Round-up: Key Iran nuclear deal and sanctions developments

Round-up: Key Iran nuclear deal and sanctions developments
Brian Hook, the US State Department special representative on Iran, has said American military action against the Islamic Republic could be possible should sanctions fail to curb Tehran from delivering weapons to hostile groups in the Middle East.
By bne IntelliNews November 29, 2018

There have been several important developments in relation to US sanctions targeted at Iran and preserving the nuclear deal in the past two to three days. Here’s a round-up:

France and Germany have said they will take joint responsibility for the EU-Iran special purpose vehicle (SPV) mechanism to enable US sanctions-shielded trade between European companies and Iranian counterparts. However, Reuters reported that few involved parties now believe it will cover oil sales, heightening fears for the fate of the landmark international nuclear deal with Iran.

The EU has been struggling to find an EU member state willing to host the SPV, given the threat of reprisals from Washington. Diplomats are saying the French-German gambit is a “safety-in-numbers” tactic to overcome the refusal of individual EU states to domicile the mechanism. But given the unrelenting US threats of retribution for sanctions-busting, the goals of the nascent trade work-around could be scaled back to encompass only less sensitive items such as humanitarian and food products.

It is no wonder US officials have taken to describing the SPV as a “paper tiger” and the German-French solution may well fall short of what Iran’s moderates wish for to fend off anti-Western hardliners. The hardliners are demanding Tehran ditch the 2015 nuclear accord which they opposed in the first place as unwise as the US could not be trusted.

“The SPV (Special Purpose Vehicle for trade) is important, but what’s more important to the Iranians is oil and ensuring their exports in the long term,” a senior French diplomat was reported as saying.

“None of the measures that we’re trying to put in place will perform miracles, but what we’re trying to do is a series of measures to convince the Iranians to keep to their nuclear commitments. That is our objective,” he said.

At least 24 Iranian hardline parliamentarians have tabled a motion to impeach Iranian Foreign Minister Mohammad Javad Zarif—seen as a key figure in the pragmatic, centrist Rouhani administration which has fought to keep Iran in the nuclear deal despite the unilateral US pullout—for remarks he made about money launderers, Fars News Agency reported November 27.

Zarif’s faux-pas, according to some, was that he said that “those who profit in billions from money laundering are spending millions of it to prevent the passage of bills [in Iran] requiring more financial transparency” which are demanded by inter-governmental organisations such as the Financial Action Task Force, or FATF.

Several groups with special interests have moved against Zarif.

Meanwhile, 27 MPs signed a motion to have Speaker of Parliament Ali Larijani impeached. The parliamentarians accused him of violating the constitution in the way he moved along a money laundering bill.

Neither Zarif nor Larijani is likely to lose their position, but the impeachment moves raise the hardline pressure being exerted on the Rouhani administration.

Taiwan’s Formosa Petrochemical will not buy Iranian oil despite being able to benefit from a US sanctions waiver, it said on November 29, citing the lack of a payment mechanism.

It told Reuters it would replace Iranian oil consignments with Iraqi crude.

Formosa’s decision highlights the challenges Tehran faces in selling its oil despite what the market sees as generous US exemptions awarded to eight of Iran’s traditional buyers—China, India, Turkey, Taiwan, South Korea, Italy, Greece and Japan. The waivers took effect on November 5 and last for 180 days.

Formosa has a long-term contract with the National Iranian Oil Company to buy 2mn barrels of crude every quarter.

The Hill on November 29 reported the Trump administration as saying military action against Iran could be possible should US sanctions against the country fail to curb Tehran from delivering weapons to hostile groups in the Middle East.

"We have been very clear with the Iranian regime that we will not hesitate to use military force when our interests are threatened. I think they understand that. I think they understand that very clearly," Brian Hook, the State Department special representative on Iran, was quoted as saying.

"I think right now, while we have the military option on the table, our preference is to use all of the tools that are at our disposal diplomatically," he added.

Hook spoke at an event held to display pieces of what he claimed were Iranian weapons and military equipment—many handed over to the US by Iran’s regional arch rival Saudi Arabia—deployed by Tehran to militant groups in Iraq, Syria, Yemen and Afghanistan.

Some countries are trying to harm Iran by manipulating the oil market, Iranian Oil Minister Bijan Zanganeh said on November 28, according to Iran’s semi-official Mehr news agency.

Zanganeh did not name any countries but Iranian officials have accused Saudi Arabia of trying to take Iran’s share of the oil market in recent months. US sanctions targeting Iran’s oil, gas, petrochemicals, banking and transport sectors snapped back into effect in early November.

“Some countries are trying to strike a blow against Iran by interfering in the oil market and its supply,” Zanganeh reportedly said.

Japanese oil refiners are to ask the US for an early extension of Tokyo’s 180-day waiver on importing oil from Iran, according to the head of the Petroleum Association of Japan (PAJ), NHK reported on November 28.

Japan has argued it has a special reliance on Iranian oil as the country has oil companies with refineries specifically designed to process its sour crude type. The country has few other options, with only nations such as another US foe, Venezuela, producing a similar grade of oil.

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