US Policy On Iran After The Midterm Elections

By Barkley Rosser, Professor of Economics at James Madison University in Harrisonburg, Virginia. Originally published at EconoSpeak

A curious coincidence is that the US midterm elections happened one day after the US reimposed its second round of illegal economic sanctions on Iran, with the focus on oil, shipping, and banking, along with some other sectors. Despite all but a handful of governments around the world supporting Iran in this matter (despite apparently two attempted assassinations of opponents of Iran’s government in European nations recently) against the US out of a hope to keep Iran following the JCPOA nuclear agreement as it has by all reports been doing, the impact of the midterm elections is probably to reinforce support for Trump’s policy, even as mostly he lost support in the election. The reason is that the most important location for serious critics of a president’s foreign policy usually come out of the Senate, not the House of Representatives or governors. So, even though the Dems have taken the House and gained governorships, the GOP gaiined in the Senate, and some of the GOPs leaving included the few Trump critics, notably departing Foreign Relations committee Chair, Robert Corker of TN. This is the case, even as those GOP gains may only amount to a net two (Dem Sinema now ahead in AZ) or even only one (Nelson in FL may yet pull it out too).

Yet another reason the gains by Dems will probably not lead to much more pressure on Trump on this is that many Dems at least somewhat support his policy, especially those strongly influenced by the Israeli government. Thus in today’s Washington Post, a lead editorial (presumably by neoconnish Fred Hiatt) said there may be reasons for imposing some sanctions because of “malignant” policies by Iran, notably supposedly supplying missiles to the Houthis in Yemen, plus the Syrian government, and Hezbollah in Lebanon (there are doubts on the extent of all this), even as WaPo opposes the US withdrawing from the JCPOA and is highly critical of Saudi Arabia due to the murder of their journalist, Jamal Khashoggi, probably on orders of KSA Crown Prince MbS, a main enemy of Iran. Indeed, members of both parties in the Senate have become unhappy with the Saudi war in Yemen and may move to cut US military support of the Saudi war effort there. But this will probably have little to no effect on the reimposed economic sanctions on Iran.

As it is, the ultimate impact of the new sanctions is quite complicated with various cross-cutting effects that are already damaging the Iranian economy, but may end up having less impact than Trump would like. The most important part of the sanctions involves Iran’s oil exports, which US officials claim they would like to see go to zero. Early forecasts had those falling to about a third of the about 2.8 million bpd of a few months ago, which anticipation helped push oil prices up substantially, with Brent crude topping $80 per barrel while West Texas intermediate crude topped $70 per barrel. But the Trump administration has granted temporary waivers to 8 countries allowing them to continue importing Iranian oil for awhile, supposedly to avoid excessive disruption of global markers (while not officially announced, the Japan Times claims the 8 waivered nations are China, India, Japan, South Korea, Taiwan, Turkey, Italy [only EU nation on list]. and UAE [yes, that big anti-Iran oil exporter imports oil from Iran]). As it is, with surging oil inventories in the US, prices have fallen sharply in the last two weeks, with Brent down to nearly $70 and WTI to nearly $60 , with some commenters today claiming that oil is turning into a “bear market.” While this clearly allows Iran to export more oil than previously thought for now, the price decline will hurt Iran.

A fundamental clash in this is between governments and the businesses based in their nations. Only a handful of national governments officially support Trump in this policy, basically the odd group of Saudi Arabia, Israel, UAE, Bahrain, and apparently Egypt, with a few others sort of semi-supportive, such as Jordan, if with little enthusiasm. Russia, China, Turkey, and the major EU nations all oppose Trump’s policy. While businesses in Russia in particular go along with their government’s view, nearly all of those that are reasonably large in the EU nations are obeying the demands of the US government to cut back business relations with Iran, with poster boys for this being Total and Peugeot from France out of fear of losing markets in the US or facing sanctions from the US government. All of this has led to efforts in both China and the EU to set up alternative payment systems to avoid using US dollars and going through US-controlled financial intermediaries, a big conflict over this involving the SWIFT payment system, which the US would like to prevent Iran from using while the major European nations oppose this move by the US. As it is, given the ongoing efforts by they EU nations to help Iran out, it seems especially unwise of Iranian intel agencies to be attempting to assassinate people in France and Denmark as they have reportedly done, albeit unsuccessfully so far.

A final point is that it is extremely unlikely that this policy by Trump will lead to Iranian leaders kowtowing to him and entering into any negotiations. If anything, they might get pushed into pulling out of the JCPOA or create trouble for their enemies in various ways. OTOH, it may be that the sanctions will not lead to as harsh impacts on the Iranian economy as forecast, whether this is due to the Europeans and Chinese setting up alternative payments systems, or due to Iran wriggling out of the sanctions whether due to waivers or through such maneuvers as barter transactions involving oil or the use of “ghost ships” that do not use any radio communications, something reportedly already going on. We shall see how this all turns out, but for now Trump probably has gotten a modest boost of support for his policies within the US as a result of the midterm elections, much as I am not pleased to see this.

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19 comments

  1. The Rev Kev

    I’m not sure that the US can really afford to have Iranian oil go to zero in any case. One exception that the Trump regime granted was to the Indian-backed port of Chabahar in southern Iran. Apart from Indian goods going through here, so does Iranian oil. The situation in Afghanistan is touch and go as it is but if all Iranian oil was cut off from that country, well, you can guess the result on the war effort there. I would imagine that other countries said that if they did not get a sanction exemption, their economies would slow down leading to cutbacks on contracts with things like, oh I don’t know, American weapons and the like.
    Another factor pushing Trump is the position of the so-called deep state in Washington. Secretary of State Mike Pompeo said in a BBC interview a day or so ago that the Iranian “leadership has to make a decision that they want their people to eat” or “use their wealth to import medicine”. In other words, the US government wants to do to Iran what the Saudis are doing to Yemen. Broadcaster RT noted that this was like when Madeleine Albright said that “killing half a million Iraqi children through punishing sanctions was, indeed, ‘worth it’ to achieve US foreign policy goals.” The BBC interview is at-

    https://www.state.gov/secretary/remarks/2018/11/287210.htm

    Reply
  2. Doug Hillman

    What? No hope and change? Que sorpresa!

    Meet the new boss, same as the old boss — Netanyahu. Look at any vote AIPAC weighs in on and dispense with any pretense of the usual vote-rigging for democracy cosmetology. It’s abundantly clear who pays tribute to whom and whose tail wags the American mongrel.

    Reply
  3. Amfortas the Hippie

    On Texas public radio a little while ago,an administration guy was crowing about forcing Iran to implement democracy, and made mention of their history back to 1905 of dictatorship and authoritarianism, and how terrible it is that they meddle in other nations affairs.
    Interviewer did counter with mention of operation Ajax, at least…but, to paraphrase hitler,”what luck for the rulers that we don’t teach history”
    Every single thing that dude said about Iran could more plausibly be applied to the USA.
    What a world, where baudrillard was a prophet, and nothing is real.

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    1. divadab

      It’s all very real to the objects, which are actual people experiencing actual suffering. Just ask the over half of the Syrian population who have fled their homes in fear for their lives because of imperial aggression.

      True that here at the heart of the empire, the reality of the empire’s actions is deliberately suppressed and replaced with fairy stories. Fairy stories which are mostly believed by a population barraged with distractions and cinematic “news” written in little rooms somewhere by moral degenerates. You can fool all of the people some of the time especially if the alternative reality involves the destruction of carefully constructed fairy stories, deeply held and loved and all tied up with tribal and personal identity.

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      1. Amfortas the Hippie

        Part of his outraged critique of the Iranian regime was their meddling in Syria, Iraq, Yemen and Libya.
        Exporting terror around the world,lol.
        It was so overthetop hypocritical…the only question was if the administration lackey believed what he was saying.
        Post truth. Ontological crisis.
        Nothing is real. Reality is completely mediated.

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        1. divadab

          Pompeus Maximus apparently lies as a matter of habit, like the rest of his ilk. Pure projection, which may well mean he is not conscious of his habitual lies. IMHO he’s a monster – perhaps the worst kind – the kind that makes himself believe the other is a monster, while his lies are for the good.

          @amfortas, thx for your insights.

          best, divadab the fashion hippie

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        2. knowbuddhau

          Buck up, amigo, just because there’s a surfeit of propaganda about these days doesn’t mean “nothing is real.” Besides, considering my moniker, what makes you think that’s news, anyway? ;-}

          They may sit at the Mighty Wurlitzer, but that doesn’t make them Players. We should laugh at them, scorn them, but not wail and bemoan *the loss of *the reality. They have only the power of our belief in their weapons-grade BS.

          Which is why I truly don’t get the whole “kill me now,” “help me” mentality. Is it an East Coast thing? Never hear it in the Puget Sound circles I travel in.

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          1. Amfortas the hippie

            if i’m bewailing anything, it ain’t the presence of trump…nor even the apparently inherent dysfunction of “democratic” and “republican” politics at this scale…
            I bewail the utter disconnect between much of our mediated and online life, and talking to the person in the elevator.
            as both of my grandads would say(and likely their whole generation), “there’s yer problem right there…”
            the couple or three hospital suits i rode with wanted to pray for my wife, and prolly vote straight ticket GOP.
            (I’m almost certain of this)
            That hospital that those guys run forgave almost a quarter million dollar debt.
            I’m certain…given other data, both anecdotal and otherwise, that they do that often.
            For all it’s potential, sometimes i think that it would be better if the internet just stopped working one day(as currently used, at least)
            the difference is so stark.

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        3. Sparkling

          Of course they do. We do too. The difference between now and a decade ago is that the civilian populations in both countries are tired of wasting blood and treasure to “defend” countries they don’t give a shit about. Of course, our governments don’t factor that into their grand plans.

          “I do not want to die for Gaza and Lebanon!” is just as popular of an idea over there as it is over here.

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    2. Darius

      The signal event in modern Iranian history was the overthrow of the elected Iranian government under Mossadegh by the Churchill and the CIA and the reinstallation of the Shah. This makes US declarations of fealty to Iranian democracy ring hollow, to say the least.

      It also must be reiterated that many Americans can’t even remember why they hate Iran so much. It’s because the right has an irreconcilable grudge against Iran arising from the hostage crisis of 38 years ago. They don’t know that Iran has reason for a much greater grudge against us.

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  4. Louis Fyne

    American original sin of the entire post-WWII era, picking sides in the Muslim world.

    Most Americans have zero idea of the 1000-year long Shia v. Sunni/Iran-Persia v. Arabs/Sunni v. Sunni. power struggles. And Saudi and Netanyhu’s lobbyists have exploited that. America got sucked into that mess thanks to oil, fear of the Commies and $$$$ from weapons exports.

    Ironically if the US used the standard colonial playbook, we’d use the minority Shia as regional pawns against the dominant Sunni and Saudi Wahabbis.

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    1. Anarcissie

      Does any of that matter? Great leaders and great empires need great enemies, as do their followers and inmates. If they cannot find them they must create them and inflate them. Let us not dignify the pathology of the prehistoric tribal mind caught in the present world more than we have to.

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    2. knowbuddhau

      Yes, and look how well playing by that book has ever worked out. That last sentence contains all the hubris of every empire, ever.

      Reply
  5. Skip Intro

    The ‘apparent two attempted assassinations’ in Europe seem likely to be false flag attacks meant to sway the EU against Iran.

    By Way Of Deception – False Flag Terror Acts Press Europe To Sanction Iran

    Denmark claims, without providing evidence, that Iran tried to assassinate a leader of the Arab separatist movement over the incident. Iran denies any such attempt. The right wing Danish government uses the claim to urge other European countries to sanction Iran.

    It is unlikely that Iran would take action in Europe, which it urgently needs to reduce the damage of U.S. sanction, over an incident for which it already punished the Islamic State.

    The Danish claims are allegedly based on information provided by Mossad. That only increases the suspicion that the assassination plot is a false flag operation similar to a recent one in Belgium.

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    1. psv

      Yes, I think that if, as the author says, “it seems especially unwise of Iranian intel agencies to be attempting to assassinate people in France and Denmark as they have reportedly done”, one should question the likelihood of it, and cui bono. Certainly it doesn’t seem in Iran’s interest at this time to engage in such activity.

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  6. Sparkling

    This is how every public spat between the United States of America and Iran goes:

    Figurehead-of-State #1 says something mean/imposes more sanctions. Figurehead-of-State #2 says something defiant and that the other guys will pay for what they’ve done. The media breathlessly hypes up the saber-rattling and claims war will break out any day now while the nationalists hold giant rallies and unironically scream “The other guys are tyrannical nutjobs! Death to the other guys!” (These are also dutifully covered by the media and used as evidence that war will break out any day now.) Of course, a shooting war never actually breaks out… within the borders of the United States of America or Iran. Sanctions are applied, more tough words are exchanged, and the guys really running the show either coast on the propaganda-generated goodwill or start another proxy war in the latest Arab country unfortunate enough to be in their crosshairs.

    The fact that the latest argument involved dueling Game of Thrones memes on social media should be a clear sign that neither government is even pretending to take this song and dance seriously anymore.

    Reply

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