Daily Times

The Trump administration this week imposed economic sanctions on Tehran which had previously been suspended under the landmark Joint Comprehensive Plan of Action (JCPOA) of 2015. In real terms, this translates into hitting Iranian trade in gold and other precious metals; transactions linked to the rial; issuance of sovereign debt; and the purchase or acquisition of American banknotes, among other key areas. And this is not even the whole story. For November will bring with it an additional round of more aggressive sanctions; targeting Iranian oil exports as well as the country’s central bank.

Yet what remains clear is that this has less to do with nuclear capability and more to do with choking Tehran financially. Indeed, since President Trump first announced pulling the plug on the JCPOA, the Iranian rial has devalued almost by half; while the IMF warned back in March that Tehran’s net official foreign reserves could decline (this year) to $97.8 billion; barely sufficient to finance 13 months of imports. Then there are predictions that the economy could contract by as much as 4.3 percent in 2019.

Washington, for its part, remains adamant that it seeks not regime change but, rather, a shift in Tehran’s dealings with the rest of the world. This includes curbing its ballistic missile programme as well alleged support of terrorism. Which, of course, is another way of cautioning the Iranians against challenging Saudi regional influence.

That being said, this has the unintended consequence of the White House possibly undermining its own global influence. After all, a resurgent Russia and an ascending China have proved unwilling to play ball on this front. The same goes for the EU. Indeed, the 28-member bloc has enforced a “blocking statute” to protect European companies “engaged in legitimate business with Iran” from the threat of American retaliation.

All of which suggests that the US is courting trade wars with not just Beijing but with Brussels, too. Even Britain, for better or worse, has sided with the Union that is all set to leave next year; thereby underscoring that, for now at least, the hope of a Brexit deal has taken precedence over the US transactional relationship. Given such prevailing dynamics, Pakistan must do its best to avoid being caught in the American-Iranian crosshairs. For not only is its own economy extremely fragile at the present — both Washington and Tehran remain important allies.

It is hoped that Trump Town will soften its position on Iran. Particularly if it wants to avoid charges of opportunistic deflection from securing Afghanistan. Yet as things stand, the administration risks unprecedented isolation in a uni-polar world.  *

Published in Daily Times, August 8^th 2018.