US Ends Sanction Waivers for Nations in Iran Nuclear Deal

The United States said Wednesday it was ending waivers in its sanctions for nations that remain in the Iran nuclear accord, bringing the deal further to the verge of collapse.

Secretary of State Mike Pompeo said he was responding to Iran's "brinkmanship" of nuclear steps, which have been aimed at pressuring the United States to remove sanctions as called for by the 2015 accord.

"These escalatory actions are unacceptable and I cannot justify renewing the waiver," Pompeo said in a statement.

President Donald Trump bolted from the agreement negotiated under his predecessor Barack Obama, under which Iran had drastically curbed its nuclear activities.

But the Trump administration until now had issued waivers to allow companies, primarily from Russia, that are still present in Iran to carry out the agreement.

The United States will notably remove the waivers that allowed the modification of the heavy water reactor in Arak, which prevented it from using plutonium for military use, as well as the export of spent and scrap research reactor fuel.

Pompeo said that the United States was issuing a final 60-day waiver to allow companies involved in the projects to wrap up their operations.

The United States, however, did not move to stop international support for Bushehr, oil-rich Iran's only nuclear power plant, where Russia has been supplying fuel.

Pompeo said the United States was providing a 90-day waiver extension on Bushehr to "ensure safety of operations" but reserved the right to modify it at will.

In justifying the moves, Pompeo also pointed to recent comments by Iran's supreme leader, Ayatollah Ali Khamenei, who said it was an "Islamic duty" to fight for the "liberation of Palestine" and denounced supporters of Israel.

Pompeo accused Khamenei of invoking the Holocaust, saying: "The regime's vile rhetoric only strengthens the international community's resolve to counter its threats."

Britain, France and Germany—along with Russia and China—still support the nuclear accord, saying that it was working by reducing Iran's nuclear activities.

The Trump administration, which has close ties both to Israel and Iran's regional rival Saudi Arabia, called the deal a "disaster" and said the larger issue was reducing Tehran's activities in the region.

Iran's economy has faced intense pressure over the sanctions, while Trump has also used military force, killing a top Iranian general in a January drone strike.

Photo: State Department

US Ends Sanction Waivers for Iran's Fordow Nuclear Plant

By Shaun Tandon

The United States announced Monday it would halt sanctions waivers for Iran's Fordow plant, likely ending a key component of a landmark nuclear deal after Tehran said it had resumed enrichment activities.

Piling pressure as protests hit Iran, the move is intended to discourage work led by Russia's state-owned nuclear company Rosatom at the once-secret site, which was supposed to be transformed into a civilian research center under the 2015 agreement.

Secretary of State Mike Pompeo pointed to Iranian President Hassan Rouhani's announcement of renewed activity at Fordow—one of a series of steps taken by Tehran as it presses Europeans to make good on sanctions relief promised for compliance.

"Therefore the United States will terminate the sanctions waiver related to the nuclear facility at Fordow effective December 15, 2019," Pompeo told a news conference.

"The right amount of uranium enrichment for the world's largest state sponsor of terror is zero," Pompeo said.

"There is no legitimate reason for Iran to resume enrichment at this previously clandestine site. Iran should reverse its activity there immediately," he said.

President Donald Trump last year withdrew from the denuclearization accord and reimposed sweeping sanctions on Iran, aiming to inflict economic pain and reduce the Shiite clerical regime's influence in Arab countries.

But the Trump administration has still granted waivers to let other nations implement the nuclear deal, which was negotiated under former president Barack Obama, without facing penalties in the United States.

Critics of Trump have said that the waivers proved the administration saw the benefits of the deal, which sharply expanded access for international inspectors. Iran had been in compliance before the US withdrawal.

US waivers remain in place for other nuclear sites including Bushehr, a nuclear power plant off the Gulf coast being developed with Russia under safeguards.

Hawkish Republicans have been pressing on Pompeo to end the waivers. Senator Tom Cotton praised the decision as he pointed to the weekend protests in Iran over gas price hikes.

"The mullahs are playing with atoms in an underground bunker at Fordow instead of helping their own people, who are demonstrating in the street," he tweeted.

Latest Step by Iran

Iran, which insists its nuclear program is exclusively peaceful, has taken a series of measures that fall well short of developing a nuclear weapon but are meant to put pressure on European powers.

The UN's nuclear watchdog said Monday that Iran's stock of heavy water for reactors had crossed the level agreed upon in the 2015 accord for the first time.

Iran's stock of heavy water—which can be used to produce plutonium for nuclear weapons as an alternative to enriched uranium—was 131.5 tons, above the 130-ton limit, said a spokesperson for the agency in Vienna.

At Fordow, Iran said it began feeding uranium hexafluoride gas into mothballed enrichment centrifuges.

Britain, France, Germany and the European Union said Iran's decision was "inconsistent" with the nuclear deal.

Iran has accused European nations of hypocrisy over the nuclear deal and also attacked the United States for its statements of support for protesters.

Major roads have been blocked, banks torched and shops looted since Friday's abrupt hike in gas prices.

Pompeo again voiced solidarity with the protesters, saying: "The world's watching."

"The Iranian people will enjoy a better future when their government begins to respect basic human rights, abandons its revolutionary posture and its destabilizing foreign policy in the region, and behaves simply like a normal nation," he said.

Photo: State Department

Key Senators Circulate Legislation Banning Iran Nuclear Waivers

By Nick Wadhams

Two of the U.S. Senate’s staunchest opponents of the Iran nuclear deal drafted legislation that would bar President Donald Trump from renewing waivers allowing the Iran to maintain a limited civil nuclear program.

The legislation from Republicans Ted Cruz of Texas and South Carolina’s Lindsey Graham is part of a broader effort by hardline opponents of the 2015 Joint Comprehensive Plan of Action, which Trump withdrew the U.S. from last year, to end the few remaining benefits Iran still gets from the accord. They circulated their draft legislation to officials at the Departments of Treasury, State and Energy this week, according to a U.S. official familiar with the matter.

When Trump backed out of the nuclear accord, he imposed a raft of new sanctions designed to choke Iran’s economy and compel it to agree to stricter limits on its nuclear and missile programs. But he left intact a set of sanctions waivers allowing Iran to work with nations that remain in the deal. The point was to limit nuclear weapons proliferation and ensure Iran doesn’t enrich uranium to high levels.

The bill from Graham and Cruz would end three waivers allowing work at a reactor at Arak, an enrichment facility at Fordow, and the Tehran Research Reactor, according to the draft. The administration renewed those waivers for 90 days on July 31 and has been debating whether to do so again.

The State Department didn’t immediately respond to a request for comment.

Iran moved in recent months to exceed the 2015 deal’s limits on enriched uranium stockpiles, though President Hassan Rouhani’s government insists it is still meeting the terms of the accord.

Proponents of the legislation say the Tehran government channeled a covert nuclear-weapons program through civil nuclear projects in the early 2000s. They also argue that ending the waivers would make it harder for a Democratic president to revive the deal should Trump not be re-elected next year.

Photo: wikicommons

US Renews Waivers for Iran Civil Nuclear Projects

The United States said Wednesday it was extending waivers for three civilian nuclear projects in Iran, despite Washington's withdrawal from the 2015 nuclear agreement.

"This is a short 90 day extension," said White House National Security Advisor John Bolton, a champion of the hawkish policy towards Tehran.

"We are watching those nuclear activities very, very closely, they remain under daily scrutiny," he told Fox Business.

The projects include the Bushehr nuclear power plant, the Arak heavy water reactor, which has been modified under the supervision of the international community to render it impossible to produce plutonium for military use, and the Fordow fuel enrichment plant.

The State Department downplayed the move, as it did when it last granted an extension in May, describing the waivers as "continued restrictions on the Iranian regime's nuclear program".

"The action today will help preserve oversight of Iran's civil nuclear program, reduce proliferation risks, constrain Iran's ability to shorten its 'breakout time' to a nuclear weapon, and prevent the regime from
reconstituting sites for proliferation-sensitive purposes," Secretary of State Mike Pompeo's spokeswoman Morgan Ortagus said in a statement.

In reality, the move extends exemptions for the three Iranian civil nuclear projects, the State Department confirmed to AFP.

There was debate in President Donald Trump's administration about these exemptions, with hawks saying that after Washington's withdrawal from the Iran nuclear deal in 2018, it would have been logical to stop them in order to further increase the pressure on Tehran.

But the more moderate line has prevailed for the moment, so as not to upset the other signatories to the 2015 deal—China, Russia, Germany, France and Britain—amid escalating tensions between the US and Iran.

The 2015 agreement promised that world powers would assist Iran in developing civilian nuclear energy -- the clerical regime's stated goal for its atomic program.

The waiver announcement came as Washington imposed sanctions Wednesday on Iranian Foreign Minister Mohammad Javad Zarif.

Photo: President.ir

China Is Buying Iranian LPG Despite Sanctions, Ship-Tracking Shows

By Saket Sundria and Dan Murtaugh

After being hit by the trade war and U.S. sanctions on Iran, some Chinese buyers of liquefied petroleum gas from the Persian Gulf nation are finding it’s too tough a habit to kick.

China sourced around a fifth of its LPG—used as cooking fuel, in cigarette lighters and to make plastic—from the U.S before Beijing slapped a 25% tariff on the gas last August as the trade tussle heated up. Buyers then turned to Iran, which accounted for around a third of imports in April, before President Donald Trump blocked all energy exports from the country in May.

But some Chinese customers are still buying from Iran, according to Kpler SAS. Based on ship-tracking data, the Paris-based energy researcher estimates that at least five supertankers loaded Iranian LPG in May and June that was destined for China. That would equate to around $100 million of the gas, according to Bloomberg calculations.

“They’ve started using a variety of techniques to hide their activity,” Ilya Niklyaev, an LPG analyst at Kpler, said in an interview. “Like switching off transponders as well as intentionally signaling wrong destinations and indicating loading ports in Qatar, Saudi Arabia or the U.A.E.”

The predicament of the Chinese buyers underscores how the White House’s aggressive trade and foreign policy is disrupting global commodity flows. To avoid running afoul of the U.S. sanctions, LPG importers in Asia’s largest economy would have to turn to more expensive supplies from elsewhere in the Middle East or Africa.

Going Dark

Tankers carrying Iranian oil and gas are notorious for masking their journeys by turning off satellite locator beacons, a technique known as going dark, and transferring fuel between ships to hide the origin of the cargo.

LPG tanker Sea Dolphin sailed into the Persian Gulf between Iran and Qatar with empty tanks on May 17, and then turned off its beacon, Kpler said in a June 6 note. It turned the locator back on May 26, indicating its tanks were now full, and headed toward the Maldives, where it again went dark.

Another ship, the Pacific Yantai, loaded its tanks near where the Sea Dolphin had stopped, and then set sail toward China, according to Kpler. Bloomberg ship-tracking data confirms the movements of the two vessels and show the Pacific Yantai appearing to drop off a partial cargo at Ningbo on June 14.

The Sea Dolphin is owned by Kunlun Trading Co., data compiled by Bloomberg show. Staff who answered the phone at its Hong Kong office said they weren’t authorized to speak to the media and there was no spokesperson. There was no response to emails sent to Kunlun’s investor relations department.

Pacific Yantai is owned by China’s Pacific Gas, Bloomberg-compiled data show. The ship was on a long-term charter, said a staff member at the company’s Shanghai office who asked not to be identified as the person is not authorized to speak to media. The person wouldn’t name the company that chartered the vessel. Nobody answered emails sent to generic addresses for information and investor relations at Pacific Gas.

Oil Imports

Chinese refiners may also be circumventing American sanctions to import Iranian oil, with FGE saying in a note last week that it expects some degree of non-compliance. China probably isn’t complying with U.S. sanctions on Iranian crude, U.S. Deputy Energy Secretary Dan Brouillette said Friday, adding that he didn’t have any hard evidence to show this.

LPG is an important export for Iran. Some 83% of the country’s 507,000 barrels a day of petroleum product shipments in 2017 were LPG and fuel oil, according to Energy Information Administration data. That compared with 2.5 million barrels a day of crude and condensate exports.

China’s Foreign Minister Wang Yi last month pledged to support Tehran’s efforts to safeguard its interests. The country’s Ministry of Commerce and the General Administration of Customs didn’t respond to faxed requests for comment.

China took 346,000 tons, or 80%, of Iran’s LPG exports in May, Kpler estimated. If the cargoes loaded before the end of the U.S. waivers on May 2 they may not have been in contravention of the sanctions. Iran is likely to export a total of 400,000-500,000 tons in June with at least eight supertankers set to load the fuel in coming weeks, Kpler said in the note. Three supertankers have loaded LPG from Iran in June, of which at least one is headed for China, it said.

Kpler and Chinese customs figures show similar overall LPG import data for the past year. But while the Kpler numbers show a sizable portion coming from Iran, the Chinese data has no cargoes from the Persian Gulf nation since mid-2017.

Iranian LPG supplies have been among the cheapest in the world as customers from Japan to South Korea turned away from doing business with the country following the U.S. sanctions. China could turn to other suppliers, like Qatar and Saudi Arabia, but it would be more expensive.

After rising 21% this year through late April, the benchmark east Asian price for propane, a type of LPG, has since fallen 23%, according to data from PVM Oil Associates. The contract traded 3.2% lower on Tuesday at $410.12 a ton.

“While the LPG market isn’t expected to be nearly as tight in the second half of 2019, China will still have to lean heavily on LPG supplies from Iran, as well as from Qatar, Saudi Arabia, Nigeria and Angola to fill the gap left behind by the U.S,” said Han Wee Ong, a Singapore-based senior consultant at FGE.

Photo: Wikicommons

Germany, UK Warn Iran Over Uranium Plans as EU Urges Caution

Germany and Britain on Monday warned Tehran not to breach uranium stockpile limits set by the 2015 nuclear deal, as the EU's diplomatic chief dismissed Iranian threats as "political dialectics".

Iran set a 10-day countdown on Monday to exceed the 300-kilogram limit set on its enriched uranium stocks, dealing another blow to the crumbling nuclear accord signed by Tehran and six international powers.

The EU has battled to save the agreement since US President Donald Trump withdrew and reimposed sanctions, but Iran said it would step back from exceeding the 300-kg limit on June 27 only if "other parties live up to their commitments.”

The move comes as Iran tries to step up pressure on the deal's other signatories—Germany, France, Britain, China and Russia—to help it sidestep US sanctions and in particular enable it to sell oil.

German Foreign Minister Heiko Maas rejected the Iranian ultimatum and insisted Tehran must stick to its commitments under the deal.

"We have already said in the past that we will not accept less for less. It is up to Iran to stick to its obligations," Maas said after talks with EU foreign ministers in Luxembourg.

"We will certainly not accept a unilateral reduction of obligations."

A spokesman for the British government echoed the call, saying the E3—the European signatories to the deal—has "consistently made clear that there can be no reduction in compliance".

"For now Iran remains within its nuclear commitments. We are coordinating with E3 partners on next steps," the spokesman added.

The European Union's diplomatic chief Federica Mogherini said the bloc would not act on the basis of Iranian rhetoric but wait for reports by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA).

"Our assessment on the implementation of the nuclear deal has never been, is not and will never be based on statements, but on the evaluation that the IAEA makes, the reports that the IAEA produces and that can be done at any time," Mogherini said after the talks.

"Announcements are relevant elements of political dialectics but our assessment on the implementation of the agreement is based on the factual, technically sound assessment and evaluation that the IAEA makes in its reports."

On May 8, President Hassan Rouhani said Iran would stop observing restrictions on its stocks of enriched uranium and heavy water agreed under the 2015 nuclear deal.

Rouhani said the move was in retaliation for the unilateral US withdrawal from the accord a year earlier, which saw Washington impose tough economic sanctions on Tehran.

Tensions between Tehran and Washington have escalated ever since, with the United States bolstering its military presence in the region and blacklisting Iran's Revolutionary Guards as a terrorist organization.

Photo: IRNA

Saudis Take Iran's Oil-Market Share, Keeping OPEC Supply Steady

By Grant Smith

Saudi Arabia ramped up oil production last month by the most this year, largely filling the gap created by tougher U.S. sanctions on its political rival, Iran.

Iranian output plunged in May to the lowest since 1990 as the Trump administration threatened penalties for anyone trading with the Islamic Republic, according to a Bloomberg survey of officials, analysts and ship-tracking data.

Nonetheless, the production boost by Riyadh, along with increases in fellow OPEC members Libya and Iraq, meant that overall output from the group remained unchanged in May from the previous month. OPEC pumps about 40% of the world’s oil supplies.

Iran’s production plunged by 230,000 barrels a day to 2.32 million a day, according to the Bloomberg survey. Saudi Arabia increased by 170,000 barrels a day to 9.96 million a day. Total supply from OPEC’s 14 members was unchanged at 30.26 million barrels a day.

President Donald Trump is tightening the squeeze on Iran’s oil exports amid a dispute that revolves around the country’s nuclear program, and has turned to America’s allies in Riyadh to keep global crude markets comfortably supplied. The survey indicates that Saudi Arabia, a long-standing antagonist of Iran, has been willing to oblige.

That sets the stage for a contentious meeting when the Organization of Petroleum Exporting Countries and its partners gather in the coming weeks to consider production levels for the second half of the year. Iran has warned that the 59-year-old cartel is at risk of collapse because of aggressive moves by some members.

Despite the boost, the Saudis are still significantly below the limit of 10.3 million barrels a day agreed at the start of the year with a global coalition of producers, which spans fellow OPEC members as well as nations outside the group including Russia and Kazakhstan.

Saudi Arabian Energy Minister Khalid Al-Falih has recommended that the alliance should keep the supply curbs in place for the rest of the year, as headwinds to global economic growth may reduce oil demand.

Oil prices slumped more than 11% in London last month as the trade dispute between the U.S. and China threatened to crimp growth in the world’s two biggest economies. Brent, the international benchmark, was trading around $62 a barrel on Monday.

While the Saudi production increase was still well inside the limits agreed with fellow producers, the same can’t be said of a boost by Iraq.

Baghdad raised output by 50,000 barrels a day last month to 4.63 million a day, meaning that it has now abandoned any of the restraint pledged under the OPEC agreement. As the Saudis have urged fellow OPEC members to abide by their individual targets, that could provide another source of friction when the producers get together.

Photo: Aramco

State Department Says No Change in Plan to End Iran Oil Waivers

By Nick Wadhams

The U.S. State Department sought to quash speculation that the Trump administration is easing its clampdown on Iranian oil exports after a sanctions waiver program ended May 2, saying there has been no softening in the American stance that any country buying Iran’s oil would be subject to penalties.

A U.S. decision not to renew the six-month waivers allowing limited exports is final and no more trade will be permitted, Brian Hook, the U.S. special representative for Iran, said in a statement to Bloomberg News on Thursday. The U.S. had previously granted waivers, known as significant reduction exceptions, to eight governments in November—China, India, South Korea, Japan, Turkey, Taiwan, Greece and Italy.

“Our firm policy is to completely zero out purchases of Iranian oil—period,” Hook said. “Any new purchases of oil initiated after the expiration of the SREs on May 2 will be subject to U.S. sanctions, even if a country had not met its previously negotiated purchase caps during the SRE period from November to May 2.”

The statement was intended to clarify comments Hook made during a news briefing earlier Thursday. Those remarks were construed as saying the U.S. would allow countries to keep buying Iranian oil after May 2 as long as they remained under the limits the U.S. set out when it originally granted the waivers.

For weeks, oil traders have asked how tough the U.S. stance really is and whether there would be any loopholes for buyers of Iranian crude following the decision to end the waivers. Thursday’s statement sought to clarify that the only possible exception to the position would be for oil that was already en route to its destination before the waivers expired.

“If oil was purchased, loaded and en route to its destination prior to the expiration of the significant reduction exceptions on May 2, these cargoes would not exceed the agreed-to caps on imports of Iranian crude oil negotiated under the now-expired SREs,” Hook said.

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U.S. to Extend Most Key Waivers Linked to Iran's Nuclear Program

The Trump administration will renew several key waivers that allow Iran to keep operating a limited civilian nuclear program, a move that heads off a clash with European allies and Tehran over the fate of a 2015 deal that Trump abandoned last year.

The U.S. is extending waivers that the administration had previously granted allowing nations that remain in the deal to engage in nonproliferation activities and nuclear research at three sites—Fordow, Bushehr and Arak—without facing sanctions, Assistant Secretary of State Christopher Ford said Friday. Instead of granting the waivers for 180 days, the administration will shorten their term to 90 days.

Two other waivers, allowing Iran to ship surplus heavy water to Oman and to ship out any enriched uranium that exceeds the 300 kilogram limit in exchange for natural, or “yellowcake” uranium, will be revoked. Those were allowed under the Joint Comprehensive Plan of Action, the 2015 accord that President Donald Trump withdrew from a year ago.

“We are tightening restrictions on Iran’s nuclear program as part of our pressure campaign,” Brian Hook, the State Department’s special representative for Iran, said in an interview. “Iran cannot have any path to a nuclear weapon."

Photo: IRNA

Turkey Reluctant to Replace Iran Oil With Saudi, U.A.E Supplies

Turkey is loath to buy more oil from Saudi Arabia and the United Arab Emirates as the U.S. looks to squeeze exports from Iran, currently the third-largest supplier of crude to the Middle East’s biggest economy.

“Iranian oil isn’t cheap but there is a big difference” with the price of Saudi and U.A.E crude, Turkish Foreign Minister Mevlut Cavusoglu said at a reception in Ankara, according to state-run TRT television. “The U.S. is taking a decision and wants all countries to comply with it. Why should we pay the price?”

The Trump administration is ending waivers that allowed a handful of countries including Turkey to continue importing oil from sanctioned Iran a year after the U.S. withdrew from the 2015 nuclear deal. Secretary of State Mike Pompeo has said he’s confident the market will remain stable as Saudi Arabia and the U.A.E. will ensure an “appropriate supply” of oil along with the U.S.

Turkey is resisting the idea of buying oil from America’s two anti-Iranian allies, whose relations with Ankara are fraught with tension after the murder of Saudi critic Jamal Khashoggi in the kingdom’s consulate in Istanbul last October. Turkey has also long opposed the U.S. curbs on Iran, with President Recep Tayyip Erdogan saying last year that “such sanctions are aimed at tipping the balance in the world” and violate international law and diplomacy.

The blowback from American sanctions against Iran could also hit Turkey’s economy, which entered its first recession in a decade last year as oil prices surged. The prospect of higher prices or the risk of a confrontation with the U.S. don’t bode well for Turkey’s currency, already battered by weeks of upheaval.

“Turkey could very soon find itself in a difficult position at the time when inflation remains stubbornly high close to 20 percent,” said Piotr Matys, a London-based analyst at Rabobank. “Iranian oil could be the source of another diplomatic spat between Ankara and Washington, when the relationship is already tense due to Turkey’s insistence on buying a Russian missile-defense system.”

China, India and Turkey aren’t necessarily committed to bringing imports of Iranian crude down to zero and the U.S. will have to negotiate "over the terms of their withdrawal from Iran or be prepared to deal with their noncompliance,” according to a report by Richard Nephew published by Columbia University’s Center on Global Energy Policy.

In January, Iran accounted for just over 12 percent of Turkey’s oil imports, according to the latest available official data. Iraq was the top supplier with almost 24 percent, followed by Russia with 15 percent. Saudi Arabia ranked 8th with 4.3 percent. Turkey only imported diesel fuel from the U.A.E. in January.

Meanwhile, Iraqi oil pipelines running to Turkey have been badly damaged, limiting the volume of exports, Cavusoglu said. While that’s limiting Turkey’s options, it remains wary of turning to supplies from the Gulf.

“Our refineries aren’t compatible with oil purchased from there,” Cavusoglu said referring to Saudi Arabia and the U.A.E. “Their technology must be upgraded. And for that, they should be shut down for awhile. On the other hand, it is costly.”

Photo: IRNA

Trump to Sanction Allies Over Iran Oil, Risking Friction

The United States said Monday it would start imposing sanctions on friends such as India that buy Iranian oil, in its latest aggressive step to counter Tehran that could jeopardize US relationships.

The announcement sent global crude prices spiraling higher, although President Donald Trump tweeted that Saudi Arabia and other US allies would "more than make up" for decreases in Iranian oil.

In seeking to reduce Iran's oil exports to zero, the Trump administration is targeting the country's top revenue maker in its latest no-holds-barred move to scale back the clerical regime's influence

"The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime's destabilizing activity threatening the United States, our partners and allies and security in the Middle East," the White House said in announcing its move.

Eight governments were initially given six-month reprieves from the unilateral sanctions imposed last year by the United States on Iran.

They include India, which has warm ties with Washington but disagrees on the US insistence that Iran is a threat.

Other countries that will be affected include China and Turkey, opening up new friction in contentious relationships if the United States goes ahead with sanctions over buying Iranian oil.

Secretary of State Mike Pompeo insisted that the United States would punish countries that buy Iranian oil after May 2, without spelling out the scope of the sanctions.

“We've made clear—if you don't abide by this, there will be sanctions," Pompeo told reporters. "We intend to enforce the sanctions."

The others—Greece, Italy, Japan, South Korea and Taiwan—have already heavily reduced their purchases from Iran.

Pressure Keeps Building

Trump last year withdrew the United States from an accord negotiated by his predecessor, Barack Obama, under which Iran drastically reduced its nuclear program in return for promises of sanctions relief.

Pompeo said the United States would keep raising pressure until Iranian leaders come back to the table, although he appeared little concerned with wooing them, saying he was making his demands to "the ayatollah and his cronies."

Trump's tough Iran policy has already alienated close allies, with the Europeans supporting the 2015 accord—with which UN inspectors say Iran is complying—and setting up a way for their businesses to evade US sanctions.

A key backer of Trump's push is Israeli Prime Minister Benjamin Netanyahu, who hailed the latest move as "of great importance."

Just two weeks ago, Trump took another key step by designating Iran's elite Revolutionary Guards—who are in charge of preserving the regime and have amassed vast commercial interests—as a terrorist group, the first time such action has been taken against part of another government. 

Iran earned USD 52.7 billion from petroleum exports in 2017, according to the oil cartel OPEC, before the reimposition of US sanctions.

Experts say it is unlikely that Iranian exports will ever be reduced completely to zero, with a black market likely to exist.

Oil Prices Rise

Oil prices jumped overnight on reports of the action by the United States.

US benchmark West Texas Intermediate for May delivery went up another 2.2 percent shortly after opening to $65.39 a barrel.

Backing Trump's comments, Saudi Arabia's Energy Minister Khalid al-Falih said that the kingdom would work to "stabilize" the oil market.

Energy-hungry India stands to be among the most affected by the decision and is also facing US pressure not to buy from Venezuela, where Trump is seeking to topple leftist President Nicolas Maduro.

According to Indian commerce ministry data, oil imports from Iran in the 10 months to January rose 16.3 percent to 21.3 million tonnes—although they have declined since the initial US sanctions announcement.

Trump's move has also been good for US business, with India's oil purchases from the United States skyrocketing 350 percent from 2017 to 2018.

In the case of Turkey, Ibrahim Kalin, the spokesman for President Recep Tayyip Erdogan, recently told reporters in Washington that "we are expecting" a waiver extension as the country had reduced imports from Iran, despite disagreeing with US policy.

The United States still has an exemption in place for Iraq, which relies on electricity from its neighbor to cope with chronic blackouts that have triggered unrest.

Photo: Bloomberg

Turkey Hopeful US Will Extend Waiver on Iran Sanctions

Turkey voiced hope Tuesday that the United States will extend an exemption in sanctions to allow it to keep buying oil from Iran, despite tensions between the allies on multiple fronts.

Turkish Finance Minister Berat Albayrak met President Donald Trump at the White House on Monday and discussed the range of disagreements including Ankara's major weapons purchase from Russia, said Ibrahim Kalin, the spokesman for President Recep Tayyip Erdogan.

"It was a positive meeting overall," Kalin told reporters in Washington.

Kalin said Turkey was hopeful that the Trump administration would issue another waiver for Turkey after last year demanding that all nations stop buying oil from Iran.

"Certainly we are expecting an extension for Turkey," Kalin said, adding that Ankara has not received a formal notice.

The United States has given six-month exemptions to eight countries -- China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey—that run out on May 2.

Kalin said Turkey had reduced its imports from Iran despite disagreeing with the US sanctions, which Trump imposed unilaterally after pulling out of an international accord under which Tehran drastically scaled back its nuclear program.

"People should not expect Turkey to turn its back on Iran just like that," he said, pointing to the countries' shared border and historic relationship.

"We want to maintain good relations with Iran and we believe that the way to deal with Iran is more engagement rather than more sanctions."

Relations between the United States and Turkey deteriorated after the NATO ally said it would buy the S-400 missile defense system from the alliance's main nemesis Russia.

The United States has responded by suspending Turkey's participation in the key F-35 fighter-jet project.

Kalin renewed Turkey's offer to form a joint committee to examine US concerns that Russia would gain data in Turkey to help the S-400 system shoot down the Western planes.

He said that Russian air defenses are already operating in war-torn Syria, where Israeli F-35s frequently enter the airspace.

“When you consider the airspace in the region, it should be very easy for Russians to gain access to that sensitive data already," Kalin said. 

"If they are waiting for Turkey to install these S-400s in Turkey to get that information, that wouldn't make sense."

Kalin was in Washington to participate in a conference of the American-Turkish Council, a business group, at the Trump International Hotel.

Photo: Turkish Government

U.S. Waiver Concern Sees Iranian Oil Buyers Put Imports on Hold

The biggest buyers of Iranian oil are said to be putting their purchases on hold as they wait to see whether the White House will extend waivers allowing them to keep buying the crude.

Most Asian buyers are avoiding imports for next month as it’s unclear what will happen to the exemptions that are set to expire in the first week of May, according to people with knowledge of the matter. Even if the waivers are extended, it would be too late to order and receive cargoes for the month, said the people who asked not to be identified as the information is private.

The U.S.’s surprise decision last year to allow eight nations to keep buying Iranian oil was a big contributor to the plunge in crude prices in the fourth quarter. While the White House appears keen to keep the pressure on the Persian Gulf nation, analysts including FGE have speculated that preventing further gains in oil prices is a bigger priority for President Donald Trump. Given that crude has recovered strongly this year, that suggests that at least some of the waivers may be extended.

At least five refiners in South Korea, Japan and China are not planning to import Iranian crude and condensate loading in May, the people said. Some Korean and Japanese processors have already bought alternative cargoes for the period, while Iran is being flexible with its customers on timing, they said. Iranian shipments take over 20 days to reach east Asia, meaning there won’t be enough time for the cargoes to load and arrive during the same month.

Japanese refiners say imports from Iran might start loading in June at the earliest if the exemptions are extended, the people said. The nation took 108,000 barrels a day of Iranian supplies last month, tanker tracking data from Bloomberg show.

India, on the other hand, may take some shipments next month if the waivers are extended because shipping time from Iran is only about a week, the people said. The South Asian nation was already in discussions for an extension of the waiver and the country’s processors are allowed to import 9 million barrels of Iranian oil every month under the 180-day exemption.

Photo: Bloomberg

Trump Team Split Over Iran Oil Waivers as Next Deadline Nears

President Donald Trump’s national security team is deeply divided over whether to let a small group of countries keep buying Iranian oil after a U.S. deadline on sanctions waivers expires in May. Now that fight is getting ugly.

The division—primarily between John Bolton’s National Security Council and Michael Pompeo’s State Department—has led to rising frustration and flared tempers. It’s exposing fault lines over how the president’s most senior advisers approach the Iran issue, according to four people familiar with the debate who asked not to be identified discussing the internal deliberations.

Above the fray, at least for now, is a president who must weigh competing priorities. While Trump wants to make good on his “maximum pressure” campaign against Iran and strong-arm it into meeting U.S. demands—including ending its ballistic missile tests and support for Hezbollah—there’s also concern that squeezing Tehran too much will lead to a spike in oil prices. That could raise gasoline costs for U.S. drivers as the 2020 election approaches.

Favoring a tougher tack, Bolton and his team point out that oil prices remain low—about USD 59 a barrel as of Monday. But that could change quickly depending on production moves by OPEC nations as well as the administration’s separate efforts to choke off Venezuelan oil sales in a bid to push President Nicolas Maduro from office.

“The administration will really be weighing its desire to put the screws further on Iran against its allergy to oil over USD 70 a barrel,” said Meghan O’Sullivan, a former deputy national security adviser now at the Harvard Kennedy School. “It is risky for the administration to think that it can drive a hard policy which contracts the oil supply from both Iran and Venezuela simultaneously.”

A spokesman for the White House National Security Council said agencies are coordinating closely to apply maximum pressure on Iran. A State Department official said the U.S. goal remains to get to zero Iranian oil exports as quickly as possible, adding that the secretary of state alone has the discretion to grant exemptions.

There’s little doubt the U.S. sanctions have pinched Iran: Oil revenue has tumbled, the rial has been battered and shortages of meat, medicine and gasoline are spreading. Iran’s supreme leader this week even called European efforts to sustain trade with Iran outside of U.S. sanctions “a joke.”

Price Spike

Trump has until the first week of May to decide whether to issue new waivers to eight governments—China, India, Japan, Turkey, Italy, Greece, South Korea and Taiwan—that were allowed in November to keep buying Iranian oil without facing penalties. The current speculation is that the biggest buyers of Iranian crude, including China and India, will get waivers again.

But Bolton and officials in the Energy Department argue that it’s time for the administration to make good on its demands to push Iran’s oil exports to zero. Pompeo’s team, led by Iran special representative Brian Hook, caution that a sudden removal of Iranian crude from the market—about 1.1 million barrels a day—would fuel volatility and lead to a price spike.

A key analyst who has advised the White House on its approach said the intensifying squabble underscores just how much more politicized the debate over the waivers has become as the U.S. presidential election in 2020 grows nearer.

“If you think Trump will be a two-term president, you have about six years and you can afford to go more slowly,” said Mark Dubowitz, chief executive officer of the Foundation for Defense of Democracies. “But if you think there’s a risk that he’s a one-term president, then he’s got 21 months left and you want to throw everything you can at the regime.”

Pompeo, a hard-line conservative on most issues, and Treasury Secretary Steven Mnuchin find themselves increasingly isolated from Bolton and their usual allies on Capitol Hill, including Republican Senators Marco Rubio and Tom Cotton, who have argued for the U.S. not to grant any more waivers.

“The Iranian regime uses its petrodollars to fund terrorism and sow chaos throughout the region,” Cotton tweeted on March 18. “Going forward, the proper amount of oil exports from Iran is zero.”

According to two GOP aides familiar with the thinking of Senator James Risch, the chairman of the Senate Foreign Relations Committee, the Idaho Republican believes any new waiver will need “substantial justification” to be granted. Risch also thinks there’s more than enough oil sloshing around global markets to counter the crude removed from Iran, thanks to Saudi Arabia and the U.S., according to the people.

As the debate plays out, Pompeo is also facing pressure from his own ambassadors. According to one of the people, Kay Bailey Hutchison, the U.S. ambassador to NATO, is among several who especially oppose giving Turkey another waiver. They argue that would send the wrong message when the U.S. is pushing NATO allies to cut ties with Tehran.

The debate has moved along enough that Hook and his allies have lost several key supporters who were previously open to the waivers but now believe issuing them sends the wrong signal.

“I’m sympathetic to where Brian Hook and Secretary Pompeo are in striking a balance between zero Iranian oil and global oil prices,” Dubowitz said. “But today’s oil market supports zero. So either you’re running a maximum pressure campaign against Iran or you’re not.”

Photo Credit: Bloomberg

Oil Market Can Weather Zero Iranian Exports: U.S. Officials

US officials said the global oil market can withstand the removal of all Iranian crude exports this year, a conclusion that could be pivotal in the coming weeks as President Donald Trump weighs whether to end sanctions waivers granted to several nations.

Based on current oil supply and the potential of the US and Saudis to ramp up production, “going to zero” could happen this year without compromising affordable crude supplies, according to four officials who spoke on condition of anonymity to discuss internal deliberations. The officials emphasized that the discussions are still underway and no final decision has been made.

The message from American officials comes as OPEC and its allies prepare for a ministerial meeting in Baku, Azerbaijan, this weekend to discuss whether the cartel and its allies should continue cutting global output.

President Donald Trump re-imposed sanctions on Iran in November, with the goal of choking off the Islamic Republic’s oil revenue. The administration granted eight countries full or partial waivers allowing them to continue buying the nation’s crude: China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey. The waivers, which last for 180 days, were meant to be temporary measures to ease their transition from Iranian oil and avoid unsettling the energy market.

As the waivers near their expiration date, the officials said that sufficient spare capacity exists to make up for the loss of all Iranian oil barrels. They cited OPEC’s ability to ramp up production as well as booming U.S. output, among other possibilities.

According to the International Energy Agency, OPEC has 2.8 million barrels a day of spare capacity, more than enough to offset Iranian supply losses. Iran exported 1.17 million barrels a day in February, up from a multiyear low of 629,000 barrels a day in December, according to Bloomberg tanker tracking. Meanwhile, the U.S. Energy Information Administration estimates that global crude supply this year will exceed demand by 180,000 barrel a day, according to its Short-Term Energy Outlook.

But future supply losses from Venezuela muddy the picture. The politically beleaguered country saw oil production decline by 100,000 barrels a day in February to 1.14 million, the IEA said. Deeper declines are likely in March, the group said.

“We’re committed to bringing Iranian crude oil exports to zero as quickly as market conditions will permit,” U.S. Secretary of State Mike Pompeo said Tuesday at the CERAWeek by IHS Markit conference in Houston.

Photo Credit: State Department

US to Exempt China, India, Japan from Iran Oil Sanctions: Pompeo

The United States will exempt China, India and Japan from oil sanctions on Iran, Secretary of State Mike Pompeo said Monday, while vowing to be "relentless" in pressuring Tehran.

Hours after sweeping sanctions were reimposed following the US withdrawal from a denuclearization deal, Pompeo said eight countries would be at least temporarily exempt from the ban on buying Iranian oil due to special circumstances or so as not to disrupt energy markets.

The countries with the waivers will be China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey, Pompeo said.

“Our objective is to starve the Iranian regime of the funds it uses to fund violent activity throughout the Middle East and around the world. Our ultimate goal is to encourage them to abandon their revolutionary course," Pompeo told reporters.

A notable omission was Iraq. Had Iraq been granted a waiver, Iran might have been able to skirt sanctions by mixing its crude with its neighbor's output, analysts say.

President Donald Trump withdrew in May from the deal that his predecessor Barack Obama had reached with Iran, calling it a failure because it addressed only the clerical regime's nuclear program.

Pompeo reiterated demands for Iran to make a "180-degree turn" from its regional policies rooted in the 1979 Islamic revolution, such as support for the Lebanese militia Hezbollah.

“We hope a new agreement with Iran is possible, but until Iran makes changes in the 12 ways I listed in May, we will be relentless in exerting pressure on the regime," Pompeo said.

Pompeo said the eight countries exempted have "already demonstrated reduction of Iranian crude over the past six months and, indeed, two of those eight have already completely ended imports of Iranian crude and will not resume as long as the sanctions remain in place."

"We continue negotiations to get all of the nations to zero," he said.

Pompeo also said without specifying that the United States would exempt three non-proliferation projects underway in Iran from the sanctions.

European powers have strongly disagreed with Trump's decision, pointing out that Iran is abiding by the nuclear agreement, and have looked to create ways to allow its businesses to keep up commerce with the country.

Photo Credit: Deposit Photos

Transcript: Special Representative for Iran Brian Hook Briefs Reporters on Iran Sanctions

This transcript was published by the Office of the Spokesperson at the U.S. Department of State. The briefing took place on November 2, 2018.

MR HOOK:  I’m happy to take questions.  And you’ve heard the Secretary talk.  I just (inaudible).

QUESTION:  What are the eight countries?

MR HOOK:  Huh?

QUESTION:  What are the eight countries? 

QUESTION:  What are the eight countries? 

MR HOOK:  Monday.  Monday.

QUESTION:  Can you at least say what are the two that said that they will cut to zero since it seems the negotiations with them are over?

MR HOOK:  It’ll – it’s all going to be announced on Monday.

QUESTION:  But why do all of this today if there’s so little detail available today?

MR HOOK:  There was a lot of detail today.  There was a full briefing by both secretaries.  So --

QUESTION:  There was not a lot of detail.

MR HOOK:  The sanctions go back into effect on Monday.  This was a preview today.

QUESTION:  Can I ask, though, similar to the question Arshad asked on the – using the word jurisdiction instead of country, can we assume that a certain island that begins with “T” is the reason that you’re using jurisdiction instead of country?  Or is that --  

MR HOOK:  I think --  

QUESTION:  Taiwan.  I’ll --

QUESTION:  Could jurisdiction mean more than one government, or does it mean one government?

MR HOOK:  Is this what Secretary Mnuchin said?

QUESTION:  He said – no, Pompeo.

QUESTION:  Both, both.  Pompeo – both of them said --

QUESTION:  They used the word jurisdictions.

QUESTION:  -- jurisdiction not country, which is why – I mean, it’s a technical point, but I’m just – and I get – I can understand that you don’t want to give the names.

MR HOOK:  I don’t know all of them.  I don’t know.  

QUESTION:  But are all of the eight countries?

QUESTION:  Single governments?

QUESTION:  Countries?

MR HOOK:  Yes.

QUESTION:  Yes countries or yes governments?

MR HOOK:  They are – they are -- 

QUESTION:  If Taiwan is among them, that would be a reason to -- 

MR HOOK:  I get it.  They’re nations.  They’re nations.

QUESTION:  Okay.  So Taiwan is not.

MR HOOK:  I’m not going to say what it’s not.  I’m saying that eight nations.

QUESTION:  Can I get a clarification on the SREs?

MR HOOK:  Yeah.

QUESTION:  Yesterday you said the waiver is granted for a six-month period and then re-evaluated. 

MR HOOK:  That’s by statute.

QUESTION:  Right.  And then the Secretary said it will take them weeks longer to wind down.  Is that all-encompassing for the eight that are being granted or just --  

MR HOOK:   No, he was – there he was talking about two of the countries that will receive an SRE are going to be given a little extra time, weeks of time, to get to zero.

QUESTION:  But they – if they can still – the waiver is for six months still by statute?

MR HOOK:  But operationally it’s only relevant for the first few weeks of the – but by law, when we give an SRE, it’s for 180 days.

QUESTION:  Right.

MR HOOK:  And that’s under the National Defense Authorization Act of 2012, NDAA.  And so it’s a 180-day SRE.  It doesn’t matter whether they go to – I mean, it’s – each country is different.  In two of the countries, they will be getting to zero before the expiration of the SRE.

QUESTION:  Can you talk about kind of the broader efforts on trying to get Iran to behave like a normal regime?  I mean, does that include kind of the Twitter messaging or social media messaging, or is it something more than that, more concrete about supporting opposition groups or protestors?

QUESTION:  Is it more than just Twitter messages?  Is there something – is the U.S. doing something to kind of promote protestors?

MR HOOK:  The Iranian regime has historically not come to the negotiating table absent significant economic and diplomatic pressure.  The reimposition of our sanctions are designed to do two things:  deny the regime the revenue it needs to fund violent wars abroad, and also to change the cost-benefit analysis in our favor so that Iran decides to come back to the negotiating table. 

The Ayatollah Khamenei has said that require hostility with the United States, which is the kind of thing that you expect to hear from a revolutionary regime.  We have been very clear.  Secretary Pompeo has been very clear that we have an ear open to what is possible.  We very much want to begin work on a new and better deal to replace the insufficient Iran nuclear deal that the President left in May, and our campaign of maximum economic pressure is a critical tactic to achieve that goal.

QUESTION:  But he’s also talking about restoring democracy. 

MR HOOK:  The President, the Secretary of State, the Vice President, at all levels of the administration, have stood with the Iranian people and their aspirations for a better way of life.  The Iranian people want a more representative government, a government that does not rob them blind, that supports their human rights, their economic rights, their freedom of expression, freedom of assembly.  These are all rights that the United States wants for the Iranian people.  We think they deserve a much better way of life, and Secretary Pompeo has repeatedly made remarks addressed to the Iranian people in support of their demands for reforms from this regime.

QUESTION:  How – I want to ask the question that Gardiner asked yesterday about the Khashoggi murder and the war in Yemen and how any of that is playing into this.  I mean, how can you, on the one hand, focus so much on Iran’s human rights record while not doing enough to pressure the Saudis on some of the same very issues?

MR HOOK:  We do not share interests or values with the Iranian regime.  We have asked Saudi Arabia to increase the production of oil while we take off Iranian oil from the market, and Saudi Arabia has been very helpful to ensure an adequately supplied oil market during this period where we have seen dramatic reductions in the import of Iranian crude as part of our maximum economic pressure campaign.  The Saudi Government has successfully insulated oil from broader political issues, and that has been helpful in the broader context of our pressure campaign.

QUESTION:  Well, just to be devil’s advocate here, I understand the shared interests that you have with the Saudis on Iran.  But what shared interests, what shared values does the U.S. have with the Saudis – respect for human rights?

MR HOOK:  I can only speak to how the Saudis have helped our Iran strategy.  The President gave a speech in Riyadh on his first trip overseas as president, where he called upon our Sunni Arab partners to increase their capabilities to reverse Iranian hegemony so that our Arab partners can shoulder more of the burden in the Middle East.  And we have enjoyed a great deal of cooperation from Gulf countries and beyond to isolate Iran and to apply as much economic pressure as possible so that they don’t have the money they need to destabilize the Middle East.

QUESTION:  How is this escrow account that he talked about going to work, and how do you make sure that the Iranians are going to get basic needs fulfilled – medicine, food?

MR HOOK:  The escrow accounts that are being created for those nations that need to continue importing Iranian oil deny Iran hard currency, and it denies Iran any revenue from oil sales.  Any time Iran sells oil, that money goes into an escrow account in the importing nation’s bank, and Iran has to spend down that credit.  We strongly encourage those nations to ensure that Iran spends that money on humanitarian purchases to benefit the Iranian people.  The longest-suffering victims of the Iranian regime are the Iranian people.  This regime uses fake companies disguised as humanitarian organizations to divert purchases that should go to food, medicine, and medical devices, and they use that to enrich the regime and support revolutionary activities overseas.

QUESTION:  So you’re counting on countries like China to make sure that they don’t use money for those things?

MR HOOK:  The United States will be monitoring these escrow accounts very closely.  Unlike in prior administrations, we will ensure that the money is not spent on illicit activities, that there isn’t any leakage in these escrow accounts, and we will work closely with countries to encourage the purchase and – the sale and purchase of humanitarian goods to benefit the Iranian people.  Our sanctions regime has very clear exceptions for the sale of food, medicine, and medical devices.

QUESTION:  So how does the travel ban fit into the U.S. support for Iranian people?

MR HOOK:  Because the Iranian regime is the largest sponsor of terrorism in the world, we have a restrictive visa policy.  And that policy is driven by the terrorism of the regime.  It is not driven by a desire to restrict the average Iranian people.  The problem we have is --

QUESTION:  But it does.

MR HOOK:  But that is the problem of the regime.  If the regime would stop funding terrorism and open up its economy so that we can see where the money goes, it would create a much better environment for us to be granting visas.

QUESTION:  So for the countries that you say need to keep importing oil, do you foresee issuing these exemptions over and over again?  Are you going to put an upper limit on how many times they’ll be renewed?

MR HOOK:  Our goal remains getting countries to zero imports of Iranian oil.  In 2019, our projections are that oil supply will exceed demand, and that creates a much better atmosphere for us to bring remaining nations to zero as quickly as possible.

QUESTION:  So you’re not putting an upper limit on how – for how – how many times these exemptions will be renewed at this point?

MR HOOK:  We are not looking to grant additional SREs at the end of the 180-day period.  We are being very careful to advance our maximum economic pressure campaign without increasing the price of oil.  Next year we anticipate a stronger oil supply coming online, and that will allow us to accelerate the path to zero.

QUESTION:  And are you – how many Iranian banks will be cut off from SWIFT?  I mean, the administration is saying more than prior, but can you give a number?

MR HOOK:  That will be announced by Secretary Mnuchin on Monday.

QUESTION:  He did say, though, on this subject – he was very precise in his language.  He said “certain designated Iranian financial institutions.”  That does not categorically mean all.  So is it possible that either, one, don’t redesignate all of the banks that had previously been designated; and two, is it possible that some designated bank, because he used the word “certain designated,” would not be required to disconnect?

MR HOOK:  I’m not going to interpret what “certain” means beyond saying that he will announce all the banks on Monday.

QUESTION:  The 20 – 20 countries import 80 percent of Iran’s oil, as I understood – stand.  Are those eight countries, any of them, among those 20 – the eight countries receiving the SREs?

MR HOOK:  That there’s a small group of – that there’s a – there is a relatively small number of countries that make up the lion’s share of the import of Iranian crude.

QUESTION:  And are any of them getting exemptions?

MR HOOK:  I’m not going to get ahead of the Secretary’s announcement on Monday.

QUESTION:  Can you offer a little clarity on the response about non-U.S. civil nuclear cooperation?  Will waivers be granted in that --

MR HOOK:  The Secretary addressed that this morning, and it’ll be announced on Monday.

QUESTION:  On the humanitarian transaction, Europeans have expressed concern in the past weeks that even though there were exemptions to humanitarian goods and services, the financials mechanism were not safe enough, that you have to clarify what are the means by which the countries and entities can do those kind of transactions.  Do you think that what you announced today clarifies this and that it’s safe to do humanitarian transactions with Iran?

MR HOOK:  The Iranian regime has a history of creating front companies to divert the distribution of humanitarian goods.  Financial institutions around the world know of Iran’s history of deceiving banks on the sale of humanitarian goods.  The burden is on Iran to open up its dark economy so that banks around the world have more confidence that when they facilitate humanitarian transactions that the humanitarian goods will reach the Iranian people. 

The United States is the largest donor of humanitarian assistance in the world.  Every sanctions regime we have makes exceptions for food, medicine, and medical devices.  That is, we have done our part; the Iranian regime needs to do its part by making those transactions possible in an open and transparent financial system.

QUESTION:  Sounds like there’s not very many safe ways of trade – like, for pharmaceutical companies and medical companies.

MR HOOK:  The Iranian regime makes it very difficult to facilitate the sale of humanitarian goods and services.

QUESTION:  The Europeans says that the fear is that even if you sell humanitarian goods to Iran, you will be target by U.S. sanctions, so they addressing this to you and not to Iran.

MR HOOK:  Say that again?

QUESTION:  The European countries say that companies fear that if they sell those goods to Iran, they will be targeted by U.S. sanctions.  So they ask you to say what are the safe channels to do that.

MR HOOK:  The burden is not on the United States to identify the safe channels.  The burden is on the Iranian regime to create a financial system that complies with international banking standards to facilitate the sale and provision of humanitarian goods and assistance.

QUESTION:  Right, but I think that the point is that they are looking for some kind of, like, assurance --

QUESTION:  Guidance from OFAC.

QUESTION:  Guidance.

MR HOOK:  We have been – OFAC has given very clear guidance over many years --

QUESTION:  That’s not what the Europeans say.

MR HOOK:  We have done our part to permit the sale of humanitarian goods to Iran.  That is our part.  That is our role.  Iran has a role to make these transactions possible.  Banks do not have confidence in Iran’s banking system – often don’t have confidence in Iran’s banking system to facilitate those transactions.  That’s Iran’s problem; it is not our problem.

QUESTION:  But banks do not have confidence, the companies do not have confidence in Iran banks because they are subject to American sanctions from now on.

MR HOOK:  That’s not true.

QUESTION:  That’s what the Europeans say.  I’m just --

MR HOOK:  I’m giving you the answer. 

QUESTION:  We were expecting the list.  (Laughter.)

MR HOOK:  But he told you it was coming Monday.

QUESTION:  Why is it that – and when you say Monday, this isn’t going to be at literally 12:01 Monday morning, is it?  Or I mean --

MR HOOK:  No.  The Secretary will announce it on Monday, and then it will be published in the Federal Register.

QUESTION:  Okay, but he’ll announce it – what, do you have any – like, I just want it for personal planning purposes.

MODERATOR:  About 8:30 in the morning.

QUESTION:  8:30 Monday morning and not beforehand.  So in other words, I – at 12:01 Monday morning, they go into effect --

MR HOOK:  Yes.

QUESTION:  -- but there won’t be a – like, is something going to go up on the Treasury website at 12:01?  I mean, I’m just trying to figure out --

MR HOOK:  I don’t know about that.  For our part, on the SREs and anything else will be announced on Monday.  I don’t – Treasury may have a different way where at 12:01 they have to --

QUESTION:  So you guys aren’t planning on saying who the eight are at 12:01.

MR HOOK:  No.  No.  No.

QUESTION:  But presumably these eight are aware that – right, they’ve been told that they’re okay to – because they’re all coming out of the woodwork now, the Turks, the Italians, the South Koreans, the Indians, the – they are.

MR HOOK:  I think you’ve answered your own question.

QUESTION:  Well, I just want to make sure no one’s lying.

MR HOOK:  Oh.  We’ll announce it on Monday.

QUESTION:  And so will we see sanctions on the countries that aren’t getting these things on Monday?

MR HOOK:  We expect – well, we have already seen enormous pre-compliance with the reimposition of our sanctions because corporations around the world are rightly choosing to sell goods and services in the United States over the Iranian market if given the choice.

QUESTION:  But I mean, weren’t we going to see sanctions on big countries that aren’t – that don’t get these waivers?  Are you going to – sanctions announced on Monday?

MR HOOK:  We expect nations around the world to comply with sanctions because it’s in their interest, and it promotes our broader national security objectives to address a significant and expanding threat to peace and security.

Okay.

QUESTION:  Thank you.

MR HOOK:  All right, thank you.

Photo Credit: State Department

Transcript: Pompeo and Mnuchin Brief Reporters on Forthcoming Iran Sanctions

This transcript was published by the Office of the Spokesperson at the U.S. Department of State. The briefing took place on November 2, 2018.

MS NAUERT:  Thank you, sir.  Good morning, everyone, and welcome to today’s on-the-record call on the Iran snapback sanctions.  We’re pleased to have with us Secretary of State Mike Pompeo and Secretary of the Treasury Steve Mnuchin.  They will each have brief remarks at the top and then take several of your questions.  We’ll start first with Secretary Pompeo. 

Secretary, please, go ahead.

SECRETARY POMPEO:  Thank you, Heather.  Good morning, everyone, and thank you for joining the call.  Earlier this year, President Trump withdrew from the fatally flawed nuclear deal and implemented a new campaign aimed at fundamentally altering the behavior of the Islamic Republic of Iran.  This part of the campaign about which we’re speaking today is simple.  It is aimed at depriving the regime of the revenues that it uses to spread death and destruction around the world.  Our ultimate aim is to compel Iran to permanently abandon its well-documented outlaw activities and behave as a normal country.

Today, Secretary Mnuchin and I will discuss one of the many lines of effort to achieve these fundamental changes in the Iranian regime’s behavior as directed by the President.  While important, these economic sanctions are just a part of the U.S. Government’s total effort to change the behavior of the Ayatollah Khomeini, Qasem Soleimani, and the Iranian regime.

On November 5th, the United States will reimpose sanctions that were lifted as part of the nuclear deal on Iran’s energy, ship building, shipping, and banking sectors.  These sanctions hit at the core areas of Iran’s economy.  They are necessary to spur changes we seek on the part of the regime. 

In order to maximize the effect of the President’s pressure campaign, we have worked closely with other countries to cut off Iranian oil exports as much as possible.  We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation. These negotiations are still ongoing.  Two of the jurisdictions will completely end imports as part of their agreements.  The other six will import at greatly reduced levels.

Let me put this in context for you.  The Obama administration issued SREs to 20 countries multiple times between 2012 and 2015.  We will have issued, if our negotiations are completed, eight and have made it clear that they are temporary.  Not only did we decide to grant many fewer exemptions, but we demanded much more serious concessions from these jurisdictions before agreeing to allow them to temporarily continue to import Iranian crude oil.  These concessions are critical to ensure that we increase our maximum pressure campaign and accelerate towards zero.

Our laser-focused approach is succeeding in keeping prices stable with a benchmark Brent price right about where it was in May of 2018 when we withdrew from the JCPOA.  Not only is this good for American consumers and the world economy, it also ensures that Iran is not able to increase its revenue from oil as its exports plummet.  We will, we expect, have reduced Iranian crude oil exports by more than 1 million barrels even before these sanctions go into effect. 

This massive reduction since May of last year is three to five times more than what many analysts were projecting when President Trump announced our withdrawal from the deal back in May.  We exceeded our expectations for one simple reason: Maximum pressure means maximum pressure.

The State Department closed the Obama era condensate loophole which allowed countries to continue importing condensate from Iran even while sanctions were in place.  This loophole allowed millions of dollars to continue to flow to the regime. 

This administration is treating condensate the same as crude since the regime makes no distinction between the two when it decides to spend its oil revenue on unlawful ballistic missiles, terrorism, cyberattacks, and other destabilizing activities like the assassination plot Denmark disclosed this past week. 

And starting today, Iran will have zero oil revenue to spend on any of these things.  Let me say that again.  Zero.  One hundred percent of the revenue that Iran receives from the sale of crude oil will be held in foreign accounts and can be used by Iran only for humanitarian trade or bilateral trade in nonsanctioned goods and services.  

These new sanctions will accelerate the highly successful effects of our sanctions that have already occurred.  The maximum pressure we imposed has caused the rial to drop dramatically, Rouhani’s cabinet is in disarray, and the Iranian people are raising their voices even louder against a corrupt and hypocritical regime.

On that note, our actions today are targeted at the regime, not the people of Iran, who have suffered grievously under this regime.  It’s why we have and will maintain many humanitarian exemptions to our sanctions including food, agriculture commodities, medicine, and medical devices. 

I will now turn the call over to Secretary Mnuchin.

SECRETARY MNUCHIN:  Thank you very much.  Since the beginning of the Trump administration, the Treasury Department has been committed to putting a stop to Iran’s destabilizing activities across the world.  We’ve engaged a massive economic pressure campaign against Iran, which remains the world’s largest state sponsor of terrorism.  To date, we have issued 19 rounds of sanctions on Iran, designating 168 targets as part of our maximum pressure campaign.  We have gone after the financial networks that the Iranian regime uses to fuel its terrorist proxies and Hizballah and Hamas, to fund the Houthis in Yemen, and to support the brutal Assad regime in Syria.

The 180-day wind-down period ends at 11:59 p.m. Eastern Standard Time on Sunday November 4th.  As of Monday November 5th, the final round of snapback sanctions will be enforced on Iran’s energy, shipping, shipbuilding, and financial sectors.  As part of this action on Monday, the Treasury Department will add more than 700 names to our list of blocked entities.  This includes hundreds of targets previously granted sanctions relief under the JCPOA, as well as more than 300 new designations.  This is substantially more than we ever have previously done.  Sanctions lifted under the terms of Iran’s nuclear deal will be reimposed on individuals, entities, vessels, and aircraft that touch numerous segments of Iran’s economy.  This will include Iran’s energy sector and financial sectors.  We are sending a very clear message with our maximum pressure campaign that the U.S. intends to aggressively enforce our sanctions.  Any financial institution, company, or individual who evades our sanctions risks losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies.  We are intent on ensuring that global funds stop flowing to the coffers of the Iranian regime. 

I want to make a couple of comments on the SWIFT messaging systems since I’ve received lots of questions about this over the last few weeks.  So I’d like to make four points.  Number one, SWIFT is no different than any other entity.  Number two, we have advised SWIFT the Treasury will aggressively use its authorities as necessary to continue intense economic pressure on the Iranian regime, and that SWIFT would be subject to U.S. sanctions if it provides financial messaging services to certain designated Iranian financial institutions.  Number three, we have advised SWIFT that is must disconnect any Iranian financial institution that we designate as soon as technologically feasible to avoid sanctions exposure.  Number four, just as was done before, humanitarian transactions to nondesignated entities will be allowed to use the SWIFT messaging system as they have done before, but banks must be very careful that these are not disguised transactions or they could be subject to certain sanctions.  Thank you very much.

MS NAUERT:  Thank you, sirs.  Why don’t we go ahead, take our first question.  We’ll go to Matt Lee with the Associated Press.  Matt, go ahead.

QUESTION:  Thank you, Heather.  Both – either or both of you, on SWIFT, there are a lot of complaints among the President’s allies in Congress that this does not go far enough, and that without designating – without going after SWIFT harder for these messaging transactions, that it allows a serious loophole.  I understand Secretary Mnuchin’s four points on it, but how will you address this criticism?  Because it’s already coming even before this announcement today.

SECRETARY MNUCHIN:  Okay, well let me – Secretary Mnuchin – let me make some comments.  First of all, I think there’s been a lot of fueled misinformation as it relates to SWIFT and what we’re doing with SWIFT.  So that’s why I want to be very clear.  So one, okay, I think there was information that SWIFT would not be subject to sanctions.  That’s not the case.  SWIFT will be subject to sanctions.  Number two, as I said, that – could be subject to sanctions, excuse me.  Number two, it is our intent that they cut off designated entities as was done before.  And again, I think there’s misinformation that they cut off everybody last time.  Again, they did allow for certain entities to do humanitarian transactions consistent with what’s allowed under our sanctions.  There are exceptions for humanitarian sanctions, but I want to very clear, people need to be careful that those are real humanitarian – those are real humanitarian transactions.  So again, I would just say I – hopefully this will clarify the misinformation that’s out there.

MS NAUERT:  Next question, we’ll go to Nick Wadhams from Bloomberg.

QUESTION:  Hi.  I had a question about the oil sanctions going into effect.  Will those include – or will there be exceptions granted for nonhumanitarian transactions such as consumer goods, as were allowed last time, or will Iran only be allowed – or will Iran only be allowed to spend revenue that it gains through – on humanitarian items?  And then second, if you’re giving eight waivers and two jurisdictions are already cutting imports to zero, what’s the point of giving them – those two jurisdictions waivers?  Thanks.

SECRETARY POMPEO:  Nick, this is Mike Pompeo.  With respect to your first point, you’ll see the details on Monday.  There are nonhumanitarian goods that we included in there, but they’re small.  They’re ones that you would’ve already seen in the exemptions that were granted under the direction of the President.  Second, some of these will take a few months to get to zero.  So by November 5th they won’t be there.  That’s the purpose of those exemptions, to give them a little bit longer to wind down.  Weeks.

MS NAUERT:  Pardon me?

SECRETARY POMPEO:  Weeks longer to wind down.

MS NAUERT:  Next question, Mike Warren from the Weekly Standard.

QUESTION:  Hi, gentlemen, thank you.  I want to follow-up on Matt’s questions about SWIFT.  Secretary Mnuchin, you said that certain financial institutions in Iran will be cut off from SWIFT.  Could you explain exactly which financial institutions, or maybe the financial institutions described in a Treasury FAQ, the Central Bank of Iran and other Iranian financial institutions described in section 104(c)(2) blah blah blah – could you be more specific about which institutions?  And how can – how can the United States Government be confident in SWIFT’s ability to monitor transactions using SWIFT that they – I imagine there are numerous of these transactions going on daily.  How can the United States Government be confident that those are not transactions that are funding the bad actions that the government says is – they are trying to stop?

SECRETARY MNUCHIN:  So again, let me comment on the first issue, which – that the list of banks, which will be substantially longer than last time, will be coming out over the weekend.  And as it relates to monitoring transactions, again, financial institutions have liability for any transactions that go through SWIFT or any other mechanisms.  I’m being told the list will come out on Monday.  And again, it’s our expectation that that will be implemented as soon as technologically feasible.

MS NAUERT:  Okay, thank you.  Next question goes to Elise Labott from CNN.

QUESTION:  Thank you.  The question is for both secretaries, but maybe from a different angle.  Could you address the workaround that the Europeans are trying to institute to avoid U.S. banks, maybe using their own central banks or electronic transactions?  For Secretary Mnuchin, how much revenue do you think this would give the Iranians, and how seriously are you taking that in terms of a financial component?

And then Secretary Pompeo, could you talk about once these sanctions go into effect and if the Europeans do try to institute this workaround, what the diplomatic implications for relations with European allies?  Thank you.

SECRETARY MNUCHIN:  I’ll comment on the Special Purpose Vehicle.  I have no expectation that there will be any transactions that are significant that go through a Special Purpose Vehicle based upon what I’ve seen.  But when the details come out of some Special Purpose Vehicle, if there are sanctions – if there are transactions that go through there that have the intent of evading our sanctions, we will aggressively pursue our remedies.

SECRETARY POMPEO:  And let me take the second part of that.  We’ve been working closely with the Europeans on this set of issues.  We’re very confident that our sanctions will be incredibly effective.  And frankly, I can prove that already.  As I stated, the Iranian economy today is already feeling the effects of this.  It’s already feeling the effects of this effort not because the sanctions have snapped back – that won’t occur until – on Monday – but because the world and Iran knew this was coming.  And so European entities of any scale that are doing business with the United States of America have already ceased their conduct with Iran.  There may be an exception to that, but there has been an enormous departure of European businesses.

So whatever it may be that the EU is proposing, the folks who have risk – financial risk, business risk, operation risk – have already made their decision about the effectiveness of the sanctions that will be reimposed this coming week.

MS NAUERT:  Our next question goes to Michele Kelemen with NPR.

QUESTION:  Yeah, hi, thank you.  One quick question that – just technically, which of the eight countries are getting these waivers?  And then secondly, for Secretary Pompeo, you said in one of your interviews this week that the U.S. wants to restore democracy in Iran.  Is that one of the goals of this campaign?  And if so, how do you make sure that these sanctions aren’t going to hurt average Iranians who, as you point out, are suffering under this corrupt regime?

SECRETARY POMPEO:  Yes, thanks for the question.  The President’s policy is very clear:  We are looking to change the Iranian leadership’s behavior.  I laid out the 12 things we’ve asked them to do; that is the goal not only of what we’re speaking about this morning – and please don’t lose sight, we’re talking about a set of sanctions that will be reimposed on Monday.  The administration’s efforts to change Iranian behavior are far broader, far deeper, there are many other lines of effort.  We’re simply focused on this line of effort today because of the significance of November 5th.

My comments about restoring democracy are completely consistent with what we have described before.  We’re counting on the Iranian people to have the opportunity and we are working towards allowing the Iranian people to have the opportunity to have the government they want, a government that doesn’t take wealth from their country and spend it on malign activity around the world.  I mean, this is a regime that is conducting a assassination campaign inside of Europe today, murdering not Iranian citizens in those countries, but folks who live, reside, and are citizens of those European countries.  These are the behaviors we’re trying to change, and our every effort is aimed at giving the Iranian people the opportunity to have the government that they not only want but deserve.

MS NAUERT:  Next question:  Josh Rogin, Washington Post.

QUESTION:  Thank you so much for your time.  Thanks for your service.  I’d like to ask you about the Atomic Energy Organization of Iran.  My understanding is that you waived secondary sanctions on foreign firms that do business with that organization, mostly Russian and Chinese firms that are involved in the Arak and Fordow facilities.  Why did you make that decision, and why are you letting Arak and Fordow continue?  And are there plans to change that in the future?  Thank you.

SECRETARY POMPEO:  Thanks, thanks for the question.  We are not allowing the continued work to develop nuclear weapons and nuclear weapons systems in Arak and Fordow.  We will provide on Monday a complete explanation of what we’re going to do with the continued efforts to prevent those facilities from doing the things that put the world at risk through proliferation, and we’ll give you all the detail.  It’s a long and complex answer, but we’re happy to provide it to you on Monday morning.

MS NAUERT:  Final question to Arshad with Reuters, please.

QUESTION:  Two things.  One, exactly how many financial institutions are going to be redesignated, i.e. put back on the SDN list on Monday?  Previously I believe the number was close to or slightly above 30.  You said it would be substantially more.  How many is it going to be?

Secondly, you pointedly said that you were granting the exceptions to eight jurisdictions.  Is one of those jurisdictions the European Union, thereby covering a much larger group of countries, i.e. 28 EU member-states?

SECRETARY POMPEO:  Steven, you want to go first?

SECRETARY MNUCHIN:  I’ll answer the first part.  So the bank list will come out on Monday.  Again, it will be more than last time, and again, we may continue to add banks to that in the future.  But the original list will come out on Monday and we’ll carefully monitor situations to add on more banks as needed.

SECRETARY POMPEO:  The second part of your question, we will provide the list of the eight jurisdictions on Monday.  The EU will not be receiving an SRE.

MS NAUERT:  The final question, Carol Morello, Washington Post.

QUESTION:  Hi, thanks for doing this.  Say in the past, the Iranians have blended their oil with foreign oil to evade sanctions, and there have already been reports that they are turning off the ID tags on their tankers.  So what in particular are you going to be doing to track their attempts to evade these sanctions?

SECRETARY POMPEO:  Thanks for the question.  Make no mistake about it, the Iranians will do everything they can to circumvent these sanctions – that’s unsurprising to me.  They’ll turn off ships, they’ll try and do it through private vessels, they’ll try and find third parties that don’t interact with the United States to provide insurance mechanisms.  The list of Iranian efforts to circumvent these sanctions is long.  You should all recognize there’s a reason for that.  These sanctions are far tougher than the sanctions that have ever been imposed on the Islamic Republic of Iran.  That is why they are so desperate to find ways to circumvent it. 

And I won’t speak to our efforts to counter those circumvention efforts.  There are many, they are varied, and make no mistake:  The United States is fully prepared to do all that we can to prevent Iran from circumventing not only the crude oil sanctions and the financial sanctions, but all of the designations and all of the other sanctions that are being reimposed this coming Monday and those that are already in place.

SECRETARY MNUCHIN:  And I would just add to that that anybody that does facilitate those transactions will be subject to sanctions and will be added to the list.

MS NAUERT:  Secretary Pompeo, Secretary Mnuchin, thank you so much for joining us.  Everyone, thanks for joining the call.  Have a great day.  We’ll be putting out a transcript shortly.

SECRETARY POMPEO:  Thank you all. 

Photo Credit: Wikicommons

US Eyes Limited Waivers for Iran Crude Buyers

The US administration likely will enable some countries to continue importing oil from Iran in the short term, despite Washington's maximum pressure campaign against Tehran, White House national security adviser John Bolton said today.

"We understand, obviously, that a number of countries, some immediately surrounding Iran, and others that have been purchasing oil, may not be able to go all the way to zero," Bolton said at a forum hosted by the Washington-based Alexander Hamilton Society. "We want to achieve maximum pressure, but we do not want to harm friends and allies either. We are working our way through that."

The sanctions statutes that President Donald Trump re-activated in May require the administration to assess by 4 November, and every 180 days after that date, whether buyers of Iranian crude are "significantly reducing" their purchases. The administration can then sanction financial institutions in countries that it deems have not cut their purchases adequately and grant exemptions to countries that do.

The State Department is expected to provide such exemptions before the full brunt of US sanctions pressure begins on 5 November, even though the scope of waivers is yet undetermined.

China, India and Turkey were among the largest buyers of Iranian crude before the US withdrew from the Iran nuclear deal. US sanctions explicitly exclude exports of natural gas from Iran to its neighbors, but lack of guidance from Washington has created uncertainty for natural gas importers in Turkey and Iraq.

Iranian oil exports have fallen faster and by a greater amount than initially expected, as refiners in Asia-Pacific and Europe curbed their purchases, despite opposition from some of their governments.

"You already see reduction in purchases in countries like China, that you would not have expected, countries that are still in the nuclear deal," Bolton said. "European businesses are fleeing the Iranian market. Most of the big ones are already out."

Argus estimates that Iranian crude loadings fell to 1.58mn b/d in September, down by 12pc since August. But these figures do not include vessels belonging to Iran's state-owned NITC, which have stopped transmitting GPS transponder signals. Iran's exports averaged 2.5mn b/d in January-May.

Trump's decision to reimpose sanctions on Iran has contributed to higher oil prices globally, an analysis by the US Energy Information Administration (EIA) shows. But Bolton today downplayed the effect on oil markets.

"One of the things this administration has done that (former president Barack Obama's) administration did not do was to encourage producers to alter their production to make up for the lost output in Iran," Bolton said. "It has been an interesting exercise, but we have been able in some cases to find alternative purchases for the buyers of Iranian oil," he said, without providing details.

Russia and Saudi Arabia increased production since June. Opec and its non-Opec allies will produce as much as necessary to meet global demand and offset any supply disruptions, Saudi oil minister Khalid al-Falih says.

Growing US output and a lower oil import bill have enabled the administration to implement stricter restrictions than were imposed between June 2012 and January 2016 under Obama. These factors also influenced the layout of sanctions in the run-up to 5 November.

"It is important to remember the context in which the Obama administration negotiated (sanctions exemptions) in 2012," given oil prices above USD 100/bl amid a presidential re-election campaign, said Richard Goldberg, a former congressional aide who helped craft Iran sanctions legislation.

"Their strategy was to announce exemptions early to show that the US was willing to provide exemptions and demonstrate that other countries are reducing purchases from Iran," said Goldberg, a senior fellow at the Washington-based advocacy group Foundation for Defense of Democracies, which backs the administration's Iran policy.

By contrast, Trump's administration—partly as a negotiating tool—has kept the scope of waivers unclear, even as the sanctions deadline approaches. It also has yet to clarify the scope of possible financial sanctions and to explicitly exclude condensate from US sanctions.

"Ultimately the Iranians are evaluating what is going to happen on 5 November, how sanctions will be enforced" and what concessions on financial sanctions the EU has managed to extract from Washington, Goldberg said.

Forcing Iranian exports to zero remains the primary objective, Bolton said. "The president said unmistakably our goal is maximum pressure. There has to be a fundamental change in the behavior of the Iranian regime."

Photo Credit: IRNA

US Rejects European Call for Iran Sanctions Waiver

Washington will not budge on its decision to impose fresh sanctions on corporations operating in Iran, despite a European request for exemption, the Financial Times reported Monday.

"International companies active in Iran face the threat of US sanctions within weeks after Washington rebuffed a high-level European plea to exempt crucial industries to help keep a landmark nuclear deal with Tehran alive," the paper reported.

France, Britain, Germany and the European Union had on June 6 sent US President Donald Trump's administration a joint official request for their companies to be exempt from the fresh US sanctions on Iran.

The plea had come as European leaders scrambled to save the hard-fought deal signed between Iran and world powers in 2015 under which Tehran agreed to limit its nuclear capacities in exchange for relief from crippling economic sanctions.

Trump announced he was abandoning the deal in May—paving the way for new sanctions on the Islamic republic and punitive measures for those who trade with it.

In a formal letter, US Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin refused to grant the European powers the waiver they had asked for, the Financial Times reported Monday, citing diplomats.

French Economy Minister Bruno Le Maire had already said the United States would not grant Europe its request.

"I wrote in the springtime to Steve Mnuchin... to ask him for an exemption for European companies legally working in Iran," Le Maire said according to an interview with French newspaper Le Figaro that was published Friday.

Failing an outright exemption, Le Maire had also asked for more time before the sanctions regime was due to kick in.

"We have just received the answer, and it's negative," he said.

Washington's refusal came as Trump called Europe a foe in trade and renewed accusations that the EU was taking advantage of the United States.

Analysts say European firms which have rushed to invest in Iran after the lifting of sanctions over the past three years have the most to lose from the renewed sanctions.

Photo Credit: Bruno Le Maire Twitter