Last year, the U.S. State Department announced that it would be expecting all countries to stop importing Iranian oil. Despite initial hesitancy, it issued a number of waivers to the countries that imported significant amounts. The waivers were granted towards the end of last year and had strict restrictions attached to them, but the announcement at the beginning of the week signals that no more waivers will be granted.
U.S. Secretary of State Mike Pompeo said that it has been 12 months since President Trump announced that the United States would no longer be party to the Joint Comprehensive Plan of Action (JCPOA), or 2015 Iran nuclear deal as it is known, and pointed out that the administration is in the midst of the “strongest pressure campaign in history against the Islamic Republic of Iran”.
He emphasised that the aim of the pressure campaign is to cut the regime off from the revenue that it uses to spread chaos across the region. The pressure should “incentivize Iran to behave like a normal country,” he said. Around 40 per cent of Iran’s income is from the sale of oil.
The current waivers that were put in place to give countries a chance to gradually decrease their oil purchases from Iran are due to expire on 2nd May. The waivers were also granted to ensure that the oil market was not majorly impacted.
The Secretary of State emphasised in his speech that this means no countries will have a waiver in place after 2nd May and that the United States expects all countries to completely stop importing Iranian oil. He advised that the U.S. would be carefully monitoring compliance and will be enforcing sanctions. Pompeo also warned that ignoring the U.S. on this issue will open countries up to risks that are “not going to be worth the benefits”.
This means that China, South Korea, Turkey, India and Japan would be sanctioned if they continue to import Iranian oil after the waivers expire. The other waiver holders – Taiwan, Italy and Greece – have already reduced their imports of Iranian oil to zero.
The United Arab Emirates (UAE) and Saudi Arabia have agreed to compensate for the drop in order to prevent serious economic disruption.
The Trump administration is keeping to its word regarding the maximum pressure campaign. It was announced earlier this month that the Iranian regime’s notorious Islamic Revolutionary Guard Corps (IRGC) is being designated as a foreign terrorist organisation (FTO). This is the first time a government of the United States has designated another country’s military as an FTO, but it is a move that is long overdue.
The IRGC controls a large part of the Iranian economy and the Trump administration is trying to change this by preventing businesses around the world from making it richer.