The only clear outcome of the meeting was that the two reportedly agreed to meet again on Friday, on the sidelines of a UN ceremony celebration the signing of a climate change agreement. Kerry said that that follow-up meeting would “sort of solidify” what he talked about with his counterpart on Tuesday. He also vaguely indicated that the first meeting had yielded “progress” on “a number of key things.”
Iranian officials, especially Supreme Leader Ali Khamenei, have recently complained that the economic effects of the Joint Comprehensive Plan of Action have not been what they expected. Khamenei and his colleagues have also used this to fuel anti-US rhetoric, accusing the American government of violating the “spirit” of the nuclear deal by standing in the way of Iran’s reentry into the international banking system.
Many Western companies and virtually all banks have indeed continued to keep their distance from the Islamic Republic in the several weeks since the mid-January implementation of the nuclear deal. These policies have been explained in terms of the fear of “snap-back” of suspended sanctions, as well as the effect of sanctions that remain in place, related to Iran’s human rights violations and support for terrorism.
These outstanding punitive measures prevent Iran from having access to the American financial system, thereby putting international banks at risk of fines and seizure of assets if they try to do business with both countries. The JCPOA does not require the US to lift this ban, but a number of recent reports have indicated that there is considerable pressure for it to do so.
Khamenei’s complaints are certainly a contributing factor in this pressure, but so too are efforts by European Union officials and business leaders who are eager to gain fuller access to Iranian markets. This eagerness has been demonstrated by a number of new developments, including trade agreements and state visits, a number of which have met with protest from dissenting legislators and activists who feel that the rush to invest has come at the expense of awareness of Iran’s poor human rights record.
Several of these developments have been related to the Iranian commercial air travel industry, which is moving quickly to update its fleet and airports with contracts and purchases from European manufacturing and construction firms, and possibly also from the US aircraft giant Boeing. Now Iran’s Press TV reports that the EU may be aiming to harvest greater fruits from its investment by quickly removing the safety-related bans on flights by Iran Air.
The announcement of the possible revocation of this ban comes shortly after eight European commissioners visited Tehran over the weekend. The trip reportedly sought to boost bilateral relations and concluded with several new agreements in fields of energy development, travel, and joint research.
But this investor eagerness only adds to the pressure that the Obama White House is already putting on itself to make sure that the JCPOA remains in effect, and arguably successful. The problem is that especially in light of the Iranian regime’s complaints, such success depends upon economic empowerment of Iran to a degree that the Obama administration’s critics consider to be beyond the scope of the deal, and generally threatening to global security.
The whole of the Republican Party certainly has its place among these critics, but the White House must also contend with the apparently growing ire of traditional American allies including Saudi Arabia, which broke of diplomatic relations with the Islamic Republic early this year and has been spearheading efforts to counteract Iran’s growing regional influence, often against the advice or preferences of the Obama administration.
Reuters reported on Wednesday that President Obama had arrived in Riyadh to meet with Saudi Arabia’s King Salman, in large part to discuss tensions between the Gulf Arab states and Iran. The meeting was a precursor to Obama’s presence at a summit of the Gulf Cooperation Council, where he can be expected to continue trying to reassure the US’s traditional partners over the current American policy of rapprochement with the Islamic Republic.
Such reassurances will arguably be even more difficult in light of recent events that have highlighted the unlikelihood of reconciliation between Iran and Saudi Arabia. On Sunday, numerous oil producing countries attended a meeting in Doha to discuss a possible freeze on oil production, with an eye toward stabilizing global prices. Among the attendees were representatives of all OPEC nations except Iran, which had cancelled only the day before, following a number of statements declaring its intention to not participate in the freeze.
This led to the failure of the entire agreement, since Saudi Arabia had declared Iran’s participation to be a prerequisite. This likely reflects a Saudi interest in containing Iran’s economic growth, reentry into international markets, and by extension the expansion of its power in the broader Middle East. In this context, the Saudis’ prevention of the deal they had helped to spearhead is presumably one aspect of a strategic of what has been called “economic warfare.”
In a report on the crude oil tanker industry, Market Realism took notice of another aspect of this economic warfare, pointing out that the Saudis had barred Iranian tankers from using their territorial waterways. This tactic has the potential to be especially impactful in light of another Reuters report that finds Iran is struggling to locate and operate tankers to accommodate its rising, post-sanctions oil output. An estimated 45 to 50 million barrels of Iranian crude have turned some Iranian tankers into mere storage as a consequence of global oversupply, which is certain to remain a problem in light of the failure of the Doha meeting.
The problem is made worse for Iran by the fact that it cannot gain access to the tankers operated by most foreign carriers. This fact demonstrates the limits of European eagerness to reclaim the Iranian market. Reuters notes that the difficult logistics of reentering that market have left many such carriers with little to no sense of urgency about doing so, especially since they are not lacking for oil to carry away from other producers.
But of course, the reluctance of Western tanker companies may still evaporate if the White House goes ahead with plans to further open up the Iranian market, over the objections of Congress, the Saudis, and other critics.
Whether or not this will happen remains very much up in the air. While some parties’ opposition to a rapid Iranian economic recovery are sure to remain intransigent, the Obama administration’s conciliatory plans can be expected to gain support from other corners, some of them arguably surprising.