By Javad Heirannia

U.S. secondary sanctions is principal red line for Iran: Askari

May 22, 2018

TEHRAN – Professor Hossein Askari, an expert on Saudi Arabia who also teaches international business at the George Washington University, strongly believes that most European financial institution and corporation “would cut business ties with Iran.”

Hossein Askari, who teaches at George Washington Univerisity, tells the Tehran Times that “If this happens, then Iran would get NO benefit from the JCPOA.”
Following is the text of the interview:

Q: In regard to Trump's violation of the Iran deal, what are the obligations and responsibilities of the deal's other signatories?

A: It is difficult to give a short answer to this question. The other signatories are obligated not to snap back any sanctions on Iran. But if this is all that the other signatories do, then the agreement may have no benefit whatsoever for Iran.  This would be the case if the U.S. imposes secondary sanctions (extraterritoriality) on European, Chinese, and Russian or for that matter on any other financial institution and corporation doing business with Iran. If the U.S. does this, these institutions and corporations have a choice. Do they risk U.S. sanctions (which may later entail horrific fines as we saw before the JCPOA) or do they cut business ties with Iran. I believe that most would cut business ties with Iran. If this happens, then Iran would get NO benefit from the JCPOA. Of course the other signatories would say to Iran ‘we are market economies and cannot tell banks and corporations where to invest’ but Iran would be left out in the cold. They would argue that this is not their obligation. It would be only a matter of time until we get to this point.
So it is not so much the obligations that matter for Iran. For Iran to get benefits from the JCPOA, the other signatories would have to tell the U.S., and now, that if the U.S. were to sanction any non-U.S. financial institution or corporation for doing business (not related to Iran’s nuclear program) with Iran, then they would sanction U.S. institutions and corporations doing business in their territories. Now ask yourself if the other signatories are likely to do this? I believe the answer is no.
If I am right, Iranian negotiators must get an answer to my question and if the answer is that the others will not sanction U.S. banks and firms in retaliation, then Iran should immediately set about planning for the abrogation of JCPOA and make its preparations. There would be no time to waste.

Q: In a tactful reaction to Trump's Betrayal of Nuclear Deal, Iran said the survival of JCPOA highly depends on firm European guarantees. Since the EU's leverage is not strong enough to bring the U.S. back to reason, shall Iran count on their guarantees?

A: I am sorry to disagree with this Iranian position. It may be tactful but what does it mean? Guarantees of what? The only guarantee that matters is for the other signatories to announce to the U.S. and the world that they would impose sanctions on U.S. entities IF the U.S. imposes secondary sanctions on non-U.S. institutions doing business with Iran.

I believe if this was said, the U.S. would have little choice but to back down on its threat. For if the U.S. did not do this in the face of such a declaration by the other signatories, it would plunge the world into a trade war that no one wants.

It is a poker game! Are the other signatories willing to play it to save the JCPOA? If they don’t, then Iran would get no significant sanction relief.

Q: Will EU dare to invest or have economic engagement with Iran in a situation where the U.S. nuclear related sanctions are back again and the foreign companies face U.S. penalties?

A: I think I have answered this. The answer is an absolute no. Financial and non-financial institutions would be scared to be cut out of the U.S. market and be exposed to heavy fines. They would want to know that the other signatories would retaliate against U.S. entities. This would give them added assurance that the U.S. would in all likelihood back down.

Q: Returning which kind of the sanctions are red line for Iran that will danger its national interest?

A: There are two red lines. Any and all U.S. secondary sanctions is the principal red line. But there is also a secondary red line that deals with the U.S. cutting off Iranian financial institutions from the dollar market and SWIFT. The other signatories could accommodate Iran in Euro and Sterling denominated transactions. But Iran needs this access and accommodation if the U.S. cuts Iran off the dollar market. Unlike its earlier negotiations in the JCPOA, Iran would be well served to have an expert on economic sanctions and international financial transactions on its team. The Iranian delegation has been weak on this account.

Q: Why did Trump pull out of the agreement?

A: I don’t think that it was one thing but a combination of many reasons. Let me just list them.
He wants to undo everything that Obama did—as if Obama was never President!
It was a campaign promise. Given his base, he wants to do what he said he would do no matter if it hurts or helps the U.S.
The Israeli lobby in the U.S. and Israel see Iran, not Arabs, as the threat to Israel’s future. They have been joined by Mohammad bin Salman. With Trump sympathetic to their cause, they have pulled out all the stops to isolate Iran and engineer regime change.
Trump and Jared Kushner have signed on the Saudi agenda to overthrow the regime in Tehran. Why? I think that they have been led to believe that they would receive significant future financial rewards if they did Saudi Arabia’s bidding.

Q: Finally, what advice do you have for Iran?

A: Iran must be realistic. They need the other signatories to make the declaration I have stated above. But Iran must also stop making enemies for no reason. There is no benefit for Iran to burn the U.S. flag. It does not serve Iran’s interest. Iran must say little but make its demands crystal clear to the other signatories and tell them if they do not deliver, the inspectors will be expelled immediately. If they do not deliver, Iran should ‘quietly’ expel the IAEA. There is no need to have demonstrations and shouts against the U.S. Iran should also prepare for U.S., Israeli and Saudi aerial attacks. Even if Trump does not initiate an attack, Saudi Arabia, the UAE or Israel may instigate a conflict in order to get the U.S. involved. We live in dangerous times.

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