Special ICPS Report: Potential Impact of Resumed Sanctions On the Iranian Economy

 

Iranian hardliners, led by the Supreme Leader, were unwilling that the Rouhani Government should follow up his government’s successful negotiations following the signing of the JCPOA in July 2015 with further agreements with the US on other issues, though it was clear that the sanctions that were removed at the time pertained only to the nuclear issue and nothing else (i.e. terrorism, human rights etc.).

The Iranian Supreme Leader, Ayatollah Ali Khamenei, and his advisers have in the interim period further exacerbated matters for the Rouhani government by insisting that all efforts be concentrated towards the imposition of what they have labelled a ‘Resistance Economy’ in place of a growth oriented, prospering economy that had been promised by President Rouhani and supported by the people on two separate occasions (i.e. presidential elections of 1993 and 1997). By curbing the efforts of the Rouhani government to increase its outreach to the West (and in particular the US), Khamenei and his hard-line constituency were essentially consigning the Iranian economy to a fate that would encounter severe difficulties in terms of dealing with such issues as employment, production, inflation, investment and ultimately the value of the national currency. While mainly indifferent towards Europe, a consequence of their action was that they knowingly created a situation whereby the Iranian economy would inexorably become reliant on partners such as China or Russia, both of whom being incapable of fulfilling Iran’s long-term economic needs and future ambitions.

The election of Donald Trump further exacerbated matters. While movement on the flow of much needed capital and technology was from the very outset seriously impeded (contrary to the spirit of JCPOA) by the Obama administration, the emergence of Trump and subsequent US exit from the JCPOA in May 2018 has created a situation which, if unresolved by November 2018, could lead to further social and economic upheaval inside Iran augmented by continuing increasing levels of public unrest and general protestations.

With Europe, China and Russia unlikely to be able to counterbalance American opposition, the Iranian economy will in the coming months face serious trouble in the absence of a broader deal that includes the US. While Trump has left the door open for ‘unconditional negotiations’, the Iranian regime, nonetheless, continues to remain reticent (despite obstinate third party mediation) about initiating a new ‘taboo breaking’ session of dialogue with the US.

President Rouhani has also been forced to change direction in order to retain a semblance of credibility (this time with open support from ‘hard-line’ quarters) though his actions have failed to make any impact. His resort to changing key personnel such as the governor of the central bank account for nothing, as nothing will change until such time that a new approach with the US has been worked out and slogans such as ‘death to America’ have been officially discarded.

This is undoubtedly the gravest crisis that has confronted the Islamic regime in the past 40 years and unless the Islamic Republic can react in a meaningful way – especially in its approach towards the US (as well as attempting to reach some kind of a regional compromise with Israel), the ruling establishment in Iran will have to confront what will be nothing short of a most serious existential threat.

Nature of the Upcoming Sanctions: 90-Day Sanctions and 180-Day Sanctions

Following its withdrawal from the JCPOA, the US stated that it would allow a maximum of up to 180 days amnesty for foreign companies that had resumed their economic activities with Iran in the aftermath of the nuclear agreement to disengage from their activities thereby avoiding US fines or other counter-measures that might be employed against them.

1. As of 7 August 2018, the first series - i.e. ‘90-day sanctions’ were resumed affecting the following areas:

• The Iranian Government’s purchase of US dollar banknotes;
• Iran’s trade in gold and other precious metals;
• Direct or indirect sale, supply or transfer to or from Iran of graphite, raw or semi-finished metals like aluminium, steel, coal and software for integrating industrial processes;
• Significant transactions related to the sale or purchase of Iranian Rials or the maintenance of significant funds or accounts of Rials outside Iran;
• Iranian sovereign debt;
• Iran’s automotive sector.

Moreover, other authorisations under the JCPOA will also be revoked, including the import of Iranian carpets and foodstuffs to the US as well as special licences for the sale of commercial passenger aircraft and related parts and services.

2. As of 5 November 2018, the second and more substantial series - ‘180-day sanctions’, affecting key areas like shipping, oil, banking and insurance will be resumed affecting the following areas:

• Iran’s port operators, and shipping and shipbuilding sectors, including the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates;
• Petroleum-related transactions with the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemical products from Iran, plus Iran’s energy sector;
• Transactions by foreign financial institutions with Iran’s Central Bank and other designated Iranian financial institutions;
• The provision of specialised financial messaging services to Iran’s Central Bank and other designated Iranian financial institutions;
• The provision of underwriting services, insurance, or reinsurance for transactions with Iran.

Additionally, The ‘Office of Foreign Assets Control’ (OFAC) has stated that non-US persons who are still owed payment under written contracts which were concluded prior to 8 May 2018, and which had complied with sanctions regulations at the time of delivery or provision, may still receive payment under the terms of their contracts even after the expiry of the 90-day or 180-day wind-down period (as applicable). Such payments could not involve any US persons or US financial system, unless they are exempt or have been explicitly authorised by OFAC.

As part of the January 2016 sanctions relief, certain Iranian entities which had been on the US ‘SDN’ List(1), including the likes of NIOC and NITC were removed from the SDN List, but put on the EO 13599 list(2), which meant that US persons and foreign entities which are owned or controlled by US persons could not deal with them, but other entities were able to deal with them. Such positions will also be reversed by 5 November 2018 (the end of the 180-day period), with OFAC putting the relevant entities back on the SDN List. This will mean that non-US persons who engage in activities with these entities become exposed to the risk of infringing US secondary sanctions.

Potential Impact of Resumed Sanctions on the Iranian Economy

Resumed sanctions, in simple terms, can impact Iran’s already highly damaged and perennially mismanaged economy in the various areas listed below:

1. Infrastructure projects will come to a halt (already has) thereby creating lack of new capacity for production of electricity, crude oil, natural gas, water desalination, telecommunication, railroad and metro expansions and modernizations, etc. The reason is that foreign engineering companies and contractors will not be bidding for any project in Iran. It is they who can provide the newtechnology and know-how to design and build these projects. This will seriously affect the creation of new production and services and new employment capacities;
2. New machinery will not be sold to Iran, thereby not allowing Iran to create new production capacity to meet increasing demand for products. Also, import of certain types of raw materials, essential for domestic production will be stopped, thereby not allowing Iran to continue the smooth production of goods consumed generally in the domestic market;
3. Foreign banks, especially the large international ones who have presence in the US, will refuse accepting payments from Iran and sending payments to Iran. Also, foreign banks will refuse to lend money and credit facilities to Iran in order to facilitate trade (export and import). These are key facilities that are desperately needed;
4. Foreign investors will refuse investing (desperately needed for the creation of new production and employment capacities);
5. Foreign Export Guarantee Agencies will refuse issuing insurance cover for projects and loans to Iran.
6. The Iranian government, which claims to currently hold up to 100 billion dollars in deposits outside Iran, is unlikely to use those reserves in order to assist local producers with imports of goods. It will possibly keep those reserves for other plans outside Iran;
7. Foreign companies offering specialised services will refrain from offering those services to Iran - i.e. insurance and reinsurance, engineering companies, management consultants, ICT services (information and communications technology), software companies, financial services and the like, which will have a knock on effect for the creation of new service and new employment capacities.

A consequence of the combination of a lack of new investments, cash flow shortages, lack of new machinery and parts as well as a lack of raw material on the Iranian economy will inevitably result in the following:

1. Shortage of goods and services resulting in higher prices because sellers can no longer replace the goods and service at their disposal/inventory;
2. Higher prices will result in high overall inflation for the country, which will eat into people's already low income, thereby making them poorer;
3. Higher prices will also act in a chain affect making all related goods and services more expensive. This is likely to create a vicious inflation cycle;
4. Those companies that cannot produce enough goods due to the shortage of raw materials will be forced to layoff people since they do not have the income/cash to pay them indefinitely;
5. The consequence of increase in unemployment in any society ultimately leads to strikes, demonstrations and social unrest (as witnessed in recent weeks);
6. Goods produced in Iran (e.g. agricultural products) will automatically become subject to higher prices due to more expensive transport services (e.g. fuel) as well as a general perception about higher demand and lower supply.
7. The doubling of foreign exchange rates against the Rial, which, in part, was due to institutions and individuals seeing the sanctions coming, has already impacted import prices. Imported goods in the past 9 months have doubled in price much to chagrin of domestic consumers.
8. All animal feed and pharmaceuticals and all human pharmaceuticals produced in Iran rely to a great extent on theimport of base products (generic). The price of imported pharmaceutical products has already been seriously affected by the rise in the value of foreign currencies against the Iranian Rial.
9. Finally, some opportunistic elements will aggravate the current dire situation for the ordinary citizen by taking advantage of these bottlenecks in the economy through hoarding of their products (in the hope of increasing their future profits) and essentially allowing for ‘Greed’ to exacerbate matters by entering the price-rise cycle.

Immediate Prospects

The figures for Iranian trade in the period from 21 March to 22 July of this year (compiled by Iranian energy and economics analyst Faezeh Foroutan - source cited in footnote 3) show China and the UAE jointly accounting for 39.8 percent of Iranian imports and 37.8 percent of its exports. By comparison, nine members of the European Union, including heavyweights Germany, France and Britain shouldered only 15.5 percent of imports and 7.93 percent of exports.



American pressures to reduce Iranian oil exports to ‘zero’ post November 2018 has already received a major setback given China’s refusal to cut back its Iranian oil purchases. However, it is expected that Iranian oil exports to Europe, Japan, South Korea and India will be sharply reduced as a result of US pressures. The only measure of slight comfort for Iran has been a rise that has taken place in the price of crude oil in recent months.

Iran, nonetheless, in response to a series of measures initiated mainly by Abu Dhabi (encompassing Iranian business activities in the UAE as a whole (i.e. Dubai) has sought to shift its export hubs to Qatar and Oman and strengthen economic ties with Russia(3). However, these measures are incapable of providing the comfort that is sought by Iran in the shorter term.

Finally, Europe’s ability and willingness to play its part in salvaging the nuclear deal was called into question by the new German financial rules and could depend on whether the Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT) bows to US threats if it fails to exclude by November Iranian banks from its global financial transfer system.

As matters stand, in the absence of serious change in Iran’s disposition towards the US (and by implication towards Israel in the region), there is no short-term remedy for tackling Iran’s current economic crisis. The bottom line is that Iran needs to enter into a discussion that will address all its quarrels with the US, if American initiated economic sanctions are to be removed. It is obvious that in the absence of any bi-lateral negotiations (that can consume a great deal of time), Iran will not be able to reestablish meaningful economic relations with partners it is eager to work with, especially in Europe, for the reconstruction of the Iranian economy.

In the interim period, with the unlikely prospect of any meaningful EU package to blunt the effects of US sanctions, according to a recent report(4), the United Arab Emirates (not Abu Dhabi but Dubai and Sharjah), and China are likely to offer Iran some solice against the impact of harsh sanctions. According to the same report, Russia and Oman rather than Europe are emerging as runners-up in possibly enabling Iran to circumvent or cope with the sanctions.

Conclusion:

Unprecedented pressures resulting from the collapse of the Iran’s national currency, the Rial (having lost more than 50% of its value in the past 6 months) coupled with increasing levels of public protests against worsening economic circumstances, have seriously dented the credibility of the Rouhani government. Forced into addressing the Iranian nation (on national radio and TV) with the purpose of calming the population, Mr. Rouhani’s charge that the US was waging “a psychological war against Iran” and other remarks are not expected to have any significant impact. This is due mainly to the fact that, for the time being, he is in no position for providing any tangible solutions to any of Iran’s serious dilemmas that range from improving the economic situation, holding direct talks with the US to soliciting support from the ‘4+1’ (i.e. EU3+China and Russia) for circumventing the effects of US sanctions. Rouhani indicated some hope that prior to the imposition of the second (more serious) round of US sanctions in November, talks with EU and other leaders in Europe and at the UN General Assembly in New York might lead to a situation whereby some of the current pressures are lifted.

(1). As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called "Specially Designated Nationals" or "SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them. Click here for more information on Treasury's Sanctions Programs.
(2). List of Persons Identified as Blocked Solely Pursuant to Executive Order 13599 (E.O. 13599 List).
(3). Dr. James M. Dorsey (senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture), “Can the US make Iran sanctions stick?”, 4 August 2018.
(4). Ibid.

Can Iran Turn Crisis into an Opportunity?

“Those who do not learn from history are doomed to repeat it”, George Santayana
 

In the face of unprecedented US hostility buoyed by a host of regional adversaries like Saudi Arabia and Israel, the ruling establishment in Tehran needs to tread cautiously if it is to manage what is potentially the greatest existential threat it has faced since its inception in 1979. The choices before them are simple: Continue as before and risk greater economic hardship, more internal unrest and possible military conflict; Or provide instead through dialogue and engagement, real possibilities for economic recovery and a final end to Iran’s international isolation.

In a difficult ride that has endured one crisis after another, the Islamic state has successfully managed not just to retain total control at home but to extend its influence as a powerful regional player. Yet, its economy is in tatters and the gulf between ordinary people and the regime in general and its hardline ideologues in particular has seriously widened with the passage of time.

Following President Trump’s announcement to withdraw from JCPOA and to reinstate previously removed sanctions, earlier promises to revive Iran’s ailing economy by creating jobs, curtailing inflation, salvaging the national currency and promoting over all prosperity by resolving the ‘nuclear dispute’ seems little more than a fading mirage.

Although the European signatories of JCPOA along with Russia and China have remained faithful to their commitments so long as Iran remains compliant to its obligations, the reality is that the scale of investments and technology transfers needed by Iran is simply beyond their grasp in face of persistent US opposition. The French President, Emanuel Macron, has been quite succinct in pointing out the reality that no European government can force any major private entity to risk jeopardizing its US operations for the sake of doing business with Iran.

The situation was further exacerbated when Mike Pompeo sent a 12-point ‘set of demands’ to the Iranian leadership - telling them amongst other things to give up Iran’s ballistic missile program, end all enrichment activities and cease involvement in every regional country it is currently involved in. Expectedly, his message was immediately rebuked by Ayatollah Khamenei and countered by Iran’s own ’15 point demand list’ as later announced by the Iranian Foreign Minister, Javad Zarif.

Yet somehow, irrespective of the current toxic atmosphere, the possibility for a potential ‘new deal’ with Iran has deliberately not been blocked by no lesser figure than President Trump himself. This was made abundantly clear in the tail end of his speech removing the US from JCPOA and repeated in more precise terms during the course of his press conference with the visiting Japanese Prime Minister in early June. This flexibility suggests that much like his earlier hard rhetoric against North Korea, the US President in concert with a responsive Iranian leadership could be a willing partner to once again confound everyone by squaring the circle.

Such a supposition would suggest that any initiative for exploiting possibilities for a more comprehensive ‘deal’ capable of meeting Iran’s broader expectations must now come from the Iranian leadership. Anticipating the urgent nature of this matter, some 100 well known Iranian political and social activists have signed an open letter demanding that direct negotiations with the US should now be actively pursued. While this call has been strongly rejected by hardline quarters close to Ayatollah Khamenei, the spirit of their message has received a positive response from a number of senior advisers close to President Rouhani.

Responding to this challenge while strategically strong in the region, is an obvious advantage for Iran’s bargaining position in what one Iranian journalist has dubbed as the on going “public negotiations’ following the ‘maximalist positions’ that have been advanced by both Pompeo and Zarif. The alternative, in the event of added altercations leading to further diplomatic discord and possibly military confrontation with the US, would in all probability weaken Iran’s bargaining position and play more directly into the hands of its regional competitors such as Saudi Arabia and Israel. Such an outcome in concert with continuing domestic protests, could lead to seriously detrimental consequences not just for the ruling establishment but also for the country.

The Iranian leadership has never been in a better position – i.e. given the existing level of international irritation with the Trump administration - for advancing its arguments for a more comprehensive new deal following America’s withdrawal from JCPOA. It is ironical that Iran stands to potentially gain a great deal more than an alternative scenario that would have had the US in the agreement but still obstructing the resumption of normal economic ties between Iran and the rest of the world.

It is now incumbent on Ayatollah Khamenei in particular to respond in support of Iranian national interest by not obstructing the start of direct Iran-US talks with the clear purpose of reaching a durable agreement that no longer leaves Iran reliant upon partners incapable of meeting its crucial economic needs. While President Rouhani’s pragmatic government might be amenable to such an outreach, it is those self-serving quarters associated with Khamenei who grudgingly continue to label any rapprochement with the US as a betrayal of the Islamic Revolution.

The hard-liners conveniently forget that while serving as President, Khamenei never opposed either repeated purchases of military equipment from Israel during the Iran-Iraq War nor the invitation that was extended to Robert McFarlane to visit Iran in what later became infamously known as the ‘Iran Gate’ scandal. At the time, pragmatism, not ideology was at the forefront of Khamenei’s consideration, much like the flexibility he later displayed over the nuclear issue when he allowed the Rouhani team to strike the JCPOA deal with the ‘5+1’.

Obstinate rigidity on the part of Khamenei in current circumstances can prove lethal both at home and abroad, while direct dialogue with the US can potentially lead to a situation that might avert economic uncertainties, domestic instability , external humiliation and regional chaos.

While Iran – just as the US - will undoubtedly have to make some concessions for reaching a durable compromise– similar to those made by countries like China, Vietnam and Cuba, each with their own past history of hostility with the US, the gains it can make are significant and well capable of bringing to realization the ambitious hopes of many patriotic Iranians for the future of their country.

Iranian leaders need to appreciate that for the foreseeable future, Europe, China and Russia are incapable of circumventing the US in meeting Iran’s urgent needs. Moreover, they need to realize that either buying time or becoming reliant on countries like China and Russia simply for purposes of counterbalancing the US, quite apart from its limitations, is hardly in the long-term interests of the Iranian people.

Mr. Khamenei, in light of America’s withdrawal from the nuclear deal, may be permitted to take some solace in having previously warned against “not trusting the Americans”, but it is a fact that as matters develop, only he will be held responsible for any harm that should befall upon the Iranian nation as a consequence of his intransigence in allowing for new talks.

1st May 2018.

Europe Has A Duty To Protect The Nuclear Deal

What is at stake when President Trump announces his decision on 12 May to stay or part with the ‘JCPOA’ (Joint Comprehensive Plan of Action) involves not just reopening old wounds and the renewed threat of proliferation in the Middle East, but also the prospects of another costly war in the region. What is also disturbing is the fact that an inexperienced American president should defy consensus opinion not just amongst his closest international partners but also amongst his own foreign policy community thereby subjecting regional and international security to wanton risks.

It is ironic that the rise of ‘Iran Hawks’ in the US decision-making process should happen at a time when ideological radicals are but a minority in Iran’s ruling establishment with very little public support. While Trump’s persistent threats to renege on America’s signed obligations has been a god sent gift for reviving the fortunes of Iranian hard-liners, they have at the same time frustrated the economic promises of the Rouhani government and compromised his reformist agenda before millions of hopeful Iranians.

The leaders of France and Germany have in recent weeks tried to persuade President Trump to look for new ways of augmenting the JCPOA while remaining faithful to a signed agreement that also includes Russia and China. While President Trump – perhaps eager to flex some muscles in advance of his impending talks with the leader of North Korea, remains ambiguous about his final decision; it is quite possible that in the end he will refrain from completely rejecting the JCPOA.

However, from an Iranian standpoint there continues to be a huge gap between what had been promised and what has actually been delivered by the JCPOA. In reality, while President Rouhani is struggling to retain public support by attracting foreign capital and technology in order to resuscitate the country’s suffering economy, what is being discussed by Iran’s Western interlocutors is at best clinging to an agreement which has not been fully implemented or at worst the prospect of new sanctions and ‘add-ons’ in lieu of scrapping the agreement altogether. It is no wonder that Ayatollah Khamenei, who has repeatedly voiced his distrust of American intent, should feel vindicated leaving such figures as Foreign Minister Zarif who had successfully negotiated the JCPOA in the lurch for having naively succumbed to a series of broken promises.

It is now incumbent upon Europe - in line with imitative recently proposed by the French president - with Russian and Chinese support to put matters right. Honouring the commitments made under the JCPOA – an agreement confined entirely to the nuclear issue – does not mean that there are no other areas of contention between Iran and the West such as Iran’s missile program or its activities in the Middle East. However, it is only right that they should be addressed in separate formats, independent of JCPOA.

Providing Iran with incentives to remain inside the JCPOA in face of repeated US badgering, it will be possible for Europe to negotiate for a more comprehensive deal that includes extending the duration of the agreement. With regards to Iran’s missile program or its often referred to ‘bad behaviour or malign influence in the Middle East’, again all these issues can be raised provided due recognition is also given to all of Iran’s legitimate defence and security considerations as well as other priorities. For example, the independent European Central Bank or Central Banks within some key European countries may be induced to finding ways of bypassing continued American banking obstructions (in violation of JCPOA) by lending directly to companies willing to engage with Iran.

It is well to remember that no local or outside power currently engaged in the Middle East can claim to have a monopoly on ‘good behaviour’. The carnage and instability in Iraq or Afghanistan or the on going civil war in Syria or the calamitous state of affairs in Libya were not instigated by the Iranian regime. Indeed the rise of ISIS in Iraq and Syria along with funding for radical Sunni elements who have callously murdered innocent civilians in the streets of Europe and America have been a product of bad behaviour on the part of some of the West’s closest allies in the Middle East who are now lobbying the US as well as Israel to start a new war with Iran.

For its part, while it should remain faithful to the JCPOA, Iran also needs to understand that due to some of its past activities and current provocations, it continues to remain exposed to all kinds of allegations and at times unwarranted accusations. Its only tangible success in having extended its influence in Iraq, Syria and Lebanon and the corridor which it provides to the Mediterranean, if anything has been a consequence of American failures in these arenas. Iran, which can potentially exploit certain economic benefits from such an opening, has simply filled the vacuum left by miscalculated interventions on the part of the US and its friends. Nonetheless, there is a huge volition on the part of all the losers in the Syrian equation to dispossess Iran of its gains and dislocate its influence from the region.

Finally, Trump’s continued robust criticisms of the nuclear deal in collusion with other anti-Iranian claims and provocations sponsored by the likes of Saudi Arabia could also serve as a catalyst for another potentially explosive situation in the Middle East sparked by an all out ‘intended’ or ‘accidental’ conflict between Iran and Israel on Syrian soil with unpredictably catastrophic consequences.

Europe in tandem with Russia and China must now act to avoid further conflict in the region by helping to preserve the JCPOA and the credibility of those who negotiated its passage with or without the US.

1st May 2018.

Relinquishing the ‘Moral High Ground’ to Iran

President Trump’s belligerent approach in muddying the water with Iran is yet another ploy to remain true to populist promises he made to right wing audiences – at home and abroad - in the course of his 2016 campaign for the White House.

However, despite all his rhetoric, what remains obscure at the end of the day is what is to be gained by ‘decertification of the nuclear agreement’ and how such a move is likely to chastise Iran while enhancing US or Western interests?

The truth of the matter is that since the ratification of the nuclear deal in July 2015, Iran despite having complied with all its obligations, has continued to suffer from persistent US obstructions that have essentially prevented international banking and financial institutions from actively participating in what is generally believed to be the world’s largest foreign investment market. Hence, all ‘antics’ aside, the only real difference in US position vis-à-vis Iran is that while the Obama administration made promises that it did not keep, President Trump intends on passing the buck to Congress so that it can then re-impose the kind of robust measures, which the Treasury Department under his predecessors had never removed.

What is even more unclear is how exactly the pursuit of such gratuitous belligerency which could potentially result in the cancellation of the nuclear agreement benefit the US, its allies and the cause of non-proliferation at a time when all parties are engaged in a serious crisis over international security with North Korea. Trump’s message is clearly in contradiction to positions enunciated by all senior military officials as well as his key cabinet members who have spoken on the record about the need to honor the commitments which the US has made in conjunction with Russia, China, France Britain and Germany to the nuclear agreement that has also been endorsed by the UN Security Council.

Moreover, Trump’s actions in this regard will not even satisfy regional players such as Israel or Saudi Arabia who see this empty and inconsequential gesture on the part of the US President as a ploy for not living up to the kind of expectations he had created in advance of his election. In the case of Israel, such a ploy that is incapable of making any material short to mid-term difference to Iran’s overall strategic disposition in the region, is hardly any compensation for not moving the US Embassy to Jerusalem or openly validating Israeli settlement policies in the occupied territories. For Saudi Arabia, Trump’s ‘bad mouthing’ of the Iranian regime in the absence of any direct military action against Iranian targets, falls way short of the kind of US support that would help resurrect their fortunes from the downward spiral of their bankrupt policies on Yemen and Qatar while Iran consolidates its position in Iraq, Syria and Lebanon.

There is no question that Trump’s exacerbation of a situation that hinders the flow of capital and investments needed for economic reconstruction into Iran will seriously affect the lives of millions of ordinary Iranians who had hoped that on the back of the nuclear agreement, the road would be paved for further agreements with the West that would assist Iran’s complete rehabilitation and reintegration into the world community.

Sadly the Iranian people’s overwhelming support for the re-election of Hassan Rouhani in the recent presidential election in face of hardline elements bent on frustrating his moderate and progressive agenda, is being rewarded by policies and pronouncements that enhances the position of only those who want to emulate the North Korean model in dealing with the US.

In the final analysis, any move to dismantle the nuclear deal will not have the support of world public opinion or that of any of the other major signatories to that agreement. It will only relinquish the high moral ground to Iran, leaving the US as the isolated party.

Dr. Mehrdad Khonsari is a former Iranian diplomat and a Senior Consultant at the ‘Iranian Centre for Policy Studies’.

Less Iran - Bashing And More Dialogue, Please

The alternative spells bad news.

The anti-Iran rhetoric employed by self-serving politicians in the US, mostly aims to cash in on years of built up anti-Iranian sentiments amongst their general public. There is no question that the Islamic regime bears a great deal of responsibility for this precarious situation due to more than three decades of provocative and at times militant behaviour. Nonetheless, it is generally accepted that this situation has been seriously reversed since the departure of Mahmoud Ahmadinejad and the advent of the Rouhani presidency in 2013.

While many senior world leaders have embraced Iran's new disposition, the same cannot be said of the US, where "Iran bashing" continues to remain a choice option for enhancing one's domestic popularity.

The resulting change in Iran's demeanor has already reduced a major source of international tension as well as Iran's isolation in the aftermath of the nuclear agreementthat was concluded with the '5+1' in July 2015. While many senior world leaders have since embraced Iran's new disposition, the same cannot be said of the US, where "Iran bashing" — under whatever circumstance — continues to remain a choice option for enhancing one's domestic popularity. This kind of disingenuous behaviour on the part of many leading American politicians continues despite "known" realities such as the fact that neither Iran nor any Shiites have ever been involved in any fatal terror attacks carried out in America or Europe. At the same time, these leaders remain solemnly silent about the fact that thousands of American and European citizens in the past two decades have been murdered at the hands of Sunni radicals from "friendly" American "partners" in the Middle East.

Apart from failing to promote better Iran-US ties, the inability on the part of leading US policymakers to shrug off their "Iran-phobic" tendencies — much to the delight of President Rouhani's hardline opponents in Iran — has not only dangerously increased regional tensions but it has also led to new schisms within the Arab world following the ostracising of Qatar and the possible dismantlement of the GCC by Saudi Arabia, UAE, Bahrain and Egypt. Apart from hosting the only Arab media outlet not directly or indirectly controlled by the Saudis, thereby airing "radical views" in support of the "Muslim Brotherhood", Qatar's other alleged main folly has been its failure to adopt a hostile posture towards Iran.

Their "Iran-phobic" tendencies — much to the delight of President Rouhani's hardline opponents in Iran — has not only dangerously increased regional tensions but it has also led to new schisms within the Arab world...

This sorry state of affairs descends to the ridiculous when a number of leading US political figures such as Senator John McCain, Mayor Rudi Giuliani and Ambassador John Bolton accept dubious speaking engagements and openly call for the overthrow of the Iranian regime, expressing their unswerving support for a muchdespised cult organisation (the Mojahedin Khalq or MEK). It is interesting to note that while these people keep blasting Iran for being the foremost "state sponsor of terrorism" — at a time when everyone acknowledges that non-state actors such as ISIS and Al Qaeda present the main international threat from terrorism — they are somehow "induced" to overlook the past history of their generous hosts who until recently were on the US (and EU) list of terrorist organisations and bear direct responsibility for murdering Americans in Iran. Today, the priority must surely lie in trying to defuse the dangerous crisis confronting the Middle East from North Africa to Syria, Yemen and the Persian Gulf. Only through dialogue and compromise — to start with between Iran and Saudi Arabia — can the escalation of the current crisis and the dangerous "war of words" in the Persian Gulf region and the Middle East be contained. At a time when the Iranians have repeatedly indicated their desire for such talks, it would be a mistake for "Iran-phobic" politicians in the US to jeopardise regional peace and stability by tacitly supporting intransigent Arabs and Israelis, bent on demonising and punishing Iran at any cost.

"Post-revolution, evolutionary Iran" (i.e. with radicalism on the wane and political reform on the rise) is much more on the right side of history than most others in the region...

The West, in particular the US, also needs to show greater appreciation for the fact that "post-revolution, evolutionary Iran" (i.e. with radicalism on the wane and political reform on the rise) is much more on the right side of history than most others in the region—irrespective of how many arms they buy. Also the failure of democracy following the "Arab Spring" is not a justification for perpetuating autocracy. Hence, it is highly important for all in the West to encourage and promote regional dialogue while keeping a balanced position between the quarreling sides that is cognizant of their legitimate interests.

This article was published in ‘Huffington Post’ on 18th July 2017

The Surreal ‘Grand Coalition’ Against Iran

The open manifestation of an ‘American-Sunni’ coalition against Iran with huge anti-Shia intonations around the region and particularly in Iraq, where the incumbent Shia government in Baghdad is supposedly a close ally of the United States does nothing to promote peace, stability and coexistence in the region.

Such an orchestration, designed to prop up a Saudi regime beset by serious internal squabbling along with an array of social and economic problems exacerbated by a military quagmire of its own making in Yemen, can neither contain Iran nor prevent previously disenfranchised Shias from Afghanistan and Pakistan to the shores of the Mediterranean in Syria and Lebanon, where they constitute more than 40% of the total population from having their say.

Despite the $350 billion ‘tribute’ paid by the Saudis that included the purchase of more than $100 billion of unwanted weaponry to the financially drained Kingdom, it is unlikely that in the final analysis, their reward will serve any purpose beyond the ‘photo opportunity’ that exhibited so many Sunni Arab leaders humbling themselves around President Trump.

Having secured his expected ‘tribute’ from the Arabs, President Trump then travelled to Israel and much to the chagrin of Israeli leaders, skirted around their key issues, such as continued US opposition to Israeli settlements in Palestinian territory or moving the US Embassy from Tel Aviv to Jerusalem by simply harping on the exaggerated anti-Iran rhetoric carried over from Riyadh.

Meanwhile, as this surreal and mendacious ‘US-Sunnis-Israeli Grand Coalition’ was being projected, the people of Iran were celebrating the re-election of President Hassan Rouhani who in the course of the past 4 years has stirred Iran away from his predecessor’s path of wanton agitation and lunacy, having most importantly taken the strident steps necessary for ending Iran’s nuclear stand off with the international community.

Repeated labeling of Iran as the ‘biggest state sponsor of terrorism’ or assertions such as ‘Iran’s provocative and unacceptable behavior in the region’ - especially under the presidency of Hassan Rouhani, simply lacks the thrust and luster that it once had in the 1980s and the 1990s. It is a fact that since 911, non-state actors such as Al Qaeda and more recently ISIS have almost completely monopolized the terrorism threat directed against the West and in the case of ISIS with equal venom again Iran and more generally Shias in the region.

Therefore, it is surreal to watch Saudi Arabia and its Wahhabi cronies exonerating themselves from any association with various acts of terrorism carried out against people in the West during the past two decades and falsely levying the blame on Shias in general and Iran in particular. This clear deception, camouflaged and sweetened by payments of billions of dollars of tribute to the US, becomes even more surreal in view of the fact that there has never been any evidence of Iranian or Shia involvement in any of the attacks that have been carried out in Europe or America.

It is even more ironic that at a time when the Iranian people have so blatantly exhibited their preference for moderation and peaceful coexistence by soundly silencing those who continue to advocate radicalism and confrontation, such an outrageous and unwarranted display of open hostility should be orchestrated against them.

So far, Iranian reaction to these unwarranted provocations has remained relatively moderate. Thus instead of continuing such rash policies that only increase tension and instability in the region, it would seem more prudent that steps should be taken to encourage dialogue and diplomacy in order to defuse tension and prevent further division and misunderstanding.

While there is undeniable validity in some of the past Saudi grievances voiced against the Islamic Republic, it is important to note that since the advent of the Rouhani government, Iran’s entire demeanor has undergone a fundamental shift, thereby allowing dialogue and diplomacy to play a decisive role.

The re-election of Rouhani who has pledged to remove non-nuclear sanctions through diplomacy offers a unique opportunity for the US to resume its dialogue with Iran, while both Iran and Saudi also need to manage their differences, much like they did prior to the Iranian revolution. Surreal exhibitions, such as those exhibited in Riyadh instead of reducing tension, stopping carnage and restoring much needed peace in places like Syria and Yemen, only widen differences by adversely exposing the region to further divisions and external meddling.

This article was published in ‘Open Democracy’ on 8th June 2017

Dr. Mehrdad Khonsari

Born in Tehran, Iran, Mehrdad Khonsari is an Iranian politician and former diplomat. After completing his undergraduate and postgraduate degrees at Georgetown University and The Fletcher School of Law and Diplomacy in the USA, Khonsari began his career as a diplomat, and entered politics shortly after the Iranian Revolution in 1979. He later (1995) obtained his PhD from the London School of Economics. An active student of international politics, Khonsari was a Senior Research Consultant at the Centre for Arab and Iranian Studies in London from 1990-2010.

Mehrdad Khonsari received his primary and secondary schooling in Iran, Ireland, France, England and the United States where he was awarded a high school diploma in 1967 from Bellaire Senior High School in Houston, Texas. Mehrdad Khonsari next attended New York University to study Electrical Engineering before transferring to the School of Foreign Service at Georgetown University in Washington, DC were in 1972 he received his undergraduate degree (Bachelor of Science in Foreign Service). Following his entry into the Iranian Foreign Service, he was later sent on a scholarship to The Fletcher School of Law and Diplomacy where he completed his master's degree in 1976 which was followed in 1978 with an M.A.L.D. (Master of Art in Law and Diplomacy). Although Mehrdad Khonsari was admitted to the Fletcher School’s PhD program, the completion of his thesis was disrupted by the advent of the Iranian Revolution. However, having switched to the London School of Economics and Political science (LSE), he was able to obtain his PhD in the field of International Relations in 1995.

Having begun his internship at the Iranian Ministry of Foreign Affairs in 1968 (serving in Tehran, Washington and the UN in New York), and having passed the MFA’s entrance examinations, Mehrdad Khonsari began his diplomatic career in 1972. From 1973-75, prior to being posted to the Iranian Mission to the United Nations, he served as a member of the Secretariat of the Iranian Minister of Foreign Affairs. In 1977, he was transferred to the Iranian Embassy in London where he also became a Visiting Research Fellow at the International Institute for Strategic Studies. In June 1978 he was placed in charge of the Embassy’s Cultural Section prior to becoming Press Attaché following the start of unrest leading to the Iranian Revolution. Following the execution of former Foreign Minister, Abbas Ali Khalatbari, Mehrdad Khonsari ended his diplomatic career by resigning from the Iranian Foreign Ministry. During his period as an Iranian diplomat, Mehrdad Khonsari also served as a member of the Iranian delegation to the 23rd, 24th, 25th, 29th and 31st Sessions of the UN General Assembly in New York; the ‘Summer Sessions’ of the UN Economic & Social Council, July-Aug 1976 and July–August 1977; as well as the 10th Special Session of the UN General Assembly on Disarmament May–July 1978.

From 1979-1984, Mehrdad Khonsari worked as a Consultant in International Affairs for the Saudi Arabian multinational business organization, the ‘Shobokshi Group’ [1] while at the same serving as the Managing Director of the UK based Middle Eastern Charitable Trust, the ‘Avicenna Foundation’ (which was later transformed into the ‘Centre for Arab and Iranian Studies’ where Mehrdad Khonsari was ‘Senior Research Fellow’ from 1992-2010). Since 1984, Mehrdad Khonsari has been an Iranian political activist having served as an Adviser to Prime Minister Shapour Bakhtiar (1984–87) and Reza Pahlavi, the former Crown Prince of Iran (1987-1991). Since 1991, he has served as Secretary General of ‘Front Line’ -the Constitutionalist Movement of Iran (1991-2010), Member of the ‘Iran Referendum Campaign (2004-2005) and as Secretary General of Green Wave (2010-2014). Since January 2015, Mehrdad Khonsari is Secretary General of the newly established but currently inactive ‘Organization for Economic Reconstruction and National Reconciliation (BAAM).

Mehrdad Khonsari was a ‘Visiting Research Fellow’ at the International Institute For Strategic Studies (1978). In 1977 and 1978, he had travelled to Kuwait, Bahrain, Qatar, U.A.E., Saudi Arabia and Yemen on research mission for the Ministry of Foreign Affairs on the subject of ‘Iran-Arab Relations’ and how best to expand and enhance them in the future. Mehrdad Khonsari was Editor of the London-based Iranfile, an independent monthly analysis of current affairs and ‘Khate Moghaddam’ with special emphasis on economics and politics. Apart from numerous TV broadcasts and articles in Persian [2] and English,[3] he has conducted extensive research [4] and participated in many international conferences in various countries in Europe, North America, the Middle East [5] and the South Caucuses. From 2005-2008, he was Managing Director of Payam Azadi TV (based in Los Angeles) and from 2012-2014, he was Chairman of the Board of Governors of ‘Raha TV’, a London-based satellite television station operating for audiences in Iran. For 2 years, Mehrdad Khonsari as the only guest of the weekly program ‘Bardashte Dovom’,[6] provided up to date commentary and analysis concerning various aspects of political realities in Iran.

Mehrdad Khonsari is a Senior Consultant and a founding member of the “Iranian Centre for Policy Studies’ established in France in 2017.

Mohammad Jawad Akbarin

Born in Babol, Iran, Mohammad Jawad Akbarin is an Iranian writer and journalist who currently resides in France. He is also a respected theological scholar having studied under the tutelage of Eminent ‘Shia Sources of Emulation’ (‘Marjas’) such as Grand Ayatollahs ‘Abdollah Javadi Amoli’, and ‘Hossein Ali Montazeri, while being hugely influenced in his earlier days by the thinking of two major Iranian theological scholars of the late 1990’s, Mohammad Mojtahed Shabestari and Abdolkarim Soroush.

Akbarin began learning Arabic literature in 1988 at ‘Elmieh Rouhie’ (Mirzaki) in Babol. That is where he familiarised himself with the bases of the Islamic culture and increased his general knowledge of Islam (Fegh).

In 1992, he started religious and spirituality studies in Qum. His most important teaching scholars during his years of religious studies were Grand Ayatollahs ‘Abdollah Javadi Amoli’, and ‘Hossein Ali Montazeri’. From 1992-2002, he participated in the ‘Koran Interpretation’ classes of Grand Ayatollah Abdollah Javadi Amoli.

In 2004, he immigrated to Lebanon where he pursued his Islamic training with Ayatollah Seyed Mohammad Hossein Fazlollah.

He obtained a bachelors degree on the subject of ‘Religion, Science and Philosophy’ from the Islamic Azad University of Tehran, a ‘Master of Islamic Science’ from ‘Beirut Islamic Research University’ in Lebanon and a PhD on the subject of ‘Analysis and Interpretation of the Koran’ from the Islamic Research University of Cairo in Egypt.

He was a researcher in Tehran between 1993 and 1997 and studied in particular, western culture and the works of the German philosopher, Martin Heidegger. He was also greatly influenced by the thoughts of two major Iranian thinkers at of the late 1990’s, Mohammad Mojtahed Shabestari and Abdolkarim Soroush.

Journalistic Background
Apart from being a regular contributor to many publications, Akbarin’s journalistic background has included the following associations:
2014– Member of the International Federation of Journalists. Member of the Editorial Board of the monthly analytical magazine «Mihan», published Paris
2012-2014 Editor in chief of the online newspaper «Rahe Digar»
2012-2014 Editor-in-Chief of the London based, Persian ‘News and Analysis] Satellite TV Station, ‘Raha TV’.
2011 Editor–in-chief of the online newspaper «Mihan»
2010 Journalist, Online newspaper «Deutsche Welle»
2009-2010 Member of the Editorial Board of the Online newspaper «Jarass» linked to the ‘Green Movement’
2009- Writer, journalist and editor for the Online newspapers «Roozonline»
2009 Close collaboration with the Beirut based TV channel, ‘Future TV’
2008 Member of the digital staff of the Beirut based newspaper, «Al Mostaqbal»
2005 Collaboration with the Beirut based newspaper «Al Nahar»
2003 A selected Judge for the religious category of ‘the National Iranian Press Competition’
1998-2003 Member of the Editorial Board of the weekly Tehran based newspapers, «Gounagoun», ‘Chel-Cheragh, ‘Salaam’, ‘Sobhe Emrouz’. ‘Fath’, ‘Bayan’, ‘Bahar’ and ‘Nowrouz’

Political Background
2001-2002 Secretary of ‘the Clerical Student Assembly of the Followers of the Line of Imam [Khate-e-Emam]’, 2002-2004 Secretary of the Qum Branch of the reformist ‘Islamic Participation Party’ (‘Jebheye Mosharekat’)

Imprisonment and Exile
2000-2001 In spring 2000, following the publication of four critical newspaper editorials in ‘Sobhe Emrooz’, ‘Fath’, ‘Bayan’ and ‘Bahar’, M. J. Akbarin was summoned to the offices of the ‘Special Clerical Prosecution Office’ in Qum. Following a brief investigation, he was ‘tried’ on charges of ‘propagating against the ruling order’. In the absence of his lawyer and a valid trial by jury, in violation of the prevailing laws pertaining to press and political trials, he was sentenced to a prison term of 1 year. Objection to this ruling voiced by the ‘Human Rights Committee’ of the Sixth Islamic Parliament was subsequently overruled.
2002 40 days after his release from incarceration that had begun at Qum’s Central Prison in January 2002, he was once again summoned by the “Clerical Court’ of Isfahan and placed in custody on charges pertaining to a ‘critical speech’ he had made at party meeting (‘Jebheye Mosharekat’) in ‘Shahr Reza’.
2007 Summoned again by a Tehran court on charges pertaining to his provocative writings on the need for gender equality with emphasis on criticizing a long established tradition of promoting ‘male domination of women’ (‘Roozonline’, 08/03/07). As a result, he was once again placed in custody just as he was about to board a plane returning him to Lebanon. He was then banned from leaving the country and the special ‘Clerical Court’ in Qum summoned him for a new series of interrogations without specifying charges levied against him. Fear of further arbitrary imprisonment forced him to clandestinely flee Iran for Lebanon via Iraqi Kurdistan in winter 2007.
2009 Working with the local media in Lebanon, following his critical reviews of the 2009 Iranian presidential election, he was subjected to serious threats by the Iranian embassy in Beirut, forcing him to flee Lebanon for France with the aid of ‘RSF’ (Reporters Without Borders).
2009- Consistent Researcher on Middle East and Islamic Studies.

The Iranian Centre for Policy Studies (ICPS)

The mission of ICPS, established in 2017, is to provide an accurate examination of events that shape Iranian domestic and foreign policy with the distinct aim that its analysis may help the adoption of policies that best promote and protect the national interest of the Iranian nation.

The complex circumstances in the region and the world in recent years and its implications on Iranian politics, especially in the aftermath of the nuclear agreement, have hurled Iran into a new era much different than the past.

This new era has three distinct features:
1. The increasing empowerment of technocrats, committed to regional peace and stability, and insistent upon establishing a constructive relationship with the outside world.
2. The rising status of educated middle classes and their demands
3. The increasingly more important role that is played by social media and Internet communications in the world.

In times, when both the Iranian political scene as well as events in the broader international community is witnessing a process of fundamental transition, simple reliance upon traditional findings based on out-dated analytical yardsticks only leads to simplified deductions that are clearly inadequate. Failure to understand constantly changing developments, can thus lead to serious miscalculations, which can in turn deprive Iran, the region and the wider world of rare opportunities for promoting non-violent and progressive change in Iran along with peaceful and constructive relations in the region.

There are a number of important research centres within Iran charged with the task of collecting facts and providing policy analysis. However, due to the fact that they are mostly tied with various governmental institutions, they are understandably restricted in providing the kind of unbiased and objective reporting that is neither contained nor restricted because of certain obvious boundaries.

ICPS through its connections with highly respected international experts and credible ‘Think Tanks’ around the world as well as its own host of experts both inside and outside Iran, intends to fill this vacuum. This will be done through the production of daily, weekly and monthly briefs (on demand in 4 languages: Farsi, English, Arabic and French) as well as the organization of conferences and seminars (including ‘web-seminars’) with the participation of key experts on subjects of national importance concerning the future of Iran (all to be subsequently posted on the Centre’s website).