Oct 07, 2019 17:32 UTC

From Iran to Russia and the DPRK, US administrations have long relied on sanctions and threats as a preferred weapon against these countries.

However, it is America's allies that are increasingly feeling the pressure, for divisions hurt shared interests. No wonder a US administration watchdog like the Government Accountability Office (GAO) concludes that Washington's favorite economic power tool has been so overused it's becoming ineffective and counterproductive.

The following is an article in this regard by staff writers of Iran’s English language website of Fars news agency under the heading: “US sanctions don’t work.”

The US government departments involved in enforcing economic sanctions against other countries say they do not know whether the coercive measures actually work.

According to a new report by the Government Accountability Office (GAO), "The Departments of State, Commerce, and the Treasury have assessed sanctions' impacts - for example, on a targeted country's economy or trade. But they haven't determined whether sanctions really work - nor are the agencies required to do so."

Tell that to US President Donald Trump, who continues to take part in the lie, water it down and make it logical. Although the damning report by the GAO outweighs Trump's world, he continues to use sanctions and blockades as a key part of his foreign policy aggression in a bid to force concessions in negotiations with Washington. This is while his sanctions on nations and a record number of targeted sanctions on individuals and entities have failed to fulfill US policy goals.

It hardly matters where you look. Washington's unilateral sanctions have become more like an impediment than a tool in the case of Iran. Authorized under a variety of statutes and executive orders, they have had knock-on effects. Trump's "maximum pressure" campaign has destabilized West Asia, and Tehran says it will only hold talks with Washington within the framework of the 2015 nuclear deal if sanctions are lifted first. This has brought the US into a dispute with European allies France, Germany and Britain, who stayed in the nuclear agreement with Tehran after Trump walked out and imposed unilateral sanctions.

Regarding the Democratic People's Republic of Korea, the GAO's report is showing a new road to the Trump White House, favoring cooperation and rapprochement with Pyongyang. It is the US government that's still throwing stones at the DPRK by refusing to fully commit itself to international law and diplomacy. If Trump wants respect, it goes both ways. For this to happen, he has to stop upping the ante and lying to himself. If he is serious about security in the Korean Peninsula, Pyongyang is the best ally America could ever hope for in the region. The proliferation of sanctions laws is not the way forward.

The US financial system is the engine of European trade. Prohibitive and restrictive sanctions drive European business to foreign markets and, in doing so, shapes new alliances between friends and foes. Tensions created by US sanctions against Russia over Crimea have divided allies in Europe. For instance, French Foreign Minister Jean-Yves Le Drian says although the conflict in Eastern Ukraine remains unresolved, the time has come to work towards reducing the distrust between Russia and Europe, "who ought to be partners on a strategic and economic level".

It is yet another evidence that Trump's sanctions policy on a wide basis has been a failure. A similar report by the Cato Institute and the Center for a New American Security substantiates that. It has equally dismissed the effectiveness of sanctions and blockades. The institute has called sanctions against Russia and Iran an outright failure whose ripple effects are harming Western economic and geopolitical interests. Then again, if the new report by the GAO is any indication when it comes to alleged enemies, the peace-haters won't stop with Iran, the DPRK and Russia. They pour money into the further rebuilding of the military-industrial complex. They name a new enemy at any moment and as often as they wish, irrespective of repercussions.

This approach has almost never contributed to create a real change, let alone lead to peace and security. Washington's economic wars and oppressive tactics have generated and will continue to generate a great deal of resentment on the world stage. Given the rotting security situation in the world, it is still in the best interests of Washington to converge on diplomatic solutions and work with target countries and allies on regional and security matters. It is the only high aim that would make the headlines on page one.

From Iran to Russia and the DPRK, US administrations have long relied on sanctions and threats as a preferred weapon against these countries. However, it is America's allies that are increasingly feeling the pressure, for divisions hurt shared interests. No wonder a government watchdog like the GAO concludes that Washington's favorite economic power tool has been so overused it's becoming ineffective and counterproductive.

This is probably why many European governments say Washington should go for other means in dealing with alleged adversaries and not blunt policy tools. Brussels has urged US lawmakers to coordinate their actions with European partners, as Washington expands the policy of economic pressure against Iran, Russia and the DPRK. The EU warns that coercive measures and senseless wickedness undermine transatlantic unity and have international backlash.

Regardless, the effectiveness of Washington's indiscriminate sanctions and unilateral measures is now very much in doubt. According to the GAO's report, burdensome sanctions may have satisfied a thirst for retribution, but failed to coerce changes in policies or practices of governments in Tehran, Moscow and Pyongyang. They haven't stopped Iran from expanding its defense program and influence in West Asia. They haven't dislodged DPRK's leaders or forced a rollback of their nuclear and missile programs. For all the use of economic coercion and saber-rattling, Russia has stood its ground and is not changing policy over Ukraine.

Moreover, the United States’ sanctions regime has forced Iran to strengthen financial and economic ties with Russia and other Eurasian nations. The US economic warfare has forced the two neighbors to trade in local currencies by connecting their financial messaging services to handle two-way banking transactions. 

According to the Governor of the Central Bank of Iran, Abdolnasser Hemmati, and the Russian Presidential Aide, Yury Ushakov, banks in both countries are now connected through the Russian SPFS and the Iranian SEPAM. They are using this new system as an alternative to payments through SWIFT (Society for Worldwide Interbank Financial Telecommunication) to protect themselves from Washington's sanctions.

SPFS (System for Transfer of Financial Messages) is a Russian equivalent of the SWIFT financial transfer system, introduced by the Central Bank of Russia to ensure intermittent financial services. SEPAM (a Persian acronym) is a platform through which inter-bank transactions are conducted electronically. It is now officially connected to the Russian banking system through SPFS.

This was all expected. Tehran will join the Russia-led free-trade zone, the Eurasian Economic Union (EAEU), next month. Russia’s alternative to SWIFT will help expand trade exchanges between Iran and EAEU member states, using Armenian dram, Belarusian ruble, Kazakhstani tenge, Kyrgyzstani som, Russian ruble, and Iranian rial.

Washington’s unilateralism is forcing China, Turkey, Iraq and a host of other nations to also resurrect the same currency exchange system. US unilateralism approach has even pushed Moscow and Beijing to use their currencies in settlements. Trade in rubles and yuans is the priority and eventually both will turn from a convertible currency into a reserve currency. The two economic powers are implementing the currency swap agreement to boost trade and eliminate dependence on the dollar. They have stressed their support for trade with Iran and opposition to US unilateral and secondary sanctions.

Same way, delegates from Iran, China, Russia and the European Union have publicly proposed a banking mechanism that would allow the exchange of European goods for Iranian crude oil through Russian territory. Turkey is also discussing with Iran ways to maintain trade relations through similar banking mechanisms.

These mechanisms and trade in local currencies have a common aim: To ditch the US dollar and protect banks and bank-rollers from secondary sanctions the Trump administration has threatened against countries and entities that dare to purchase oil from Iran.

That the Trump administration has forced nations to adopt new or old economic strategies shows the continuing isolation of the US and unilateral policies. The Trump administration’s measures are bringing many countries together with a common goal of bypassing what, especially in the case of Iran, are unilateral sanctions. They know that if Washington is allowed to try and use its dollar to punish Iran, soon they will be next. That’s why these nations are refusing to side with Washington and scrap the nuclear deal.

As things stand, the new system of payment between Iran and Russia and trade in local currencies are here to stay. The two neighbors have begun enjoying their new-found partnership, and even if one day the US lifts its sanctions and returns to the nuclear deal, the mechanisms won’t die out. 

At regional and local levels, these mechanisms are efficient. Both Iran and Russia want what the other has to offer, and they don’t want to rely upon the dollar. They have now proven that trade in local currencies works. They are officially circumventing unilateral and secondary sanctions imposed by the US, and it is much safer to bilaterally trade in local currencies instead of taking the dollar risk.

This is not a short-lived project, in part because the global economy is still exposed to Washington’s unilateral and wrong foreign policy practices, but more because unilateral sanctions against Iran are also against the United Nations Charter, have no international support, and were imposed after President Trump walked out of the 2015 nuclear deal that had been endorsed by the UN Security Council.

Little wonder the European Union is also working out strategies to save the nuclear deal and continue trade with Iran through the so-called Special Purpose Vehicle or INSTEX. They are unwilling to take orders from Washington as with whom they are allowed to do trade. Soon, they will also cut reliance on the US dollar to avoid sanctions targeting their direct payments and bilateral trade with Iran.