President Donald Trump's administration said Monday that it will no longer exempt any countries from U.S. sanctions if they continue to buy Iranian oil, stepping up pressure on Iran in a move that primarily affects the five remaining major importers: China and India, and U.S. treaty allies Japan, South Korea and Turkey.
Trump made the decision as part of the administration's "maximum pressure" campaign on Iran that aims to eliminate all of its revenue from oil exports that the U.S. says funds destabilizing activity throughout the Middle East and beyond.
"This decision is intended to bring Iran's oil exports to zero, denying the regime its principal source of revenue," the White House said in a statement.
Announcing the step, Secretary of State Mike Pompeo said no more sanctions waivers would be granted when the current batch expire on May 2, choking off Iranian income that had been more than $50 billion a year.
"The goal remains simply to deprive the outlaw regime of the funds that it has used to destabilize the Middle East for decades and incentivize Iran to behave like a normal country," Pompeo told reporters at the State Department.
Last year, Pompeo laid out a wish list of 12 demands for Iran to meet including more civil liberties to Iranians and refraining from funding Shiite militias in the region, testing ballistic missiles and keeping its nuclear infrastructure intact so it could theoretically be used someday to develop weapons.
At the same meeting, Pompeo had a warning for Iran's customers.
"If you don't abide by this, there will be sanctions," he said. "We're going to zero. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits."
The administration had granted eight waivers when it reimposed sanctions on Iran in November after Trump pulled the U.S. out of the 2015 nuclear deal. The waivers were issued in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude. Three of those waivers, for Greece, Italy and Taiwan, are no longer needed because they have all halted their imports of Iranian oil.
But the other five continue to import Iranian oil and had lobbied for their waivers to be extended. NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their U.S. counterparts that Iranian oil is critical to meeting their country's energy needs. They have also made the case that as a neighbor of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.
Turkish Foreign Minister Mevlut Cavusoglu criticized the decision, saying it "will not serve regional peace and stability."
In a message posted on Twitter on Monday, Cavusoglu said: "Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors." Cavusoglu added that the decision would harm the people of Iran.
China, one of Iran's largest customers, slammed the step, calling it more evidence of U.S. "unilateral sanctions and long-arm jurisdiction." China, which relies on imports for about half of its oil, could present the toughest diplomatic challenge for the U.S. in trying to enforce its sanctions.
Any move by Beijing to keep buying Iranian oil -- which analysts predicted China almost certainly will find some way to do -- would force the United States to decide whether to sanction Chinese financial institutions, which are a growing global presence and increasingly important in the worldwide economy. China could also set up a new vehicle as an alternative to using the current banking mechanisms, as the European nations have done to keep doing some business with Iran.
"Iran sanctions are going to be a big challenge for the U.S.-Chinese relationship," said Jason Bordoff, director of Columbia University's Center on Global Energy Policy and a former energy adviser to President Barack Obama.
He added that if Chinese imports do not drop quickly, the U.S. sanctions could be applied to Beijing's central bank, the People's Bank of China.
Iran brushed off the U.S. decision, calling the sanctions "illegal."
"Regarding the illegal status of the sanctions, the Islamic Republic of Iran basically has not seen and does not see any worth and validity for the waivers," the Foreign Ministry said in a statement carried by the official IRNA news agency.
It said Iran has intensified consultations with its "European and international partners" and that a "necessary decision" would be announced later, without elaborating.
Earlier, Iran reiterated its long-running threat to close the Strait of Hormuz if it's prevented from using the crucial waterway in the Persian Gulf through which about a third of all oil traded at sea passes.
"In the event of any threats, we will not have the slightest hesitation to protect and defend Iran's waterway," said Alireza Tangsiri, head of the Revolutionary Guard naval force, according to state media.
Other critics said the move amounted to a demand for Tehran to capitulate and increased the potential for confrontation.
"The attempt now to forgo oil waivers and spur Iran's economic collapse signals a desperate attempt to coerce Iran to restart its nuclear program in order to invite a dire confrontation," said Jamal Abdi, president of the National Iranian American Council. "Trump is bizarrely set on this destructive policy even as it threatens U.S. security and risks American voters' digging deeper into their pockets to pay for rising gas prices."
Left unclear by the U.S. decision is whether the five countries will face immediate American sanctions if they continue to take delivery of Iranian oil after the waivers expire.
Two senior U.S. officials -- Special Representative for Iran Brian Hook and Assistant Secretary of State for Energy Resources Francis Fannon -- refused to comment on whether any of them would be given additional time to complete purchases made before May 2 or allowed to use money already set aside for purchases after that date without penalty. Both said questions about such provisions were "hypothetical," suggesting that some accommodation may be possible.
Fannon said the U.S. did not expect any sharp spike in oil prices or any significant reduction in the global supply of oil, given production increases by other countries, including the U.S. itself, Saudi Arabia and the United Arab Emirates.
Kevin Hassett, chairman of the Council of Economic Advisers, echoed those comments, although benchmark U.S. crude oil rose 2.4 percent early Monday after the decision was announced.
Hassett told reporters at the White House that he's not concerned that the decision will negatively affect oil prices.
He said U.S. production has risen in recent years by "more than all of Iranian production" so there is adequate capacity should there be a need for oil supplies. He said the link between oil prices and the U.S. economy has diminished as American oil production has increased.
And, Saudi Energy Minister Khalid Al-Falih said in a statement that his country would work with other oil producers "to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance."
Information for this article was contributed by Matthew Lee, Deb Riechmann and Nasser Karimi of The Associated Press; by Carol Morello, Karen DeYoung, Simon Denyer and Steven Mufson of The Washington Post; and by Edward Wong and Clifford Krauss of The New York Times.
A Section on 04/23/2019
Print Headline: U.S. no longer waives sanctions on Iran oil