Iran promises to "break" sanctions as the US reintroduces the oil ban

Iran promises to "break" sanctions as the US reintroduces the oil ban

Iranian leaders struck in Washington on Monday as the Trump government raised economic sanctions to its highest level.

The punishment indicated a surge in tensions between Washington and Tehran as the Trump government banned oil imported from Iran and sanctioned more than 700 Iranian banks, corporations and individuals in the recent phase of a pressure campaign.

Iranian President Hassan Rouhani appeared on national television to denounce the action and demanded indefinite countermeasures.

"Unfair sanctions violate the law, US resolutions and international agreements. That's why we'll be proud to break the sanctions, "said Rouhani.

"It will not be just words," he added. "Action means putting pressure on the US so it does not dare to continue with its conspiracies."

As sanctions escalate, the US has also taken a number of measures to mitigate their impact on countries around the world that have reopened their doors to trade with Iran since the 2015 Iran nuclear agreement came into force. President Trump withdrew from the agreement in May, said it was inadequate, and introduced new sanctions to force Iran to embark on a new and more far-reaching deal that Iran has rejected.

The government temporarily released eight governments from US sanctions against the purchase of Iranian oil.

China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey received waivers that would allow them to continue the temporary import of Iranian crude oil without imposing sanctions, said Foreign Minister Mike Pompeo.

The exemptions allow these governments to continue buying Iranian oil for 180 days, with the option of an extension if governments take steps to eventually stop such purchases.

The Trump government also issued a shorter waiver for Iraq so that it can continue to source power from Iran. The government will also allow Iraq to buy Iranian natural gas as long as the proceeds from natural gas are used for humanitarian purposes.

When the US imposed economic sanctions on its country, Iranian President Hassan Rouhani said Iran would bypass the measures and "repent of the United States" to reinstate them. Photo: AP

In addition, the US has decided to temporarily allow the temporary continuation of international non-proliferation efforts at three Iranian nuclear sites – Arak, Bushehr and Fordow – to ensure oversight and safe operation.

Finance Minister Steven Mnuchin said the new sanctions show that the Iranian regime "will face increasing financial isolation." [it fundamentally changes its] destabilizing behavior. "

Iranian Foreign Minister Javad Zarif equated the renewed US sanctions with bullying, but said the move was backfiring as five other parties to the nuclear deal signed in Iran in 2015 remained in the deal following Trump's truff withdrawal in May. "The US – and not Iran – are isolated," he wrote on Twitter.

Mr. Zarif also ridiculed the US action and wrote on Twitter that the sanctions targets were a six-year closed bank and a ship that had sunk last year.

Iran's international sales have declined by a third in the second round of sanctions against the economy.

Nonetheless, the government officials want Tehran's exports reduced to zero, threatening to punish anyone who violated its oil-free embargo.

Countries that import Iranian crude and have no US waiver risk US sanctions that prohibit Americans from doing business with their companies and blocking access to the US financial system.

The recipients of the waiver welcomed the US decision to apologize for the time being.

Ruhsar Pekcan, the Turkish Minister of Commerce of Turkey, said the US waiver was "an important, positive step," but noted that Iran is a major supplier of oil and natural gas, and suggested that Washington create other tensions between the two nations including US tariffs, tackle steel imports.

The Turkish authorities also hoped that the government would resolve a protracted US case with a Turkish government lender

Halkbank
,

US authorities suspect that Iran escaped a previous sanction round. Halkbank officials have denied the allegations.

The extension granted to Greece would become the largest refinery in Greece

Greek kerosene
,

Greek officials declared to repay debt to Iranian companies.

Hellenic Petroleum agreed to buy oil from the National Iranian Oil Co. in 2016. This was the first sale of Iranian crude to a European country as sanctions were lifted.

The agreement was part of an agreement that allowed the company to repay at least € 500 million ($ 569 million) in debt owed to Iranian companies before sanctions were imposed by the European Union.

South Korea's renunciation will allow Seoul to "continue its imports of Iranian crude oil to ensure a stable supply of condensate," the government said, adding that it would continue to export articles to Iran that are not subject to sanctions.

The South Korean exemption was settled in a telephone conversation between Mr. Pompeo and South Korean Foreign Minister Kang Kyung-wha on October 29, the South Korean government said.

In Italy, a government official said that the government has been granted a temporary derogation allowing Italian companies to conclude their contracts with Iran.

Chinese and Indian embassy officials did not respond to a request for comment. US representatives for Taiwan refused to comment. Japan said it still has no comment.

The Trump administration also took measures on Monday to threaten the global financial news service Swift, which allows cross-border transactions for financial institutions to divest some Iranian banks of their services.

Swift said it would block access to Iranian banks.

"This step, while regret

has been seen for the sake of overall stability and integrity of the global financial system, "he said.

Swift is required only by US law to end some of the 70 blacklisted Iranian banks and financial institutions that have been blacklisted by the Ministry of Finance – those accused of links to weapons of mass destruction, terrorist groups and human rights abuses.

Swift's decision will not only contribute to the political and financial isolation of Tehran, but will also increase Iran's trade and financing costs and make international transactions much more difficult.

Iraq was a challenging case for the Trump administration. The US is competing with Iran for influence in the country and is eager to support the new Iraqi Prime Minister Adel Abdul Mahdi and his new President Barham Salih.

However, some Iraqi cities near the Iranian border receive their electricity directly from their neighbors. Iraq also imports a considerable amount of natural gas from Iran to generate electricity.

US officials said Iraq has only 45 days to import electricity from Iran. American officials expect Iraq to use this time to become energy independent. These include projects to flarer natural gas and re-export oil from the fields near Kirkuk, which, according to US authorities, could reach 200,000 barrels per day. The US also demands that Iraq take steps to reduce its Iranian influence in the country.

US officials have not said whether Iraq would have more time after the 45-day deadline to meet these demands, but Iraq hopes for an extension.

Iraq will continue to import natural gas. However, Iraqi payments are to be transferred to a trust account in Baghdad to buy humanitarian and civilian goods.

Iraq is negotiating contracts with several US companies to become independent of energy supplies, which was apparently a factor in the Trump government's deliberations.

Write to Asa Fitch at asa.fitch@wsj.com and Ian Talley at ian.talley@wsj.com

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