The Trump Administration’s Waivers to Eight Jurisdictions

and 11.13.18
Samira Bouaou/The Epoch Times
World News /13 Nov 2018
and 11.13.18

The Trump Administration’s Waivers to Eight Jurisdictions

Earlier this month, the Trump administration re-imposed sanctions on Iran that were in place prior to the Joint Comprehensive Plan of Action (JCPOA)’s implementation in 2016. Fearing a spike in oil prices, however, the administration granted waivers—or as Washington’s chief diplomat Mike Pompeo called them, “temporary” exemptions”—to eight nations: China, Greece, India, Italy, Japan, South Korea, Taiwan, and Turkey.

As the US aims to curb Iran’s nuclear and missile programs while countering Tehran’s regional ascendancy, the “toughest ever” sanctions, as the Trump administration refers to them, are meant to help achieve these goals. Yet many details of the waivers are still unknown. How much oil can these jurisdictions still import from Iran and under what conditions can they make deals with the Iranians?

Despite these unknowns, Washington’s motivation for granting these waivers is clear. Uncertainty surrounding the Trump administration’s indecisiveness on the question of Iran’s exports, combined with ongoing supply cuts from Venezuela and other producers, had kept the oil market in a worrisome state for the last few months, causing an upward trend in oil prices as the sanctions deadline approached. As a result, Brent prices climbed to $85 on October 9, a record for last two and half years. Major OPEC members such as Saudi Arabia and Iraq, in addition to Russia on the other hand boosted their production to balance the deficit while simultaneously competing for the market share vacated by loss of 700 thousand to one million barrels of Iranian crude. But as the deadline approached the administration was still unclear which path it wanted to pursue. To bring Iran’s exports to zero or to pursue Obama-era policy of significant reductions? It is now clear that the administration opted for the incremental policy by granting the waivers.

The fact that the announcement came on the same day when early voters hit the polls across America for this month’s midterm election, it is now clear that the administration opted not to risk spurring the oil markets to avoid any unpleasant surprises on the election day. But waivers also mean that the administration has agreed (or are currently negotiating in China’s case) to the mandatory caps on Iranian crude imports, which are like the Obama-era waivers. US Secretary of Treasury Steve Mnuchin already made it clear that the reductions would be more drastic than previous waivers and Iranian exports would be eventually brought to nil, in contrast to Obama administration’s goal of reducing Iranian exports to one million barrels a day.

The administration is also ambivalent about the end goal regarding Iran. Trump who hinted about the regime change in Iran in August, recently affirmed his readiness to come to the negotiation table with Iran. However, the administration has also made it clear that if the negotiations happen, nuclear disarmament will not be the only item on the agenda. Unlike the previous administration, which was exclusively focused on preventing Iran from obtaining nuclear arms, Trump also aims to counter Iran’s efforts to expand its influence across the region, reiterating that behavioral change by Iran will serve as a prerequisite for any possible deal.

The administration is also closely watching how these eight jurisdictions behave in terms of their perceptions of sovereignty over energy imports and exports in addition to which of these eight are conducting non-dollar transactions. As some members of the eight such as China and India continue their energy business with Iran, the idea of sovereignty while adhering to sovereignty as an extension of jurisdiction. In other words, sovereignty has a wider mandate than jurisdiction and that might play into these sanctions.

The process of de-dollarization in terms of procedure and scope will be a challenge to the Trump administration if the phenomena accelerates next year. Essentially, legal arguments and pressure points are being developed by all sides in order to navigate through crippling sanctions without having to relinquish access to Iranian oil. It is likely that this battle will be played out throughout 2019 as the supply and demand equation continues to evolve with Iranian oil technically off market due to US sanctions.

Optimistic oil production forecasts from the United States for 2019 will certainly embolden Trump’s push for more assertive policy in respect to Iran. Around 2.5 million barrels of additional crude are expected to come from these countries in 2019, more than enough to offset potential Iranian crude losses. Thus, oil supply-demand balance for the near future is expected to drive the administration’s policy with respect to the Islamic Republic.

As soon as the White House is confident that cutting Iranian exports to zero will not spike prices, the Trump administration will attempt to enforce the “zero export” policy. Yet how the politics of sanctions against Iran play out is difficult to predict at this juncture. In the case of Turkey, President Recep Tayyip Erdogan has asserted that this country will refuse to abide by the sanctions which he said are based on plans for “unbalancing the world.” Regarding China and India too, it is unclear when they would actually bring their imports of Iranian oil down to zero, and how/when “maximum pressure” from the Trump administration will come down on them. Yet, ultimately when the “temporary” period in which these waivers grant exemptions ends, these eight jurisdictions will probably have to decide between trading with Iran or with the United States, the world’s largest economy.

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