Tehran, Iran, November 15
By Mehdi Sepahvand –- Trend:
US President Donald Trump's get-tough approach to Iran has proven to be a serious threat to one of the Islamic Republic’s biggest international economic deals.
Under the deal, signed about four months ago, France’s Total and China's CNPC agreed to invest billions of dollars in Iran to develop the giant South Pars gas field in partnership with Iran's Petropars.
It was the first investment of its kind since sanctions on Iran were relaxed in 2016 after Tehran promised to roll back its nuclear program. Trump has threatened to quit the nuclear deal if Congress and America’s allies fail to strengthen it.
But now after a recent interview of Total’s Chief Executive Officer Patrick Pouyanné, Iran’s pride in the deal as an ice-breaker stands on shaky ground. Iran has repeatedly said the Total/South Pars transaction demonstrated the success of the nuclear deal, hoping that other major Western and Asian firms would sign agreements with Iran.
“Either we can do the deal legally if there is a legal framework," Pouyanné told CNNMoney this week.
"If we cannot do that for legal reasons, because of [a] change of [the] regime of sanctions, then we have to revisit it."
Trump unveiled a tough and comprehensive new policy towards Iran last month. He accused Tehran of violating the nuclear accord, and announced that he would no longer certify that the lifting of sanctions was in US interests.
Total just recently increased its assets in the US, which it fears dealing with Iran would endanger.
"If there is a sanctions regime [on Iran], we have to look at it carefully," said Pouyanné. "We work in the US, we have assets in the US, we just acquired more assets in the US."
Total last week increased its US presence with the purchase of a portfolio of liquefied natural gas assets from Engie (ENGIY), including the company's stake in the Cameron LNG project in Louisiana, one of the first new gas export terminals in North America.
But a big question remains to be asked. After his Iran deal decertification, Trump told Europe they can “do business” with Iran, promising any new US sanctions against Iran would not affect them. What Trump is pushing for, along with France and some other countries, is not to redo the nuclear deal, but to pressure Iran over its missile program and regional presence which has harmed US interests. The Revolution Guards, which has been defying pressure to stop its missile program, is most probably going to be the target of any new sanctions. The question to be asked is how sanctions on the Guards would influence international companies’ business with Iranian partners.
The experience of Western sanctions on Iran for its nuclear program in the 2000s and early 2010s was a bitter one, for, along with the government, it affected ordinary people, sometimes costing them their lives as Iranian patients had very limited access to medication. Under the light of that experience, any future sanctions on Iran would probably be of the smart kind, to avoid including ordinary Iranians. This may be the basis on which Trump showed European companies the green light over Iran.
In the 1990s, leaders of the United Nations concluded that general economic sanctions disproportionately harmed powerless citizens and should be greatly avoided. Meanwhile, the terms “smart” and “targeted,” rich with connotations of precision, modernity, and effectiveness, gained traction on the world stage. As a result, beginning in 1994, “smart sanctions” became the United Nations’ reigning sanction policy. These sanctions are theoretically meant to maximize the target regime’s costs of noncompliance, while minimizing the general population’s suffering. They must hit the target government and its key domestic constituencies the hardest, while ideally sparing economic sectors that affect the population as a whole.
But all does not end there, and Total may have a point in worrying over its Iran business. The Revolution Guards is not a solely military organization. Over the past decades it has developed economic wings and currently it holds great megaprojects across Iran and many holding companies in a variety of fields, including energy. Smart sanctions have the ability to track down any relation of governmental or non-governmental entities with their subject, and therefore influence an array of entities which are not firsthand subjects.
According to a former Iranian diplomat, there is the possibility that a move by Trump to pose new sanctions on Iran could influence Total.
“There is a time when we are discussing things within a legal framework. In that case the answer would be no [that Iran’s economy will not be affected]. But when it comes to Trump, we are talking of a guy who is not bound to rules and is trying on impulse to do anything. Here things are different,” Ali Khorram, Iran’s former ambassador to United Nations' European Headquarters in Vienna, said in an interview with Trend.
“Although he has said he would pose new sanctions on defense-related transactions, Trump may do something which can affect Total as well.”
The ex-diplomat nonetheless stressed that Iran cannot be put under sanctions in a legal framework. “Iran has upheld its commitments under the JCPOA [nuclear deal]. The International Atomic Energy Agency has confirmed that. So neither in the nuclear sector nor in other sectors would there remain any excuse for Trump.”
But the commander of the Revolution Guards recently said if the Guards are sanctioned, then Iran’s government would be sanctioned as well, Khorram was asked, answering, “Yes. With smart sanctions Iran’s government, economy, and the energy sector can be put pressed.”
“However,” he underlined, “The sanctions have been there for 40 years. They were removed only 2.5 years ago. But the sanctions that Trump is talking about are different than those before, which were backed by UN Security Council resolutions. These date back to before 2004, when Iran had been under US sanctions for some 25 years. But since 2005 or 2006, UN Security Council sanctions were leveled at Iran with international support. Such sanctions are not the question right now, because other countries do not follow Trump.”
“So the [to-be] sanctions are those which, according to European companies themselves, [their damage] will be compensated by their respective governments so the companies would go on doing business with Iran. However, if the penalty is too big, the companies might rethink their decisions. After all, it’s all business decisions… and there may be a lot of pressure in certain areas. However, these all go back to the pre-2004 era style. Even if Trump poses any sanctions, they would be illegal, that is, once Trump leaves office, his successor would have to return to the legal framework.”