Iran On the Ropes?

I confess that even after I boarded the Trump train–basically, when no alternative was left–I didn’t imagine that Trump would prove to be a foreign policy genius. But isn’t that what we are seeing? Improving our trade deals, finally doing something about North Korea, standing up to Putin’s Russia, pushing back against Chinese theft of intellectual property, exposing anti-Semitism and fecklessness in the U.N., getting more contributions from NATO allies–it’s been a heck of a year and a half!

Then there is Iran. Barack Obama pursued a bizarre Iran policy, from the first days of his administration, when he went on Iranian television. His view, apparently, was that strained relations between the U.S. and Iran were mostly our fault–never mind that incident at the embassy that stretched on for more than a year–and really, the U.S. and the mullahs’ “Death to America” Iran are natural allies. So he tried to build Iran up as a regional power, supplying pallets of cash and ultimately something like $100 billion in exchange for promises that can be revoked at will.

Donald Trump’s policy is, thankfully, entirely different. He has withdrawn the U.S. from Obama’s foolish agreement, and is imposing new sanctions on Iran’s radical regime. Most important, probably, he is rallying a natural coalition of Sunni Gulf states plus Israel to check Iran’s (and Russia’s) ambitions in the region.

How is it going so far? AFP reports:

Iran’s currency hit a record low on Sunday of 100,000 rials to the dollar amid a deepening economic crisis and the imminent return of full US sanctions.

100,000 rials to the dollar isn’t Venezuela territory, but it is getting there. Just a few more orders of magnitude to go!

The rial has lost half its value against the dollar in just four months, having broken through the 50,000-mark for the first time in March.

In other words, in response to Trump’s policies.

The government attempted to fix the rate at 42,000 in April, and threatened to crack down on black market traders.

Good luck with that. Price fixing has never worked anywhere, but socialists and mullahs will never give up on it.

But the trade continued with Iranians worried about a prolonged economic downturn turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop.

Interesting. That means that Iranians who have a little cash are betting against the regime.

With banks often refusing to sell their dollars at the artificially low rate, the government was forced to soften its line in June, allowing more flexibility for certain groups of importers.

The handling of the crisis was one of the reasons behind last week’s decision by President Hassan Rouhani to replace central bank chief, Valiollah Seif.

Iran, like Venezuela, shuffles the deck chairs by firing the head of the country’s central bank. Which will make zero difference.

So, what is causing Iran’s financial crisis?

The currency collapse was encouraged by the US announcement in May that it was pulling out of the 2015 nuclear deal, that lifted certain sanctions in exchange for curbs to Iran’s atomic programme.

The US is set to reimpose its full range of sanctions in two stages on August 6 and November 4, forcing many foreign firms to cut off business with Iran.

So Iran’s current problems are only anticipatory.

Is Donald Trump a foreign policy genius? I assume not. But still: if he were, how would his moves over the last 18 months be different?

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