It was inevitable, two of the grand standing countries, run by autocratic Muslims, would see their currencies implode faster than a meteor streaking across their horizons going head to head with the mother of all tornadoes. Iran’s currency is now in the midst of an extreme desert vortex sucking the life out of it. The desert kingdom, once known as the Persian empire is feeling the spirited wind of President Trump; the value of their currency vanishing under the sun is no mirage. Citizens are protesting en masse.
Turkey, no friend of the United States, has run amok of the West; the result has been a whirlwind that has sucked up everything in its path. Hardest hit has been the implosion of their currency. There is no stopping its demise as the drooling Erdogan continues to lambaste the West and Israel. But soon, he will heel like the dog he is. His ascension to the Turkish presidency with unlimited powers has created a rift with NATO and particularly the United States. A schemer of all sorts, making love to Putin while on his knees, is taking Turkey down the third world path to devastation.
Turkey keeps rates unchanged. It was not exactly clear how the inflation outlook with improve if the central bank will not increase rates, prompting some to ask if it was dictator Recep Erdogan – who has been vocally against highest rates and who recently made himself de facto head of the central bank – who wrote the statement.
As a reminder, traders have been worried that after President Erdogan appointed his son-in-law to the Finance and Treasury, while taking more control over the central bank, his influence would prevent the central bank from hiking further, even if they gave him the benefit of the doubt. They are no very disappointed.
Meanwhile, as a result of the aborted tightening, Turkey’s inflation is set to soar even more: June’s inflation data saw the Y/Y rate rise to 15.4% from 12.1%, the highest print in 15 years.
Indeed, on Wednesday morning, even before word of the impending sanctions began to appear in US media, Turkish President Recep Tayyip Erdogan responded to earlier complaints from US officials—most notably President Donald Trump and Vice-President Mike Pence—about Brunson’s continued detention.
Apparently, Erdogan did not comprehend how serious the White House was. He claimed that Turkey had an independent judiciary, while he affirmed, “We will not give any credit to this type of threatening language,” which comes from an “evangelist (Mike Pence), zionist mentality.”
News reports of the US sanctions then sent Turkey’s currency tumbling to historic lows, even before they were formally announced. Dr. Aykan Erdemir, a former Turkish lawmaker and now senior fellow at the Foundation for the Defense of Democracies, suggested to Kurdistan 24 that the “biggest impact” of the US sanctions “will be on Turkey’s economy, which is on the verge of a meltdown.”
The Iranian Mules (mullahs) are changing their turbans by the hour – sweat pouring out of them like a camel unloading in the desert heat. Other Iranians chose to yell out glorifying eulogies to the late Persian monarch Reza Shah Pahlavi, during whose reign Iran enjoyed a prosperous economy and secure living conditions. Addressing Iran’s intrusive regional policy and the spending of national resources on military excursions and ambitions for hegemony, some demonstrators affirmed that their lives are dedicated not to Gaza, nor Lebanon, but only the homeland Iran.
First Wave of Resumed Iran Sanctions Targets Automobiles, Currency, Gold
As part of the United States’ withdrawal from the Joint Comprehensive Plan of Action (JCPOA), the US Treasury Department will restore sanctions on a number of key Iranian sectors and activities on August 6.
Here’s what you need to know about this set of sanctions:
What is the JCPOA?
The JCPOA or Iran nuclear deal is a 159-page document agreed to on July 14, 2015 by the five permanent members of the United Nations Security Council—Britain, China, France, Russia, and the United States—plus Germany with Iran. It traded curbs on Iran’s nuclear program for sanctions relief from the European Union, United States, and United Nations. The JCPOA went into implementation on January 16, 2016.
US President Donald Trump announced on May 8 that the United States would withdraw from the deal—despite Iran’s continued compliance—and re-impose all sanctions lifted under the agreement because of perceived deficiencies in the deal including Iran’s pursuit of “destablizing and malign activities” that the United States and its allies oppose.
What are the Trump administration’s stated goals for a new Iran deal?
President Trump has claimed that the United States is open to a new agreement with Iran. Secretary of State Mike Pompeo on May 21 publicized a twelve-point plan aimed at making Iran a “normal” country by ending its uranium enrichment program, its ballistic missile program, and its support of militant proxies in the Middle East. In return, Pompeo offered a complete lifting of US sanctions and normalized diplomatic and trade relations.
Many observers saw the plan as unrealistic and it was rejected by the Iranian government as a thinly disguised effort at regime change.
What Iran sanctions will snapback on August 6?
According to the US Treasury Department, the following sanctions will be re-imposed:
“Sanctions on the purchase or acquisition of US dollar banknotes by the Government of Iran; sanctions on Iran’s trade in gold or precious metals; sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes; sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial; sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; sanctions on Iran’s automotive sector.”
The United States will no longer import Iranian-origin Persian carpets and foodstuffs such as pistachios, and export or re-export commercial airplanes as well as services and parts.
What companies have already left Iran?
The Trump administration gave foreign companies and the foreign subsidiaries of US multinationals ninety days to wind down their business with Iran. In anticipation of the sanctions, over a dozen major companies have already left the country. They include Boeing, General Electric, Maersk, Peugeot, the Reliance refining complex, Siemens, and Total oil and gas. The Trump administration claims that over fifty international entities and firms have committed to leaving Tehran.
What happens if a company doesn’t comply?
The Trump administration has repeatedly said that it “will not hesitate” to penalize US and foreign businesses that don’t comply with re-imposed sanctions on Iran by blocking them from doing business in the United States. In June, US officials from the State Department and Treasury Department met with foreign counterparts in Europe and Asia to explain the new sanctions policy.
What is the European Union doing?
The EU has promised to try to keep the JCPOA alive, despite the accord being in “intensive care.” It has sought to provide channels for trade to continue, but has conceded that it cannot force private businesses to remain in Iran. Several European countries—including Britain, France, and Germany—have also requested “broad exemptions” for their companies. However, the Trump administration has so far rejected these requests.
What has been the impact in Iran?
The Iranian economy, also burdened by corruption and mismanagement, has taken a nosedive since the US withdrawal from the JCPOA. While the Iranian currency has also gone into free fall. The rial is now worth less than 100,000 to the US dollar, although it has recovered slightly from an all-time low of 117,000 rials after President Trump offered to meet his Iranian counterpart without preconditions.
The Iranian people will suffer under the weight of sanctions, while the Iranian government scrambles to find alternatives means to keep the country afloat.
How will Tehran respond?
The Iranian government has shown no indication that it will surrender to the Trump administration’s demands any time soon. The upper echelons of the Iranian government also reacted negatively to Trump’s offer to meet, widely believing that they wouldn’t get anything in return and demanding that the US first return to the JCPOA. However, some Iranians don’t see the harm of President Hassan Rouhani talking to Trump.
Holly Dagres is editor of the Atlantic Council’s IranSource blog, and a nonresident fellow with the Middle East Security Initiative in the Scowcroft Center for Strategy and Security. She also curates The Iranist newsletter. Follow her on Twitter: @hdagres.