US President Donald Trump has issued a strong warning to anyone trading with Iran, following his re-imposition of sanctions on the country.
“Anyone doing business with Iran will NOT be doing business with the United States,” the president tweeted.
Some re-imposed sanctions took effect overnight and tougher ones relating to oil exports will begin in November.
Iran’s president said the measures were “psychological warfare” which aimed to “sow division among Iranians”.
The sanctions follow the US withdrawal from the Joint Comprehensive Plan of Action, also known as the Iran nuclear deal, earlier this year.
The deal, negotiated during the presidency of Barack Obama, saw Iran limit its controversial nuclear activities in exchange for sanctions relief.
Mr Trump has called the deal “one-sided”, “disastrous” and the “worst I’ve ever seen”. He believes renewed economic pressure will force Iran to agree to a new deal.
The European Union, which remains committed to the original agreement. has spoken out against the sanctions, vowing to protect firms doing “legitimate business”.
What else did Mr Trump say in his latest tweet?
He praised the “most biting sanctions ever imposed” and said they would “ratchet up to another level” in November.
“I am asking for WORLD PEACE, nothing less!” he said.
On Monday he had said that Iran faced a choice to “either change its threatening, destabilising behaviour and reintegrate with the global economy, or continue down a path of economic isolation”.
“I remain open to reaching a more comprehensive deal that addresses the full range of the regime’s malign activities, including its ballistic missile programme and its support for terrorism,” he said.
A second phase is planned to come back into effect on 5 November which will have implications for Iran’s energy and shipping sectors, petroleum trading and transactions by foreign financial institutions with the Central Bank of Iran.
Iranian President Hassan Rouhani said the US government had “turned their back on diplomacy”.
“They want to launch psychological warfare against the Iranian nation.” he said. “Negotiations with sanctions doesn’t make sense. We are always in favour of diplomacy and talks… but talks need honesty,”
The foreign ministers of Germany, the UK and France released a statement on Monday that said the nuclear deal remained “crucial” to global security.
They also unveiled a “blocking statute” which is intended to protect European firms doing business with Iran despite the new US sanctions.
Alistair Burt, the UK’s minister of state for the Middle East, told the BBC: “If a company fears legal action taken against it and enforcement action taken against it by an entity in response to American sanctions, then that company can be protected as far as EU legislation is concerned.”
He said Iran would simply “batten down the hatches” until the next US election.
However, German car and lorry maker Daimler, which announced a joint venture in Iran last year, confirmed this week that it has now ceased activities in the country.
Iran’s reaction is a mix of defiance and denial. Parliament speaker Ali Larijani says sanctions will strengthen Iran, as the country will become “more self-reliant”.
Previous sanctions saw a temporary dash towards manufacturing essential industrial components locally.
But they hurt the economy so deeply Iran had to go back to the negotiating table in 2013. Sanctions of this magnitude are more likely to kill industries than boost them.
President Rouhani tried to show a brave face, saying Iran would survive. But his remarks lack recognition both of the extent of dissatisfaction with the economy, and of the ensuing street protests over rising prices, corruption and cronyism. Some Iranians reacted on social media by saying their leaders were in denial and wanted to fight the US at the cost of ordinary people’s lives.
Iran has seen unrest since last December over a poorly-performing economy.
Rising food prices, unemployment and even poor water supplies have led to protests in a number of cities.
Demonstrations in Tehran in June were said to be the capital’s biggest since 2012.
How much they are tied to the new US sanctions policy is hard to determine, but one definite link is the effect on Iran’s currency. It lost around half of its value after Mr Trump announced the US withdrawal from the nuclear deal. Iran acted by easing its foreign exchange rules on Sunday, and the rial has strengthened by 20% since then.
Iranians have been hoarding gold as a safeguard, pushing it to a record high in Tehran.
The sanctions may bite hardest in November, when the US blocks Iranian oil sales.
This could halt about half of Iran’s exports of some two million barrels a day, although Iran may look to China and Russia to keep its industry afloat.
The International Monetary Fund said in March that Iran’s net official reserves could decline this year to $97.8bn, which would finance about 13 months of imports. And analysts at BMI Research say Iran’s economy could contract by 4.3% in 2019.
However, Barbara Slavin, of the Future of Iran Initiative at the Atlantic Council, told the Wall Street Journal that when sanctions hit hard, it often means ordinary people become “totally dependent” on their government and so sanctions do not tend to topple regimes.
