U.S. sanctions against Iran

The lonely "axis of evil"

In the new Cold War between the USA and the Islamic Republic the theocracy is taking on the status of the defunct Soviet Union, writes Ali Sadrzadeh. Tehranʹs powerbrokers have, however, come up with several strategies to counter Trump's tightened sanctions policy

How can a state effectively organise the "black market"? A strange question, one might think: after all, isnʹt the state meant to combat smuggling and trafficking – not organise it.

But the objection is only correct in principle, because there are exceptions and special cases. A state that wants to fight illegal trade must itself be a reasonably normal state; moreover, the time in which it acts must also be normal, that is to say, a time of peace. And it is precisely these exceptions that lead us to Iran and its oil.

The Islamic Republic of Iran is not a normal state. In any case, it is not a republic in the traditional sense. And this particular state is currently on a war footing. Therefore, instead of fighting illegal trade, it sees itself forced to engage in it. Because in these strange times, the "Islamic Republic" is urgently looking for ways and methods to cheat the President of the United States, Donald Trump. And Iran believes it has found what it's looking for.

"Strong sanctions"

Trump announced a new round of sanctions against Iran on 4 November. "Strong sanctions", as Trump has been fond of repeating ever since he came to power. For example, he is looking to cut Iran's banking connections with the outside world, banning the sale of certain goods to Iran and making the purchase of Iranian oil a punishable offence for all but a handful of countries. But the rulers in Tehran have come up with a few ideas on how to continue supplying their most important export good to their customers.

In mid-October, Iranian Vice President Ishagh Jahangiri opened a stock exchange in Tehran that is the only one of its kind in the world. It is called an energy exchange. The state acts as a seller of oil: to be shipped on the Persian Gulf at a price that is up to five dollars cheaper per barrel than the daily price on the world market. Buyers remain anonymous, thus avoiding punishment by the USA. However, they do need to have small, agile tankers at their disposal. Ships are to carry a maximum load of 37,000 tons of oil and will sail the world's oceans without navigation, so that they cannot be located. Buyers are to pay 20 percent of the price in advance in Iranian currency, the rest following resale of the oil in U.S. dollars or euros.

Iranʹs Khargh oil-loading platform in the Persian Gulf (photo: AP)
"Stealing a march on Donald Trump": in Tehran, ways are currently being explored to circumvent the new U.S. sanctions in the oil sector. The state acts as a seller on the stock exchange in Tehran and offers oil: to be shipped on the Persian Gulf at a price that is up to five dollars cheaper per barrel than the daily price on the world market. Buyers remain anonymous thus avoiding punishment by the USA. However, they do need small, agile tankers that cannot be located by radar

The Iranian government is promising absolute confidentiality: not only for the buyers themselves, but also their end customers. Where the oil tanker originated from and under what flag it is sailing will not be revealed. The government in Tehran thus believes it has found a way to sell at least one million barrels of oil a day.

Dubious trade in "black gold"

It is an economic venture with many uncertainties. Whether the state will actually receive the full price for its oil through this illegal trade is uncertain. Moreover, all observers agree that this clandestine method of trading oil is likely to open the corruption floodgates.

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