Trump’s May withdrawal from a landmark 2015 nuclear agreement had already spooked investors and triggered a run on the Iranian rial long before nuclear-related sanctions went back into force.
US President Donald Trump warned the world against doing business with Iran on Tuesday as he hailed the “most biting sanctions ever imposed”, triggering a mix of anger, fear and defiance in Tehran.
“The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level,” Trump wrote on Twitter.
“Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less.” Within hours of the sanctions taking effect, German carmaker Daimler said it was halting its business activities in Iran.
Trump’s May withdrawal from a landmark 2015 nuclear agreement had already spooked investors and triggered a run on the Iranian rial long before nuclear-related sanctions went back into force.
“I feel like my life is being destroyed. Sanctions are already badly affecting people’s lives. I can’t afford to buy food, pay the rent,” said one construction worker on the streets of the capital.
The sanctions reimposed today, which target access to US banknotes and key industries such as cars and carpets, were unlikely to cause immediate economic turmoil.
Iran’s markets were actually relatively buoyant, with the rial strengthening by 20 per cent since Sunday after the government relaxed foreign exchange rules and allowed unlimited, tax-free gold and currency imports.
But the second tranche, which kicks in on November 5 and targets Iran’s vital oil sector, could be far more damaging — even if several key customers such as China, India and Turkey have refused to significantly cut their purchases.
In a statement on Monday before the sanctions were reimposed, Trump said he was “open to reaching a more comprehensive deal” with Iran, which covered “its ballistic missile programme and its support for terrorism.” But his Iranian counterpart Hassan Rouhani dismissed the idea of talks while crippling sanctions were in effect.
“They want to launch psychological warfare against the Iranian nation,” Rouhani told state television. “Negotiations with sanctions doesn’t make sense.” – ‘Legitimate business’ –
European governments are infuriated by Trump’s strategy, which has prompted many of their large firms to leave Iran for fear of US penalties. Daimler said it had “suspended our already limited activities in Iran in accordance with the applicable sanctions”.
British Foreign Office Minister Alastair Burt said that the “Americans have really not got this right”.
The nuclear deal was important “not only to the region’s security but the world’s security,” he told the BBC.
Iranian Foreign Minister Mohammad Javad Zarif told reporters the global reaction to Trump’s move showed that the US was diplomatically “isolated”. Iran ally Syria branded Washington’s move “illegal under international law”.
“The US administration’s policies have a proclivity for hegemony and arrogance,” said a foreign ministry official, quoted by state news agency SANA.
Russia’s foreign ministry said it was “deeply disappointed” by the return of sanctions, adding that it would do “everything necessary” to save the 2015 nuclear deal.
Zarif today welcomed to Tehran his North Korean counterpart, Ri Yong Ho, as Pyongyang also faces US pressure to scrap its nuclear capabilities.
Most Iranians see US hostility as a basic fact of life, so their frustration is largely directed at their own leaders for not handling the situation better. “Prices are rising again, but the reason is government corruption, not US sanctions,” said Ali, a 35-year-old decorator in Tehran.
Long-running discontent over high prices, unemployment, water shortages and the lack of political reform has sparked numerous protests over the past week, though a verifiable information is scarce due to heavy reporting restrictions.
Many hope and believe that Iran’s leaders will “drink the poison cup” and negotiate with the US eventually.
There have been rumours that Trump and Rouhani could meet in New York in September on the sidelines of the UN General Assembly — though Rouhani reportedly rejected US overtures for a meeting at last year’s event. Two countries that have welcomed the tough new US policy are Iran’s regional rivals, Israel and Saudi Arabia.
Israeli Prime Minister Benjamin Netanyahu hailed the renewed sanctions as “an important moment for Israel, for the US, for the region, for the whole world.” Iran’s currency has lost around half its value since Trump announced the US would withdraw from the nuclear pact.
But the last two days have seen the rial’s value surge by a fifth following the arrest of the central bank’s currency chief and new plans being announced.
The new rules mean foreign exchange bureaus will reopen after a disastrous attempt to fix the value of the rial in April backfired spectacularly, with corrupt traders making a fortune out of a mushrooming black market.
