Iran is no stranger to intense economic pressure. It has weathered U.S. sanctions for nearly four decades, and survived the brutal UN sanctions imposed over its nuclear program from 2010 to 2015. It learned how to avoid sanctions to sell its oil and acquire the products and raw materials it needed to sustain its economy. But the United States has also gotten more adept at cracking down.“Fifteen years ago some guy would set up a company in Dubai’s Jebel Ali port and load stuff from wherever and ship it to Iran and no one would notice,” Farhad Alavi, a sanctions-compliance attorney at the Akrivis Law Group in Washington, told me. “Now the detection systems and knowledge are leaps and bounds ahead.” [...]
To circumvent the banking measures in the past, Iran has tried to conduct transactions in gold or in local currencies, allowing foreign companies to pay for oil and gas with their own money instead of dollars. China and India, for example, set up barter deals to do business with Iran using local currencies, while Turkey conducts some business with its neighbor in lira. The problem for Iran is that businesses abroad rarely want to be paid in Iranian rials, which are plummeting in value. In addition, the United States could demand that local currency or gold transactions also be limited, potentially foiling an ongoing attempt by Iran to build a trading network with Russia and Turkey. “Because Iran had problems with the U.S. central bank, Iran cut separate deals with Russia and Turkey,” Mehmet Koç, a scholar at the Center for Iranian Studies in Ankara, told me. “But the new condition Trump has put is that Iran can’t do business in either dollars or rials.” [...]
While a few countries like the UAE, which long opposed the nuclear deal, may agree to crack down on Iranian financial networks, others will require more costly sweeteners from the United States. China may demand an easing of trade rules, undermining Trump’s other policies. Russia may press for an easing of sanctions over its invasion of eastern Ukraine and meddling in U.S. affairs. Turkey may require a return of the self-exiled scholar Fethullah Gulen, the spiritual leader now living in Pennsylvania and accused of backing a 2016 coup attempt, as well as an end to U.S. backing for Syrian Kurdish militias deemed a threat by Ankara. Iran could also turn to Iraq, Lebanon, Afghanistan, or Syria, where it has local allies.
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