Will the US’ “Maximum Pressure” Strategy Vis-A-Vis Iran Work?

P 30.04.2019 U Salman Rafi Sheikh

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The US strategy of “maximum pressure” on Iran aims to bankrupt the Middle Eastern country in order to cripple its ability to (successfully) challenge hegemonic pursuits of its arch regional rivals: Israel and Saudi Arabia. While the strategy of imposing sanctions is not new, the idea of forcing all other countries—specifically all of the buyers of Iranian oil—into following the US diktat is certainly being pursued a lot more intensely than has ever been the case in the past. In other words, success of the US policy depends not so much on whether or not the US applies “maximum pressure” on Iran, but on the extent to which it can really make other countries comply with its policy. As such, a cardinal aspect of the strategy of “maximum pressure” is that this pressure is to be exerted not just on Iran but on many other countries as well, including India and China—two major buyers of the Iranian oil. It means that the US will exert this pressure in ways that don’t lead to potentially fracturing US relations with its allies.

The US, in this context, has received some success in India, which has already caved in to the US diktat. Although the Indian officials have said that the decision to stop buying Iranian oil stems from the fact that Iranian oil will be “expensive” due to sanctions, there is little gainsaying that India had no option but to agree to the US policy; for, if “expensive oil” was a genuine concern, India wouldn’t have asked for a waiver in the first place.

But will India’s decision to stop buying Iranian oil make a big difference? It wouldn’t. The reason is that Iran’s major allies—China and Russia—have refused to follow the US diktat and because the US itself cannot apply “maximum pressure” for reasons that are beyond its control.

As far as China is concerned, it has expressed its opposition to US unilateral sanctions. “China consistently opposes US unilateral sanctions,” said Geng Shuang, a Chinese Foreign Ministry spokesman. “The Chinese government is committed to protecting the legitimate rights and interests of Chinese enterprises.” China is Iran’s largest oil buyer and has been increasing its purchases this year, explicitly defying the Trump administration’s demands for bringing the imports to zero. Russia, too, is opposed to US unilateral sanctions. A statement released by Russia’s Foreign Ministry said that “Washington is not even hiding its desire to make the world bend to its will,” describing the intensification of Iran sanctions as “disturbing.”

The opposition and defiance matters, but what matters the most is that the US wouldn’t be able to control the oil market prices if Iran’s oil exports go to zero.

A crucial aspect of the imperative of maintaining stable oil prices is that US allies, such as Saudi Arabia and the UAE, will increase production to maintain supplies. The “maximum pressure”, therefore, depends upon these allies’ willingness to serve US interests. But the question is: can and will they do so?

While Saudi Arabia and the UAE have expressed some willingness to do this, they are bounded by the OPEC+Russia agreement to follow their specific ceilings of production and supplies. This deal means that while in theory Saudi could add a few hundred thousand barrels per day above current levels (approximately, 500,000 bps), that may not be enough to compensate for the missing Iranian oil—a situation that would cause a surge in oil prices and would make countries like India, a big importer of oil, see their oil-import bills surging massively. Would then these countries continue to support the US “maximum pressure” strategy? This is a major up-coming dilemma that the US would have to resolve.

In fact, the Saudi officials have already expressed that they wouldn’t be violating the OPEC deal. The Saudi oil minister Khalid al-Falih recently said that they will “coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance”, meaning thereby that will not just jump onto the bandwagon of increased production at the expense of creating a global oil-price crisis. This is aside from that a scenario with increased oil prices suits the Saudis way more than a scenario where the prices remain stable and they produce more oil just to “fill the gap.”

However, the high-oil prices will not affect the Saudis or the Russians, but the US itself. Ironically enough, the US president recently took to twitter to criticise OPEC, calling hike in oil price “artificial”, whereas it is a direct outcome of the Trump administration’s own “maximum pressure” strategy. According to a report, “Americans consume roughly 400 million gallons of gasoline a day…..[and] the 33-cent increase over the last year means roughly $132 million less every day in consumer pockets” after oil-price hike. This is happening at a time when the US is starting to go into presidential elections next year.

All of this then comes to down to the fact that the US has designed a policy that might end up severely hurting its own political economy. This is a major contradiction that the US govt. will have to resolve. Chances of its successful resolution, however, remain very weak due to the fact that it is not just the US but almost all of its allies as well in Europe and beyond will be affected by it in one way or the other.

Salman Rafi Sheikh, research-analyst of International Relations and Pakistan’s foreign and domestic affairs, exclusively for the online magazine “New Eastern Outlook”.


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