Sanctions against Iran about to trigger a trade war with our allies

Trump is preparing to go nuclear on our allies if they don't toe the line on our stupid and unilateral decision regarding Iran.

President Donald Trump threatened "severe consequences" for those who continue to trade with Iran, as administration officials said Monday that newly re-imposed US sanctions are meant to change the regime's behavior, not topple leaders in Tehran.
"The United States is fully committed to enforcing all of our sanctions, and we will work closely with nations conducting business with Iran to ensure complete compliance. Individuals or entities that fail to wind down activities with Iran risk severe consequences," Trump said in a statement about penalties that will go back into effect at 12:01am Tuesday.
A senior administration official said that, "our stated policy has not been regime change, it's been to modify the Iranian regime's behavior."

There's two bullsh*t statements here: a) We aren't "working closely" with anyone. We are just imposing our will like a bully, and b) We obviously want regime change.

In response, our European allies are trying to grow some guts.

The EU will allow European companies hit by new US sanctions on Iran to sue the American government amid concerns Brussels cannot provide adequate protection for companies operating in Tehran.
Under a “blocking statute” first drawn up by the EU in the 1990s, European businesses will not have to comply with the US’s secondary sanctions designed to hit Iranian cars, gold and other metals as of August 7. EU companies hurt by the sanctions can also take the US to court in EU member states for compensation.

It's unlikely that the EU measures will be able to shield these companies, but it is very likely that this will trigger legal challenges and cause a diplomatic break.
It's also expected to cause oil prices to spike above $90, which will probably trigger a recession.

The largest buyer of Iranian oil, China, will flat out ignore our sanctions threat and keep buying.
They key is the second largest buyer of Iranian oil, India. Their plan is a bit more ambiguous.
iran.PNG

What government has said: Foreign Minister Sushma Swaraj at first stated that India only complied with United Nations-mandated sanctions. Then, in June, the oil ministry held a meeting with refiners and asked them to prepare for a scenario of ‘drastic or zero’ imports of Iranian oil from November, Reuters reported. The country is currently trying to find alternative payment methods to enable it to continue buying from the Islamic Republic.

These secondary sanctions are the only way that Washington's unilateral sanctions will have any bite. Despite our being the largest economy in the world, the U.S. does very little direct business with Iran.

A landmark study published in the 1990s by the Peterson Institute for International Economics found that unilateral US sanctions achieved their foreign policy goals only 13% of the time .

The rare instances when unilateral sanctions work involve countries that have extensive trade relations with the US, clearly not the case with Russia or Iran . Russia is low on the list of US trading partners, and Iran has had virtually no economic or commercial relations with the US. Neither country is dependent on US trade or likely to submit to American economic pressure.

There are two dangers from the Iran sanctions.
One problem is that overusing sanctions (and imposing sanctions on many of your allies is de facto evidence you are overusing them) comes with a cost.

Sanctions work because they cut targets off from dealing with U.S. citizens and American financial institutions—a complete severance from the world’s largest economy and its most important financial center. If Washington used this power idly, Lew suggested, it could encourage countries to find partners outside of the United States, and undermine sanctions’ deterrent effect.

Both the executive and legislative branches seem to have ignored Lew.
...At their most effective, sanctions are the product of multilateral efforts to solve clearly articulated, shared global-security concerns. Now they are becoming strident expressions of displeasure from an isolated United States, often wielded in service of domestic partisan priorities—a careless approach that may well neutralize the effectiveness of these powerful tools.

The other danger is deadly serious.

Iran said its Islamic Revolutionary Guard Corps held a naval exercise in the Strait of Hormuz last week "within the framework of their annual training program."
The exercise was held with aim of "controlling and maintaining the security of the international waterway of the Persian Gulf and the Strait of Hormuz, and to proportionately counter any threats by the enemy," semiofficial Tasnim news agency reported.

If Trump actually succeeds in cutting off Iran's oil buyers, then Iran may feel it has no choice but to shut off the Straight of Hormuz.
This would trigger a war, and the U.S. would have very few allies in this war except for Israel and Saudi Arabia. Even if that war could be won (a very big "if"), it would come with baggage.

The only military action that can truly prevent Iran from acquiring a nuclear weapon, then, is for the United States to invade and occupy the country, potentially turning it over to a U.S.-friendly regime that would uphold Iran’s non-nuclear status. Despite the widespread support in the United States for preventing Iran from building a nuclear weapon, this option is almost never proposed by any serious observer.
Part of this undoubtedly reflects America’s fatigue following the wars in Iraq and Afghanistan. However, it goes much deeper than that—namely, while Iran’s military is greatly inferior to the U.S. armed forces, the U.S. military would not be able to conquer Iran swiftly and cheaply like it did in Iraq and Afghanistan. In fact, Tehran would be able to impose prohibitive costs against the U.S. military, even before the difficult occupation began.
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with peace approaching in both Syria and Afghanistan, that we may be about to start the biggest war of all against Iran.

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edg's picture

@gjohnsit

peace approaching in both Syria and Afghanistan

That is why we must start a new war post haste. Can't have our defense contractors suffering a downturn in profits.

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GreatLakeSailor's picture

@gjohnsit

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Compensated Spokes Model for Big Poor.

Pricknick's picture

Stand against our bully or suffer the consequences of a major war in your back yard.
No threat. Just a challenge.

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Regardless of the path in life I chose, I realize it's always forward, never straight.

EU and NATO leaders talked tough about sanctions on Russia starting from the Ukrainian coupe. Once Putin stopped EU agricultural imports in retailiation, the Europeans should have realized that they would pay for Washington's sanctions. The ironic thing is that US sanctions keep the EU dependent on the US economy by stopping them from expanded markets. Wait till Trump shuts down Nord Stream 2.

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ggersh's picture

"IT IS PART OF THE GENERAL PATTERN OF MISGUIDED POLICY THAT OUR COUNTRY IS NOW GEARED TO AN ARMS ECONOMY WHICH WAS BRED IN AN ARTIFICIALLY INDUCED PSYCHOSIS OF WAR HYSTERIA AND NURTURED UPON AN INCESSANT PROPAGANDA OF FEAR. WHILE SUCH AN ECONOMY MAY PRODUCE A SENSE OF SEEMING PROSPERITY FOR THE MOMENT, IT RESTS ON AN ILLUSIONARY FOUNDATION OF COMPLETE UNRELIABILITY AND RENDERS AMONG OUR POLITICAL LEADERS ALMOST A GREATER FEAR OF PEACE THAN IS THEIR FEAR OF WAR." GENERAL DOUGLAS MACARTHUR, 1952

https://jessescrossroadscafe.blogspot.com/

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“Those who choose the lesser evil forget very quickly that they chose evil.”
— Hannah Arendt

@ggersh
you've got a wheel on the road and a wheel in the ditch.

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The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

Pluto's Republic's picture

They are probably pulling the plug as we speak. The US has forbidden them to complete the gas pipeline with Russia, as well. Europe wasn't so much about trade as it was development in Iran: factories, car makers, airline upgrades, alternative energy. However, Iran is a key district in China's One Belt One Road trading zone, so development and infrastructure will come from that quarter. A complete financial structure is now in place as an alternative settlement system for trades outside SWIFT, so that's not really a concern. Neutering US sanctions was the key reason a secondary financial system was built during the past fifteen years. Journalists seem very careful to never mention it, however.

Does anyone know what this refers to — YOUR DEMENTED WORDS OF VIOLENCE & DEATH? Or does Bibi have his arm up Trump's ass moving his lips? So far, I have not seen or heard any evidence of any wrong doing on Iran's part. The US looks psychotic, no?

China and India will continue trade with Iran. India has been trading with Iran for years, using gold. South Asia and Russia, will trade, as well. Turkey will do as it pleases. US sanctions against Iran is an act of war. It's the Neocons final demented dream.

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____________________
It is the way of men to make monsters... and it is the nature of monsters to destroy their makers. — Harlan Wade

@Pluto's Republic

The US has forbidden them to complete the gas pipeline with Russia, as well.

deep in this article

Also absent from both bills is the specific targeting of Gazprom’s Nord Stream II. Trump made reference to the controversial pipeline during the NATO meeting and again in Helsinki. He called Russia a strong competitor in global energy markets. And said that Europe was a market the U.S. wanted to get its LNG into, competing with cheaper Russian gas. Trump said Nord Stream I and II gave Russia the upper hand in Europe. But Nord Stream II is not in the language of
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Pluto's Republic's picture

@gjohnsit

...to the sanctions. There must have been a side negotiation that allowed the Nord Stream II to continue if they went along with the unprovoked attack on Iran's economy. Hope it comes back to bite the white men. It brings to mind a Paddy Chayefsky quote:

You British plundered half the world for your own profit. Let's not pass it off as the Age of Enlightenment.

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____________________
It is the way of men to make monsters... and it is the nature of monsters to destroy their makers. — Harlan Wade

Should Europe decide not to trade with us over being sanctioned for not going along with our sanctions, who blinks first?

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They say that there's a broken light for every heart on Broadway
They say that life's a game and then they take the board away
They give you masks and costumes and an outline of the story
And leave you all to improvise their vicious cabaret-- A. Moore

@Johnny Q
We fall into the Chinese Orbit (we're 8-% of the way already) and Europe falls into Russia's orbit.
Germany once had a goal of energy independence with nukes and solar. What happened?

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

lotlizard's picture

on German voters for years now.

By “sovereignty” they mean a change in governing philosophy along the lines of a German Charles de Gaulle — putting an end to subservience to the U.S. and the “keeping the Germans down” part of NATO’s express founding doctrine.

On that score, it looks like those voices were correct all along. Trump is just making the need for a break obvious to more people.

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