With Trump’s Iran Hammer About to Fall, Who May Seek a Waiver?
(Bloomberg) -- When it comes to buying Iranian oil, Donald Trump has laid down the law for the world: Don’t do it.
Starting next week, the U.S. president will have to decide how to deal with violators. His unilateral sanctions on oil purchases take effect Nov. 5, and they’re supposed to present the world with a stark choice. “Do business in Iran or in the United States’’ is how Brian Hook, the State Department’s special representative for Iran policy, put it last month.
But despite the hard-line approach, it looks like there will be plenty of countries –- including American allies -- either in open violation or seeking waivers. The last time the U.S. imposed similar sanctions, during the Obama administration, China, Japan, South Korea, Turkey, Taiwan and India won exemptions.
This time around, Secretary of State Michael Pompeo says America expects all oil purchases from Iran to “go to zero’’ but also that the administration will “consider waivers where appropriate.’’
It’s not clear whether such exemptions would be announced publicly or agreed to behind the scenes, but a request for waivers will force the U.S. to consider other priorities before deciding how hard to crack down. Here are some countries that could fall afoul of U.S. rules -– and the case they could make for special treatment.
The second-biggest importer of Iranian oil is cutting back –- while signaling that it won’t shut down the trade completely. And India’s government isn’t just buying crude from Iran. It’s also preparing to buy missile defenses from Russia, another sanctionable offense in Washington’s eyes.
But the U.S. has struck a dovish note, saying it can work with India. “Our effort here is not to penalize a great strategic partner,’’ Pompeo said during a visit to New Delhi with Defense Secretary Jim Mattis in September.
That may reflect a key role America envisions for India in the new era of great-power rivalry with China and Russia. India was one of four countries to get special praise from Trump at the United Nations last month. The “Indo-Pacific’’ is becoming the label of choice for a region U.S. officials used to call the “Asia-Pacific,” or just Asia.
South Korea, Japan
America’s two closest allies in Asia are ahead of the curve: Both scaled back their purchases of Iranian crude to zero recently, but that may not last. The South Koreans have officially requested a waiver, and Japanese refiners have pressed their government to do the same.
The U.S. needs both countries to help sustain international sanctions on North Korea over Pyongyang’s nuclear program, arguably the administration’s top foreign policy issue. Any request for an exemption from Seoul or Tokyo won’t be easily dismissed.
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Like India, Turkey is in double defiance, insisting it won’t comply with oil sanctions that aren’t endorsed by the UN and won’t drop its plan to buy advanced missile systems from Russia, despite being a NATO member.
U.S.-Turkey ties were tense over the country’s detention of an American pastor, who was finally freed this month. Turkey is also a central actor in the drama that upended the Middle East this month: the murder of Washington-based Saudi journalist Jamal Khashoggi. President Recep Tayyip Erdogan says he has intelligence about Saudi Arabia’s role in the killing. That could give him leverage with Trump, who’s keen to preserve his Saudi alliance.
But relations are still strained. A senior Turkish banker remains in a U.S. jail for breaking an earlier round of Iran-related sanctions, with major fines still pending. And Erdogan has clashed with Trump on a raft of other issues, spurring the U.S. to impose tariffs.
A major producer itself, Iraq doesn’t import Iranian crude, but it relies on its neighbor for electricity as well as natural gas to fuel its own power plants. Those supplies are vital for a struggling economy, say Iraqi officials who’ve expressed interest in a sanctions waiver.
America has competed with Iran for influence in Baghdad ever since the U.S. invasion in 2003. The latest twist appeared to favor Tehran: U.S.-backed premier Haider al-Abadi lost elections and was ousted this month.
His replacement, Adel Abdul Mahdi, is struggling to fill his cabinet. Washington may see a risk of pushing the fledgling government further into Iran’s arms by getting too tough over sanctions.
The biggest oil importer from Iran, China is a wild card in Trump’s calculations. It’s a competitor, not amenable to the kind of pressures that can be applied to allies. Beijing has rejected the U.S. request to stop buying Iranian crude, Chinese officials say, though it’s agreed not to ramp up purchases.
Cutting the burgeoning commercial ties between China and Iran is probably a task beyond American power. In fact, as European companies quit the Islamic Republic under pressure from Trump, China sees a business opportunity there. Still, Trump is engaged in a broader tussle with China over trade, slapping tariffs on an ever-larger chunk of Chinese exports. Iran sanctions are one possible area where Beijing could offer him a concession.
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