The days of U.S.-Iranian rapprochement, which peaked at this 2015 conference, are long over
Carlos Barria—AFP/Getty Images
By W.J. Hennigan
November 8, 2018

It is fashionable to argue that U.S. global power is fading, but you wouldn’t necessarily know it from Iran. Over the past six months, President Donald Trump has turned the global financial system into a weapon against Tehran, despite resistance from virtually every major world power, and he is getting results. The policy has triggered an exodus of corporations and financial institutions that would rather abandon their investments in Iran than risk U.S. Treasury Department sanctions. On Nov. 5, Trump’s Administration made its boldest move yet, restoring crippling penalties on Iran’s oil, banking and shipping sectors.

But if American money is talking, and many of the world’s big business players are walking, it’s less clear whether Trump will achieve the ultimate goal of his “maximum-pressure campaign” against Tehran: diminishing Iranian influence in the Middle East.

The U.S. hasn’t been shy about setting benchmarks for policy success. On the day he unveiled the latest sanctions that now target more than 900 Iranian individuals, businesses and banks, U.S. Secretary of State Mike Pompeo told reporters, “The Iranian regime has a choice. It can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble.”

Pompeo said more than 100 companies have already withdrawn from Iran or canceled plans to do business there while over 20 nations have stopped importing Iranian oil, “taking more than 1 million barrels of crude per day off the market.” Saudi Arabia, Iran’s archenemy, has increased its oil production to near record levels amid U.S. pressure to keep prices down; international crude-oil futures touched a three-month low of $71.18 early in the week as expectations of shortages faded.

French energy giant Total, Danish shipping giant A.P. Moller-Maersk and French carmaker Peugeot are among the growing number of businesses to flee Iran under the threat of U.S. sanctions. And in a remarkable show of American financial supremacy, the Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, said on Nov. 5 that it would suspend an unspecified number of Iranian banks from its systems, essentially unplugging Iran’s already anemic economy from the international banking industry.

Tehran has seen the value of its currency, the rial, collapse to record lows of 189,000 to the U.S. dollar–a nearly 80% drop since January. In an economy based on petrodollars and heavy importing, most Iranians have lost much of their wealth as prices soared for everything from daily goods to cars. Sporadic protests have popped up throughout the country because of the economic free fall. “We are in the economic war situation,” Iranian President Hassan Rouhani said during nationally televised remarks after the sanctions were unveiled. “We are confronting a bullying enemy. We have to stand to win.”

 

For all the economic pressure, Iran may yet pull off a victory, for a simple reason: much of the world is ambivalent about the U.S. moves. The Trump Administration’s efforts target Iran’s pursuit of ballistic-missile technology and its support for proxy militias in Yemen, Syria and Lebanon, which other nations agree are destabilizing the region. But the U.S. sanctions violate the Obama Administration’s 2015 deal with Iran, which brought Tehran’s nuclear program under tight control. Everyone from China to the U.K. has opposed breaking the nuclear deal to penalize Iran’s regional bad behavior.

Tehran, which for its part has complied with the 2015 agreement despite the U.S. pullout, is seeking to split other countries from the U.S. by salvaging a deal with its remaining signatories: Russia, China, Germany, Britain and France. There is some indication it is working. On Nov. 5, the U.S. granted waivers to China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey to allow them to continue buying Iranian oil despite America’s sanctions. Pompeo explained that the “temporary” exemptions were meant to avoid a major spike in world oil prices.

While the U.S. says such moves show diplomatic finesse and give it cards to play, even Administration backers say wavering international support could undermine the U.S. effort to bring Tehran to heel. Richard Goldberg, a sanctions expert who helped draft Senate bills that toughened the 2015 deal, said the Administration’s moves on Iran are important “first steps” but that Trump must “continue to build pressure day after day nonstop.” Says Goldberg: “Otherwise, the regime will adapt and find ways to evade.”

And as the 2015 deal showed, getting Iran to back down requires a unified front. “The only thing the Iranian leadership deems more dangerous than suffering from sanctions is surrendering to them,” says Ali Vaez, the Iran project director at the International Crisis Group. Which means the Trump Administration may yet learn that in the Middle East, at least, there is a big difference between wielding power and achieving results.

Write to W.J. Hennigan at william.hennigan@time.com.

This appears in the November 19, 2018 issue of TIME.

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