By Edward Carney
Speaking to a Senate committee on Wednesday, US Secretary of State Mike Pompeo addressed both the recent designation of the Iranian Revolutionary Guard Corps as a terrorist group and the Trump administration’s broader strategy of exerting “maximum pressure” on the Islamic Republic. Pompeo characterized the terror designation as just one step in an ongoing process leading toward the realization of that maximum pressure. “I can assure the rest of the world that President Trump will continue to ratchet up the pressure on the Islamic Republic of Iran so that their behavior will change.”
In numerous prior statements about the administration’s Iran policy, Pompeo has utilized this same language, insisting that assertive measures will compel the Iranian regime to return to the negotiating table and agree to fundamentally change its behavior in a way that constitutes “acting like a normal country.” But a number of policy analysts have speculated that the subtext of the White House’s strategy includes advocacy for regime change. This in turn has been connected to statements by Trump, Pompeo, and others expressing support for the Iranian people and their apparent conflict with the theocratic government, especially in the midst of a nationwide uprising at the beginning of 2018.
Leading organizers of that movement were affiliated with the People’s Mojahedin Organization of Iran, a group that participated in the overthrow of the Shah in 1979 but broke with the regime of Ayatollah Khomeini immediately thereafter. The PMOI promotes a democratic alternative to the existing system of government and has accordingly acquired support from a wide range of politicians and foreign policy experts from across the world, including in the United States. Among its known supporters are President Trump’s National Security Advisor John Bolton and his personal lawyer, Rudy Giuliani.
The PMOI has long advocated for IRGC terror designation, and its leader, Maryam Rajavi, quickly embraced Monday’s announcement, calling it “long overdue” and recommending that the designation next be extended to the Ministry of Intelligence and Security. An intelligence network affiliated with the PMOI has linked the MOIS to a number of terrorist plots that were thwarted on Western soil over the course of 2018, including the planned bombing of a political rally near Paris organized by the PMOI’s parent coalition the National Council of Resistance of Iran and attended by Giuliani, among others.
The French government corroborated the PMOI’s findings after a thorough investigation into the bomb plot, resulting in the imposition of sanctions on the Iranian intelligence agency and some of its known operatives. The rest of the European Union followed suit late last year, after coming under pressure from other countries that had been the site of Iranian terror plots and actual attacks. But these sorts of sanctions are only comparable to the measures taken by earlier American presidential administrations, which floated the idea of terrorist designation for the entire IRGC but ultimately limited their sanctions measures to individual contributors to its operations, and especially to members of the foreign special operations wing, the Quds Force.
It is for this reason that President Trump described the IRGC terror designation as “unprecedented” in his announcement on Monday. And so it remains an open question whether his government will dare to apply that designation to any other state entity, or whether US allies in Europe will find sufficient cause to similarly sanction the IRGC itself. But while such questions remain unresolved, there is little doubt that the vast majority of US trading partners will abide by the sanctions and sever ties with known or suspected affiliates of the IRGC.
This is evident from the ways in which the nations of the world have responded to the sanctions that were re-imposed on Iran’s oil and export industries last year in the wake of President Trump’s withdrawal from the 2015 Iran nuclear deal. Many former partners of Iranian companies went beyond the requirements of those sanctions, out of an abundance of caution and in fear of still more inclusive sanctions being imposed later on. The IRGC terror designation confirms that these fears were justified, but the advance compliance with those expanded sanctions suggests that their impact may be limited, even though the IRGC reportedly controls the vast majority of Iran’s gross domestic product.
Of course, the Trump administration’s blacklist of the IRGC represents only a portion of the economic pressures that might still be imposed on the Islamic Republic. This is especially evident in light of the fact that the aforementioned sanctions on Iranian petroleum exports have not yet taken full effect. Although the “maximum pressure” strategy initially called for an uncompromising approach to enforcement, the White House ultimately granted waivers to the eight largest importers of Iranian oil, so as to guard against a spike in global market prices.
Those waivers are set to expire in May, and it remains to be determined whether all of them or a portion of them might be extended for another six-month period. This topic was raised in the Senate committee’s interview with Secretary Pompeo, but he declined to make any explicit statement, opting instead to emphasize the general trend toward greater and greater pressure.
Brian Hook, the State Department’s special envoy on Iran policy, spoke publicly last week about the latest effects of the oil export sanctions and emphasized the apparent fact that three of the eight waiver recipients have cut their exports to zero. This too is an instance of US trading partners going beyond the strict requirements of the sanctions that have been enforced up to this point, insofar as the relevant nations were expected to reduce their loadings as a condition of receiving waivers, but were not yet required to reduce those loadings to zero.
This situation seemingly sets the stage for the administration to allow waivers to expire for at least three nations, although Hook also suggested that market conditions were approaching the point at which waivers might no longer be necessary at all. And even if they are renewed, it is understood that they will be accompanied by still greater American demands for reductions in loading – specifically reductions of up to 20 percent.
Hook did not specify which three nations had already succeeded in halting all imports of Iranian oil, but several recent reports have highlighted the efforts of India, Japan, and other waiver recipients to shift their energy needs toward a range of alternatives. A common feature of this reporting is an emphasis on the given countries’ uncertainty about the future of their trade with Iran. Their decisions on that point are influenced in large part by the latest expectations regarding the progress of US policy toward the final goal of “maximum pressure.”
On Tuesday, a report by Reuters quoted a source familiar with Indian oil imports as saying, “Sanctions against IRGC have also added to the uncertainty over supply of Iranian oil... In the current scenario when enough alternatives are available it is better to wait for a clarity.” Accordingly, India is reportedly avoiding all loadings of Iranian oil for the month of May while it awaits word on the US government’s decision regarding waivers. The report indicates that at least some Indian refiners would prefer to continue their Iranian oil imports in the months to come, but the current pause in those imports suggests that they may be capable of doing otherwise if the US demands it.
Similarly, The Iran Project reported on Wednesday that the Japanese refiner Fuji Oil had indicated it would resume importation of Iranian oil in the near future if US waivers were extended, even though it has halted those imports for the month of May, pending the White House’s decision. Other Japanese refiners also helped to bring the nation’s Iranian oil imports to zero for the month ahead, and some of these appear ready to maintain the current situation even if sanctions are waived for another six months.
For Iran, this stoppage of exports to multiple prominent trading partners is no doubt contributing to an already dire economic situation. And the effects of recently re-imposed sanctions are presumably amplified both by the new sanctions associated with the IRGC blacklist and by old sanctions that continue to be enforced in the face of violations that have been uncovered and litigated. On Tuesday, the BBC reported that Standard Chartered bank had been assessed a 1.1 billion dollar fine over inadequate money-laundering controls and violations of US sanctions on Iran, Myanmar, Cuba, Sudan, and Syria.
EA Worldview highlighted the collective impact of the latest developments in US-led economic pressures on Wednesday. It noted that in the immediate aftermath of the IRGC terror designation, Iran’s national currency, the rial, fell nearly eight percent, from 134,000 to one against the dollar, to 145,500 to one. While inflation had already been a problem as a result of preexisting pressures and rampant government mismanagement, it has now reached 40 percent, effectively undermining the Iranian regime’s best efforts to portray itself as weathering the storm of foreign sanctions and isolation.