On April 6, the United States issued sanctions against several Russian oligarchs, officials, businesses, and agencies. One of the companies included Rusal, one of the largest aluminum producers in the world. In a sign that the Trump administration is willing to wield sanctions regarding how they can have a ripple effect on other agencies.
As a result of the sanctions, all of Rusal’s assets under the jurisdiction of the United States have been frozen. Their stock took a plunge, and the aluminum market responded, as it was clear that supply was likely to get tight. Rusal is essentially being banned from doing business and that can negatively impact not only them, but also have a ripple effect on those businesses and countries depending on that aluminum. Trump also slapped a 10% tariff on aluminum imports into the United States.
For Iran, this is a warning shot across the bow. Clearly, if the Trump administration is willing to do this to a Russian company, despite Trump’s calls for a better relationship with Russia and President Putin, then he will have no problem doing the same or worse to Iran, since he has declared the regime an enemy by his actions.
Additionally, legislation by the United States, which took effect in 2012, give Trump the power to deny access to the U.S. banking system for anyone who conducts or facilitates a significant transaction with the Central Bank of Iran or another Iranian financial institution designated for the imposition of sanctions.
In light of the situation with the 2015 nuclear deal being at risk, those sanctions could come back into play, making it difficult for countries that buy Iranian oil to continue doing business with the regime. Essentially, they risk the ability to do business with the United States if they do business with Iran and buy its oil. Without individual waivers to countries that are attempting to reduce the amount of Iranian oil that they are purchasing, it could mean that all of Iran’s oil export are at risk.
Oil, however, is more critical to the global economy, which may make President Trump a bit more cautious in his sanctions against Iran, but nothing about this President has indicated that he believes in being cautious about anything. For the Iranian regime, this means that calling the President’s bluff could have dire consequences for the Iranian economy, which is still suffering from the last round of sanctions.
The question for Iran is how to address the real-life threat of sanctions from Trump. They need to recognize that this President is not willing to use diplomacy, but instead is willing to use the painful stick of tough sanctions, no matter who it impacts.