LAST UPDATE | 5 Nov 2018

THE UNITED STATES will exempt China, India and Japan from oil sanctions on Iran, Secretary of State Mike Pompeo said, while vowing to be “relentless” in pressuring Tehran.

Hours after sweeping sanctions were reimposed following the US withdrawal from a denuclearisation 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 neighbour’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.

Secretary of State Mike Pompeo, left, and Treasury Secretary Steven Mnuchin. J. Scott Applewhite J. Scott Applewhite

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.

Earlier

Iran’s President Hassan Rouhani said the Islamic republic “will proudly bypass sanctions” that target the country’s oil and financial sectors.

“I announce that we will proudly bypass your illegal, unjust sanctions because it’s against international regulations,” Rouhani said in a televised speech.

“We are in a situation of economic war, confronting a bullying power. I don’t think that in the history of America, someone has entered the White House who is so against law and international conventions,” he added.

AP / PA Images AP / PA Images / PA Images

State TV broadcast footage of Iranian air defence systems and anti-aircraft batteries in the manoeuvres underway today and tomorrow across a vast stretch of the country’s north.

Iranian army General Habibillah Sayyari says both the national army and the Revolutionary Guard are taking part and that all ammunition used in the drill is produced in Iran.

Oil markets on alert

World oil markets were on alert, nervously set to gauge the consequences of the sanctions.

“All eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall,” said Riccardo Fabiani, an analyst for Energy Aspects.

Oil is Iran’s main source of income. But the sword has two edges: Iran is also the OPEC cartel’s third-largest producer.

The US stance has already inflicted serious pain on Iranians, with the country’s currency, the rial, losing more than two-thirds of its value since May.

Iranian oil exports have fallen by about a million barrels a day in that time, though India and China have continued to purchase it. Most Europeans, as well as Japan and South Korea, have stopped.

Asked if the US had firm commitments from India and China to stop all oil purchases from Iran within six months, Pompeo replied: “Watch what we do. Watch as we’ve already taken more crude oil off the market than any time in previous history.”

Saudi Arabia is the only country with the capacity to make up for lost Iranian oil production.

‘Utter disregard’

Hours before the fresh sanctions went ahead, thousands of people in Iran marked the anniversary of the 1979 hostage-taking at the US embassy by carrying placards mocking Trump and burning American flags and fake dollars.

Trump has long argued that the 2015 nuclear deal is badly flawed, in part because its provisions would expire in 10 to 15 years and partly because it does not adequately constrain Iran’s destabilizing behavior in the region.

His decision was widely criticised abroad and by Democrats at home, who said that while imperfect, the pact had placed the Iranian nuclear program under the tightest scrutiny ever.

In parallel with the imposition of the crude oil sanctions, the US Treasury Department is placing more than 600 Iranian individuals and entities on a black list.

And Pompeo said that any Iranian banks involved in “sanctionable behavior will be sanctioned by the Department of Treasury, period, full stop”.

The European Union has established a mechanism to permit its multinational companies to maintain presences in Iran, but all signs are that the US sanctions will be dissuasive. Both Airbus and Total have announced plans to leave Iran.

A first set of sanctions announced 7 August prompted European automakers Daimler and PSA to quit Iran.

To continue exporting crude oil, Iranian tankers in recent weeks have been turning off their transponders to avoid detection. But satellites have continued to track them

With reporting from AP

- © AFP 2018