Insider news & Analysis in Iran

By INU Staff 
INU - The New York Times reported on Thursday that a number of travel companies have halted plans for tours of Iran as a result of the increased barriers to travel between the Islamic Republic and the United States.

At the end of January, President Donald Trump signed an executive order temporarily suspending virtually all travel to the US from Iran and six other Muslim-majority countries. As a reciprocal measure, Tehran suspended some US visas and declared its own travel ban. It remains to be seen how long any of these measures persist, but companies are anticipating a major decrease in cultural and economic interchange between the two countries, compared to the more open environment that was established by the Iran nuclear deal spearheaded by Mr. Trump’s predecessor.

Interestingly, even as Iran was retaliating against the travel ban, some officials made a point of saying that American companies were nonetheless still welcome to invest in the Iranian oil industry or to otherwise do business with the Islamic Republic. A sale of nearly 100 commercial aircraft is still expected to go forward between Iran and the Seattle-based manufacturer Boeing, although some in the US government are opposed to such exchanges and may still try to obstruct the sale.

But regardless of the status of prospective American investment in Iran, the greatest effects of the nuclear deal involve companies from elsewhere in the West, many of which have tentatively pursued opportunities since the implementation of the agreement in January of last year. Market Realist reported on Thursday that Iranian oil officials were still insisting that Western energy companies were interested in such investments. However, other reports suggest that the many such companies are retreating from nascent plans, out of fear that the renewed animosity between Iran and the US will give rise to expanded sanctions enforcement and other barriers to trade.

This claim was seemingly backed up by Reuters, at least where the French energy giant Total is concerned. The report noted that the company is planning to give a final decision this summer on a prospective two billion dollar gas project investment. But the decision remains up in the air, and Total indicates that the greatest determining factor will be whether the US renews the sanctions relief that was put in place for 18 months under the nuclear deal, pending reauthorization.

The situation faced by Total is probably shared by the vast majority of prospective Western investors. Their near-future relationships with the Islamic Republic, then, will depend on how effectively the other six parties to the nuclear agreement can defend against pressure from the new presidential administration in the US. While campaigning for office, President Trump repeatedly referred to the Joint Comprehensive Plan of Action as the worst deal ever negotiated. He also promised to change its terms, though following through on such a promise would require building consensus among Britain, France, Germany, and – what’s more difficult – Russia and China.

After Trump’s victory, there was some discussion of the possibility of his supposed relationship with Russia being an asset in convincing it to scale back existing levels of support for Iran. So far, though, this has not happened, and during a visit on Wednesday to Moscow, Iranian Deputy Foreign Minister Abbas Araqchi specifically praised the Russians for their defense of the JCPOA, according to IFP News.

In this sense, Iran’s retention of friendly relations with Moscow could be instrumental in the retention of its burgeoning business relationships with the Eurozone. But at the same time, Iran’s Eastern alliances are also potential sources of both military and economic leverage in the event that its relations with the West continue to break down. This is a fact that the Trump administration has arguably begun to shine light upon, as evidenced by a Washington Times report describing how some of the administration’s sanctions on Iran’s ballistic missiles were directed against Chinese nationals, and possibly also a Chinese front company.

This report of Chinese involvement in the Iranian ballistic missile program is backed up by earlier documents including a 2009 State Department cable that said, “Chinese firms over the past year have offered or sold [Missile Technology Control Regime]-controlled and non-annex items to ballistic missile-related entities in foreign countries, including Iran.” And while this quotation says nothing of the involvement of the Chinese state structure, there have been increasing signs of Iranian-Chinese alliance in the subsequent years, including joint military drills in the Persian Gulf.

Meanwhile, Iranian economic exchanges with the Chinese have expanded as well, and have come to include other mutual partners in the region. On Thursday, the Times of Islamabad reported that the Iranian consul in Pakistan had expressed renewed interest in what’s known as the China-Pakistan Economic Corridor. Meanwhile, Reuters reported that Iran had reached out to some of its traditional Arab adversaries in the Persian Gulf region, and had received a warm reception, even if a tentative one, from the government of Kuwait.

While Arab cooperation would be more difficult to obtain for Iran and would come with attendant risks related to the traditional relationship between those countries and the US, all of this represents opportunities for Iran to seek economic leverage elsewhere in the event that the Trump administration slows or halts Western investment. Thus, these other areas of Western influence will be areas that the administration will likely have to address after the fact.

 

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