The first round of U.S. sanctions reinstated against Iran this week makes clear to the Islamic Republic the Trump administration’s willingness to financially squeeze the regime until it curbs its destabilizing behavior, according to regional experts.
President Donald Trump on Tuesday warned that firms doing business with Iran would be blocked from the U.S. market as new sanctions hit the country despite appeals from Washington’s allies.
The sanctions are part of a steadily increasing pressure campaign implemented after Trump in May decided to withdraw the United States from the Obama-era Iran nuclear accord that sought to limit Tehran’s nuclear program in exchange for sanctions relief.
The administration will ratchet up pressure on Tehran’s economy in early November when U.S. sanctions on Iranian oil are due to snapback.
The renewed U.S. sanctions go into effect as protests escalate against Iran’s hardline ruling party over its immense military spending, which has crippled an already weak Iranian economy.
Mark Dubowitz, chief executive of the Foundation for Defense of Democracies, said the first wave of sanctions targeting Iran’s automotive sector as well as gold, steel, and other metals will add fuel to the protests.
“The financial and political war against the regime will continue and I anticipate Iran’s predicament will only worsen,” Dubowitz told the Washington Free Beacon.
“Anyone who knows anything about Iran’s behavior knows that the Iranians escalate when they sense American mush and they back down when they perceive American steel.”
Citing a sharp reduction of Iranian missile tests and drop-off in the harassment of U.S. naval vessels in the Persian Gulf by the Islamic Revolutionary Guard Corps, Dubowitz said Tehran has been “more cautious and more reticent” than it was under the Obama administration.
“They fear the application of overwhelming American power, and as long as the overwhelming power is credible, they will be cautious in how they’ll escalate,” he said. “Though one should never underestimate how they may escalate, I think for now they have to be very cautious because if they escalate too egregiously then they risk losing European support, and maybe even Russian and Chinese support.”
Jim Phillips, a senior research fellow for Middle Eastern affairs at the Heritage Foundation, said this second round of sanctions would be more powerful than the first in curbing Iran’s adverse behavior. Still, he said Trump’s move Tuesday served as a necessary step toward breaking away from the nuclear accord.
Despite Trump’s threats of retribution against companies operating in the Iranian market, the European Union on Monday issued a “blocking statute” to protect European businesses from the impact of the sanctions.
U.S. administration officials swiftly dismissed the move.
“Even if [the EU] can protect them in a narrow legal sense, they still won’t be able to keep them from losing potential future business,” Phillips told the Free Beacon. “There’s going to be an opportunity cost that many companies will not want to pay just to stay active in the Iranian market, especially if it’s a smaller contract.”