Iran re­opens black mar­ket as Trump im­poses oil sanc­tions

The Washington Times Weekly - - Geopolitics - BY DAN BOYLAN AND GUY TAY­LOR

With Pres­i­dent Trump fi­nally pulling the trig­ger on tough eco­nomic and fi­nan­cial sanc­tions, Iran is gear­ing up to re­vive a black-mar­ket oil ex­port op­er­a­tion that kept the regime afloat the last time Wash­ing­ton en­gi­neered an in­ter­na­tional em­bargo on Ira­nian crude.

The bat­tle of wills could de­ter­mine a crit­i­cal piece of the Trump for­eign pol­icy as the U.S. seeks to im­pose its will on Iran and on its lead­ing in­ter­na­tional part­ners to force a ma­jor change of be­hav­ior in Tehran. Ira­nian lead­ers said last week that the pres­sure cam­paign won’t work.

“We have to make the Amer­i­cans un­der­stand that they must not use the lan­guage of force, pres­sure and threats to speak to the great Ira­nian na­tion — they must be pun­ished once and for all,” Pres­i­dent Has­san Rouhani told a Cab­i­net meet­ing in the Ira­nian cap­i­tal.

While the sanc­tions on Iran’s oil, ship­ping and bank­ing sec­tors mark the most ag­gres­sive move Mr. Trump has made against the Is­lamic repub­lic since pulling the U.S. out of the 2015 Iran nu­clear deal, re­gional an­a­lysts warn that the sanc­tions may take a smaller bite than the ad­min­is­tra­tion pre­dicts.

Iran, they say, has been sub­jected to en­ergy-sec­tor sanc­tions so of­ten over the past three decades that it has de­vel­oped highly re­fined tech­niques to sell bootleg oil and laun­der the prof­its — de­spite West­ern ef­forts to stop such ac­tiv­i­ties.

“They have en­dured so many years and types of sanc­tions that they have bet­ter cop­ing mech­a­nisms than other coun­tries,” said Ah­mad Ma­jid­yar, who heads the Wash­ing­ton-based Mid­dle East In­sti­tute’s Iran Ob­served project.

“While sanc­tions could hurt them down the road, they do not see this is as an ex­is­ten­tial threat that will top­ple the regime,” Mr. Ma­jid­yar said in an in­ter­view. “They are hop­ing the Trump ad­min­is­tra­tion is a one-term pres­i­dency and they can sur­vive this out.”

With­out vig­i­lant global en­force­ment, in­clud­ing po­ten­tial ship in­ter­dic­tions on the high seas, the sanc­tions will fall short of strip­ping the Ira­nian regime of its cash.

“The U.S. now has the le­gal and eco­nomic ar­chi­tec­ture in place to prop­erly ex­e­cute its max­i­mum pres­sure cam­paign,” said Behnam Ben Tale­blu, a sanc­tions an­a­lyst with the Foun­da­tion for De­fense of Democ­ra­cies. “But as is the case with all co­er­cive poli­cies, fol­low-through mat­ters, es­pe­cially when the Ira­ni­ans are brag­ging that they will ‘proudly’ bust sanc­tions,” he said in an anal­y­sis last week.

With Rus­sia, China and key Euro­pean al­lies all say­ing they re­main com­mit­ted to the 2015 nu­clear deal, it re­mains to be seen whether the U.S. penal­ties force them to com­ply or drive their com­pa­nies away from Iran. Some, in­clud­ing France and Ger­many, have gone so far as to es­tab­lish a “spe­cial pay­ment ve­hi­cle” to fi­nance deals with Iran while by­pass­ing the Amer­i­can fi­nan­cial sys­tem.

Ira­nian of­fi­cials, mean­while, will con­tinue scram­bling to prop up a na­tional econ­omy hit badly by an ear­lier round of U.S. sanc­tions, and the U.S. Trea­sury Depart­ment’s ter­ror­ism and il­licit fi­nance en­force­ment teams will hunt Tehran’s ef­forts to trick them.

Dodgy ways to dodge sanc­tions

There is al­ready ev­i­dence that Ira­nian oil sec­tor op­er­a­tives are im­ple­ment­ing tried-and-true eva­sion tac­tics that al­lowed some of the coun­try’s oil to move on the global mar­ket prior to the Obama-era eas­ing of sanc­tions un­der the nu­clear deal three years ago.

One ma­jor chal­lenge for the U.S. is the size of the mar­ket that must be po­liced. World­wide, 4,500 oil tankers carry 2 bil­lion bar­rels of crude per year over al­most 140 mil­lion square miles of ocean, ac­cord­ing to in­dus­try and in­tel­li­gence agency es­ti­mates.

Mon­i­tor­ing such vast quan­ti­ties of oil, ships and area is im­pos­si­ble, an­a­lysts say, al­low­ing for a wide range of smug­gling en­deav­ors, in­clud­ing blend­ing Ira­nian oil with other liq­uid ex­ports that are not sanc­tioned. Tankers are also painted and reg­u­larly change their flags.

Most no­to­ri­ously, “ghost tankers” turn off their geo­transpon­ders and dis­ap­pear from the world’s satel­lite tanker track­ing ma­trix, es­sen­tially van­ish­ing into the mil­lions of miles of open ocean.

Ellen R. Wald, a non­res­i­dent se­nior fel­low with the At­lantic Coun­cil think tank’s Global En­ergy Cen­ter, noted re­ports of ghost ships “turn­ing off [their track­ing de­vices] for longer pe­ri­ods” and paving

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