Trump re-imposes Iran sanctions: Now what?

The re-imposition of the full panoply of sanctions against Iran has been passed on to the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement marks a high-point for President Donald Trump's foreign policy.

He had long objected to the agreement, which was seen by most analysts as one of the most significant foreign policy achievements of his predecessor Barack Obama.

Now the Trump administration is aiming for maximum pressure against the Iranian regime to make it work again and again.

So what measures exactly are being re-imposed and what will their impact be? Will this mark the final demise of the JCPOA? And what is the real US strategy behind the sanctions effort? Not all of these questions have clear or definitive answers.

The sanctions that are being re-imposed are the most damaging to the Iranian economy – it's targeting its oil sales, its wider energy industry, shipping, banking, insurance and so on. In large part these are known in the trade as "secondary sanctions", in which they are intended to apply to other countries to prevent them from trading with Tehran.

The idea is to dissuade them from Iranian oil, which brings in a huge proportion of Iran's revenue. In addition, sanctions will be imposed on

There will be a sudden collapse in Iranian revenues. Indeed much of the damage has already been done.

The pressure has been building since President Trump's original announcement last May. US officials assert that since then, Iran's daily exports have dropped significantly – by more than one third.

Foreign companies have had to decide in effect what is more important to them: business with Iran or business with the United States. Many major players have already announced the termination of projects in Iran.

Knowing the penalties were coming, many business made their decisions.

Several of Iran's customers may continue to purchase and be granted waivers by the United States to do so. In the past – under the Obama administration – these are known as "significant reduction exemptions" and meant, in fact, that they countries promised to reduce their costs to Iran significantly, then the administration did not seek to punish them for conducting some trade .

This makes good sense as it helps US allies like Taiwan, South Korea and Japan manage their energy problems while falling into line with the broad thrust of US policy. India also got exemptions, and China reduced its purchases under a slightly different arrangement.

The Trump administration has already signed it and has made it so much easier. National Security Adviser John Bolton noted this week that: "We want to achieve maximum pressure (on Iran), but we do not want to harm friends and allies."

Previously, the Trump administration had insisted that oil imports from Iran had to be reduced to zero.

China's Behavior – Beijing is a major trading partner for Tehran – is going to be key. It is possible to continue buying Iranian oil without facing sanctions.

There is a logic here. Is the US really going to hit Beijing with damaging secondary sanctions which would effectively average economic risk, given the difficult state of the trade between the two countries? Probably not.

Uncertainty ahead?

The US must also be concerned about the international stability of the international market, not least given the political uncertainties in Saudi Arabia. Indeed, it is the Saudis who can be expected to pump up the oil in Iranian crude.

A further uncertainty comes from the European Union's efforts to bolster the US sanctions. There is also an alternative payment system that would not involve the US dollar or US banks. But experts in Washington – even those critical of the Trump administration's approach – remain highly skeptical that EU efforts, in the short-term, will make much economic difference.

The general view is that the EU's pronouncements have been predicted to be more powerful to Tehran of their opposition to President Trump's approach. That is not to say that they would not have to face constraints on Iran's missile programs or change in Tehran's regional behavior. But they believe that the JCPOA (remember France, Germany, the UK and the US are all signatories) remains a useful constraint on Iran's nuclear activities and should not be overthrown lightly.

So is the JCPOA now doomed? Not necessarily. Some experts believe that if China and other customers like India continue to buy a reasonable level of Iranian oil and if the EU maintains its political support for the deal, then Iran may possibly stick with it for the time being. However, sanctions may be more important – then the fate of the JCPOA will depend on the complex political battles between moderates and hardliners in Tehran.

All this begs the question: what's really the Trump administration's goal in all of this? Ostensibly it is to bring Iran back to the negotiating table.

But many analysts feel that such a move from Tehran is highly unlikely and the scope of US demands suggests that the Trump administration's real goal is somehow to produce change in Tehran.

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As one expert criticizes the Trump policy told me: "At the end of the day, the problem is the administration has no real plan.They know how to make use of one tool, ie sanctions, but they lack any semblance of a broader strategy. " Jarrett Blanc, a former official who has handled the implementation of the JCPOA, argues that "the US has blown its ability to make credible promises".

So for the future will be a messy situation where it will be reduced significantly. The US will persevere with its current approach to isolate Tehran – but without the international backing that sanctions the scheme of the JCPOA.

Few analysts believe that Iran's foreign policy in the region will change much. They say it is based on strategic and ideological concerns, rather than merely economic ones, and in any case its activities in Lebanon, Syria and Gaza are probably not important enough to trump these other priorities.

Nonetheless the Trump administration is clearly determined to the pressure on Tehran. It especially wants to choke off funding for the Iranian Revolutionary Guard Corps responsible for conducting many of Iran's operations abroad.

This is part of a broader policy of containment if you like, in which Israel (through its actions in Syria) and Saudi Arabia (through its campaign in Yemen) are also involved. But Israel is already running up against problems with Russia, and there is a huge question in the future of Saudi Arabia in Yemen.

So much remains uncertain about the Trump approach. Can he win over allies, might he actually apply penalties to those countries trading with Iran, and how long will the waivers actually have? Just what will be the impact on Iranian society and its politics? And amidst this maelstrom can the JCPOA survive in any meaningful form?

But there is also a longer-term question here about US policy which relates to Washington's growing recourse to the tool of economic sanctions. Many believe that they are being over-used and that the threat of secondary sanctions is counter-productive to other US goals.

It is not just the Europeans: Russia and China are also talking about developing international payment systems.

We could look back – perhaps a decade from now – and say that this was the moment when the utility of US economic sanctions and the diplomatic weapons began to erode.