ASSESSMENTS

Iran Faces Bleak Options as the U.S. Turns the Screws

Apr 24, 2019 | 09:00 GMT

Export oil pipelines are pictured at an oil facility on Iran's Kharg Island on Feb. 23, 2016.

This picture shows export oil pipelines at an oil facility on Iran's Kharg Island on Feb. 23, 2016. The United States' harsh sanctions on Iran will certainly incite popular anger as hoped, but it might not be enough to tip the balance against the government.

(STR/AFP/Getty Images)

Highlights

Despite the United States' move to end exemption waivers for Iran's oil exports — the country's economic lifeline — Tehran will continue to make some shipments.
Nevertheless, the robust measures will exacerbate Iran's economic, currency and financial crises as the country struggles to import much-needed food.
Iran's lower and lower middle class will begin to feel economic pain as a result of the sanctions, raising the risk of a humanitarian crisis that would compound the one Iran is already facing because of record flooding.
Hard-liners are calling for a strong retaliation, including Iran's departure from the nuclear deal, but such action would come at a high cost for Tehran.
As part of its campaign of maximum pressure, the United States is likely to allow other waivers to expire without extension and impose even more sanctions on Iran.

The United States' campaign of "maximum pressure" against Iran has been no bluff. In announcing its intention to deprive Tehran of all oil revenue, Washington is moving into uncharted territory, as it previously offered sanctions waivers to importers of Iranian oil. So what does Iran do now? Until now, Tehran has adopted a pragmatic response to U.S. President Donald Trump's harsh stance, remaining within the Joint Comprehensive Plan of Action -- the Iran nuclear deal -- and avoiding other retaliation even if it hasn't benefited economically from maintaining its moderation. But given Iran's bleak economic prospects as a result of the United States' punishing line, Tehran's patience could soon wear thin. An Iranian retaliation in the form of renewed uranium enrichment or attacks on shipping would certainly invite a furious U.S. response, yet it's not clear if Washington's aggressive campaign would ever achieve the United States' ultimate goal: altering Iranian...

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