February 23, 2019

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Is Trump Giving In On Iran?

Is Trump Giving In On Iran?
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In May, the Trump administration announced that the U.S. would withdraw from the Iran nuclear deal and reinstate sanctions on Iran’s oil industry starting November 4. Initially, the rhetoric from President Trump and his advisors was that the U.S. expected countries to cut their imports of Iranian oil to zero and that, unlike the Obama administration, this State Department would not grant any waivers.

This combination of two pictures shows U.S. President Donald Trump, left, on July 22, 2018, and Iranian President Hassan Rouhani on Feb. 6, 2018. (AP Photo)

However, last night–just four days before the sanctions are set to begin–reports began to leak that the U.S. will, in fact, issue exemptions for some importers.

The Iran sanctions stalwarts, President Trump’s foreign policy base, felt betrayed.

But they shouldn’t be so quick to abandon hope. Here’s why:

Zeroing out Iranian exports by November 4 was never a realistic goal. It was a good negotiating tactic to achieve significant reductions in Iranian oil imports. Iran’s economy will still take a significant economic hit from these sanctions, particularly as Iran is again cut off from the SWIFT financial transactions system. Iran’s economy is already in a precarious state and the Iran’s revenue decrease from the reduced oil exports may be sufficient.

Meanwhile, these exemptions can be revoked or decreased over time, and the more gradual reduction in Iranian oil exports prevents an oil shock from harming American consumers at the pump so close to the midterm elections. Trump’s foreign policy base clearly got its hopes up from the strong rhetoric coming out of the State Department and the White House over the past 6 months, but they shouldn’t be too disappointed with how the Trump administration is implementing the sanctions even if it does provide a small reprieve for Iran.

 





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