Baku, Azerbaijan, Aug.7
By Leman Zeynalova – Trend:
Iran can live with the first part of the US sanctions, which does not mean it will not suffer from it, Francis Perrin, Senior Fellow at the OCP Policy Center (Rabat, Morocco), Senior Research Fellow at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
He noted that on 6 August several sanctions against Iran are re-imposed by the US. "They cover in particular the acquisition of US dollar banknotes by the Iranian government, Iran's trade in gold, precious metals, raw and semi-finished metals, transactions related to the purchase or sale of Iranian rials, the purchase or facilitation of the issuance of Iran sovereign debt and the automotive sector."
It is of course a first hard blow for the Iranian economy, the expert believes.
"More is to come with a second wave of sanctions on 4 November. They will cover the key sectors for Iran such as oil and gas, energy and petrochemicals as well as the shipping and shipbuilding sectors, transactions with the Central Bank of Iran and several other financial institutions and insurance and reinsurance services," noted Perrin.
The expert believes that the first batch of sanctions is significant of course but the second one will be much more difficult to deal with because it includes oil and gas.
"Iran can live with the first part, which does not mean it will not suffer from it. It will also suffer before 4 November because several companies will stop trading with Iran and investing in Iran well before this date," said Perrin.
He recalled that since the decision by President Donald Trump on 8 May to reestablish all the US sanctions which were in force before January 2016 the degree of political risk related to Iran has been greatly reevaluated by companies, investors and financial institutions and there is a strong deterrent impact since this announcement.
"The dramatic fall in the value of the Iranian rial and withdrawal decisions already taken or which will be confirmed soon by several companies are the most visible signs of the deterioration of the economic situation," said the expert.
He went on to add that another problem for Iran and its present economic partners is the strong willingness of the Trump administration to apply very strictly the sanctions which have just been reestablished or will be reestablished in the near future.
"Trump administration repeatedly said that it would not grant waivers and that its goal was zero trade with Iran and zero investment in Iran. The real result will be different of course but it is obvious that the negative impacts for Iran will be very strong and the Iranian government is not really able to counter this impact," said Perrin.
The expert pointed out that the European Union (EU) has clearly stated its opposition to the reestablishment of US extraterritorial sanctions and there is a political dialogue with Iran in order to find ways and means to go on trading with Iran and investing in Iran.
"That being said it has so far failed to deliver any tangible results. At the end of the day private actors are trading with Iran and investing in Iran, not governments or the European Commission. For them, between the threat of US sanctions and promises from the EU, there is no doubt. Companies and investors are already voting with their feet and it is only the beginning of the story," he concluded.
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