Iran's Trade With China Could Top $60 Billion Without US Sanctions

The US dollar rose to 280,000 rials on Monday from 260,000 on March 12, when signs emerged that negotiations in Vienna over reviving the 2015 nuclear agreement known as JCPOA were coming to a halt without an agreement.

Last December, the rial hit a low of more than 300,000 against the dollar but it gradually strengthened as hopes emerged of a nuclear deal that would lift US economic sanctions.

The Iranian government news website Monday morning claimed that a “high-level” regional official would visit Tehran on Tuesday to finalize the release of $7 billion frozen by South Korean banks. However, the foreign ministry spokesman immediately denied any knowledge of such a visit.

Any solid sign of blocked funds being released would boost the rial, which has fallen ninefold since late 2017, as former US president Donald Trump signaled his intention to withdraw from the JCPOA and impose sanctions on Iran.

Tehran has been claiming a 40-percent increase in oil exports in recent weeks, which have been partly confirmed by industry observers, but there are no positive signs of a financial windfall in Iran.

The falling currency has kept inflation at around 40 percent for more than a year, with food prices rising much faster, pushing wage earners into poverty. Even government-controlled media have been full of reports lately about food items rising in price to unaffordable levels.

The IRNA report did not mention who the high-level official is but said the visit would be the last step to execute “the recent agreement” to free $7 billion of Iran’s funds frozen abroad because of United States’ sanctions.

But in an unusual and obvious contradiction, foreign ministry spokesman, Saeed Khatibzadeh in his Monday morning briefing with reporters said his ministry had no knowledge of such a visit. Later, he told the media that an agreement to free some frozen funds does exist.

In the past months, there has been talk of unblocking $7 billion frozen by two South Korean banks after the US imposed banking sanction on Iran in 2018. A Korean diplomat visited Vienna in early January where talks to restore the Iran nuclear agreement were taking place, and met with all delegations.

However, IRNA said that “a framework” has already been agreed to free “a considerable part” of Iran’s blocked funds within a certain time period. It was not clear if the gradual release it mentioned would be about the $7 billion, or more money will be released by other countries, such as Iraq and Japan.

IRNA and other Iranian media reported last week that an agreement was reached, presumably with the US, to free the blocked funds, in what appears to be a deal to free dual nationals kept as hostages in Iran.

Washington has not commented on the Iranian reports, but last month the United Kingdom b paid more than $500 million of an old debt to Iran to free two dual nationals who returned to Britain.

Hossein Amir-Abdollahian, who was speaking at a meeting of officials dealing with foreign economic relations in Tehran, referred to Washington’s requests for direct talks with Iran and said that the United States should show goodwill. He emphasized that Tehran had asked the USto release some of Iran’s frozen funds prior to a final nuclear agreement but had received no positive reaction.

Amor-Abdollahian first made a direct demand in September 2021, while visiting New York, for the US to greenlight the release of $10 billion from Iran’s frozen funds.

Amir-Abdollahian once again on Sunday reiterated that Iran stands and will continue to stand on its “red lines” in the Vienna nuclear talks.

“The Americans continuously speak of the need for direct talks with Iran. After examining the issue and considering the views the Americans have, we did not find a benefit in direct talks,” he said. Amir-Abdollahian added, that the US “has not done anything positive” to provide confidence.

The chief Iranian diplomat’s remarks did not seem to be suggesting a new formal pre-condition for an agreement in Vienna, but it did appear that he wanted to emphasize the need for some sort of “goodwill” by the Biden Administration.

The negotiations stalled in mid-March after 11 months of talks among the original signatories of the 2015 nuclear agreement known as JCPOA, apparently because of Iran’s demanded from the US to remove its Revolutionary Guard from the list of foreign terrorist organizations.

At one point in his remarks, Amir-Abdollahian said that talks came to a halt after Russia’s invasion of Ukraine and the Western side told Iran that even if all outstanding issues were resolved, Russia would not agree to finalize a deal. In fact, Russia did make a new demandright before the talks ended in Vienna asking the US for waivers from Ukraine sanctions in its dealings with Iran.

Amir-Abdollahian maintained that instead of showing any goodwill, the United States imposed new sanctions on certain Iranian individuals and companies. He suggested that President Biden could release frozen funds with just one “executive order.”

He repeated that Tehran told Washington, “Not to create hurdles” and delay an agreement. “If our red lines are observed,” we can reach a good and lasting agreement, and now “it is the American side that must demonstrate goodwill,” Amir-Abdollahian said.

He added that the diplomatic path is open and claimed that the three European participants in the talks, the United Kingdom, France and Germany are also unhappy about unreasonable American demands.

The foreign minister emphasized that the people of Iran should know the government is striving for an agreement and lifting of sanctions, but he also repeated government’s policy of self-reliance in overcoming the impact of sanctions.

Iran’s economy continues to struggle amid a 40-percent annual inflation rate and a host of other serious issues mainly caused by US sanctions imposed by former president Donald Trump after he withdrew from the JCPOA in 2018. Criticisms and a general mood of despair has intensified in recent weeks as food prices continue to climb, and the government has no immediate solution to offer.

One report suggested that the United States has refrained so far from sending a counterproposal to Iran regarding its demand that the Revolutionary Guard be removed from the US Foreign Terrorist Organization list as a pre-condition to reviving the 2015 nuclear deal, the JCPOA.

Talks in Vienna that have lasted one year were close to completion at the end of February as the Russian invasion of Ukraine began. But then Iran that was insisting all along for the removal of all US sanctions imposed since 2018, demanded the delisting of the IRGC. The US position in the talks is that it will remove major sanctions related to Iran’s nuclear program, but not other sanctions that are related to terrorism or human rights violations.

Once the issue became public, opposition in the United States grew. Most Republicans and many Democrats openly put pressure on the White House not to delist the Guards, that are known to have caused mayhem in the Middle East by supporting a large network of militant groups, all the way to the Mediterranean shores and beyond.

The opposition made it less likely for the Biden team to agree to Iran’s demand, specially as Democrats face an uphill battle in the November elections.

But a nuance in White House statements leads to the possibility that President Biden might be thinking to delist the IRGC but not its extraterritorial Qods (Quds) Force, which is Iran’s direct arm for building up anti-US, anti-Israeli, and anti-Saudi forces in the region.

An opinion piece by David Ignatius in the Washington Post on Friday mentioned that sanctioning the IRGC in 2019 was somewhat of a controversial issue, as some in the government and outside experts believed the multi-faceted entity was not only Iran’s main military force but also a major player in Iran’s economy and the public sector in general.

But opponents of giving a reprieve to the IRGC argue that separating it from the Qods force would be a wholly artificial distinction, just as trying to distinguish between the political and military wings of Hamas or Hezbollah. The US has traditionally rejected such a distinction.

Frequent Iranian threats directed at the United States and Israel are officially pronounced by the Revolutionary Guard, not just by the Qods Force, which speaks occasionally. Practically, the IRGC might even officially disband the Qods and create another outfit overnight that would carry out the same mission in the region.

The issue is Iran’s anti-West ideology kept alive by Supreme Leader Ali Khamenei who reinforces it in every public speech. Every Iranian government entity is supposed to fight against the archenemy, America, and Israel, according to the official dictum of the Islamic Republic.

Even at the height of improved ties in the wake of the JCPOA, Khamenei declared in 2016 that the Islamic Republic had no intention of cooperating on regional disagreements with main enemy the United States and “evil” Britain. He repeated the same message in November 2017, before former president Donald Trump had pulled out of the JCPOA and imposed sanctions.

The Biden administration, however, believes that the revival of the JCPOA is important to delay Iran’s nuclear breakout timeline, while opponents believe in continuing ‘maximum pressure’ sanctions until the regime is crippled or collapses.

On Thursday, Chairman of the Joint Chiefs of Staff Gen. Mike Milley told a Congressional hearing that he opposes removing the Islamic Revolutionary Guard Corps (IRGC) from the US terror list and believes the Qods Force to be a terrorist organization.

“I’d say that the President shares the chairman’s [Gen. Milley] view that IRGC-Quds Forces are terrorists, and beyond that, we aren’t going to comment on… topics in the nuclear talks,” Deputy State Department Spokesperson Jalina Porter said.

Negotiations that started one year ago in Vienna to revive the 2015 nuclear deal known as JCPOA are in a state of limbo after Iran demanded the removal of IRGC from the US Foreign Terrorist Organization blacklist. The Biden Administration has apparently not made a decision on Iran’s demand.

Most Republicans and many Democratic lawmakers have increasingly voiced opposition to delisting the IRGC, which has created a network of militant proxy groups in the Middle East and threatens US allies.

The nuance in the State Department statement is about whether President Biden considers the whole of IRGC a terrorist organization or is trying to only keep the Qods Force on the terror list and remove the larger organization to reach a deal with Tehran.