White House reimposes oil, shipping and banking sanctions on Iran with limited international support

Reporting from Washington —  The Trump administration announced plans Friday to reimpose sweeping sanctions on Iran’s shipping, banking and oil industries and vowed “severe consequences” against any country or company that violates them, a move that has roiled relations with U.S. allies.

The aggressive array of sanctions will go into effect Monday, a day before the midterm election and six months after President Trump withdrew from the landmark Iran nuclear accord.

Unlike the global coalition that forced Iran to abandon its nascent nuclear program in 2015, the White House has struggled to gain broad diplomatic support for its decision to slap back all the U.S. sanctions that were lifted as part of the disarmament deal.

In a sign of the patchwork support, the administration granted temporary waivers to eight nations to allow them to continue importing Iranian oil. The group reportedly includes several major U.S. allies, including Japan, South Korea and India.

Russia suggested it would deliberately defy the U.S. sanctions, saying it will continue importing Iranian oil and trading it to third countries, and may expand its dealings.

Secretary of State Michael R. Pompeo said the U.S. sanctions — the second round since May — were aimed at “fundamentally altering” Iran’s behavior and would deprive Tehran “of the revenues it uses to spread death and destruction around the world.”

The White House argued that the sanctions will cause such hardships that Iranian authorities will be forced to reopen negotiations and ultimately abandon their ballistic missiles and stop bankrolling militant groups across the Middle East. Iranian officials quickly rejected that notion.

“The possibility of America being able to achieve its economic goals through these sanctions is very remote and there is certainly no possibility that it will attain its political goals through such sanctions,” Iran’s Foreign Ministry spokesman, Bahram Qasemi, told state TV.

Iranian President Hassan Rouhani, a strong supporter of the nuclear deal, called on Europe, Russia and China to quickly enact plans to “compensate for and mitigate the effects of America’s newest unilateral and extraterritorial sanctions.”

The White House decision is expected to be the focus of state-sponsored commemorations in Iran this Sunday of the anniversary of the 1979 takeover of the U.S. Embassy in Tehran by Islamic militants.

The sanctions announced Friday target major sectors of the Iranian economy, such as energy, shipping, shipbuilding and finance, including the Central Bank of Iran. In all, more than 700 individuals, vessels, aircraft, banks, companies and other entities were put on the U.S. blacklist — 300 more than before.

“Any financial institution, company or individual who evades our sanctions risks losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies,” said Treasury Secretary Steven T. Mnuchin, who joined Pompeo on a conference call with reporters. “We are intent on ensuring that global funds stop flowing to the coffers of the Iranian regime.”

Mnuchin also said that Swift, the Brussels-based financial messaging service that connects banks worldwide and facilitates money transfers, could be subject to sanctions if it worked with Iranian institutions on the U.S. blacklist.

Officials said they aim to cut Iran’s crude oil exports by 1 million barrels a day, a little more than half the current output, which had already dropped due to earlier U.S. sanctions.

Over the last six months, U.S. officials have lobbied allies and other countries that import Iranian oil to shift to other sources before the sanctions hit, and have threatened to punish those that do not comply. But they have achieved only partial success.

More than 20 countries cut their imports of Iranian oil to zero, according to the White House, but some of the biggest consumers of Iranian oil, including China and Turkey, have not significantly reduced their imports, U.S. officials said.

The White House moved to reassure energy markets that cutting Iran’s exports in half would not disrupt global supplies. It said U.S. oil production would increase by 1 million barrels a day over the next year.

In addition, the U.S. special representative for Iran, Brian Hook, said Saudi Arabia has complied with a U.S. request to step up production of oil to help compensate for any shortages caused by removing Iran’s output from the market.

When Trump pulled out of the nuclear deal in May, he called it “defective at its core” because it did not address Iran’s production of short- and medium-range ballistic missiles and its support for militant groups in Lebanon, Yemen, Iraq and Syria.

The deal was negotiated with Iran by the five permanent members of the U.N. Security Council, plus Germany, and all except the United States want to keep it intact — and to avoid the U.S. sanctions. The European Union announced in September, for example, that it was setting up private mechanisms to trade with Iran.

Diplomats described that effort as largely symbolic, however, intended to show support for Iran and give it incentive to remain in the nuclear deal. Most major European companies that began doing business in Iran after sanctions were lifted, such as the French-owned Total energy conglomerate and Volvo of Sweden, have departed the country.

“The Iran deal is dead in the water,” said Nile Gardiner, a fellow at the Heritage Foundation, a conservative think tank that opposed the deal and advises the Trump administration on foreign policy. “The United States has shown it’s a steamroller and either you get out of the way or you get steamrolled.”

The Trump administration claims its efforts have worsened Iran’s economic crisis and caused its national currency to plunge, factors that have stirred national unrest.

“Trump is showing his disdain for the Iranian people through these sanctions,” said Trita Parsi, founder of the National Iranian American Council, a nonprofit group in Washington that supported the nuclear deal. “They will bear the brunt of this escalation, not the Iranian government. Iranian hospitals are already starting to report medical shortages as a result of financial sanctions that make banks reluctant to handle Iranian transactions.”

Tehran announced last month it would sell oil in a private market to anonymous customers to protect them from U.S. punishment. The system appears difficult to sustain and susceptible to corruption, but Iran said a first sale was made on Oct. 29.

The danger for the U.S strategy is that at some point Iran may decide to revive its nuclear program, rather than returning to the negotiation table in a weakened state, as the White House intends.

European governments have assured Tehran they will stay by its side as long as it remains in the deal. If Iran starts to enrich uranium or rebuild its nuclear infrastructure, the Europeans say they will join the United States.

Federica Mogherini, the high representative of the European Union for foreign affairs, decried the U.S. decision to reimpose sanctions. Lifting them under the nuclear deal, she said, was designed “to have a positive impact on trade and economic relations with Iran, but most importantly on the lives of the Iranian people.”

Special correspondent Ramin Mostaghim contributed from Tehran.

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UPDATES:

3:30 p.m.: This story was updated with additional details and reaction from Iran.

7:20 a.m.: This story was updated with the announcement of the oil sanctions.

This story was originally published at 3 a.m.