U.S. sanctions of Russia/Iran are leaking like a sieve
If you thought Europe was onboard with Washington's efforts to isolate Russia, think again.
Despite ongoing sanctions, Russia/western nation trade volumes continue to grow, demonstrated by the 2018 import growth of western goods, Russia's trade officials reported.
What’s more, according to recent statistics published by the Association of Commercial Seaports of Russia, container goods imports to Russian ports on the Baltic Sea in 2018 exceeded exports — the first time that’s happened in almost five years.
Barclay's predicted that Europe would trigger its 1996 Blocking Resolution to protect its companies from U.S. legal action for doing business with Russia.
If you thought that Europe's and Asia's defiance against the U.S. sanctions of Russia was significant, just wait for the global defiance of our sanctions of Iran.
There will be so many negative consequences for the U.S. that they must be put into a list.
1) New U.S. sanctions will not break Iran because Iran never managed normal trade relations with the West anyway.
The nuclear deal hasn’t delivered more than a trickle of Western investment — and even that is poised to dry up, after US President Donald Trump pulled out of the agreement and said he’ll re-impose sanctions.
To develop its $430bn economy, Iran is being forced to rely on political allies in the east. Trade with China has more than doubled since 2006, to $28bn. The biggest chunk of Iran’s oil exports go to China, about $11bn a year at current prices.
Iran's trade with China is absolutely crucial. Which leads us to point #2.
2) China has no intention of respecting these new sanctions.
While the United States is now urging foreign companies to wind down their operations in Iran, China appears to be doing the opposite. Thursday’s launch of a freight train connection was only the latest measure that Beijing has taken to intensify trade relations with Iran, and there seem to be no plans so far to give in to U.S. demands.
During a media briefing Wednesday, Chinese Foreign Ministry spokesman Geng Shuang said that Iran and China would “maintain normal economic ties and trade.”
...That’s how China has to some extent managed to circumvent U.S. sanctions in the past and would likely be able replicate this time. Rather than trading in U.S. dollars, China and Europe could use their own currencies, for example. There are also plans to create separate funds and banks the United States would be unable to punish for having ties to Iran.
“The more the United States (overreaches), the more other countries are going to look for ways to set up longstanding systems that U.S. sanctions would no longer be able to affect,” said Esfandiary. In other words: Trump’s Iran decision could weaken U.S. sanctions threats in the long run.
China is too big of an economic powerhouse for the U.S. to intimidate them. China has long defied our sanctions of Russia, and they will do the same with Iran.
China is not alone.
3) India has no intention of respecting our new Iran sanctions.
India could revive a rupee-rial payment arrangement with Iran to bail out exporters from the heat of US sanctions that have cast a shadow over any plan to further boost trade with the Islamic nation, exports to which had reversed a three-year slide in 2017-18, trade sources told FE on Thursday. Around 2011-12, a rupee-rial mechanism was put in place where up to 45% of India’s purchases of Iranian crude could be effected in rupees in exchange for items like rice, wheat and medicines that were not sanctioned by the UN.
...India’s oil purchases from Iran, worth around $9 billion, accounted for over 80% of its total imports from the Persian Gulf nation in 2017-18. According to commerce secretary Rita Teaotia, the US move is unlikely to cause any major shift in India’s trade with Iran, as the country had shipped out goods to the Islamic nation earlier even when sanctions were on.
India, like China, has long defied our sanctions of Russia, and they will do the same with Iran.
The difference now is how opposed Europe is to these Iran sanctions.
Russia, China, and Europe all have "shared disapproval" of Washington's move.
4) Europe is prepared for open and coordinated defiance of our sanctions.
Europe is prepared to introduce measures to nullify the effect of Donald Trump imposing sanctions on any non-US firm that continues to do business with Iran, the French government has said.
“We have to work among ourselves in Europe to defend our European economic sovereignty,” Le Maire said, adding that Europe could use the same instruments as the US to defend its interests. Speaking on Europe 1 he added: “Do we want to be a vassal that obeys and jumps to attention?”
He added: “The second avenue is looking at Europe’s financial independence – what can we do to give Europe more financial tools allowing it to be independent from the United States?” One proposal is to set up a purely European finance house to oversee euro-denominated transactions with Iran.
He also proposed a European agency capable of following the activities of foreign companies. Le Maire said he would meet with German and British finance ministers at the end of the month to discuss these proposals.
While these measures are for a specific situation, they will have long-term effects.
Quite simply, our sanctions will permanently damage global dollar hegemony.
5) This is another of a thousand tiny cuts that are killing the petrodollar.
China is positioned to be a chief beneficiary of the U.S. decision to withdraw from the Iran nuclear deal as it would give China leverage to demand oil imports be priced in yuan, several currency experts said on Thursday.
...The People’s Republic stands to benefit if it can use its leverage as the world’s largest importer of crude by insisting that its oil purchases from Iran be priced in yuan.
Oil is priced and traded in U.S. dollars because of the dominance of the dollar-denominated Brent and West Texas Intermediate benchmarks. Pricing imports in yuan would therefore spare China the cost of exchanging dollars, and would increase the use of the renminbi in global financial trade, which could ultimately hurt the dollar’s international clout.
What this trend is leading to is an end to the American Empire.
We've been losing economic influence for a long time, but now we're losing diplomatic influence.
Eventually military influence will end as well.