On August 6, the first round of mostly non-oil US sanctions against Iran kicks in.
This was the key 90-day moment that US President Donald Trump spoke of in his May speech leaving the Iran nuclear deal.
There will be another round of mostly oil sanctions in November that in some ways may hurt Iran far more, but August 6 is already viewed as bringing the world into a new reality. Companies and countries all over the world are having to realign their policies and business as the sanctions kick in.
How much of a game-changer are these sanctions following Trump’s leaving the Iran nuclear and what happens next between the US and Iran?
This week only muddied the waters.
Following the whirlwind offer of talks – and rejection of talks – between the Trump administration and Iran this week, almost all that can be said with any certainty is that observers should hold on to their seats.
With characteristic unpredictability and dizzying tactics, Trump one moment seemed to be threatening to bomb Iran into the Stone Age, and the next moment offering a presidential summit to negotiate with no preconditions.
Iran quickly rejected the offer. Then multiple Trump aides quickly rejected the idea that Trump had made the offer or qualified the offer so completely such that they rendered the offer meaningless.
What was Trump’s sudden offer of talks about?
Was Trump having second thoughts and looking for a way out of his original brinksmanship strategy? Did he just want to feign flexibility in order to be able to claim that he tried to talk to Iran, before he escalates further? Was he so excited by his near-term summit success with North Korea that, on a whim, he just figured he would try the same tactic with Tehran?
There are no clear answers yet. And the truth is that while this exchange dominated the headlines and could hint at some unexpectedly more cooperative outcome down the road, at this stage it seems like it could also be a passing whim with little significance.
Several items relegated to the back pages of less prominent publications probably gave a more serious forecast about what is to come.
There was a report that, even as China, Russia and India are backing Iran despite US sanctions and the cost that backing Iran will incur, South Korea has preemptively massively cut oil imports, even before the sanctions have kicked in.
This is something to watch.
Though the EU has made lots of noise about wanting to support the Iran deal and keep it alive with a variety of actions, many experts say that given a zero-sum choice, the EU will have to choose business with the US over business with Iran. The likelihood of this only increased with movements of the EU and US trying to deescalate their trade wars.
If the EU does abandon Iran, as many EU businesses have already done on their own, Asia is Iran’s last bulwark to keep its economy running.
There were news reports about Iran’s currency continuing to be devalued as the impending sanctions take their toll.
There are periodic reports of ongoing protests against the government, given the worsening economic situation and protests against ongoing Iran’s adventurism in the Middle East, using up state funds which Iranians want to see invested at home.
But there is no real indication that the regime is in danger.
The more specific that Trump officials have gotten about regime change, the more exposed the holes and inadequacies in the plan appear to be.
This is not to say that many parties globally might not hope for regime change – only that many experts say such an outcome is unlikely and that it is unclear what the strategy is if that does not work out.
THERE WAS some concern about Iran’s recent announcement that it finished a new facility to manufacture rotors for more advanced IR-6 uranium centrifuges.
Some experts viewed this as a potential game-changing threat, since models of how fast Iran might breakout to a nuclear weapon are generally based on the idea that it would be using less-advanced centrifuges.
If it uses more advanced centrifuges, could six to 12 months until breakout suddenly become a few months or less?
Yet, other experts viewed the threat as still more Iranian mere saber-rattling to try to outmaneuver the US in the current conflict over Iran’s nuclear program. They said that merely building more rotors at a facility, which was itself old news, and without actually using the rotors to assemble a new army of IR-6 centrifuges, fell far short of a major escalation.
At the end of the day, despite Iranian threats, the country has stayed in the deal for close to three months since the US left. This is despite it having no clear economic guarantees from Europe to prop up its economy – guarantees which months ago it demanded immediately.
The Islamic Republic has also stayed in the deal despite its past promises that if the US left the deal it would immediately leave.
On one hand, Iran wants and needs the deal economically.
On the other, most experts say it is unlikely the US can quickly crack Tehran’s resistance to new concessions or bring about regime change.
What seems to connect all of these disparate reports and trends is that the US and Iran have been playing chicken for three months already, and even as things escalate leading into August 6, there still seems to be a stalemate.
Some thought that the Mossad’s appropriating Iran’s secret record of its nuclear weapons program and giving it to the world would turn the tide and break the stalemate. They thought maybe this would lead the IAEA or other countries to turn up the pressure on the Islamic Republic.
In that light, it is interesting that the IAEA recently visited an Iranian university connected with the nuclear weapons program. It is also interesting that a former Iranian atomic energy chief criticized the government for endangering national security by allowing the visit.
But this is likely also no more than a blip. The IAEA may be trying to show a bit more backbone to keep the deal together, but it is likely too little, too late to get the Trump administration to back down. The IAEA certainly has not had a change of heart and accepted Israel’s narrative regarding Iran’s nuclear program.
So if nothing has yet broken the stalemate, even with August 6 hovering nearby, what will?
It needs to be remembered that Iran plays the long game. Experts have suggested that Tehran might not yet have even decided what its real red lines are and when and where it might show flexibility.
Just as Trump may have been thinking about North Korea this week when he made the summit offer, Iran may want to sit back and watch whether Pyongyang or Trump blinks first in the current standoff between the sides that may derail those talks. It may want to know the outcome there before it decides its real position.
If that situation takes months or even some years to develop – and if Iran can stay afloat with Asia’s support – maybe it will keep waiting to decide.
In the meantime, the more the Islamic Republic hurts from sanctions, the more it might push the envelope on the nuclear deal’s limits, while trying to avoid overtly leaving the deal.
And if Trump blinks in the meantime for lack of patience, all the better from the ayatollahs’ perspective.
This means that short of Trump or Israel setting a dramatic military ultimatum or Iran moving much closer to a real economic collapse (not just generally hurting economically), August 6 is more likely to be a marker for aggravating tensions than an endpoint.
In that case, the current stalemate or game of chicken may draw out for quite a while.