Business Leader Says If No Sanctions Iran Can Double Trade With China

Hossein Amir-Abdollahian said on Tuesday that “In response to the new US sanctions, we started pumping gas into hundreds of new generation centrifuges. We acted based on the decision made. The Americans shouldn’t think they can get concessions from Iran at the negotiating table with these measures.”

He described it as startling that the US proposed a resolution in the International Atomic Energy Agency while “we repeatedly received goodwill messages from US President Joe Biden through mediators.” 

On Monday, August 1, the US Treasury sanctioned several companies it said were involved in the sale of Iranian petroleum and petrochemicals.

Announcing Tehran’s latest steps beyond the limits of the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action), Behrouz Kamalvandi, spokesman for the Atomic Energy Organization of Iran, said on Monday that Iran has started pumping uranium gas into hundreds of IR-1s & IR-6 centrifuges as part of its plan to reach uranium enrichment capacity of at least 190,000 SWU (separative work units), a measurement of efficiency in enrichment. Under the JCPOA Iran was allowed only 6,104 SWU and no IR-6s.

Amir-Abdollahian added that Tehran is reviewing the recent proposals by the European Union to take forward talks over renewing the 2015 Iran nuclear deal. The US State Department spokesman has said Washington also is reviewing proposals made by Joseph Borrell, the European Union foreign policy chief.

Foreign Ministry spokesman Nasser Kanaani made the remarks on Tuesday, a day after US Treasury and State Department imposed sanctions on six companies, four based in Hong Kong, one in Singapore, and one in the United Arab Emirates (UAE).

The companies were subjected to sanctions over their links with Iran's government-owned Persian Gulf Petrochemical Industry Commercial company. The Treasury also blacklisted Glory Harvest LPG Tanker for links to Iran. The US said the firms have helped Iran sell tens of millions of dollars in oil and petrochemical products to East Asian countries.

Kanaani was referring to a recent message of condolences by US Special Envoy for Iran Robert Malley who expressed sympathy with the victims and their loved ones affected by the devastating flash floods and landslides throughout Iran.

The Iranian spokesman added that the current US administration’s attitude towards the Islamic Republic does not differ from its predecessor, despite the fact that it has repeatedly dismissed Trump administration’s “maximum pressure” campaign against Iran as a failure.

Despite 16 months of negotiations to revive the JCPOA, Iran has not accepted a proposal, which the US says is on the table. After lax enforcement of sanctions since early 2021, Washington has signaled a new approach.

Kanaani said that the White House’s addiction to imposing sanctions and using them as political leverage exposes the United States’ “imperialistic nature.”

The action – under Executive Order (EO) 13846, signed by President Donald Trump in August 2018 – was followed later Monday by Behrouz Kamalvandi, spokesman for the Atomic Energy Organization of Iran, announcing Tehran’s latest steps beyond the limits of the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action).

Kamalvandi said Iran was feeding fuel into “hundreds” more IR-1 & IR-6 centrifuges – devices used to enrich uranium – as part of a plan for a capacity of at least 190,000 SWU (separative work units), a measurement of efficiency in enrichment. Under the JCPOA Iran was allowed only 6,104 of the less advanced 6,104 and no IR-6s.

The US petrochemical designations came the same day as President Joe Biden and Secretary of State Antony Blinken said they remained committed to restoring the JCPOA. It is unclear whether the Biden administration is trying to increase pressure on Tehran to make concessions in nuclear talks, appeasing domestic critics of the talks, or is moving towards a ‘Plan B’ should it deem the talks over.

‘Tens of millions of dollars’ worth’

The Treasury designations target companies over dealings with Iran’s Persian Gulf Petrochemical Industry Commercial Company (PGPICC), “one of the nation’s largest petrochemical brokers, to facilitate the sale of tens of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iran to East Asia.”

The companies were Blue Cactus Heavy Equipment and Machinery Spare Parts Trading, based in the United Arab Emirates; Farwell Canyon, and PZFNR Trading, both Hong-Kong based; Golden Warrior Shipping, and Shekufei, both based in China; and Singapore-based Pioneer Shipmanagement.

Any assets held by the companies in the US may now be impounded, while persons or entities dealing with them worldwide may be subject to US penalties.

Monday’s action follows criticism of the Biden administration – which it disputes – for allegedly not being assertive against those trading with Iran. Many US ‘secondary sanctions,’ including under EO 13846, give discretionary rather than obligatory powers to the administration.

The Wall Street Journal reported Sunday that the US was pondering designating a British-Iraqi man over the sale of Iranian disguised as Iraqi oil, while the US last month designated companies from China, the UAE, and Vietnam allegedly linked to Iranian petrochemicals.

Iran’s petrochemical exports have held up under US ‘maximum pressure,’ although figures of $12 billion exports in the year ending March 2022 are questioned. Monday’s Treasury statement linked Blue Cactus to Triliance, which it said despite being designated under EO 13946 in January 2020 “remains one of Iran’s most important petrochemical brokers, brokering the sale of Iranian petrochemicals to foreign purchasers.”

Biden – ‘lead by example’

Biden Monday released a statement, ahead of the Tenth Review Conference of signatories of the Nuclear Non-Proliferation Treaty, saying the US as part of a commitment to “lead by the power of our example” had “developed a proposal to secure a mutual return to full implementation of the Joint Comprehensive Plan of Action to ensure that Iran does not acquire a nuclear weapon.”

Blinken said during discussions at the New York conference that the US regarded reviving the JCPOA as “the best outcome for the United States, Iran and the world.” Iran’s foreign ministry spokesman earlier in the day said overcoming differences in long-running talks to revive the JCPOA, which the US left in 2018, depended on Washington.

The US blames Iran for failure to bridge differences, which center on which US ‘maximum pressure’ sanctions violate the 2015 agreement and what steps Iran need to take to return its nuclear program, expanded since 2019, to JCPOA limits.

The overall nationwide point-to-point annual food inflation rate in June 2022 compared with the same period in 2021 was 87 percent, SCI reported last week, but in four provinces the rate reached almost 100 percent.

Most of the price increases happened since early May when the government scrapped a food import subsidy to save around $15 billion annually. The move immediately triggered a massive rise in prices for basic food staples, such as bread, dairy products, cooking oil and meet.

Although the government has repeatedly said its oil exports are steadily increasing despite sanctions by the United States, economic conditions keep deteriorating, with overall annual inflation reaching 54 percent in June.

However, Iran has not made a decisive move to reach a nuclear agreement with the US, which could lift oil export sanctions and boost government revenues.

When the government stopped the import subsidies it promised to issue coupons to people with lower incomes to buy essential food items at lower prices, but so far, no system has been set up to issue coupons.

Aftab News in Tehran said Monday that the government is planning not to issue coupons offering lower prices but aims to limit how much food people can buy. This would create new political tensions even among the hardline supporters of the government. The website adds that food prices will never go down, and on the contrary inflation can only get worse.

Another major problem during US sanctions is the fast growth in Iran’s money supply, which has climbed to upwards of 50 quadrillion rials. That is 50 with fifteen zeros. In free market exchange rate this amount would be around $200 billion, simply because the Iranian currency has lost so much of its value. If we take the exchange rate before the United States imposed sanctions in 2018, the liquidity in Iran would be equivalent to 1.5 trillion dollars.

Mahmoud Jamsaz, an economist in Tehran told Khabar Online news website on July 31 that in the past Iranian year, from March 2021-to March 2022, the government has been printing the equivalent of $15 million a day to finance its budgetary shortfall. That is 3.8 trillion rials every day.

Despite assurances by President Ebrahim Raisi’s (Raeesi) government that it has stopped printing money, Jamsaz insisted that simply the format of government borrowing has changed, not the fact that it is adding to the money supply. This in turn fuels more inflation, impoverishing tens of millions of people who were modest wage earners or members of the middle class, able to live relatively comfortable lives before.

The economist explained that government finances this year are in a worse situation compared to last year, because the budget has been built on two unrealistic revenue projections.

The biggest expectation is close to five quadrillion rials of oil income, twice as high as what materialized last year, while US sanctions are still in place and the war in Ukraine has made Russia a competitive to Iran in the oil market.

The second optimistic figure is tax revenues estimated to be 62 percent higher than last year. This is unrealistic because the economy is not growing to allow so much more tax collection.

This was confirmed by the Supreme Accounting Office of the state in July that said just 15 percent of expected oil revenue came into the treasury from March to May.

Jamsaz, like other economists says that the Raisi government holds “the record in both high inflation and money supply” in nearly three decades.

Spokesman Nasser Kanaani told reporters at a foreign ministry briefing in Tehran that a “series of messages” had been exchanged since European Union foreign policy chief Josep Borrell recently made fresh proposals over efforts to revive the 2015 Iran nuclear deal, the JCPOA (Joint Comprehensive Plan of Action).

“Borrell proposed a text based on previous talks [in Vienna until March between Iran and six world powers], and both sides [Iran and the United States] received it,” Kanaani said. “Iran has passed on its own views. We have witnessed that other sides have also reacted.”

Implying that Borrell’s proposals may concern process as much as substance, Kanaani said there was a fair possibility “in the near future of success in determining a time for new talks.” All depended, the spokesman insisted, on Washington showing “readiness for a logical agreement.”

‘Realm of guesswork’

Kanaani refused to comment on reports that Borrell had suggested a partial agreement under which Iran would receive some sanctions relief over oil exports in return for restoring greater access of United Nations nuclear inspectors. “Let us not enter the realm of guess-work,” he said.

Borrell took his initiative following the failure of talks in June between Iran and the US in Qatar, which failed to bridge differences remaining after year-long talks paused in Vienna in March. The main gaps were reportedly over which US sanctions, introduced after Washington left the JCPOA in 2018, violate the 2015 deal and how Iran’s refined nuclear program would be brought back within the deal’s limits.

Monday’s statement from Mohammad Eslami, head of the Atomic Energy Organization of Iran, that Iran had the technical ability to produce a bomb – while, he said, not intending to do so – reiterated comments made last month by Kamal Kharrazi, a former foreign minister who now advises Supreme Leader Ali Khamenei.

The two men’s remarks reflect progress in Iran’s nuclear program. By enriching uranium to 60 percent, way above the JCPOA limit of 3.67 percent, and introducing more advanced centrifuges banned under the JCPOA, Iran has moved far closer to being able to quickly enrich to the 90 percent purity of ‘weapons grade’ uranium.This would leave only ‘weaponization’ if the Iranian leadership chose that route.

Sanctions and Biden ‘plan B’

Frustration has continued to grow in US political circles that President Joe Biden’s approach to revive the JCPOA is failing. Critics from across the political spectrum have argued the agreement is either dead or in limbo.

The Wall Street Journal reported Sunday that the US was considering upping sanctions on Iran – a move that could be a way of increasing pressure in JCPOA talks or a step towards a ‘plan B’ should the talks be deemed over.

The Journal reported the US administration was considering sanctioning an Iraqi-British man, Salim Ahmed Said, it believed was involved through a network of companies in disguising Iranian as Iraqi oil. In emails to the newspaper, Said denied involvement.

US third-party sanctions, introduced since 2018, threaten punitive action against those buying Iran’s oil or dealing with it financial sector, but implementation remains discretionary. While some US officials have suggested the Biden administration has held back from enthusiastic enforcement, Iran has also developed greater sophistication in evading US scrutiny.

The Journal also quoted a State Department spokesman denying the US was stepping back from action in order to allow more Iranian oil onto the market and dampen the inflationary effects of the Ukraine crisis. Opec+, led by Russia and Saudi Arabia, are not expected to agree any significant boost in production at their meeting due Wednesday.