Daily Close To Khamenei Says Iran’s Higher Oil Exports Give Leverage In Talks

Calling sanctions an “economic assault” Khamenei said that it caused some hardship for the people “but production did not buckle and the spokesman of America’s foreign ministry a few days ago frankly and explicitly announced that the maximum pressure policy has turned into a humiliating defeat for America.”

Khamenei was quoting State Department spokesman Ned Price who in his press briefing on January 25 said, “The maximum pressure campaign was an abject failure,” adding that former president Donald Trump’s policy did not change Iran’s behavior.

Iran’s economy went into a tailspin in 2018, when Trump withdrew from the 2015 nuclear agreement and imposed tough sanctions. Inflation skyrocketed and government budget deficits soared. The sanctions also impacted Iran’s proxy forces in the region, but they continued their destabilizing operations, although they could have been more effective without the sanctions.

In a speech to managers of Iran’s industrial and economic sectors Khamenei reiterated his ideology of self-reliance and called for “economic jihad” in defiance of sanctions, although he admitted that Iran’s economy performed very poorly in the last decade. At the same time, he claimed victory against US sanctions, that he said were meant to foment dissatisfaction among the people.

But as usual, the Supreme Leader blamed presidential administrations instead of the political and economic systems he presides over and his own policy of perpetually confronting the West and regional countries which have good ties with the United States.

Iran’s centralized economy plagued by corruption and mismanagement, as well as under the pressure of oil export sanctions has had zero growth in the past decade. Even before nuclear sanctions kicked in from 2011, its growth on average was anemic at under 3 percent since the early 1980s.

But Khamenei who has been in power since 1989, increasingly relied on loyal hardliners, and resorted to political persecutions and engineered elections instead of allowing a more accountable political system to take root. At the same time, insiders and the military took over the state-run economy using oil export revenues to perpetuate an unproductive system, as they enriched themselves.

In his speech Khamenei expressed disappointment at low GDP growth, lack of investments, a fast-growing liquidity problem leading to inflation and other serious problems the country faces. He emphasized however, that these difficulties are not just due to sanctions but also an outcome of “wrong decisions or lack of effort.”

He then mentioned a series of problems facing Iran’s domestic production sector, such as low quality of products, highlighting the auto industry which has been blamed for high fatalities in road accidents recently. Nevertheless, he reiterated that self-reliance should be the motto.

Khamenei and other insiders in the Islamic Republic system fail to understand or acknowledge that a modern economy can only grow with less government interference, more interaction with other economies, investments and competition. But the Supreme Leader’s domestic quest to reward supporters and continue a confrontational foreign policy, as well as a nuclear program with military ambitions foreclose paths toward economic success.

In a telephone conversation on Saturday, Raisi reiterated Tehran’s position that removal of sanctions, verification, and credible guarantees are the basic requirements for any deal in Vienna.

Raisi told Macron that "the Islamic Republic has already proven its resolve and seriousness for the realization of the agreement”, adding that any effort by the other side should incorporate Iran’s threefold demands.

Raeisi noted that the US itself has admitted that the former administration's decision to leave the 2015 deal and reimpose the so-called maximum pressure campaign had ended in failure.

During the phone call, Macron insisted that a deal is still possible if all parties give clear and sufficient commitments, stressing the need to accelerate the pace of the talk for achieving tangible progress.

The Élysée said Macron condemned Iran-backed Houthis' attack against the UAE, adding that he also expressed concern about the situation of jailed French national Benjamin Brière.

Macron also asked Raisi to immediately release 62-year-old anthropologist Fariba Adelkhah, who has been detained in Iran since 2019 on vague political charges.

The Iranian and French presidents also talked about the situation in Lebanon, where the influence of Iran-backed militant Hezbollah has sparked tensions in the sectarian country.

Speaking to ILNA on Saturday, Hamid Hosseini, a member of the board of directors of the Iran-Iraq chamber of commerce, said that there is no new development in banking relations to release Iran’s funds blocked at Trade Bank of Iraq (TBI).

Eelier in the day, websites close to the government published a letter by the Iranian Industry and Trade Ministry asking all associations of food, pharmaceutical and health industries for a list of priorities to import from Iraq using Iran's foreign exchange frozen at TBI.

Hosseini elaborated that the United States had already issued the waiver to allow Iran to use the money for the import of goods that are not under Washington’s sanctions, and since food and medicines are not sanctioned such transactions have happened several times, including to pay COVAX for buying Covid-19 vaccines.

He added that the US has promised to release some of Iran's resources in Iraq and South Korea, as well as Japan, if the Vienna talks succeed in reviving the nuclear deal, in such a case Iran won’t have to import only food and drug products.

The semi-official Iranian Students News Agency (ISNA) reported November 13 that Iran's assets frozen abroad -- largely for money owed for oil shipments -- totaled $50 billion, with $8 billion in South Korea, $3 billion in Japan, and $6 billion in Iraq.

An informed source told Yonhap on Saturday that working-level consultations to untangle the disputes will take place next month.

Seoul officials say the proposed working groups will go over details of a potential money transfer once sanctions are lifted in case the Vienna talks manage to revive the 2015 nuclear deal, adding that they are also expected to discuss other aspects in the event of a no deal.

"The working groups are expected to mainly discuss details of the payment method of the Iranian assets if the US grants sanctions relief," they said.

The source told Yonhap on the condition of anonymity that the working groups “could talk further on the possibility of resuming oil imports from Iran once sanctions are lifted."

According to the Korea International Trade Association, Seoul stopped purchase of Iranian oil since 2019 due to sanctions that ban the Islamic republic's oil exports.

Two South Korea banks hold $7-9 billion of Iranian money, owed for oil imports, but the funds are locked under US sanctions, which were reimposed after former President Donald Trump in 2018 withdrew from the deal.

Earlier this month South Korea got the green light from the US to pay over $18 million of Iran’s dues to the UN from the blocked assets so that Iran can get back its power to vote.

The Senators, including Tom Cotton (R-Arkansas) and Ted Cruz in their letter dated January 28 told Biden that a growing fleet of non-Iranian oil tankers and buyers such as China are not afraid of US retaliation any longer and are trading in hundreds of thousands of barrels of crude oil a day.

“The vessel owners and their customers in China are taking greater risks because they believe that your administration is too weak and indecisive to punish them for their crimes,” the letter says and accuses Biden of unwillingness to enforce sanctions to keep nuclear talks alive in Vienna.

For the first time in a year, China officially reported in January that it is importing Iranian oil, with US making no public demarche.

The United States imposed partial sanctions on Iran’s oil exports in 2018 when former president Donald Trump withdrew from the Obama-era nuclear agreement known as JCPOA. Full sanctions followed in May 2019, bringing Iranian shipments down to around 200,000 bpd from a high of more than 2 million barrels before the sanctions.

The Republican Senators charged that currently Iran is shipping well over one million barrels per day because, “the boom in oil sales has refilled the Iranian regime’s once-empty coffers, removed crucial American leverage over Iran, and encouraged the Iranians to stall negotiations in Vienna and irreversibly advance their pursuit of a nuclear weapon. It is long past time to stop your dithering. You are putting U.S. national security at risk.”

Arguing that the proceeds from additional oil sales will go to finance the Revolutionary Guard, which is listed as a terrorist organization by the United States, the Senators said, “enforcing oil sanctions against Iran is also enforcing terrorism sanctions against Iran. Bipartisan laws enacted by Congress in 2011 and 2012 targeting Iran’s oil exports and energy sector require the President to enforce these sanctions.”

The Biden Administration has not officially acknowledged that Iran is exporting more oil or that it is not enforcing the sanctions vigorously. If the negotiations in Vienna succeed in restoring the JCPOA, it is expected that oil sanctions will be lifted. Republicans say the talks, which started almost ten months ago are doomed to end either in an impasse or substantial US concessions.

The Biden Administration says its priority and focus is on reviving the 2015 nuclear deal to stop Iran from building nuclear weapons and argues that Trump’s withdrawal from the agreement and its ‘maximum pressure’ sanctions have not stopped the Islamic Republic’s nuclear program or regional aggression.

Earlier in January more than 100 Republican members of Congress wrote to Biden asking him to stop the negotiations and get tough with Iran, which is fast enriching uranium to higher levels.

Iran’s enrichment picket up in early 2021, after Biden said he wants to restore the JCPOA and moved toward opening talks with Iran.

The ten Republican Senators urged Biden to enforce US sanctions, saying, “Each day you delay gives Iran more money to finance their terrorist activity and more time to develop a nuclear weapon. We would also remind you that sanctions against Iran’s oil exports are mandatory and passed Congress with bipartisan majorities. You are not above the law and must stop violating it.”