Trump Threatens Iran With Fresh Round of U.S. Sanctions
President Donald Trump is threatening Iran with additional sanctions as soon as Monday, but there’s not much left for the U.S. to target because most of the Islamic Republic’s economy is already crippled under the weight of financial restrictions.
The U.S. has previously sanctioned economically significant sectors of Iran such as oil, banks and steel, leaving smaller targets including certain exports not restricted so far and more government officials. Trump could also hit Iran’s central bank with secondary sanctions, but that would come at the risk of hurting humanitarian trade.
“The Trump Administration has already hit most or Iran’s cash-earning exports and pushed the country into a deep recession this year,” said Peter Harrell, a fellow at the Center for New American Security, a Washington-based research group. “A lot of exports to Iran have dried up because of risk aversion and all the banking sanctions.”
Trump said on Saturday the U.S. will impose major new sanctions on Iran Monday, days after he abruptly called off a plan for air strikes against the Islamic Republic in response to Iran shooting down an unmanned U.S. Navy drone. Vice President Mike Pence and Secretary of State Michael Pompeo made similar comments on Sunday.
Pompeo told reporters before he headed to Saudi Arabia and the United Arab Emirates to rally an anti-Iran coalition that “some 80-plus percent” of the Iranian economy is sanctioned today. He said an additional round of sanctions “will be a further effort to ensure that their capacity not only to grow their economy but to evade sanctions becomes more and more difficult.”
The U.S. has applied sanctions to nearly 1,000 Iranian entities, including banks, individuals, vessels tied to the country’s shipping and energy sectors as well as aircraft. In May, the Trump administration prohibited the purchase of Iranian iron, steel, aluminum and copper.
The U.S. has also revoked waivers that had allowed eight countries including India and China to import Iranian oil despite American sanctions. Trump seeks to drive Iranian oil exports to zero to force Tehran to abandon support for militant groups in the Middle East and renegotiate the 2015 accord. Observed crude flows from Iran dropped to 190,000 barrels a day in the first half of June, less than a 10th of the volume shipped in early 2018.
Exceptions to U.S. sanctions on Iranian oil sales will be made for humanitarian purchases such as for food and medicine, though it’s not clear how those would be determined or approved.
The U.S. Treasury Department has also sanctioned Iran’s central bank governor and another senior official in the bank for allegedly providing support for terrorist activities.
The moves so far haven’t been enough for at least one Republican lawmaker. Representative Michael McCaul of Texas, the top GOP member of the House Foreign Affairs Committee, on Sunday egged on the Trump administration’s efforts.
“We want them to be more desperate,” McCaul said of Iran on CBS’s “Face the Nation” on Sunday. “We want them to have their economy crippled.” Doing so would put Iran’s leaders in a position “where they have to negotiate with us,” he said.
Still, given what’s already been done, the companies and officials that are left to be sanctioned would be mostly symbolic -- with little impact that “would risk Iran escalating in retaliation,” Harrell said.
“They could also sanction sales of various consumer goods to Iran, but that would probably come off as targeting the Iranian people rather than the government,” he said.
Earlier this month, Iran’s foreign ministry said new sanctions announced June 7 by the U.S. showed that Trump’s call for negotiations with the Islamic Republic -- one repeated over the weekend -- were hollow. The latest sanctions threat is likely to harden that view.
Iran’s oil exports, a main source of income, have plunged due to sanctions. Forecasts from earlier this year show Iran’s GDP set to contract 6% this year after declining 4% in 2018.