Iran’s Currency Drops 10 Percent As Hopes For A Nuclear Deal Dim

The US Treasury Department announced the move Friday, two days after Albania, a member of Nato since 2009, broke off diplomatic relations with Tehran after Albanian government computer systems were disrupted, apparently deliberately, in July. The US Treasury statement said the responsible “cyber threat actors” were “assessed to be sponsored” by Iran. Tehran has denied involvement.

Brian Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, said that “Iran’s cyber attack against Albania disregards norms of responsible peacetime State behavior in cyberspace, which includes a norm on refraining from damaging critical infrastructure that provides services to the public.” Nelson vowed the US would not tolerate “Iran’s increasingly aggressive cyber activities.” Esmail Khatib, intelligence minister since August 2021, was also sanctioned.

The Treasury statement made clear that not only US citizens and entities were barred from dealings with Iran’s intelligence ministry and minister but that non-US persons and financial institutions dealing with them could face punitive US actions.

The action was taken under Executive Order 13694, signed by President Barack Obama in 2015 to deal with cyber threats. Given Iran’s intelligence ministry is already under a range of US sanctions, largely over links to regional allies the US deems ‘terrorists,’ the practical effect of the new designation is unclear.

Talks to revive the 2015 nuclear deal, the JCPOA (Joint Comprehensive Plan of Action), have already faced challenges in identifying which US sanctions, imposed since Washington left the agreement in 2018, contravene its terms. Tehran has argued that measures introduced under rubrics like ‘terrorism’ and ‘human rights’ potentially impede it ability to access world markets as required under the JCPOA.

Virtual warfare

Talks to revive the JCPOA under President Joe Biden, who took office January 2021, have not abated a long-running cyber ‘warfare’ between the US and Iran, and between Israel and Iran. Stuxnet, a malicious computer worm first uncovered in 2010 and reportedly developed jointly by the US and Israel, damaged Iranian nuclear facilities.

The US in 2019 refused to comment on reports it had carried out a cyber attack on Iran in the wake of missiles damaging Saudi oil facilities, an action claimed by Ansar Allah, the Iran-backed Yemeni group widely known as the Houthis.

Iran has also suffered hacks of television channels, railway systems, fuel distribution, and prison security cameras, generally claimed by shadowy groups of unknown provenance. The television hacking including the appearance of supportive images of the exiled opposition group the Mujahideen-e Khalq (MEK).

The MEK was moved by the US after 2013 to Albania from Iraq, where it had been allied with Saddam Hussein until the 2003 US-led invasion. The group operates an extensive social media operation from its heavily fortified compound, discourages visitors, and claims to have given up violence.

Reza Shahrestani told Etemad Online Wednesday that in the first four months of the Iranian calendar year (started March 21), Iran’s steel exports dropped by 900,000 tons in comparison with the same four months in the previous year. During March 2021-March 2022 Iran exported a total of 4.2 million tons of various types of steel. The drop has reduced export revenues by $700 million, he said.

“We will lose our markets if this trend continues in the coming months,” he warmed while predicting a total loss of $2.5 billion in export revenues for the whole year if the trend continues.

Shahrestani blamed the government for imposing heavy export duties after steel prices rose in international markets due to the Russia-Ukraine conflict. “They didn't heed our advice no matter how strongly we objected to their decision arguing that Russia was dumping its steel products in international markets by offering huge discount.”

Shahrestani told Shargh newspaper in Tehran in May that Iran’s biggest customers --China, Afghanistan, Thailand and South Korea -- had shifted their orders to Russia as it was offering discounts of 15-20 percent on its steel and the impact on Iran’s traditional markets was already noticeable.

According to a report by the World Steel Association in June, Iran's crude steel production had dropped 17.6% year-on-year in May to 2.3 million tons following a plunge of 20.7 percent to 2.2 million tons in April.

The decline in Iran’s crude steel production in April and May impacted its overall number for 2022. While its production level was normal until end of March, the reduction in that month turned its balance sheet negative for 2022. It produced 11.4 million tons of raw steel in January-May 2022, about 10.8% less than the same period in 2021. Iran is the tenth largest producer of crude steel in the world

Shahrestani also pointed out that few international companies trade with Iran's steelmakers due to US sanctions and the need to circumvent them. “Many European, Japanese, and Korean companies will not trade with us. [On the other hand,] Russia stole our markets with huge discounts when it was sanctioned, and we lost our opportunities.”

He refused to disclose the names of the countries that import steel from Iran despite the sanctions. “Due to the sanctions such statistics better not be published. But many neighbouring countries and countries in the Far East trade with us,” he added.

Shahrestani told Etemad Online that revival of the 2015 nuclear deal (JCPOA) with world powers, can have a positive impact on reviving steel exports.

Domestic demand for steel is currently sluggish because the market is waiting for a nuclear agreement and there is uncertainty about foreign exchange rates, he said. Without a deal the exchange rate the US dollar can jump by as much as 50 percent which can harm the steel industry.

Amid United States' sanctions on Iran's oil exports, steel is one of the main exports earning foreign currency for the government, which faces a serious financial crunch.

Iran has tried to compensate for loss of oil revenue by boosting non-crude exports of petrochemicals and steel in the four years since former US President Donald Trump withdrew from the 2015 deal and imposed oil export sanctions.

In a Saturday rally among his supporters in Wilkes-Barre, Pennsylvania, Trump said, “Iran was dying to make a deal with me. I would have had a deal done with Iran one week after the election.”

Criticizing the possible financial benefits of such a deal for the Islamic Republic, he said that “now we’re going to pay them hundreds of billions of dollars, and they’re going to have nuclear weapons within a short period of time. Honestly, they can’t be stupid; they must hate our country.”

He also denounced Biden’s policies that are "allowing Iran to build a massive nuclear weapon.”

Moreover, Trump praised China’s President Xi Jinping for ruling the Chinese people with an iron fist, remarks that prompted Mohammad Marandi, an advisor-cum-spokesman for Iranian negotiators, to respond. “Your regime has bloodied much of the world with an iron fist,” he tweeted on Sunday. 

Trump concluded by repeating his chorus, saying “Iran, China, Russia and North Korea weren't going to do a thing against us just two years ago,” but now “we're a nation that is no longer respected or listened to around the world.” 

Hassan Rouhani, the only Iranian president who has ever spoken to a US president, was quoted as saying that he had a chance to talk with Trump when he was in New York in 2019. Rouhani talked with Barack Obama over the phone in September 2013. 

On Thursday, September 1, a bipartisan group of 50 US lawmakers sounded the alarm on a looming agreement with Iran,urging the administration to immediately consult with Congress.

In a long unsigned article, IRNA insisted that Iran’s positions in the nuclear talks have not changed and quoted remarks by President Ebrahim Raisi made earlier in the week. It said the president had insisted on four conditions: Removing United States’ sanctions, verification, reassuring guarantees and shelving IAEA demands on safeguards.

Recent optimistic assessments tended to assume that agreement was reached on most of these issues, except the demand of the International Atomic Energy Agency to receive satisfying answers from Tehran on its past undeclared nuclear activities.

IRNA said that based on the four conditions Iran sent its response on Thursday to the EU coordinator of the talks, Enrique Mora and hours later the United States in a “hasty” move called Iran’s response “not constructive”. It claimed that earlier Western sides had agreed that Iran’s demands on lifting sanctions and closing the IAEA file were reasonable.

IRNA specifically cited comments by European Union foreign policy chief Josep Borrell on August 22 that had called Iran’s earlier response of August 15 “reasonable”.

The article concluded by saying that the delay in an agreement is solely due to “America’s internal problems” and “weakness in the Biden Administration's decision making.”

President Joe Biden faces domestic opposition to reviving the JCPOA, but Iran has also insisted on concessions that in some cases go beyond the JCPOA framework.

Mohammad Marandi, who acts as de facto spokesman for the Islamic Republic’s nuclear negotiating team, said in a tweet on Friday that “It's time for the Biden team to make a serious decision.”

Noting that If the United States makes “the right decision, an agreement can be swiftly concluded,” he said that “For the US 'constructive' usually means accepting US terms; for Iran it means a deal that is balanced and protected.”

Iran’s Foreign Ministry spokesperson Nasser Kanaani said early on Friday that Tehran has sent a "constructive" response to US proposals, but the US State Department gave a different assessment.

"We can confirm that we have received Iran's response through the EU," a White House National Security Council spokesperson Adrienne Watson said. "We are studying it and will respond through the EU, but unfortunately it is not constructive,” adding that "Some gaps have closed in recent weeks, but others remain."

Also on Friday, Tasnim news, affiliated with the Revolutionary Guard, quoted Ebrahim Azizi, the deputy chairman of the Iranian Parliament's National Security and Foreign Policy Committee, as saying that the US should decide whether it wants to finalize the agreement or not. “Iran's most important demand is economic benefit,” he said, reiterating that “the safeguard issues must be also resolved and all allegations about Iran's nuclear issue must be dropped.”