In his testimony, Shannon sought to downplay the criticisms and reassure senators that reports of pending Iranian access to the US dollar were inaccurate. Townhall quoted Foreign Relations Committee Chairman Bob Corker as saying that he had received conflicting reports on the subject in recent days, with Treasury Department official Adam Szubin making a convincing case for continued non-access, which was undermined by subsequent comments from Secretary of State John Kerry.
It was not immediately clear whether the committee regarded Shannon as a source of further reassurance or additional questions. But it is all but certain that his testimony will fail to address the full range of concerns among congressmen and especially members of the Republican Party, who have been highly critical of the Obama administration’s approach to Iran since long before nuclear negotiations were concluded.
Shannon’s testimony appears to have focused upon reiterating previous reports that the “U-turn transactions” being considered by the Treasury Department would involve American banks processing transactions originating in Iran, but without allowing any direct contact between Iranian and American financial entities.
This clarification seems to leave open the criticism that the Obama administration is going above and beyond its requirements under the JCPOA, in order to improve Iran’s economic outcomes in the wake of relief from international sanctions on the Islamic Republic’s nuclear program. And indeed, other aspects of Shannon’s testimony highlight the oft-repeated criticism that the Obama administration appears willing to extend a variety of concessions to the Iranian regime in order to preserve the July 14 nuclear agreement.
CNN reported on Tuesday that Shannon had used the hearing to attack Republican presidential candidate Ted Cruz’s insistence that he would cancel that agreement on the first day of his presidency. Doing so, he argued, would “reopen a Pandora’s box in the region that would be hard to close again.”
This view presumably encompasses not just the possibility of the White House cancelling the deal outright, but also of the US government taking any steps that would be likely to lead to the deal being cancelled by either side. And the list of such steps appears to be rather long, on the basis of statements by Iranian officials, chiefly Supreme Leader Ali Khamenei.
By most accounts, Khamenei, the ultimate authority in all matters of Iranian policy, conceded to the nuclear agreement only begrudgingly as he balanced the need for sanctions relief against his regime’s commitment to ideological antagonism against Western democracies. Starting from this understanding, IranWire published an article on Tuesday analyzing Khamenei’s commentary on the nuclear deal, especially over the past few weeks.
On the occasion of the Iranian new year’s celebration of Nowruz in March, the supreme leader called for the return to a “resistance economy” focused on circumventing US-led sanctions and accused the American government of violating the JCPOA by standing in the way of Iran’s reentry to the international banking system.
IranWire emphasized that this sort of commentary has entailed Khamenei taking an uncharacteristically business-like point of view, focusing on the relative shortage of immediate economic benefits, to the exclusion of all other potential, long-term consequences. In the article’s estimation, this is a deliberate effort to avoid the JCPOA being perceived by Iranian citizens as a bridge to more general engagement with the international community. In fact, in the immediate aftermath of nuclear negotiations last summer, Khamenei ordered his subordinates to avoid any negotiations with Western powers over anything other than the nuclear agreement.
In this context, it appears as though Khamenei and other Iranian hardliners can be expected to pursue the early cancellation of the unsigned and non-binding nuclear agreement if it does not yield economic benefits that they deem adequate. Khamenei’s previous comments indicate that the current benefits fall far short of that, and he has apparently made efforts to spread that perception throughout the country, blaming the US for the shortfall.
On Tuesday, RT ran a brief interview with University of Tehran Professor Seyed Mohammad Marandi in which he said that “the US is trying to limit any potential benefit that Iran gets from the agreement as much as possible” and that “senior officials are traveling across the globe, speaking to banks and putting pressure on them not to do business with Iran.”
But of course, this is directly contrary to how congressional critics of the Obama administration have perceived the same situation. Western media reports last month indicated that the White House had dispatched diplomats to discuss the Iran nuclear deal with multinational businesses in order to emphasize that there would likely be no additional sanctions enforcement, thereby encouraging Iran’s re-admittance into the global banking system.
In fact, the Obama administration’s latest moves can be seen as a direct response to Khamenei’s criticism and his skepticism about the forthcoming benefits of sanctions relief. That is, by giving Iran greater access to the American financial system, the administration would be contradicting Khamenei’s rhetoric, which seeks to portray the deal as economically ineffectual as a result of American interference.
But although this may successfully undercut Iranian rhetoric, Western critics of the nuclear deal see unacceptable consequences in such efforts to improve the economic outcomes for Iran. On one hand, Undersecretary of State Thomas Shannon insists that the Middle East will become more unstable if Iran is no longer constrained by JCPOA. But on the other hand, critics have expressed serious concern that the region will become more unstable if Iran continues to acquire financial resources that it can apply to expanding its foreign influence.
This was highlighted on Tuesday, with specific reference to Iran’s economic future, in a report at Al Arabiya. It pointed out that as Iran’s oil economy recovers, it is specifically focusing its new investment ventures on shared oil fields and production sources on the border with other countries. According to the article, this indicates that as Iran acquires more foreign investment and expands upon these projects it will deepen its foothold in Iraq and other parts of the Middle East, thereby “dominating and weakening” them.
Naturally, concerns about this effect are amplified by concerns over the potential for an enriched Iran to acquire other, non-economic means for growing that dominance. Since the conclusion of nuclear negotiations, Iran has pursued the purchase of new weapons from Russia, beginning with the pre-arranged sale of the S-300 missile defense system but proceeding with discussions over fighter jets, tanks, and more.
The S-300 shipment has continued to be delayed in the midst of an uncertain political environment, with the Iranians repeatedly declaring that it was imminent, and then being contradicted. On Tuesday, however, Reuters reported that a Russian foreign ministry official had claimed that the weapons will be loaded for transport in the next few days.