Russia helps Iran circumvent US sanctions

EPA-EFE/SEBASTIEN NOGIER

Iran's President Hassan Rouhani and Russia's President Vladimir Putin arrive to the press conference after their meeting in Tehran, Iran, September 7, 2018.

Russia helps Iran circumvent US sanctions


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Russia’s relationship with the Islamic Republic of Iran has been decades in the making, one that has been fuelled primarily by Moscow and Tehran’s inherent hatred of the West and the two countries’ mutual obsession with the carving out spheres of influence aimed at countering the United States’ reach in areas that the Kremlin and Iran’s mullahs consider culturally or historically a part of their own backyard.

As tensions have built up to their worst levels since the Cold War, Russian President Vladimir Putin has successfully cultivated relationships with leaders or foreign governments who have vested interest in pushing back against the international community’s initiatives to both expose and punish countries that are guilty of war crimes or who threaten long-established treaties that guarantee nuclear security in the world.

While Putin has forged deep ties to rabidly anti-Western, neo-Marxist governments in Venezuela and Nicaragua under former Sandinista leader, Daniel Ortega, as well as budding relationships with Libya’s most powerful warlord Khalifa Haftar and elements of the Afghan Taliban, none of Putin’s closest alliances have been as beneficial on the geopolitical level in recent than the alliance Moscow enjoys with Iran and Syria.

Putin has managed in recent years to guide his intelligence officers in the FSB and GRU to cultivate ties with right-wing, Eurosceptic parties and to successfully influence the outcome of an American presidential election two years ago, but Moscow’s ability to assist the Iranian government in bypassing the US’ economic sanctions against Tehran has, and continues to be, a constant source of frustration for lawmakers in Washington.

When the administration of President Donald J. Trump announced earlier this year that it was unilaterally pulling out of a landmark deal that had been signed and negotiated by his predecessor, Barack Obama, along with Russia, the UK, France, Germany, the EU, and China, the world was outraged that an American administration would intentionally scuttle of nuclear arms deal with a government that it had had no diplomatic relations with since 1979.

Despite IAEA inspectors spending 3,000 calendar days per year in Iran, and installing tamper-proof seals and collecting surveillance camera photos, measurement data and documents for further analysis that verified that Iran had complied with its nuclear-related commitments, Trump and the Israeli government of Benjamin Netanyahu announced that that Tehran had not disclosed a past covert nuclear weapons program to the IAEA, which was required in the 2015 deal.

As a result, Trump announced the re-imposition of crippling economic sanctions on Iran and any entity that continued to do business with the Islamic Republic. Though the EU enacted a blocking statute on to nullify US sanctions on countries trading with Iran, the overwhelming number of major Western corporations that had signed lucrative, multi-billion euro deals with Tehran have followed Washington’s lead and pulled out of the country out of fear that they will be penalised for continuing to do business with the Iranians.

By denying the Iranian government to trade and the international currency market, the sanctions have cratered Iran’s economy, which had been Trump’s goal as he and Netanyahu are hoping that the intense economic and social pressure that can be brought down on Iran’s Revolutionary Guards Corps (IRGC) – the most powerful entity in the country, who fully control Tehran’s military and business activities – that regime change could be in the offering in the coming months.

The IRGC, however, turned to its reliable ally in Moscow to counter Trump’s attempt to isolate, or “squeeze”, the Iranian regime, in the words of US National Security Advisor John Bolton.

Steven Mnuchin, Trump’s treasury secretary, recently confirmed that Russia, Syria, and Iran were involved in a highly intricate operation to launder money in and out of Syria in order to generate funds for Iran’s continued pursuit of military and political hegemony in the Middle East, with Mnuchin admitting that “a complex scheme between Iran and Russia has been used to bolster the (Bashar al-) Assad regime  (in Syria) to generate funds for Iranian malign activity,”

The scheme begins with a Soviet-era entity known as Promsyryoimport, a trading company controlled by Russia’s economy ministry which largely inactive since the Soviet Union’s 1991 collapse until it began helping Iran illegally ship its oil and gas.

Much of the revenue makes its way into Syria and neighbouring Lebanon, where Iran’s close ally, the Shiite terrorist organisation Hezbollah, has access to the international offshore banks. Some of the income from the transfer of oil returns to Iran via the import of goods that would otherwise be subject to the current sanctions.

What’s far more lucrative for the Iranian regime, however, is the oil-for-goods scheme that channels capital from the Central Bank of Iran to a Kremlin-controlled Russian pharmaceutical company and bank. What this has done is allow Iran’s Revolutionary Guard Corps to use the trade as a way to gain access to Russian goods and services, including such generation, railway infrastructure, and agricultural products, while at the same time generate revenue to continue funding their activities in the region, including providing support to Hezbollah and Hamas in the Gaza Strip.

Moscow has neither confirmed nor denied the scheme, but the Kremlin openly declared its intention to help Iran counter the US’ attempt to isolate Tehran economically when the sanctions went into effect, with Putin’s own press secretary, Dmitry Peskov, and Russia’s energy minister, Alexander Novak,  admitting to Western publications that Moscow had no intention of ending its oil-for-goods programme with Iran.  Peskov went so far as to say in early November, “Those who designed and implemented those sanctions will understand sooner or later that they will not achieve their goals.”

Peskov’s admission that Moscow was openly declaring war on Washington’s sanctions prompted US Secretary of State Mike Pompeo to warn that Iran will not be allowed to “exploit the international financial system.”

American officials have said that additional schemes also exist, one of which includes the Global Vision Group, headquartered in Moscow.  Global Vision facilitates the shipment of Iranian oil to the Assad regime in Syria via tankers that switch off their electronic identifications systems to avoid detection. They then receive payments via a Russian financial services subsidiary known as the Bank of Melli in Iran and make their way to Syria’s eastern Mediterranean ports via Egypt’s Suez Canal, having been insured by European companies through Global Vision.

Moscow’s support for Assad has been defiant. The Russian foreign affairs ministry only recently accused the US of supporting terrorism in Syria by attempting to cut Iran off from one of its closest allies in Assad, who has been fighting both rebels who oppose his oppressive regime and elements of radical Sunni Islamic groups, including ISIS and Jabhat al-Nusra, who want to replace his regime with a brutal form of Sharia-based theocratic rule.

Though the US Treasury Department has targeted six individuals and three entities that are a part of the Iranian-Russian export network, there’s little chance that Moscow is suddenly about to abide by American-led sanctions and abandon Iran to its fate, particularly as Tehran plays the dual role of being a lynchpin in the Kremlin’s anti-Western alliance as well as being a key Russian ally in the Middle East and by far the region’s main power broker.

Nor is Putin going to turn his back on a Syrian government that he helped save after he ordered the Russian Armed Forces to deploy its largest expeditionary force into a combat zone since the Soviet invasion of Afghanistan more than 30 years ago.

To do so, would be to violate two core tenants of Putin’s KGB-honed worldview – the West is the enemy and Russia has a right to play great power politics against its arch nemesis – the United States.

 

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