Dr Liam Fox MP, former British Trade Minister, delivered the key note speech at Heritage Foundation in Washington. “There can be no doubt that Iran poses a clear and present danger to international shipping in the Gulf and military protection by the international community is now a necessity and is likely to remain so for the foreseeable future. It is also clear from recent events that Tehran’s word cannot be trusted.” EXTRACTS:
“When I last spoke about Iran here at Heritage in September 2015 there was an air of optimism about the recently negotiated JCPOA leading not only to the end of the Iran nuclear program but to a new relationship with the country itself.
It was not an optimism I shared. I was called a hardliner, a cynic, a pessimist. I said that President Rouhani could only have a very limited influence on a regime dominated by the Supreme Leader and the IRGC.
I said it was not credible or responsible to see Iran’s nuclear ambitions outside the context of its support for terror proxies. Those who wanted to give Iran the benefit of the doubt should remember its long history of clandestine nuclear work.
And I said that the approach was fundamentally flawed because the original aim of stopping Iran from ever having nuclear weapons had morphed into a deal that merely put its ambitions on hold for a decade.
THE CURRENT STATE OF PLAY
It was entirely expected that the frustration with the JCPOA, expressed by President Trump during his election campaign would eventually lead to the US withdrawal which was announced on 8th May 2018. This was followed by Secretary of State, Mike Pompeo setting out 12 demands for concluding a new treaty, an attempt to put in context and address the broad sweep of Iranian issues, not simply a single element.
In line with its aim to deny Iran oil revenues, the administration announced that it would not reissue Significant Reduction Exemptions when they expired in May 2019. Sanctions were also imposed on Iranian iron, steel, aluminium and copper sectors.
The effect has been dramatic. In the year since the US pulled out of the JCPOA and started re-imposing sanctions, Iranians oil exports have fallen from around 2.5 million barrels per day to below 1 million in April 2019. The Iranian Rial lost more than 60% of its value against the dollar in 2018 and the economy contracted by 3.9%. This year it is forecast to shrink by 6% with inflation hitting 40% according to the IMF.
WHY JCPOA WAS BOUND TO FAIL
But we should not be surprised that the JCPOA process has stalled and failed. Many believed that, despite its noble ambitions, it was doomed from the beginning. Rather than a graduated lifting of sanctions as a reward for full cooperation in the implementation of the agreement, Iran won the lifting of sanctions and the immediate un-freezing of $150bn of Iranian assets. It made little sense.
The frontloading of the financial elements of the settlement meant that Iran effectively got what it wanted immediately in terms of economic relief in return for promises to be delivered later. But he main reason that the agreement was bound to fail politically was that the target itself, the Iranian nuclear program, which while not wrong, was certainly much too narrow in scope.
It failed to tackle the main problem of malign Iranian actions beyond its own borders. Even as European countries sought ways to try and finance trade with the Iranian regime, Iranian inspired terror groups increased their activities across the continent.
In the Netherlands two Iranian diplomats were expelled in June 2018 for plotting political assassinations in the country. A bomb plot to target a rally of opposition groups in Paris was foiled by French intelligence and in the UK it was revealed by the Daily Telegraph newspaper earlier this summer that a terrorist cell with links to Iran had been caught stockpiling tonnes of ammonium nitrate explosive on the outskirts of London at a secret bomb factory.
Linked to this activity is the growing Iranian involvement in the global drugs trade. The close relationship built between Tehran and Venezuela has enabled it to become the gateway for Iran to South and Central America including the drug-trafficking undertaken by the IRGC. Lebanese officials have accused Iran air of involvement by transporting drugs on scheduled flights from Venezuela. Iran’s allies in Hezbollah are also reputed to bring considerable cooking exports from South America to Europe contributing to their financial resources in hard currency.
It is impossible to believe that the Iranian regime at the highest level is not aware of these activities and, if not fully in collusion, at least turning a blind eye. No matter how much they wanted the nuclear deal to succeed, there was no way that Western governments would ever be able to ignore such activities or shield them from media or political scrutiny. Even the most supportive of them must appreciate the sickening hypocrisy of a regime that is involved, directly or indirectly, in the global drugs trade while hanging young people in Iran on drug-related charges.
Iran has been a consistent supporter of U.S.-designated Palestinian terrorist organizations, including Palestinian Islamic Jihad (PIJ) and Hamas. Lebanese Hezbollah remains Iran’s primary terrorist proxy. Last month, the group’s secretary-general, Hassan Nasrallah, bluntly declared that “Hezbollah gets its money and arms from Iran, and as long as Iran has money, so does Hezbollah”. Through its proxies Iran continues both direct attacks on Israel itself and on Israeli targets in other parts of the world giving effect to Khamenei’s hatred of the existence of the Israeli state itself. But perhaps the biggest reason why the whole deal was doomed to failure lies in the Gulf region itself and Iran’s long-term aim of destabilising its neighbours with the intent of establishing a regional hegemony.
One of the main obstacles to Iran’s regional strategy has been the strong sense of nationalism amongst Arab peoples. The Shia population in Bahrain have traditionally seen themselves as Bahrainis first and Shia second. The same is true in Iraq where the majority of the forces ranged against Iran in the Iran-Iraq war were drawn from the Shia community. Iran’s objective is to reverse this relationship so that young people, in particular, come to define themselves by their religious affiliation and not their national identity.
Their aim is to see a whole generation become radicalised, in line with Khamenei’s own aim of being the leader of all, not just Shia, Islam. It is to this key strategic end that all Iran’s efforts in the Gulf region are directed, a policy that is prosecuted by all means possible – political, financial and military. The fact that the JCPOA has not diminished this real, present and existential threat is one of the main reasons why it has never had any real buy-in from the main allies of the West in the region.
But there is also an economic angle to the failure. When the agreement was concluded there was a view that increasing trade with Iran would sweep in the globalising winds of change, speeding up social and economic changes that would result in pressures for political reform. But there were two main problems.
Firstly, as I have said, the financial frontloading of the settlement put money directly into the hands of the regime and its allies.
Secondly, it has proved difficult to create the funding mechanisms that would allow wider trade to flourish. Even while the US continued its adherence to the deal, Western banks were reluctant to do business with Iran because of the risks posed under US law and because the opacity of Iran made it impossible to know whether the final customers were in fact the IRGC thus breaching sanctions law. The net effect of this is that Iran would never have been able to see the normalisation of trade and would have become increasingly frustrated by what would almost certainly have felt was poor faith from its negotiating partners.
Simultaneously, any short-term benefits brought about by the financial settlement would have been used, and have been used, to finance Iran’s political regional and international agenda rather than providing any benefits to ordinary Iranians.
The net financial effect has been a huge funding boost for terror and destabilisation directed by the regime while the Iranian people themselves continue to suffer economically.
NOT JUST A REGIONAL ISSUE
Through its foreign policy of destabilisation of its neighbours, its use of terror proxies and the international drug trade, Iran provides a real threat to stability and security well beyond its own geographical boundaries.
Those who think it is not their problem need to think again because Iran’s recent activities, particularly in relation to the Strait of Hormuz, shows how it can become a real danger to the global economy.
Around 80% of the crude oil that moves through this great chokepoint goes to Asian markets – China, Japan, India, Singapore and South Korea. Around a third of total global seaborne traded oil goes through the Strait including around 18% of total US crude oil and condensate imports. Nearly half of Chinese oil comes from nine Middle Eastern nations. Japan has virtually no fossil fuels, making it heavily import dependent for all kinds of fossil fuels. Most of the 182 million metric tons of oil it consumed in 2018 came from OPEC member states in the Middle East.
The Strait of Hormuz is only 21 miles wide at its narrowest point, with the shipping lanes in each direction just two miles wide. Large tankers negotiating the strait are open to attack from shore-based Iranian missiles or interception by fast patrol boats and helicopters.
In May four tankers, at anchorage in the port of Fujairah were hit by explosions from limpet mines. In June the tankers Front Altair and Kokuka Courageous also suffered explosions while in the Strait, again believed to have been caused by limpet mines.
The British government agrees that Iran is responsible for the attacks arguing that “no other state or non-state actor could plausibly have been responsible”.
In July the British-flagged Stena Impero, owned by Sweden’s Stena Bulk, was illegally seized by Iran’s Revolutionary Guard. Tracking data from Refinitiv show that the British vessel had not deviated from its passage through the Strait of Hormuz despite false Iranian claims to the contrary.
There can be no doubt that Iran poses a clear and present danger to international shipping in the Gulf and military protection by the international community is now a necessity and is likely to remain so for the foreseeable future.
It is also clear from recent events that Tehran’s word cannot be trusted.
The Grace 1 tanker was intercepted in Gibraltar with a cargo of oil thought to be heading for the Banias oil refinery in Syria in breach of the EU embargo.
Gibraltar’s Supreme Court ordered the tanker released after Fabian Picardo, the chief minister was given written assurances from Tehran that the ship would not discharge oil in Syria in violation of European Union sanctions.
Recent satellite images showed the tanker, renamed the Adrian Darya 1, near the Syrian port of Tartus after switching off its transponder, suggesting that Iran had indeed delivered the oil to the government of President Bashar al-Assad in defiance of sanctions and in complete breech of its undertaking.
WHERE DO WE GO NOW?
The JCPOA is dead and European attempts to salvage it are futile. Britain should follow the US lead and operate a policy that would reduce Iranian oil exports to zero in an attempt to force a change of behaviour from the Khamenei regime. The agreement has been shown to give scant, and only short term, reduction in Iran’s ability to develop nuclear weapons. The original aim of halting Iran’s nuclear weapon programme now offers merely a delay with the problem left as a toxic legacy to future governments.
The ballistic missile tests that are still being carried out breach United Nations Security Council Resolution 2231. The Khamenei regime continues to brutally repress its own people with widespread human rights abuses.
Billions of dollars unfrozen by the JCPOA have enabled Iran to support the Assad regime in Syria, fund Hezbollah’s terror activities and support the Houthis in the tragic conflict in Yemen. The IRGC is complicit in the global drugs trade and has supported numerous terrorist acts against the regime’s opponents across the world.
Illegal maritime actions in the Gulf pose a threat to global oil supplies and therefore to the global economy. The recent attacks on Saudi oil refineries show how emboldened the Iranian regime and the IRGC have become.
The current approach is not working. The twelve points set out by Secretary of State Pompeo could form the basis of a ‘grand bargain’ but only if a way could be found to enable ordinary Iranians to prosper from any liberalisation of trade, rather than pumping money into the Khamenei regime.
The biggest problem for Iran’s regional neighbours and the international community is the near-complete breakdown in trust. It is almost impossible to believe what the regime says, leaving their actions alone to be judged for their intent.
Khamenei has been consistent in his views for decades – his belief in the values of the revolution, his detestation of the United States and the United Kingdom and his contempt for the existence of the State of Israel.
The rest of the world needs to match this fanaticism with more consistency and resolve.