Strategies in the Time of Sanctions

Raman Swamy

Effective from Monday, the United States has imposed stringent economic sanctions against Iran. The Americans are calling it the “toughest-ever” trade and financial restrictions. Any company or country which continues to do business with Iran can no longer do business with the United States, says Mike Pompeo, the US secretary of state. 

But the question being asked in New Delhi is whether India will be forced to stop importing oil from Iran or whether India is among the handful of US allies which have been given special exemption from strictly obeying Washington’s dictates.

The answer depends on who you ask. Readers of Indian newspapers and viewers of Indian television will reply with the confident rapidity of a high IQ student in college quiz competition - India has been given a waiver. We don’t have to fall in line with the US sanctions on Iran.  Our oil imports will not be affected.

BJP spokespersons will add a political dimension to the answer - India’s relations with the United States are at an all-time high, thanks to the warm personal relationship between our Prime Minister and the US President.  Donald Trump has high regard for Narendra Modi and he fully appreciates how important oil imports are for India’s economic stability and energy security. 

However, the same question put to a western expert on oil politics may elicit a different kind of response - Special waiver for India?  Not really.  In fact, oil imports from Teheran have already been cut down to 300,000 barrels a day from 425,000 barrels a day. The Trump Administration has merely given India some extra time to fall in line with the sanctions. New Delhi has been asked to do so “as soon as possible” or face the consequences. 

In fact, a small number of other countries have also been given some time to adjust and these include US allies like Japan, South Korea, Iraq, Turkey and Italy. The US State Department has made it clear that the “as soon as possible” stipulation applies to each one of them – after which penalties will be imposed unless they bring oil imports down to zero. 

Down to zero. That is the language Mike Pompeo and other US leaders are using. It is the kind of tone that has become Donald Trump’s trademark. America’s closest traditional allies in the European Union find his style infuriating.   They call it arrogant, bullying, dangerous and unacceptable.  

But there is precious little that they seem to be able to do about it, except to wriggle in embarrassment and mutter in protest. When Trump loudly demanded that all NATO members should start paying their dues and contributing to the cost of Europe’s defense, the US President was openly dubbed uncouth and undiplomatic, even a madman with no understanding of international politics.  

Trump stuck to his stand and threatened to cut of US contributions – and eventually the EU countries fell in line, agreeing to cough up two percent of their individual GDP, which was what they were duty-bound to do under the NATO treaty and which has had not been doing for four decades.

Canada - and its charming Prime Minister Justin Trudeau - was shocked when Donald Trump threatened to cancel the regional trade treaty NAFTA, between the US, Canada and Mexico.   According to the US President, it was grossly unfair and needed to be re-negotiated.   Canada, he said, was charging 200 per cent on imports of US agricultural products, including dairy items.  

Justin Trudeau was almost speechless with indignation. We are neighbours, he said, we are America’s nearest, dearest buddies. You can’t do this to us, think of all the ties that bind our two peoples.  

I can and I will, replied Donald Trump. Just cut the farm tariffs and we can continue to be best friends forever.   Which is what happened.  NAFTA was scrapped and replaced with a new United States-Mexico-Canada Agreement (USMCA).   The three North American countries are supposedly back on the best of terms.

That is what Trump does. Emotional blackmail does not work with him. For him, no amount of sentimental talk of old friendships, hugs and kisses in front of news cameras can compensate for what he considers a fair deal. President Macron of France tried it and failed - during his visit to the White House in Washington the young French President indulged in an extraordinary physical interaction with the 70-year-old Trump.   The two held hands, embraced and affectionately brushed off invisible specks of dandruff from each other’s coats - all in front of the whirring cameras of the global media.  It was labeled the biggest bromance in contemporary international relations. 

When it came to the nitty-gritty, the US President put his foot down. No money, no buddy-buddy, he stated plainly.  He proceeded to do exactly what he said he would – much to the horror of western civilization he withdrew from the historic Paris Climate Accord, much to the disgust of his European allies and partners in the Arab world he shifted the American Embassy in Israel to Jerusalem and he went ahead with a summit meeting with the western world’s enemy No. 1 Vladimir Putin.

He also made the planet shiver and quake in fear and dread by threatening to attack North Korea with “fire and fury” - and then took everyone by total surprise by holding a friendly summit meeting with Kim Jong-un in Singapore that dissolved tensions and laid the ground for what could potentially turn out to be a Nobel Peace Prize winning incredible new friendship.

That’s what Donald Trump does.  He has deliberately provoked what his critics are calling a dangerous and ruinous trade war with China - but the parallel signals are that a new fair-trade agreement between Xi Jinping and Donald Trump sometime next year cannot be ruled out. 

The world is slowly and with extreme reluctance beginning to understand Donald Trump the man, the president and his methods.  The sooner India’s rulers and intelligentsia realize not to jump to conclusions on the basis of kneejerk reactions of Trump critics and panic headlines in the fake news media, the better will the chances of taking advantage of the disruptive style of functioning a truly unique American president.  

As far as US sanctions against Iran are concerned, it would be erroneous for India to view it in black and white terms – it would be self-delusional to presume that India has been granted a permanent exemption from bringing trade with Teheran down to zero merely because of a few friendly handshakes at summit level. 

Just as the much-talked-about Wuhan spirit has suddenly evaporated after the meetings which Pakistan Prime Minister Imran Khan held with top Chinese leaders over the weekend, so also India’s much-trumpeted special strategic relations with the United States are more fragile than New Delhi would like to imagine.

Nov 7, 2018

Raman Swamy [email protected]

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