The past few weeks have been a challenging period for Iran, both at home and abroad. The regime is facing a variety of obstacles and growing opposition to its policies, actions, and to its rule. This is not the first time that Iranian leaders have faced this sort of situation, however, the present geopolitical climate does not favor Iran. Unless Tehran moves swiftly and favorably on at least one front, the trend will not change.
Iran’s leadership is pinning its hopes on salvaging the Iran nuclear deal, believing that this will help reverse its fortunes of late. The future of the deal is very much up in the air at the moment. In spite of the European Union striving to keep the current deal alive, there’s no guarantee that anything substantial will stem from the effort. The US withdrawal from the deal has complicated matters for both Iran and the EU. Tehran has said it will live up to the terms of the nuclear deal if the EU is able to counteract US sanctions. A prime concern for Iran is that sanctions will have an adverse effect on its oil industry, and subsequently, on its economy as a whole.
With the US giving consideration to imposing new sanctions on Iran, a number of European companies are thinking hard about pulling back from Iran. This has led to claims by Iranian government officials over the weekend that the EU is clearly not doing enough to keep the nuclear deal alive. Next Friday, a meeting will be held in Vienna between representatives from Britain, Germany, France, China and Russia to discuss the future of the deal after the US withdrawal. According to Iranian Deputy Foreign Minister Abbas Araqchi, his nation will also be taking part in Friday’s talks.
Time is working against Iran at the moment. On Monday US Secretary of State Mike Pompeo is expected to lay out a potential US plan to force Iran back to the negotiating table. The plan will address not only Iran’s nuclear program, but its activity in other areas such as involvement in Syria, Yemen, and its escalating proxy war with Israel. If a US plan comes to fruition and gains traction, Iran’s options will narrow, forcing the regime to contend with the rising amount of international pressure in a less cooperative fashion.
While in Argentina over the weekend, Secretary of State Rex Tillerson remarked to reporters that the imposing of oil sanctions and restrictions against Venezuela’s oil sector is now on the table. US oil sanctions are considered the nuclear option and would close off Venezuela’s economy to the single source of dependable income it has left. US and international sanctions already in place against Venezuela have not had the intended effect. If anything, the moves have emboldened Venezuelan strongman Nicolas Maduro to dig in his heels and go for broke. In January, 2018 Maduro announced he will be seeking a new term in office. The presidential election has been scheduled for 30 April of this year and with the majority of opposition candidates and leaders banned from running, Maduro is expected to skate to an easy victory.
If the presidential election proceeds, and the Trump administration imposes an oil embargo in response, the impact on markets, supply, and output will be significant. 2018 has seen an overall tightening in the oil market and a supply disruption now is sure to cause reverberations that weren’t felt when there was a crude superabundance. If Venezuela faces an oil embargo its economy will collapse entirely and that could cause an undesirable chain of destabilization among its neighbors, and other Latin American nations. The prospects of sanctions bringing a scenario like this to life are real. Caribbean nations rely heavily on cheap Venezuelan oil and have resisted Tillerson’s calls for a hemisphere-wide effort to challenge Maduro. US, Mexican, and Canadian oil officials, and diplomats are forming a working group to try and find an alternative to Venezuelan oil for nations in the Western Hemisphere that are reliant on it at the present time.
President Trump favors harsher sanctions against Venezuela, though its uncertain if he’s willing to turn to his nuclear option just yet. As mentioned above, the current sanctions in place have not motivated Nicolas Maduro to begin the reform process. If US efforts to create an anti-Maduro coalition show signs of success between now and the end of April, expect the Trump administration to begin thinking seriously about oil sanctions, or an outright embargo against Venezuela by 1 May.
A confidential United Nations report suggests North Korea is exporting commodities in direct violation of the international sanctions that have been levied against the Pyongyang regime. The report, submitted by a panel of experts to the UN Security Council, accused North Korea of exporting, or attempting to export oil and other commodities that are prohibited in resolutions, from January to September, 2017. A host of multinational oil companies are also under investigation for their roles in supplying petroleum products to the North, although no specific company names were revealed.
According to the UN report, North Korea has netted $200 million from the shipment of banned commodities. False paperwork, evasive techniques, and circuitous routes were employed to cover up the North’s involvement, but it was not enough. Evidence of military cooperation between North Korea and Syria to develop the later’s chemical weapons capabilities was also discovered.
It’s unlikely that the UN will penalize Pyongyang with additional heavy sanctions with less than a week to go before the start of the 2018 Winter Olympics in South Korea. The North has made overtures to South Korea in recent weeks, and will be sending a team of athletes to the games in Pyeongchang. The UN is not about to rock the boat when North Korea has been making the effort (albeit a self-serving one) to behave itself. If the Security Council even whispers about sanctions between now and the beginning of the games it will be a PR jackpot for the North Koreans.
Consequently, do not expect North Korea to face penalties for the sanction violations. There remained a bit of hope in the UN that sanctions imposed by the Security Council might pave the way towards a turn around by Kim Jong Un. That is not going to be the case. With the sanctions so easy to circumvent, no incentive exists for the North Korean government to behave, let alone even care if the sanctions remain in place or not. And it is not as if the UN Security Council is in any position to enforce the sanctions when two of its members are not so clandestinely enabling Pyongyang to skirt a number of the sanctions now in place.
Until recently it has been generally accepted that the greatest threat to Poland lay to the east in the form of the Russian Federation. Under Vladimir Putin’s leadership, Russia has responded decisively to what it perceives as NATO and European encroachment of its traditional sphere of influence. Russia’s involvement in the Ukraine crisis following Euromaidan and the subsequent War in Donbass can be linked directly to its fear of NATO or the European Union co-opting Ukraine and molding it into a pro-West nation-state. Moscow cannot let this happen for a variety of reasons. As the fighting in Ukraine reached a stalemate, Russia began to shift its attention to the Baltics and its former satellite states in Eastern Europe. Russian military exercises set around the periphery of the Baltics and Poland, coupled with NATO military deployments to the region heightened tensions, and made the prospect of a future Russian-NATO clash in Poland seem a reasonable scenario.
While Russia remains a clear threat to Poland, its status as the greatest could be facing some competition. A newer menace to Poland and its sovereignty is developing in Brussels at the headquarters of the European Union.
The EU and Poland are moving towards a confrontation that could prove to be a crucial test for the Union. The right wing Law and Justice government in Warsaw has undertaken a series of moves that the EU regards as a challenge to EU principles. Even though Poland remains a proper democracy in every regard, the government’s attempts to reform the voting system, and judicial system rub Brussels the wrong way. Added to this is Poland’s refusal to accept refugees as part of the EU attempt to distribute asylum seekers from North Africa and the Middle East across Europe.
In December, the European Commission invoked Article Seven of the Lisbon Treaty, giving Poland three months to reverse its judicial reforms or face EU sanctions. This action projects the current differences as being a matter of the EU bullying Poland because it does not approve of the domestic decisions being made in Warsaw. Brussels claims otherwise, of course, but the fact remains that the European Union wants Poland to reverse its reforms and come in line with the supra-national body’s principles. In short, the EU seems determined to punish Poland for what it views as Polish defiance.
The brewing confrontation fits in well with a project on Poland I’m in the process of planning. Later this week I’ll post about it and then separately next week provide a deeper analysis of the EU-Poland rift.
As Venezuela remains perched on the brink of dissolution and Venezuelan President Nicolas Maduro continues stripping away the last remnants of democracy in the once vibrant land’s government, the United States has decided to begin hitting Maduro where it hurts. On Friday, it was announced that President Trump has signed an executive order imposing new sanctions on Venezuela. These will focus on Venezuela’s outstanding debt which has been a major economic vulnerability for the country. Venezuela, and its state-owned oil company PDVSA, owe international investors upwards of $100 billion. Sixty percent of the debts were issued in the US and are subject to US law. The new sanctions will stop Venezuela from borrowing money from international capital markets. They will also Maduro’s government from refinancing existing debts that are coming due later in 2017, likely setting up a financial crisis for Maduro to contend with in the fall.
The nuclear option for the United States has always been to prevent Venezuela from exporting oil. The chaos such a move could unleash on international energy markets makes it unpalatable to say the least. The sanctions ordered on Friday are a workable alternative to the nuclear option. For example, Citgo, which is PDVSA’s US energy company, can continue to sell gas in the US. However, it cannot send its profits back to Venezuela where it could finance PDVSA, and the Maduro government.
The next move for the Trump administration will be centered around diplomacy. The US has to make certain that nations like China, and Russia do not step in to fill the financing void that US sanctions will create. More importantly, Maduro needs to be informed that fiscal collapse can be headed off by restoring Venezuela’s democratic institutions. Washington has hinted at this possible scenario, but so far Maduro has not reacted to it. For his part, Maduro has launched a counterattack against US sanctions, and it is aimed at a domestic audience. “All they’re trying to do to attack Venezuela is crazy,” he said on Friday. “With the efforts of our people, it will fail and Venezuela will be stronger, more free, and more independent.”
In essence, Maduro has brought a knife to a gunfight. He is fighting an economic battle with nothing more than stale socialist rhetoric. Behind the scenes, he is likely hoping for intervention by China or Russia to keep his socialist paradise from going down the tubes completely. If that doesn’t come about, Maduro and Venezuela will be dangerously short on options and time.