War of Sanctions against Iran (IV)
By German Fioreign Policy, 06/11/2019
Jun 12, 2019 - 11:34:24 AM
German Foreign Minister Heiko Maas (SPD) is threatening Tehran with international isolation. Maas met with Foreign Minister Mohammad Javad Zarif and President Hassan Rouhani in Tehran yesterday to discuss options for salvaging the nuclear deal. Zarif, whose country has been complying with the agreement, is demanding that the West do the same and halt the sanctions: "The only way to ease tensions and de-escalate is to end the economic war." Under the weight of US sanctions, the Iranian economy is indeed collapsing and the population is suffering from dramatically increased food prices and a noticeable lack of medicines. In its effort to salvage the nuclear deal, Berlin is mainly concerned with serving the German economy's expansionist interests and with its own profile as a global player vis-à-vis the United States. Maas conceded yesterday that the INSTEX financial vehicle Berlin helped to create could not provide an adequate substitute for the losses inflicted by the sanctions. Now, he is reverting to threats.
No Arab Interest in War
In Tehran, Heiko Maas delivered the message from Abu Dhabi that the United Arab Emirates are not interested in further escalating tensions. That was just about the only result of the German Minister's trip to the Middle East - and that had certainly become already obvious earlier. The Emirates still refuse to blame Iran for the sabotage attacks on four oil vessels near the Fujairah port on May 12. Fujairah is near the Strait of Hormuz, through which around one third of the world's oil supplies are transported. Tehran threatened to prevent oil vessels from passing through the Strait, if war is waged against its country. On May 14, a drone attack was launched on an oil pipeline running from the region of extraction in the East of Saudi Arabia to a loading terminal at the Red Sea. The Yemeni Houthi, who are backed by Iran, admitted to having carried out the attack. The incident shows that if the Strait of Hormuz is closed, alternative routes for transporting oil can also be paralyzed. Because of their own vulnerability, Riyadh and Abu Dhabi are seeking to avoid a war against Iran, which could provoke a conflagration throughout the region. They have not yet officially endorsed Washington's allegation that the May 12 attack had most likely been perpetrated by the Iranian authorities.
"The Only Way Out: De-Escalation"
In view of the still unsolved acts of sabotage, Iran's Foreign Minister Mohammad Javad Zarif declared after his talks with his German counterpart, Iran would certainly not start a war. However, Iran would use whatever it takes to defend itself against an aggression recently threatened by US President Donald Trump. "The only way to ease tensions and de-escalate is to end the economic war," Zarif said, in light of the brutal enforcement of US extraterritorial sanctions. Practically all companies worldwide with US business relations are forced to abide by these sanctions. Tehran is demanding an immediate end to the economic blockade and leaves no doubt that it is unwilling to permanently comply with the nuclear deal, if not only the USA, but the European powers also break their commitments to normalize their economic relations with Iran. Tehran recently issued an ultimatum to the West and announced that it would take up uranium enrichment indefinitely, if the boycott against Iran continues unabated on July 7.
In fact, US sanctions and the retreat by not only US, but also numerous other western companies is a heavy blow to the Iranian economy. According to International Monetary Fund (IMF) estimates, already last year, the country's economic output had contracted by 3.9 percent. Even before the recent tightening of sanctions, the IMF was predicting, a sharp decline of around six percent for the current year. In March, Iran's oil export of around 2.5 million barrels/day (in April 2018) had slumped to 1.1 million, with experts estimating Tehran's losses already by March, at over US $10 billion. Iran's oil exports have fallen even further since the Trump administration withdrew its waivers at the beginning of May. Observers are calculating a current loss of 400,000 barrels/day. The sale of oil is, by far, Iran's most important source of revenue.
The Population Suffers
The situation of the population is therefore desolate. Because the value of Iranian currency has fallen sharply, imported goods have become extremely expensive, including widely used consumer products such as baby diapers. The price of groceries has also gone up sharply. The cost of red meat and poultry has increased by 57%, milk, cheese and eggs by 37%, and vegetables by 47%, since the imposition of US extraterritorial sanctions. Even though food and medicine are officially exempt from sanctions, the fear of sanctions are causing banks to even refuse the necessary transactions allowing medical goods to be imported. The domestic pharmaceutical production is also becoming more difficult, because often the basic materials for the production cannot be imported. Back in August 2018, Idriss Jazairy, OHCHR Special Rapporteur on the negative impact of the unilateral coercive measures, warned that the sanctions are destroying the economy and currency of Iran, driving millions of people into poverty. This is likely to lead to silent deaths in hospitals "as medicines run out." This situation has now been reached.
Germany as a Global Player
Yesterday, Foreign Minister Maas again reiterated his will to counteract US sanctions, to prevent the ultimate failure of the nuclear deal. Of course, his primary interest lies not with the situation of the Iranian population, but rather German economic and political interests. Germany's exports to Iran, until now a promising market, have slumped by 50 percent in the first quarter of this year, in comparison to the same period a year earlier. The number of German enterprises that are active in that country has dropped by half - from around 120 to only 60. Overall, this would be economically sustainable. In its policy toward Iran, Berlin, in alliance with Paris and London, is seeking to prevail over the United States. This will demonstrate Germany's claim to being a global player, independent of the USA. Germany's efforts to salvage the nuclear deal with Iran are considered a favorable testing ground for its power struggle with Washington. Very few countries in the world appreciated the Trump administration's dropping out of the nuclear deal.
About to Fail
Of course, until now, Berlin has not been in a position to overrule the US sanctions. This is not least of all due to the fact that the German economy, with its extensive US business ties, has no interests in jeopardizing these business returns, for the lesser returns, they can expect from business with Iran. The "Instrument in Support of Trade Exchanges" (INSTEX) finance vehicle, which functions as a barter system and is meant to bring business with Iran back into swing in spite of the sanctions, has yet to transact a single business deal. It has not even transacted the initiation of the envisaged flow of humanitarian merchandise to Iran. In Tehran, yesterday, Maas admitted that INSTEX will not be able to come anywhere close to providing an adequate substitute for the damages inflicted by the sanctions. Iran is dissatisfied. "In the nuclear deal, results and what the parties to the deal have concretely accomplished to salvage the deal are important," declared Foreign Minister Zarif following his talks with Maas. It is insufficient for "it to be constantly repeated, 'we tried, but it did not work'."
Given INSTEX's predictable failure - and therefore also Germany's attempts to develop an independent Middle East policy - Maas reverted to threats already yesterday. "If the nuclear deal fails, Iran is threatened with international isolation," Germany's foreign minister declared in Tehran. Following a phase of demonstrative independence on the issue of Iran, Berlin would, de facto, find itself back at Washington's side.
 "Wir bemühen uns nach Kräften". tagesschau.de 10.06.2019.
,  Six charts that show how hard US sanctions have hit Iran. bbc.com 02.05.2019.
 Tamara Qiblawi, Frederik Pleitgen, Claudia Otto: Iranians are paying for US sanctions with their health. cnn.com 22.02.2019.
 Iran sanctions are unjust and harmful, says UN expert warning against generalised economic war. ohchr.org 22.08.2018.
 See also Ein "Muskelaufbauprogramm" für die EU.
 19 Stunden für die Rettung des Atomabkommens. faz.net 10.06.2019.
 Matthias Gebauer: Maas droht Iran mit internationaler Isolierung. spiegel.de 10.06.2019.
Source: Ocnus.net 2019