U.S.-Iran Tensions Simmer as Trump and Rouhani Trade Threats

(Bloomberg) -- U.S. President Donald Trump launched a new broadside against Iran, warning of unspecified “consequences” if Hassan Rouhani continues threatening America.

In a Twitter post late Sunday, Trump said, “To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!”

The threat -- similar to ones Trump issued last year in warning North Korea about its rapidly improving nuclear weapons program -- risks leading to a speedy escalation if neither side backs down. Oil rose as tensions over Iran countered growing concerns that trade protectionism would hit economic growth. Brent oil -- the global benchmark -- was trading up 1.12 percent at $73.89 a barrel as of 1:37 p.m. in London.

National Security Adviser John Bolton echoed Trump’s message in a statement Monday morning but cast the threat as directed against actions that might be taken by the Iranian regime rather than rhetoric.

“I spoke to the President over the last several days, and President Trump told me that if Iran does anything at all to the negative, they will pay a price like few countries have ever paid before,” Bolton said in a statement released by the White House.

White House Press Secretary Sarah Huckabee Sanders declined to "broadcast" what actions Trump would be willing to take against Iran or what threat would prompt a response. "He’s monitoring and watching the actions of Iran. If needed, he will take what steps are necessary to protect people in this country and certainly to protect the world from nuclear proliferation," Sanders told Fox News in an interview.

Trump’s tweet came hours after Rouhani warned the U.S. against threatening Iranian oil exports and called for improved relations with neighbors, including rival Saudi Arabia.

“We’re not fighting or at war with any country, but the enemies have to clearly understand that war with Iran will be the mother of all wars and likewise peace with Iran is the mother of all peace,” Rouhani said.

The head of Iran’s paramilitary Basij forces dismissed Trump’s words as part of a psychological war. The U.S. “wouldn’t dare make the mistake of taking action against Iran,” Gholamhossein Gheybparvar was quoted as saying by the semi-official Iranian Students’ News Agency.

The tensions come as the U.S. moves closer to imposing sanctions on countries -- including key allies -- that don’t eliminate or significantly cut imports of Iranian oil by Nov. 4. That effort follows the Trump administration’s decision this year to withdraw from the Iran nuclear accord, which eased economic sanctions on the Islamic Republic in return for restraints on its nuclear program.

‘Hypocritical Holy Men’

Earlier this month, the other participants in the nuclear deal met in Vienna to look for ways to ensure Iran still gets the benefits it’s seeking from the accord despite the U.S. threats. Iranian Foreign Minister Mohammad Javad Zarif called for “practical solutions” rather than “obscure promises.” But world powers were unable to offer concrete proposals, and diplomats have warned there may be little they can do.

The back and forth between Trump and Rouhani also came as U.S. Secretary of State Michael Pompeo delivered a speech in California on Sunday, in which he accused the country’s leaders of corruption and urged European allies to join the pressure campaign against the Islamic Republic. Pompeo said Iran’s leadership is made up of “hypocritical holy men” responsible for “crooked schemes” that have hurt the country’s economy and people.

The top U.S. diplomat added that America stands in solidarity with Iranians and reiterated the November deadline for countries to get their imports of Iranian oil to “as close to zero as possible.” While the administration has said it doesn’t seek regime change, it has repeatedly said that Iran’s leaders don’t have their citizens’ interests at heart.

‘Fake News’

“While it is ultimately up to the Iranian people to determine the direction of their country, the United States, in the spirit of our own freedoms, will support the long-ignored voice of the Iranian people,” Pompeo said in the speech in Simi Valley, California. The audience included Iranian-Americans, Arkansas Republican Senator Tom Cotton -- a leading Iran critic in Congress -- and former California Governor Pete Wilson.

Saying that one in four Iranians listen to or watch U.S. government broadcasts, Pompeo announced that the organization overseeing the Voice of America is launching new Farsi-language channels across television, radio and the internet. It was the only new policy initiative Pompeo unveiled.

“For 40 years the Iranian people have heard from their leaders that America is the Great Satan,” Pompeo said. “We do not believe they are interested in hearing the fake news any longer.”

Citing his own travels to North Korea as an example, Pompeo said it’s still possible for the Trump administration to build a relationship with Tehran, but he didn’t seem optimistic that such an outcome was likely. He said Iran must make a series of changes to become a “normal” country. “That I don’t see happening today, but I live in hope,” he said.

Reagan Speech

Pompeo sought to portray his message Sunday in terms of good-versus-evil, as a major moment in history. He cited President Ronald Reagan’s 1982 Westminster Speech in which he challenged the Soviet Union and warned that its ideology would be left on the “ash heap of history.”

The administration believes that a new maximum-pressure campaign will work with Iran just as Trump and other senior officials believe that the sanctions regime against North Korea drove that country’s leaders to the negotiating table.

A big difference between the two countries is Iran’s oil. It exports hydrocarbons to countries around the world, including China and India, as well as U.S. allies Japan, South Korea and Iraq.

The administration will have to decide how hard to enforce its sanctions. Pompeo and U.S. Treasury Secretary Steven Mnuchin have told European leaders they won’t get waivers. But other countries, such as Iraq, are major importers of Iranian natural gas, and sanctions could strain alliances the U.S. seeks to maintain.

--With assistance from Golnar Motevalli and Terrence Dopp.

To contact the reporter on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, ;Brendan Scott at bscott66@bloomberg.net, Amy Teibel, Glen Carey

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