After the Iranian attacks on US troops in Iraq, the United States has imposed additional economic sanctions on Iran and the regime in Teheran. The announcement was made by Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo in Washington on Friday.
While a military counter-attack had been anticipated, the US will continue its campaign of maximum pressure against Iran by imposing additional sanctions to those that had previously been utilized. According to President Trump and his statement on Thursday, the additional sanction had been in place already; however, he did not discuss any details.
These details were left for Mnuchin and Pompeo to deliver yesterday. Both stated that the new US sanctions target particularly the oil and banking sectors in Iran. Both industry branches are essential for the country’s economy.
All current sanctions would aim to force Iran not only to abandon its missile program but also for Iran to cease its state sponsorship and the destabilization of the region its proxy militias have caused. Moreover, Iran must also “commit to never having a nuclear weapon,” Mnuchin said. While Pompeo added that “We want Iran to simply behave like a normal nation.”
Sanctions on Iran had been in place ever since President Trump exited the Iran nuclear deal in 2018 and have had a severe impact, particularly in light of Iran’s economy, which has been completely crippled by it. To the extent that Teheran has referred to the sanctions as a “war against the economy.”
However, the new sanctions now are not merely aimed at the oil and banking sector. Instead, they also are aimed at eight Iranian government and military officials. They were involved in Tehran’s efforts to destabilize the Middle East, US Treasury Secretary Steven Mnuchin said. The names on the list are moreover accused of involvement or complicity in the attacks on the American airbase. Potential assets of the men in the United States have been frozen effective immediately, and any form of transactions with them are prohibited.
Sanctions have also been imposed on seventeen Iranian steel, aluminum, copper, and iron companies, which will deprive the regime in Teheran of billions of dollars in funding, Mnuchin said. Interestingly, the sanctions are not solely aiming at Iranian businesses. In fact, three Chinese companies, based in the small island nation Seychelles, are also being sanctioned for trading Iranian steel and other metals. However, whether Beijing will feel coerced by the measure remains to be seen. After all, the metals industry accounts for approximately 10 percent of Iran’s economy, according to Treasury. Moreover, those businesses that conduct transactions with Iran, mainly from Russia or Turkey, have been doing so despite U.S. sanctions so far.
Nonetheless, sanctions against the sectors mentioned above will likely have a significant macroeconomic impact if fully enforced. Particularly since, after sanctions had almost already brought Iranian oil trade to a standstill, four important non-oil sectors are now being sanctioned by the actions imposed — in a move to expanding the punitive measures to include Tehran’s other sources of revenue.
Moreover, the US government still has the option to impose further secondary sanctions that target major foreign buyers of Iranian oil. The latter allows to increase the pressure on Iraq even more and is thus likely to be preserved until needed.
The first response from Teheran stated the measures were “symbolic,” according to the Revolutionary Guard commander Mohsen Rezaee. They would have no economic impact and would no longer bring respect to the government in Washington, said Rezaie, who is also personally affected by the sanctions.
With sanctions now affecting every part of Iran’s economy, however, Rezaee’s statement has to be taken with a pinch of salt. Iran’s economy had already been obliterated. The sanctions imposed now are further increasing the intensity without entirely shutting the country’s economy down. However, the latter is not inconceivable nor unrealistic. With the decision on Friday, Washington has shown that the administration is dedicated to continuing to pursue its maximum pressure campaign at all costs. Iran will have no choice but to oblige.