Pompeo’s trip to Russia also comes as tensions simmer between the two countries over Iran

Pompeo’s trip to Russia also comes as tensions simmer between the two countries over Iran

By A. Kantor

 

U.S. Secretary of State Mike Pompeo arrived in Russia on Monday to meet with American diplomats at the U.S. Embassy in Moscow before meeting with U.S. business leaders. He will also lay a wreath at the Tomb of the Unknown Soldier, in honor of those who fought against the Nazi regime. Pompeo’s trip to Russia also comes as tensions simmer between the two countries over Iran.

The U.S. is strengthening its military presence in the Middle East in what officials said was a “direct response to a number of troubling and escalatory indicators and warnings" from Iran.

When Trump announced the upcoming launch of anti-Iran sanctions, EU leaders condemned the decision and announced measures that should protect the interests of European companies. In May, the European Union countries adopted a blocking decree that prohibits EU companies from executing extraterritorial US sanctions. The document also annuls any judicial decisions on the execution of US sanctions in the territory of the European Union.
Iran is counting on support from China and Russia. The US authorities did not achieve a reduction in oil imports from Iran from China, although Beijing agreed not to increase purchases of Iranian oil. In May, it was reported that if Total decides to withdraw from the project to develop the 11th phase of South Pars, the Chinese CNPC is ready to acquire from a French company a 50.1% stake in the project and become an operator. In March, China and Iran signed a $ 700 million contract to build a railway from Bushehr, which will connect the port with the country's railway system. Futures contracts for oil in yuan were also opened in March. At the same time, it is unclear how far China is ready to go into conflict with the United States - the risk in international relations is generally not characteristic of the Chinese authorities.

Immediately before the imposition of sanctions, EU High Representative for Foreign Affairs and Security Policy Federica Mogherini stated that the EU will continue to develop and increase its economic cooperation with Iran. However, German Chancellor Angela Merkel in May at a meeting with Premier of the State Council of China Li Keqian acknowledged that “sanctions could probably lead to the fact that some European companies will, willy-nilly, be forced to leave Iran. This is due to the recognition of the inability of the European Union to effectively protect the interests of companies in the event of a confrontation with the United States - depriving them of access to the American financial system could be a disaster for them.
As a result, European companies began to leave Iran. According to the US Department of State, about 50 companies have already announced their intention to leave Iran in order to avoid secondary US sanctions. One of the first to do this was French Total, which left the project to develop the 11th phase of the world's largest South Pars gas field worth $ 4.8 billion. This was a strong blow to the policy of Iranian President Hassan Rouhani to attract foreign investment. Total Head Patrick Puianne said: “I cannot manage a company like Total, without access to US capital, American shareholders, without the ability to even come to the US.” In order for Total to maintain its presence in Iran, “it is necessary that there be some kind of relief, but they are unlikely to be,” Puianne admitted.

Total, like Royal Dutch Shell, has stopped buying Iranian oil. Siemens, which has been supplying equipment to Iran for many years, has stopped accepting new orders from Iranian customers. Two major container carriers of the planet, MSC and Maersk Line, also announced the revision of their work plans in the country. The deals that were concluded in 2016 with Tehran by Boeing and Airbus were in doubt.
It is noteworthy that when Iran decided to return 300 million euros in cash from Germany before restoring US sanctions, the German Financial Sector Supervision Agency and the Financial Information Administration launched a check on this transaction for compliance with the law on loans and countering money laundering. The Iranians were planning to withdraw this money from the accounts of the European Iranian Commercial Bank in Hamburg, which is controlled by Deutsche Bundesbank, and then to transfer this money on Iranian airline planes to Tehran. Earlier, US Ambassador to Germany Richard Grenell demanded that Berlin suspend the issuance of cash to the Iranian authorities.

Iran is counting on support from China and Russia. The US authorities did not achieve a reduction in oil imports from Iran from China, although Beijing agreed not to increase purchases of Iranian oil. In May, it was reported that if Total decides to withdraw from the project to develop the 11th phase of South Pars, the Chinese CNPC is ready to acquire from a French company a 50.1% stake in the project and become an operator. In March, China and Iran signed a $ 700 million contract to build a railway from Bushehr, which will connect the port with the country's railway system. Futures contracts for oil in yuan were also opened in March. At the same time, it is unclear how far China is ready to go into conflict with the United States - the risk in international relations is generally not characteristic of the Chinese authorities.
Russia is viewed by the United States as a possible counterbalance to Iran in Syria, a restrictor for the expansion of the Islamic Republic - however, it is an ally of not only Bashar Assad, but also Iran. It seems that Moscow will maneuver in Syria, not going to conflict with Iranian partners, but without preventing Israel from striking their positions. Officially, Russia opposes new US sanctions, but Russian companies, like European ones, do not want to come under sanctions themselves and minimize risks. So, Magnitogorsk Iron and Steel Works, which is the largest Russian supplier of rolled products to Iran, completely stopped its deliveries to this country.

Thus, the most likely scenario for the development of events in Iran is the growth of internal tension in the country and its external isolation. At the same time, there are serious doubts whether the regime will be able to offer adequate measures to stimulate business activity and reduce social tensions. However, even in the event of a deepening of protest activity, it has the potential for existence - but at the same time, a clear overstrain from foreign expansion in the Middle East (in Syria, Lebanon, Yemen) can lead to its forced reduction. Perhaps this is the minimum program of the United States in the Iranian issue.

 

13.05.2019

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