Naturally, this production increase has been facilitated by foreign countries’ eagerness to exploit the situation of diminished sanctions. Trend reported on Wednesday that the German government had indicated willingness to sign energy contracts worth as much as 10 billion Euros. It is the latest in an ever-growing list of examples of economic cooperation between the Islamic Republic and various countries that had greatly diminished their trade relations with Iran under the sanctions regime.
These include not only European Union countries such as Germany, several of which sent and received trade delegations in the immediate aftermath of the July 14 nuclear agreement, but also close US allies on the Asian continent. On Tuesday, it was reported that South Korean President Park Geun-hye had concluded her visit to Tehran with the announcement of approximately 60 economic agreements, contributing to a fourfold increase in the country’s purchases of Iranian oil.
At roughly the same time, it was reported that India had agreed to pay 1.5 percent interest on 6.5 billion dollars’ worth of oil revenue that are currently outstanding under an agreement that allowed the Asian country to hold half of its payments for Iranian oil in escrow during the period of economic sanctions. The interest payment was offered not out of perceived necessity but as a “goodwill gesture” toward the Islamic Republic, indicating that there is substantial interest in offering Iran major incentives to embrace the expansion of trade with traditional US allies.
Interestingly, this corresponds with growing efforts on the part of the Iranian leadership to discourage some economic interactions with the US itself. This week, the regime announced that it had banned the import of Chevrolet vehicles, in line with an order by Supreme Leader Ali Khamenei to eschew American products and promote domestic production.
While apparently pursuing this strategy, Iranian officials have also been publicly expressing outrage toward the US and blaming it for the limits so far witnessed in Iran’s economic recovery. Specifically, Khamenei and his associates have accused the US of discouraging international banks and some Western businesses from re-engaging with the Islamic Republic’s financial system. This isolation has been used to justify Khamenei’s recent claims that the US is abiding by the nuclear agreement “on paper,” but violating it in spirit.
But as Breaking Energy News emphasized in an analysis of this situation on Wednesday, the banking restrictions are a real feature of US policy, yet have nothing to do with the Joint Comprehensive Plan of Action. Rather, the problem that Iran faces in seeking to expand its own recovery is that it is apparently remaining in violation of international banking standards that the US maintains for its financial interactions with all countries, not just Iran, and not just countries that are explicitly under sanction.
These standards include participation in systems that safeguard against tax avoidance, money laundering, and bad financial reporting. But Iran has not taken the necessary steps to enter into those systems or provide the corresponding guarantees. Consequently, the US State Department still maintains that the entire Iranian financial system is of “primary money laundering concern.”
The lack of Iranian effort on these issues is perhaps indicative of disinterest in actually promoting financial interactions between Iran and the US, despite the fact that barriers to these interactions are also barriers to full reentry into European markets. Removing those barriers would effectively remove a source of anti-American rhetoric, and this rhetoric has been on the ascent among hardliners like Supreme Leader Khamenei virtually since the conclusion of the nuclear agreement.
One of the latest examples of that was reported on Wednesday by Al Jazeera, which pointed out that Brigadier General Hossein Salami, the deputy commander of the Iranian Revolutionary Guard Corps, had made vague reference to American “threats” and said that the Islamic Republic was ready to respond by closing off the Strait of Hormuz to American naval and commercial vessels.
Assuming that statements of these kinds are aimed at least in part at discouraging commerce between Iran and the US, it is worth noting that there are certainly corresponding pressures on the Western side. For instance, Fox News reported on Wednesday that three Illinois Republican congressmen had sent a letter to the executive leadership of the Chicago-based Boeing Corporation discouraging it from pursuing the sale of commercial aircraft to the Islamic Republic.
Congressmen Peter Roskam, Bob Dold, and Randy Hultgren expressed concern that even though the sales would now be legal under post-sanctions rules, going through with it could result in Boeing commercial airplanes becoming “warplanes” for the IRGC. In a tweet following the letter, Roksam expressed the more general concern that virtually any exchanges with the Islamic Republic would effectively “subsidize Iranian terror.”
The same phrase was used repeatedly by Arkansas Senator Tom Cotton in comments criticizing Obama administration policies that some congressmen feared would lead to granting Iran access to the US financial system, in line with the criticisms recently voiced by Khamenei and others.