America’s trade tango with Tehran
Sanctions are a murky business. As recently as July, the US
imposed a blanket ban on automobile exports to Iran.
French interests such as Peugeot and Renault have been especially impacted by moves against the Iranian automobile industry. Hence this week the French newspaper Le Figaro could barely contain its anger after discovering that American firms already seem to be preparing for a post sanctions environment. (In any case, for those with money there is clear evidence that US cars have still been arriving in Iran anyway, but that’s what always happens in these circumstances: somewhere along the line there will be a cabal of middlemen who cannot resist the extra profit to be made busting through sanctions).
Of course the US automotive powerhouse GM is not merely a major
US corporation, it also happens to have the US Treasury as a 17%
shareholder (diluted from a majority when President Obama ‘saved’
the Detroit car industry in 2009). In other words, the likelihood
GM representatives happened to sneak off and visit Iran without
the US Treasury pre-approving the trip is, allowing for a modest
margin of error, precisely zero.
We can deduce that President Obama’s Iran charm offensive therefore includes tacit support for US expansion to Iran even while sanctions remain to be officially unraveled. To add insult to French injury, the Iranian concern GM has negotiated with is Iran Khodro, the erstwhile partner of Peugeot. Meanwhile, Peugeot, thanks to having GM as a shareholder/partner (car companies can be incestuous) has lost hundreds of millions from being frozen out of the Iranian car market under sanctions driven by the USA. Indeed last year the French government itself even went so far as to freeze hundreds of millions of dollars in Iranian bank accounts destined for Peugeot because these payments for spare parts would have contravened sanctions enforced by, yes, you guessed it, the US Treasury Department.
If you’re confused by the politics of sanctions at this stage fear not, it really does resemble the interminable plot twists of a Brazilian soap opera.
As I mentioned on air a few weeks, back, the truth is that globalization has left sanctions as a rather blunt instrument which often spurs competition. Competition to break the trade restrictions that is. When one nation imposes sanctions, even supported across broad trade blocs, other nations tend to step into the breach, especially when the returns become very juicy. True there may be particular preferences for unique premium goods whether it is French champagne or whatever but in the current high tech global economy, almost every product can be substituted. In the case of chemicals or medicines and most engineering products, the truth is that a multitude of nations can produce equivalent products, hence diluting the impact of sanctions.
Meanwhile, in his increasingly desperate effort to achieve a foreign policy win, it looks as if President Obama will do anything within his power to entice the Iranians to embrace American products to wean them off their nuclear weapons programme. Ironically the French may be upset at being beaten at mixing politics with mega-corporate interests which has so often been their forte...
While GM representatives have apparently visited Iran, other media reports have suggested that North American oil companies were meeting Iranian officials on the sidelines of the UN General Assembly. Given that big oil has been sanctioned out of the Iranian side of the Persian Gulf for almost 20 years that is another big sign that President Obama is taking US Inc. with him on his Iranian charm offensive.
Therefore it seems clear the USA has joined the growing league of nations which have grown cynical about the power of sanctions. Ironic, given how many such sanctions have been imposed by the US itself.
Given his domestic travails, it is perhaps not so surprising that President Obama is abandoning the principle of sanctions in favor of anything which may give his flagging reputation a boost. Moreover, with the US economic recovery still rather fragile (and not helped by the confidence dent of the cack-handed government shutdown), it seems Obama will take any possibility for growth he can muster, prompting exports, anywhere…
In the 1970’s the phrase “Nixon goes to China” fell into
popular parlance for an unexpected action. Will this decade be
marked by Obama going to Tehran?
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.