Partnership between Chabahar and Gwadar

The Spokesperson and Additional Foreign Secretary of Pakistan has emphasized the enduring brotherly relations between Tehran and Islamabad and expressed Pakistan's readiness to expand bilateral cooperation with Iran, including the signing of an agreement to further the partnership between the ports of Chabahar in Iran and Gwadar in Pakistan.

During the weekly press briefing at the Ministry of Foreign Affairs of Pakistan, spokesperson Mumtaz Zahra addressed the recent 10-year agreement signed between India and Iran concerning Chabahar port on May 13, and the subsequent reaction from the United States. 

Zahra clarified that Pakistan refrains from commenting on Iran's agreements with other countries and does not engage in discussions about the positions of third parties.

The agreement between India and Iran aims to facilitate the long-term development of the Shahid Beheshti terminal at Chabahar port, with operations managed by a subsidiary of India Global Ports Limited (IGPL). The Indian firm plans to invest US$120 million in equipping the terminal, and India has also extended a credit line of US$250 million to improve infrastructure around Chabahar.

Following the agreement, the US issued a warning that entities involved in business deals with Iran could face sanctions. US State Department Deputy Spokesperson Vedant Patel highlighted the potential risks associated with engaging in commercial activities with Iran.

Zahra also underscored the significance of Iranian President Ebrahim Raisi's visit to Pakistan in April, describing it as a pivotal moment for bilateral cooperation. 

President Raisi's visit, accompanied by a high-ranking politico-economic delegation, included key meetings with Pakistani officials. 

During his two-day stay in Islamabad, President Raisi set an ambitious target of US$10 billion in bilateral trade, emphasizing the 900-kilometer shared border as a valuable opportunity for the development and prosperity of border areas.

 

 

SCO and transformation of world order

Iran's inclusion in the Shanghai Cooperation Organization (SCO) is a significant development, considering the UN Security Council sanctions it still faces. The SCO members had previously agreed that any state wishing to join should not have any UN Security Council sanctions imposed on it. This issue holds importance when analyzing the transformation in the world order.

Iran's membership in the SCO is not a result of the removal of Security Council sanctions through the JCPOA. Iran continues to be sanctioned by the Security Council, and a list of Iranian individuals and entities under these sanctions can be found on the UN website.

It is worth noting that the members of the Shanghai Cooperation Organization no longer attribute the same importance to the UN Security Council in the current circumstances. This suggests that even if the West triggers the snapback mechanism and reinstates previous Security Council resolutions against Iran, it is unlikely to affect Iran's membership in the SCO.

The UN Security Council has traditionally been viewed as a fundamental pillar of the post-Cold War world order. However, Iran's inclusion in the SCO signifies a significant blow to its authority, emphasizing the operational phase of the transformation in the world order.

The US victory in the Cold War, is facing a crisis of attractiveness and effectiveness. The number of liberal democracies in the world has decreased, and only a small percentage of the global population lives in such countries.

United States, as the leader of the liberal order, is experiencing economic and social crises rooted in the liberal ideology. The effectiveness of the US hard and soft power in safeguarding the liberal order has diminished, and it has been repeatedly defeated by its rivals.

The RAND Corporation has proposed the concept of Power to Coerce as an alternative to the US traditional power sources. This concept includes financial sanctions, cyber operations, and support for internal opposition. Financial sanctions have been a crucial tool in America's foreign policy toolbox, but their effectiveness is diminishing due to overuse.

Ukraine crisis and unprecedented sanctions against Russia have provided an opportunity to neutralize the US financial sanctions through the development of non-dollar payment systems and reserves.

There is a consensus about the emergence of a new multipolar order. However, with the collapse of communism and liberalism, there will no longer be an order based on a hegemonic ideology claiming civilization.

Instead, international cooperation and interactions will be based on mutual interests, with power units and weaker countries operating within their spheres of influence.

China and Russia are economic and military power units but lack a civilizational ideology to lead the creation of a new order.

In this context, Islam can emerge as the only leading ideology for creating a new civilization.

In light of the current challenges faced by the liberal order and the emergence of a new multipolar order, it is crucial for Islamic countries to assert their interests and values.Islamic countries should adopt a two-pronged strategy in the current period.

The first prong should focus on undermining the remaining foundations of the US leadership in order to end the liberal order. The second prong should focus on shaping a new internal order based on shared Islamic values.

It is proposed that Muslim countries establish a charter based on their shared Islamic values. This "Muslim Nations Charter" with its special institutions would serve as an alternative to the current "United Nations Charter," which is rooted in liberal values and has institutions dedicated to its defense.

 

Current status of Iran-China Trade

Trade became increasingly difficult to track as China underreported its purchases of Iranian oil to avoid US sanctions. Its companies reportedly continued to buy Iranian oil through intermediaries, many in Malaysia and the United Arab Emirates.

The biggest obstacle to Iran’s trade with China in the 21st century has been the United States—for its economic might and wealth, massive consumer base, and diplomatic clout.

Lately, Iran’s oil exports to China notably trended upward.  But Tehran was forced to sell its petroleum exports at discounted prices to lure businesses that feared US financial penalties on third parties.  

In March 2021, during the final months of Rouhani’s presidency, Iran signed a 25-year strategic agreement focused largely on strengthening economic and security cooperation – with China. “China is a friend for hard times,” said Foreign Minister Mohammad Javad Zarif.  

Chinese Foreign Minister Wang Yi said that China firmly supports Iran in safeguarding its state sovereignty and national dignity. During the announcement in Tehran, he called on the United States to abandon the Iran sanctions and remove its long arm of jurisdictional measures that have been aimed at China, among others.

Iran’s turn to the East accelerated after the election of hardliner President Ebrahim Raisi. Raisi and his team think that the 21st century belongs to Asia and rising powers there, Nasser Hadian, a University of Tehran political scientist, told The Iran Primer. 

Amid the shifting world order, they see China as the leader of an emerging Eastern bloc that includes Russia, Pakistan, and Iran. 

In 2021, Iranian oil exports to China reportedly averaged 818,000 barrels per day, although Beijing did not issue official numbers. For the first five months of 2023, it averaged about 1 million barrels per day.  

By 2023, Tehran sought a strategic relationship with Beijing because of its status as a rising global power and a potential partner in offsetting the impact of Western sanctions. But China primarily viewed Iran as an energy source. Beijing also viewed Tehran as a way to balance its ties—and diversify energy sources—in the volatile Middle East. 

Deepening ties with the Islamic Republic was also a means of ensuring stability in the Middle East, which China relied on for more than half its oil. Beijing worried that extraordinary economic pain in Iran may translate into more aggressive behavior on the international stage, which was a part of the reason for trade with Tehran, Murphy told The Iran Primer. 

Economically, the United States became China’s largest trade partner in the 2000s. By 2022, trade between the world’s two largest economies totaled US$759 billion—or 12% of China’s global trade. In contrast, China’s trade with Iran was slightly less than US$16 billion—or 0.25% of China’s global trade.  

Diplomatically, more than 1,000 US sanctions on Iran—for its nuclear program, missile proliferation, support for terrorism, and human rights abuses—also deterred China from deeper economic integration. Chinese companies face third-party sanctions if they are caught buying goods from Iran.  

Due to both factors, China has increasingly turned to trade with other Middle East countries. Its trade in 2022 with Saudi Arabia, Iran’s biggest rival in the Muslim world, was US$67 billion—or four times larger than the almost US$16 billion trade with Iran.

China’s trade with Israel, Iran’s nemesis in the Middle East, was US$25 billion—or 60% higher than trade with Iran.

“The Iran-China relationship was still quite transactional,” Murphy said. “It is a decreasingly important economic relationship in comparison to other powers in the region. China wants Iran to feel included and not engage in destabilizing behavior.”  

 

Is Pakistan liable to pay penalty to Iran for not completing its portion of gas pipeline?

An interesting debate has initiated that Pakistan would have to pay US$18 billion penalty to Iran for failing to construct its portion of Iran-Pakistan gas pipeline.

The project, aimed at supplying around 750 million cubic feet of natural gas to Pakistan daily, ran into snags, the chief being imposition of sanctions on Iran.

Originally this pipeline was named, Iran-Pakistan-India (IPI) pipeline. Pakistan was responsible for providing transit and security to the pipeline and in exchange get transit fee and also draw a small quantity of gas. However, under the US pressure India abandoned the project. Iran and Pakistan went ahead hoping that sanctions imposed on Iran would be withdrawn by the time project is complete. The US not only withdrew from nuclear talks but also imposed new sanction in Iran when Donald Trump was the US President.

Reportedly, Iran has already built its own portion of the pipeline but Pakistan has not, the work was to be completed by 2024. If Pakistan fails in completing its portion, Iran will have a right to demand compensation of US$18 billion.

The pipeline should have been completed by 2019 but the two countries revised their original agreement to give Pakistan more time to build its portion of the pipeline.

The Pakistani foreign ministry said it was going to discuss the problems with relevant parties, i.e. Iran and the United States.

Under the prevailing conditions, looming US sanctions on Iran, Pakistan just could not dare to compete this pipeline and buy gas from Iran. Therefore, no penalty can be imposed on Pakistan.

Technically, United States becomes liable to pay the penalty or let Iran and Pakistan go ahead with the project.

This demand gets credence because the United States is following double standards — being lenient with India in meeting its energy needs while punishing Pakistan for the same.

The gas from Iran via this pipeline is essential for meeting Pakistan’s energy requirements. If India is allowed by the United States to buy crude oil from Russia, why restrictions on Pakistan on buying gas from Iran?

Last year, Pakistan suffered serious problems amid the surge in international LNG prices as European buyers who could afford the higher prices took all available LNG in, leaving poorer countries such as Pakistan out in the cold and dark.

 

 

 

Iran-Saudi Arabia to boost economic co-op

During a meeting between Iran’s Finance and Economic Affairs Minister Ehsan Khandouzi and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, the two sides discussed the ways to expand economic cooperation and remove the barriers in the way of trade between the two countries.

In the meeting, which was held on the sidelines of the annual meeting of the board of executive directors of the Islamic Development Bank (IsDB) in Jeddah, the Saudi Arabian minister expressed satisfaction with the re-establishment of relations between Iran and Saudi Arabia and said, “We hope that quick steps will be taken in relations with Iran.”

“In this regard, it is necessary to remove the economic and trade barriers against the two countries”, he stressed.

Referring to the great opportunities for interaction and cooperation between the two countries, Al-Jadaan expressed hope that he will soon meet the Iranian finance and economic affairs minister in Riyadh.

The Iranian minister welcomed the progress of economic relations between the two countries and stated that the development of relations is important not only for Iran and Saudi Arabia but also for all countries in the region.

Khandouzi said these bilateral relations are very important not only from an economic point of view but also in the political and security fields.

Explaining Iran's program in the field of economic relations with Saudi Arabia, Khandouzi said, “At the government level, Iran and Saudi Arabia have not finalized any basic agreement in the field of investment, customs, and trade. In this regard, it is necessary to draw up and sign MoUs between the parties.”

The Saudi Arabian side, while agreeing to cooperate in the three fields of customs, trade, and investment, expressed hope that with the assistance of his country’s ministries, cooperation in the mentioned fields will be followed up.

 

Over 1500 companies participating in Iran Oil Show 2023

More than 1,500 Iranian and foreign companies are participating in the 27th Iran International Oil, Gas, Refining and Petrochemical Exhibition (Iran Oil Show 2023), being held at the Tehran Permanent International Fairgrounds during May 17-20.

The event is being participated by the companies active in various sectors including upstream oil and gas sectors, exploration and production, as well as domestic manufacturers, knowledge-based companies, startups and other companies related to the oil industry, in addition to technology parks and universities.

“Oil Industry, Technological Production, Optimal Consumption” is the motto of this year’s event.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of 9% in the past Iranian calendar year 1401.

Oil Minister Javad Oji has recently said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of 1400, and 190 million barrels more than the export in 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

Back in January, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.

Yemen Key Test in China Middle East Diplomacy

China scored a diplomatic coup by restoration of ties between Saudi Arabia and Iran, announced on Friday, March 10. But the two rivals for primacy in the Persian Gulf are still a long way off from sharing the neighborhood.

The first litmus test will be whether they can even share Yemen, where their proxies have been at war for eight years.

Given the intense rivalry and extreme volatility in their past relations, using terms like rapprochement and détente to describe the renewal of ties seem premature.

Even “reconciliation” remains to be seen. Since the I979 Islamic revolution in Iran, the two countries have gone through repeated cycles of intense hostility with only short-lived thaws.

The low points include the Saudi shooting down of four Iranian F-4 fighter jets in 1984, the Saudi killing of 275 Iranian pilgrims in Mecca in 1987, and the severance of diplomatic relations first from 1988 to 1991 and then again from 2016 to 2023.

Both breaks in relations were initiated by Saudi Arabia after Iranians ransacked the Saudi embassy in Tehran.

The high points saw visits to the Saudi kingdom by two former Iranian presidents.  Mohammed Khatami made the trip in 1999 - the first by any president since the Islamic revolution - and returned again for a four-day stay in 2002. Mahmoud Ahmadinejad went three times, twice in 2007. Saudi Crown Prince Abdallah, in turn, traveled to Tehran in 1997 for an Islamic summit and received red carpet treatment.

The two sides have tried in vain, again and again, to formalize a working relationship. Since 1991, the Iranians have repeatedly put forth a proposal for an alliance with the Saudi-led Gulf Cooperation Council (GCC) to establish security architecture for the Gulf. The Saudis have always viewed the proposition as a ruse to eliminate the US military presence there and therefore shown no interest.

Still the Saudis have at times signed pacts with the Iranians.  In May 1998, the two rivals signed a Comprehensive Cooperation Agreement and in 2001 a security agreement to fight together against terrorism, drug smuggling, and money laundering. The latter agreement was hailed in the Saudi press as historic and in the words of Iran’s ambassador to Saudi Arabia at that time, “the most important development in the history of relations between the two countries.” Neither agreement took hold.

Given this very checkered history in their relationship, the question is,  what chance does the latest restoration of ties have to, find an effective way to share the neighborhood and institute some sort of cold peace, as Obama put it in his 2016 interview with The Atlantic?

Saudi leaders have long insisted it is up to Iran to take the first step by showing some sign of retreat in its relentless drive to establish a key political role in Arab nations of the Middle East.

The main indicator for them is Yemen, Saudi Arabia’s southern neighbor where it has long been the dominant foreign power. Houthi rebels seized control of the capital Sanaa in September 2014, and Iran quickly came to their military and political support.

The Saudis responded with an invasion the following March and armed Yemeni tribes opposed to the Houthis. They also established a rival Yemeni government based in the south that gained international recognition, even though its rule has been increasingly disputed by secessionists there.

For Saudi Crown Prince Mohammed bin Salman (MBS), the Yemen venture has proven an albatross. He was personally responsible for leading it when the Saudi invasion began, as he had just been named defense minister by his father, King Salman. In fact, it was his first major foreign policy decision. It has led to the souring of his relations with the US Congress that has repeatedly demanded an end to all US military aid and sales to Saudi Arabia because of the disastrous outcomes of the war.

Right now, fighting between pro-Saudi and pro-Iranian Yemeni factions has reached a standstill, UN mediators last year negotiated a ceasefire, while periodically broken, still remains largely in place. Yemen itself is in ruins, however, and is one of the world’s worst humanitarian disasters, with 227,000 dead from famine alone, according to UN estimates.

The question now is whether Saudi Arabia and Iran can find a modus vivendi in Yemen upon which to build a real détente, or at least a cold peace.

This would probably require Saudi Arabia to recognize the Houthi government in Sanaa and its control over northern Yemen, where most of Yemen’s 33 million people live.

Iran would have to terminate arms supplies to the Houthis. These have included missiles and drones that the Houthis have rained down by the hundreds on strategic targets inside the Saudi kingdom, including its oil and gas facilities.

Saudi negotiators have held periodic talks for months now, with both emissaries from Iran in Baghdad and those of the Houthis in Muscat, Oman, but no agreement has been announced.

In any case, it remains far from clear if Iran is ready to stop arming the Houthis. On the contrary, a statement in early February from the US Central Command said, “US, British, and French warships had seized 5,000 rifles, 1.5 million rounds of ammunition, scores of anti-tank missiles, and parts for ballistic missiles from dhows plying the Gulf of Oman on their way from Iran to the Houthis.

They had carried out four seizures over the past two months. In addition, the British Navy declared it had captured more Iranian antitank missiles and fins for ballistic missiles from dhows on February 23.

These arms shipments could be the last before Iran stops as part of a deal with Saudi Arabia. Or, it could be a sign Iran is backing a new Houthi offensive in the making. The Houthis have been trying to extend their hold over Yemen to include its oil fields and pipelines in the center and south of the country.

A new campaign would almost certainly sink any hopes for an eventual Iranian-Saudi détente as well as China’s diplomatic bid to become a power player in the Gulf.

 

Saudis inspect embassy premises in Tehran

A Saudi technical team, headed by Nasser Al-Ghannoum visited the headquarters of the Saudi embassy in Tehran on Sunday, the second day of its visit to the Iranian capital. The delegation held consultations on the mechanisms for reopening the Kingdom’s diplomatic missions in Iran.

The Saudi delegation arrived in Iran three days after a meeting between Saudi Foreign Minister Prince Faisal bin Farhan and his Iranian counterpart Hossein Amir Abdollahian in Beijing. The foreign ministers had signed a memorandum of understanding to resume diplomatic relations between the two countries, nearly a month after the tripartite agreement reached between Saudi Arabia and Iran, under the mediation of China, in this respect.

The state-run Iranian ISNA news agency reported that the Saudi team reached on Sunday morning to inspect the embassy, after meeting with Mehdi Honardoust, the chief of protocol at the Iranian Foreign Ministry.

In the same vein, the Iranian Ministry of Foreign Affairs announced that its technical team will travel to Saudi Arabia, later this week, to inspect the Iranian embassy in Riyadh, and to prepare arrangements for the reopening of the Iranian embassy, ISNA reported.

Alireza Enayati, director general of Iran’s Foreign Ministry Office for Gulf Affairs, said that the Iranian delegation is putting the final touches on its visit to Saudi Arabia to reopen the embassy in Riyadh and the consulate in Jeddah. “We held preliminary consultations with Saudi Arabia. The Iranian team will be divided into two groups. One is in Riyadh, and the other is heading to Jeddah,” the official IRNA news agency quoted Enayati as saying.

About the date of the visit and resumption of the flight service, he said: “It is likely to be at the end of this week. Flights will resume between the two countries, according to the agreement concluded with Saudi Arabia.”

For its part, Tasnim news agency, affiliated with Iran’s Revolutionary Guard, said that the technical team will head to Saudi Arabia on Tuesday.

The first official meeting between the foreign ministers of Saudi Arabia and Iran in Beijing received considerable attention from Iranian analysts and observers, particularly regarding China’s growing role in the region. Despite domestic criticism of the policy of turning to the East, Iranian Supreme Leader Ali Khamenei has called for pursuing this policy to nullify the effects of US sanctions.

Heshmatollah Falahatpisheh, former Iranian parliament deputy and member of its National Security and Foreign Policy Committee, said that China is playing its own game of hegemony, in the way America has done during the last 100 years to be present in the international arena. “Both China and Saudi Arabia are counting the achievements of the tripartite agreement but unfortunately Iran did not properly pave the way for gaining achievements from this agreement. Saudis acted pragmatically in increasing the shares of their large companies, and moved towards ending the Yemen issue, but nothing happened on the part of Iran,” he said while noting, “the weakness of the political agreements is due to the lack of economic support.” However, Falahatpisheh, who is close to the reformists, believed that the tripartite agreement was reached in a suitable political climate.

News websites critical of the current government’s policy of distancing itself from the nuclear agreement continued to assert that the success of the agreement with Saudi Arabia, especially in the economic aspect, depends on reviving the nuclear agreement.

For its part, the Jamaran news website quoted international affairs analyst Ali Bigdeli as saying, “We are forced to solve the problem of the Joint Comprehensive Plan of Action in some way, and Saudi Arabia cannot invest in Iran without the nuclear agreement. There is no other way to revive our dying economy, and it is getting worse, every day, with the appreciation of the currency and the severe economic problems we face,” he said while noting that people are in a dilemma as there is no way to solve it, and that Russia cannot revive Iranian economy in any way.

Regarding the possibility of commercial exchanges with Saudi Arabia, even in the absence of any agreement with regard to the nuclear issue he said, “There may be superficial exchanges, but they are not important. It is important that our relations be with a country by which we can organize our failed economy,” he added.

On its part, Donya-e-Eqtesad newspaper highlighted major trade cooperation areas between Tehran and Riyadh, which has been circulated in Iranian circles since the announcement of the resumption of relations. “The latest reports showed that there is high potential for attracting capital in various fields of industry, mining, tourism and agriculture in Iran. There are also interests for Saudi businessmen in mineral products, medical tourism in Iran and Iranian tourism, in addition to the ability to enter Saudi food products to Iran, besides the plenty of Saudi investment opportunities,” the website pointed out.

Russia and Iran conspiring to weaken US dollar, alleges Israel

Russian Presidential Aide Igor Levitin, who is currently on a two-day trip in Tehran, met with the Secretary of Iran's Supreme National Council Ali Shamkani, and the two discussed ways to thwart Western sanctions.

During the meeting, Shamkhani expressed his satisfaction with the volume of economic cooperation between Russia and Iran, praising the path that started to reduce the influence of the dollar in regional and international economic exchanges.

These plans, he said, "will limit the dominance of the West over the world economy to the minimum."

The representatives also discussed the ongoing joint project, the North-South Transport Corridor (NSTC), which Shamkhani described as having a decisive role in changing the geometry of goods transit in the region.

The NSTC is a transport network for moving freights between Iran, Russia, Azerbaijan and other countries in Asia and Europe.

The transport corridor aims at creating new networks to avoid the US and the West as sanctions grow on Iran.

Levitin, for his part, expressed Moscow's readiness to invest in Iran's steel, oil and petrochemical industries.

Despite Russian efforts to weaken the US dollar, the currency has continued to gain this week, while the Russian rouble is having the worst week of the year so far.

The Russian rouble suffered its worst week against the dollar this year, tumbling on a lack of foreign currency in Moscow and on the sale of Western businesses in Russia, despite gaining slightly on Friday afternoon as traders locked in profits.

The rouble RUBUTSTN=MCX skidded more than 2% against the US dollar on Friday to an intraday low of 83.50, its weakest since April last year, and fell more than 2% against the euro to an intraday low of 91.32 against EURRUBTN=MCX.

The rouble had nosedived to 113 per US dollar after President Vladimir Putin ordered the invasion of Ukraine in February 2022, but the central bank and finance ministry helped stabilize the currency, and it strengthened to 50 per dollar in July 2022.

The West then imposed a price cap on Russian oil - the lifeblood of the Russian economy - late last year, since which the rouble has weakened from about 60 per US dollar to more than 80 US dollar this week.

Traders said the Russian currency has come under pressure recently from a cocktail of problems including the sale of Western assets to domestic investors, which stoked demand for dollars, while lower oil prices in March cut the country's export revenue.

The rouble is the third-worst performer among global currencies so far this year, behind only the Egyptian pound and the Argentine peso, Reuters calculations show.

"The Russian currency remains in fundamentally weak conditions," said Vladimir Evstifeev, head of analysis at Bank Zenik. He said exporters were reluctant to swap their export revenues for roubles in the expectation that the dollar would strengthen while importers were buying foreign currency in the expectation of a bounce back in consumer confidence.

"The rate of weakening of the Russian currency is increasing, so it is likely that the authorities will get involved in the situation on the foreign exchange market and conduct a series of verbal interventions in support of the rouble."

Can Russia and China restore balance to JCPOA?

As the United States doubles down on its diplomatic effort to reach a common consensus with Europe on the 2015 Iran nuclear deal, pundits raise speculation on how the European Union, particularly EU Foreign Policy Chief Josep Borrell, can save the day by setting the stage for Iran and the US to ultimately implement the nuclear deal in full.

These pundits rarely point to the fact that the European signatories to the nuclear deal – Joint Comprehensive Plan of Action (JCPOA) – have lost the neutrality needed to act as a go-between since Joe Biden won the US presidential election in November. The Europeans are now harboring even more hawkish views than Washington itself.

During the Trump administration, the European parties to the JCPOA – France, Germany and the UK (E3) – had been calling on Iran to fully implement the nuclear deal in the hope that Trump would lose the presidential election and then they will revive the JCPOA in collaboration with a more favorite Democratic administration.

Trump lost the election and was replaced by someone who had played a direct role in negotiating the JCPOA in the first place. But the Europeans were quick to renege on their promise to salvage the nuclear deal. They called for a new negotiation with Iran after Biden assumed office, one that would expand the JCPOA and add other thorny issues such as Iran’s defensive missile program and its regional activities to it.

The top diplomats of the E3 and the US reiterated this position during a recnt joint meeting.

“The E3 welcomed the prospect of a US and Iranian return to compliance with the JCPOA. The E3 and the United States affirmed their determination to then strengthen the JCPOA and, together with regional parties and the wider international community, address broader security concerns related to Iran’s missile programs and regional activities. We are committed to working together toward these goals,” the chief diplomats said in a joint statement after the meeting.

The Europeans are now planning an informal meeting of all JCPOA participants and the US. Citing a European official, Reuters said that the date of this meeting is yet to be set.  The official also pointed to a US willingness to accept an invitation from the EU to participate in a meeting of the P5+1.

Earlier, US State Department spokesman Ned Price said Washington was willing to attend a meeting of the P5+1, although the US is not a member of this group of major world powers.

“The United States would accept an invitation from the European Union High Representative to attend a meeting of the P5+1 and Iran to discuss a diplomatic way forward on Iran's nuclear program,” Price noted, referring to the UN Security Council's five permanent members and Germany.

Price’s remarks signified a U.S. desire to walk into the P4+1 with the help of the E3 even before lifting its sanctions on Iran.

Iran’s Foreign Ministry spokesman Saeed Khatibzadeh reminded the West that the US is still not a JCPOA member and the only way to get the JCPOA membership is to lift sanctions.

Because of US withdrawal from JCPOA, there is NO P5+1. It is now only Iran and P4+1. Remember, Trump left the room and tried to blow it up. Gestures are fine. But to revive P5+1, US must act lift sanctions. We will respond, Khatibzadeh said on Friday.

But while the E3 tries to sneak the US in the JCPOA without lifting the sanctions, two JCPOA parties, namely China and Russia, can ensure that the US would rejoin the nuclear deal after correcting the mistakes Trump made against Iran.

China took a step in this regard by saying that US should unconditionally return to the JCPOA and lift all sanctions.

Speaking at a news conference, China’s Foreign Ministry Hua Chunying said, “Currently the Iranian nuclear issue is at a critical stage with both opportunities and challenges. China holds that the return of the United States to the JCPOA is the only correct approach to resolve the impasse on this issue. All parties should act with greater urgency, work together to implement consensus reached at the foreign ministers' meeting last December, and push for the unconditional return of the United States to the JCPOA as soon as possible and the lifting of all sanctions on Iran. On its part, Iran should resume full compliance with the JCPOA. In the meantime, we call on all sides to remain calm and exercise restraint, avoid taking actions that will escalate the situation and reserve space for diplomatic efforts.”

Russia, for its part, reminded the West why the JCPOA ended up a failed deal. Dmitry Peskov, spokesman for the Kremlin, has welcomed a US decision to rescind the Trump administration’s restoration of all UN sanctions on Iran in September.

Peskov also said that the main reason for the non-implementation of the JCPOA is the sanctions pressure that the US put on Iran.

Also, Russian Deputy Foreign Minister Sergey Ryabkov told TASS that Iran cannot be suspected of carrying out a covert nuclear weapons program as the E3 and the US ramped up pressure on Iran, accusing it of pursuing nuclear activities that have no civil justifications.

“We have always said and are saying now that a state, which has an agreement on comprehensive guarantees with the International Atomic Energy Agency (IAEA) and which has been committed to this deal - and Iran has such an agreement, and a state, which has been fully observing the JCPOA for a long time, cannot be suspected of carrying out a covert program on weaponization in the nuclear field,” Ryabkov noted.

With the E3 working to pave the way for a US return to the JCPOA without lifting the sanctions, Russia and China have a unique opportunity to ensure that the dispute around the JCPOA is resolved reasonably. They need to make it clear to the West that a dispute settled unfairly is bound to break out in the not-so-distant future.

Can OPEC opt for production cut?

The Organization of the Petroleum Exporting Countries (OPEC) and its allies face a major challenge in 2020 as demand for crude is expected to fall sharply.

The IEA estimated non-OPEC supply growth would surge to 2.3 million barrels per day (bpd) next year as compared to 1.8 million bpd in 2019, based on production hike in the United States, Brazil, Norway and Guyana.

The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month.

While US supply rose by 145,000 bpd in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritize capital discipline.

Demand for crude oil from OPEC in 2020 will be 28.9 million bpd, the IEA forecast; one million bpd below the exporter club’s current production.

The recovery by OPEC’s de facto leader Saudi Arabia from attacks on the country’s oil infrastructure contributed 1.4 million bpd to the global oil supply increase in October of 1.5 million bpd.

With plans underway for the Aramco IPO and the persistent need for revenues to fund the government budget, Riyadh has every incentive to keep oil prices supported.

Saudi state oil company Aramco, the world’s most profitable firm, scheduled to start its share sale on 17^th November in an IPO that may help in mobilizing between US$20 billion to US$40 billion.

The IEA said that if some or all tariffs were lifted in coming months, world economic growth and oil demand growth would both rise significantly, though the rebound may not be immediate.

Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, but refining is set to rebound sharply in the fourth quarter and in 2020.

United States wants global oil industry to support its foreign policy agenda

According to a Reuters news, U.S. Secretary of State, Mike Pompeo has urged the global oil industry to work with President Trump administration to promote U.S. foreign policy interests, especially in Asia and in Europe and to punish the “bad actors” on the world stage. He was addressing the participants of a conference in Houston, where U.S. oil and gas executives, energy luminaries and officials of the Organization of the Petroleum Exporting Countries (OPEC) gather annually to discuss global energy development.

Pompeo said, “Washington would use all its economic tools to help deal with the situation in Venezuela, which is mired in a years-long economic crisis and where socialist President Nicolas Maduro is maintaining power despite being disavowed by the US and about 50 other countries”.

The US has imposed harsh sanctions in the past several months on two major world oil producers, Venezuela and Iran. Washington re-imposed oil sanctions on Iran to curb its nuclear, missile and regional activities. “We’re committed to bringing Iranian crude oil exports to zero as quickly as market conditions will permit,” said Pompeo.

He went on to the extent of saying, “We need to roll up our sleeves and compete – by facilitating investment, encouraging partners to buy from us, and by punishing bad actors.” He also declared, “U.S. oil and gas export boom had given the country the ability to meet energy demand.”

Referring to a natural gas pipeline expansion from Russia to Central Europe, Pompeo warned, “We don’t want our European allies hooked on Russian gas through the NordStream II project, any more than we ourselves want to be dependent on Venezuelan oil supplies.”

Pompeo also met with top oil executives for about an hour to try to persuade energy companies to help the administration’s efforts to boost crude exports to Asia and to support its policy of isolating Iran. The US seems adamant at making significant progress on a Middle East security alliance over the next few months. The alliance is an attempt to form a US-backed bloc of Sunni Muslim countries including Saudi Arabia, the United Arab Emirates and Kuwait as a bulwark against Shi’ite Iranian influence in the Middle East.

Pompeo criticized China for “blocking energy development in the South China Sea through coercive means,” which he said prevents Southeast Asian countries from accessing more than US$2.5 trillion in recoverable energy reserves.

Pompeo also termed Russia’s invasion of Ukraine an attempt to gain access to the country’s oil and gas reserves.