IRAN SANCTIONS BEGIN - WINTER HAS COME!

about 1 year ago
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“Behave yourself or else I will completely cut your pocket money!!?

These are the sanctions which a parent, who is obviously the economic power, imposes on his errant teenager. The belief is that this will improve the child’s behavior completely. For some, the mere threat of this cutting off of pocket money could be enough but for most, as experience would have taught majority of us, this threat actually backfires! The teenager, already rebellious does not cow down so easily and instead of improvement in behavior, tends to deteriorate, with many looking for other, sometimes not so correct, modes of making money. Thus sanctions in our very own small households have proven to be a big failure; only negotiations work.

This is the simple truth which probably USA does not know as the very tough sanctions on Iran kicked in from today.

The USA is punishing Iran because it has been accused of funding terror activities in Libya, Syria, Yemen. It has reinstated all sanctions removed under the 2015 nuclear deal, targeting both Iran and states that trade with it. These sanctions will hit oil exports, the biggest earner for the country, while having a contagion effect on shipping, shipbuilding, banks and all trading. Basically all core sectors of the Iranian economy will be hit. More than 700 individuals, entities, vessels and aircraft are now on the sanctions list, including major banks, oil exporters and shipping companies. Over 100 big international companies have withdrawn from Iran because of the looming sanctions.

UK, Germany, France have objected to the sanctions and they have promised to support European firms that do "legitimate business." Europe has set up an alternative payment mechanism - or Special Purpose Vehicle (SPV) - that will help companies trade without facing US penalties. But many fear that these ‘Band-Aids’ will have no impact on the profusely bleeding Iran.

Only 8 countries, allies of USA have been barred from the sanctions on the condition that they too will sever ties within six months. Italy, India, Iraq, Japan, South Korea, Turkey, China import oil from Iran and this waiver is what has kept oil prices from zooming up.

Trump is betting huge – he thinks that by getting tough on Iran, he will be able to change its behavior from being a bad boy to an almost model, first-bencher. Trump is also certain that cutting off Iran economically will mean that it will not be able to restart its nuclear program. The other big bet is that going ahead with the sanctions without EU support will show the world that their support or lack of it means nothing as European companies as such will stay away from Iran due to fear of being cut away from the bigger US markets.

Trump has either not read history or he is too naïve to think that he can force Iran to sit with him and renegotiate the Iran nuclear deal, on his terms. Iran had been living under US sanctions for years and it was only under Obama that they lived ‘free.’ They did not crack then under sanctions; what worked were negotiations only.

Maybe, the US will succeed in getting the EU to tow its line but not the Russians and most certainly not the Chinese, who are all signatories of the nuclear deal. Maybe it will not leave enough funds with Iran to restart nuclear enrichment but with friends like Russia and China, that too might need a rethink. But thinking that he can crack Iran with sanction is like thinking you can change Saudi Arabia’s human rights behavior. Next to impossible!

What Trump has done is that he has just ticked off one more box of ‘Promises to be kept’. During the election campaign he had vowed to strike off the “horrible” nuclear deal signed with the Democrats. He just fulfilled his promise ahead of the mid-term polls and set his own record straight.

It is strange that Trump does not take a stern action again Saudi which is funding killings in Yemen; not to the mention the Khashoggi killing. And what about his new found friend in North Korea? On Friday, Pyongyang issued a veiled threat, warning that it could restart building up nuclear forces if the US does not ease the crippling sanctions levied on North Korea. Well, how is Trump going to convince International Atomic Energy Agency of removing sanctions against North Korea when it already has nuclear weapons?

Clearly, Trump never had a chance to raise his children; a lesson in parenting would have surely helped!

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