Iranian President Hassan Rouhani announced on Wednesday that Iran will withdraw partially from the landmark nuclear deal of 2015. Iran’s decision to reduce its commitments to the Joint Comprehensive Plan of Action (JCPOA), known as the P5+1 agreement, comes as a reaction to the U.S.’s attempts in recent weeks to reduce Iran’s oil exports to zero. As a response to U.S. sanctions, Iran is demanding that the remaining signatories of the deal — the U.K., China, France, Germany and Russia — ease the restrictions on its banking and oil sectors in the next 60 days. In case the five endorsers of the deal decide not to act in favour of Iran, the authorities of Tehran will remove the caps on uranium enrichment levels and resume work on the Arak nuclear facility.

Iran’s plans are very clear, and they put an end to long and laborious multilateral negotiations which put strict limits on Iran’s nuclear activities in return for lifting most international sanctions. Undoubtedly, Iran’s decision comes as an expression of loss of patience with a deal that is providing very few of the promised economic benefits. But by resuming its uranium enrichment operations, Iran could be taking a huge risk, putting at danger its diplomatic relations with Europe and playing the game of the Trump administration that has been taking a hard line against Tehran.

U.S. threatens to impose more sanctions on Iran

Consequently, Iran might be economically isolated, but the message coming out from Russia is that Iran is not alone. The Kremlin has joined Tehran to accuse the U.S. of retreating from the nuclear deal, while approving Iran’s rolling back of some of the terms of the deal due to pressure from the U.S. Of course, the Russian gesture is not without some long-term interests for the Kremlin. U.S. sanctions against Iran will certainly result in the development of cooperation between Moscow and Tehran, but also with countries like Turkey which are important to American foreign policy.

This said, the goal of the Trump administration in applying the new series of sanctions is likely to hit the earnings of Iran’s major metals companies, such as Mobarakeh Steel and the National Iranian Copper Industries Company. This will have an immediate impact on the Iranian government’s revenues, but it will also deteriorate the balance sheets of Iran’s heavily indebted metals and mining companies. No doubt, this situation will be followed by mass unemployment, especially among blue-collar workers employed by state-owned enterprises who form the backbone of Iran’s economy.

It is no secret that last year the 2.5-million-strong government workforce did not get a raise while prices accelerated. To this end, the Trump administration’s “maximum pressure” policy on Iran aims directly to stoke social unrest in Iranian cities by creating labour strikes (in the Polish style of Solidarity back in the 1980s) within the metals industry. For Donald Trump and his aides, the outcome of their confrontation with Iran is clearly to deprive the Iranian regime of the funds it can use to impose its hegemony around West Asia, but also to put pressure on the everyday life of Iranian citizens. From the Trump administration’s perspective, the economic malaise in Iran should stoke protests sooner or later. But does this mean the beginning of the end of the regime of the Ayatollahs?

Things are more complex than they might appear. If we take a close look at the geostrategic situation of West Asia, Iran’s threat to violate the JCPOA is a very worrisome decision. Let us not forget that from Iran’s perspective, Mr. Trump’s America is considered a rogue state. As for the Trump administration, it considers the Islamic regime in Tehran as its Enemy Number One in West Asia. The recent announcement by John Bolton, Mr. Trump’s National Security Adviser, that the U.S. was dispatching an aircraft-carrier strike group and bombers to West Asia to protect American allies and their interests is an unmistakable attempt to intimidate the Iranian regime. Over the past few weeks, the White House has intensified its campaign of pressure and threats against the authorities in Tehran and the Iranian Revolutionary Guard Corps (IRGC). In Washington’s eyes, Iran is a rogue state because of its support of militant groups, its violations of human rights, and its pursuit of nuclear-related technologies.

But despite the sanctions, Iran continues to fund its proxies in the region, prepare missile tests and support the Syrian regime of Bashar al-Assad. Thus, at the point where things stand, it is very hard to imagine a turn towards negotiations, although some European countries might continue encouraging a return to diplomatic management of the Iranian crisis. There is little likelihood of any flexibility towards the Iranian regime from the American side till the November 2020 U.S. presidential election. Iran will certainly look for ways to inflict a cost on the U.S. directly or through militia proxies in the region. In that case, the scene will be set for military confrontation between Iran and the U.S.

Last but not the least, if Iran’s leadership is to successfully resist U.S. “maximum pressure”, it must do more than choose the military path. Those who oppose any unilateral U.S. military action against Iran can only hope that the Ayatollahs and the IRGC will not react violently to U.S. forces in the region and to its allies. In case that happens, troubled times are ahead for Iran, West Asia and the global market.

Ramin Jahanbegloo is Director, Mahatma Gandhi Centre for Peace, Jindal Global University, Sonipat

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