• 18 hours Jeff Bezos Doubles Down On Space Colonization Ambitions
  • 24 hours Gold Mining Stocks Stuck In Limbo
  • 2 days Executive Order Targets Huawei Over Espionage
  • 2 days Why Now May Be The Best Time Ever To Hold Gold
  • 3 days Fake News Sinks Shares In UK-Based Bank
  • 3 days De Beers To Build $468 Million Diamond Recovery Ship
  • 3 days Moody's: Turkey Faces Possible Credit Downgrade
  • 3 days Tesla's Solar Sales Are Slipping
  • 4 days Auto Industry To Get Temporary Tariff Relief
  • 4 days Welcome To The World’s Biggest Free Trade Area
  • 4 days Central Banks Are Stockpiling Gold At The Fastest Rate In Half A Decade
  • 4 days U.S.-China Impasse Threatens Rare Earth Trade
  • 5 days Wall Street Bears $1 Trillion Brunt Of Trade War
  • 5 days Mobile Sports Betting Isn’t Quite Minting Millionaires Just Yet
  • 5 days The Marijuana Industry’s Shocking Secret
  • 5 days A Generational Shift Is Quietly Unfolding In The Mining Industry
  • 6 days Pentagon To Pay $6 Billion To Help Build Border Wall
  • 6 days Beijing Backlash: Stocks Slammed, Gold Boosted
  • 6 days Market Sentiment At Its Lowest In 10 Months
  • 6 days Trader Compares Current Market Environment To 2007
The Marijuana Industry’s Shocking Secret

The Marijuana Industry’s Shocking Secret

Cannabis cultivation requires enormous amounts…

Executive Order Targets Huawei Over Espionage

Executive Order Targets Huawei Over Espionage

The decision to ban telecom…

Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

Contact Author

  1. Home
  2. News
  3. Breaking News

Can The U.S. Afford The Geopolitical Consequences Of Iranian Sanctions?

Globe

Turkey was granted a waiver for Iran sanctions on Monday, and a day later, Turkish President Tayyip Erdogan says the country won’t be complying in a scheme that will result in “unbalancing the world”—an issue he plans to address at a summit this weekend in Paris.

“We will absolutely not abide by such sanctions. We buy 10 billion cubic meters of natural gas. We cannot freeze our people in the cold,” Erdogan said.

The important thing to understand is that this is a negotiation—still. The waiver is temporary, and over the next six months we will see how Washington uses the temporary nature of the waiver for leverage in a possible extension.

It’s a bargaining chip particularly for what happens next in Syria.

Erdogan’s Tuesday statement is meant to send a clear message that he’s getting out in front of this and that Washington’s negotiating position isn’t as strong as Trump thinks it is.

If Turkey plays ball with Washington over Syria—or more precisely, refrains from invading northeast Syria—it may get an extension on that waiver, and it may get more: Washington’s blind eye to Turkey’s continued dealings with Iran, unofficially. In the meantime, Erdogan will maintain the pressure on a number of fronts, from Saudi Arabia and the Khashoggi murder to Syria, and the trial in the U.S. of sanctions-busting Turkish state bank, Halkbank.

All told, the U.S. has given a temporary waiver to eight countries to allow them to continue importing Iranian oil and gas, including China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey.

In the meantime, Europe is still talking about a way around sanctions, but those efforts have been complicated by a (poorly or conveniently, depending who you are) timed assassination attempt on an Arab separatist in Denmark, allegedly perpetrated by the Iranian government. That has driven a wedge in the EU’s unity on the Iran sanctions issue, at the 11th hour. Related: What’s Behind Buffett’s Billion Dollar Berkshire Buyback?

And Washington has seen an early victory in getting Belgian-based Swift—the service that connects thousands of global financial institutions for transferring money—to bow to U.S. sanctions on Monday.

That move followed a statement on Friday by Treasury Secretary Steven Mnuchin, calling on Swift to cut off all Iranian banks on its list.

Swift is a major part of the sanctions puzzle because it has the potential to deal a crippling financial blow when money transfer information cannot be forwarded to banks that are blacklisted. In other words, that makes it impossible to pay for imports and receive payments for exports—at least for banks that are exposed internationally, and connected to Swift.  

Europe has been working on a payment system workaround, even if it’s slow at best.

But India, for instance, has a workaround by paying for Iranian oil imports in Indian rupees through UCO bank in India, which is not internationally exposed and not connected to Swift.

Russia is also working on a way to bypass Swift with its own alternative payments system, which also challenges the petro-dollar in general.

Related: Analysts See Upside In Energy Stocks

By forcing countries to come up with an alternative to Swift, Washington is, over the longer term, speeding up efforts to end the dominance of the dollar.

“It will undermine America’s influence over the international financial architecture and diminish its power over allies and adversaries alike,” Henry J. Farrell of George Washington University and Abraham L. Newman of Georgetown University wrote in an NYT opinion piece.

From Turkey, to China, to Swift, to the rest of the world, Iran sanctions are indeed a ‘Game of Thrones’, that will be used to wrestle the remaining concessions on Washington’s bucket list. But the price of those concessions may be higher than national interest can afford.

By Charles Benavidez for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment