Middle East

Anger, fear, defiance in Iran at new sanctions

A man carries bags of food in a street in the capital Tehran on July 31, 2018. / AFP / ATTA KENARE

TEHRAN: Iranians voiced anger, fear and defiance Tuesday as the U.S. reimposed sanctions and their leaders dismissed U.S. President Donald Trump’s offer of talks as an act of “psychological warfare.” Trump’s withdrawal from a landmark 2015 nuclear agreement in May had already spooked investors and triggered a run on the Iranian rial long before nuclear-related sanctions went back into force.

“I feel like my life is being destroyed. Sanctions are already badly affecting people’s lives. I can’t afford to buy food, pay the rent,” a construction worker said on the streets of the capital.

The sanctions reimposed Tuesday – targeting access to U.S. banknotes and key industries such as cars and carpets – were unlikely to cause immediate economic turmoil.

Iran’s markets were actually relatively buoyant, with the rial strengthening by 20 percent since Sunday after the government relaxed foreign exchange rules and allowed unlimited, tax-free gold and currency imports.

But a second tranche to return to effect on Nov. 5 covering Iran’s vital oil sector, could be far more damaging – even if several key customers such as China, India and Turkey have refused to significantly cut their purchases.

In a statement Monday just hours before the sanctions went back into effect, Trump said: “The Iranian regime faces a choice. Either change its threatening, destabilizing behavior and reintegrate with the global economy, or continue down a path of economic isolation.

“I remain open to reaching a more comprehensive deal that addresses the full range of the regime’s malign activities, including its ballistic missile program and its support for terrorism,” Trump said.

But his Iranian counterpart President Hassan Rouhani dismissed the idea of talks while crippling sanctions were in effect. “If you’re an enemy and you stab the other person with a knife, and then you say you want negotiations, then the first thing you have to do is remove the knife,” he told state television.

“They want to launch psychological warfare against the Iranian nation. Negotiations with sanctions doesn’t make sense.”

European governments are infuriated by Trump’s strategy, which leaves their businesses in Iran faced with the threat of U.S. legal penalties.

The European Union’s diplomatic chief Federica Mogherini said the bloc deeply regrets the U.S. move.

“We are determined to protect European economic operators engaged in legitimate business with Iran,” she said in a statement co-signed by the foreign ministers of Britain, France and Germany.

Iranian Foreign Minister Mohammad Javad Zarif told reporters the global reaction to Trump’s move showed that the U.S. was diplomatically “isolated.”

But many large European firms are leaving Iran for fear of U.S. penalties, and Trump warned of “severe consequences” for firms and individuals that continued to do business with Iran.

There is also mounting pressure at home, where U.S. hostility has helped fuel long-running discontent over high prices, unemployment, water shortages and the lack of political reform.

Those protests have proliferated over the past week, though verifiable information is scarce due to heavy reporting restrictions. Most Iranians see U.S. hostility as a basic fact of life, so their frustration is largely directed at their own leaders for not handling the situation better.

“Prices are rising again, but the reason is government corruption, not U.S. sanctions,” said Ali, a 35-year-old decorator in Tehran.

Many hope and believe that Iran’s leaders will need to “drink the poison cup” and negotiate with the U.S. eventually. There have been rumors that Trump and Rouhani could meet in New York in September on the sidelines of the U.N. General Assembly – though Rouhani reportedly rejected U.S. overtures for a meeting at last year’s event.

Two countries that have welcomed the tough new U.S. policy are Iran’s regional rivals, Israel and Saudi Arabia.

Israeli Prime Minister Benjamin Netanyahu hailed the renewed sanctions as “an important moment for Israel, for the U.S., for the region, for the whole world.”

Iran’s currency has lost around half its value since Trump announced the U.S. would withdraw from the nuclear pact.

But the last two days have seen an impressive 20 percent rally in the value of the rial after the government announced new foreign exchange rules and launched a corruption crackdown that included the arrest of the central bank’s currency chief.

The new rules mean that exchange bureaus will reopen after a disastrous attempt to fix the value of the rial in April backfired spectacularly with corrupt traders making a fortune out of a mushrooming black market.

 
A version of this article appeared in the print edition of The Daily Star on August 08, 2018, on page 8.

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