Iran, energy, and geopolitics in 2019: From "strategic patience" to "lose-lose"

Abstract

In the geopolitical rivalry between Iran and the United States, energy is in the spotlight. Since the US exit from the nuclear deal (the Joint Comprehensive Plan of Action, JCPOA) in May 2018 and the launch of the "maximum pressure" campaign against Tehran, Washington seeks to curtail Iran's oil exports. Trying to bring Iran's oil exports to "zero", by the beginning of May 2019, the Trump administration ended all "significant reduction exceptions" (often referred to as "waivers) for importers of Iranian oil. Only days later, Tehran changed its strategy. For a full twelve months after the US departure from the nuclear accord, Iran pursued an approach described by Iranian officials as "strategic patience": Tehran remained in full compliance with the JCPOA in the hope that the European Union would ensure at least a partial compensation. Exactly one year after the US announced to exit the JCPOA, on May 8th, President Hassan Rouhani announced a 60-day deadline for Europe to ensure sanctions-relief and threatened to reduce JCPOA compliance. Over the summer of 2019, Iran not only started to breach several key limits under the JCPOA. The Persian Gulf region also saw a deterioration of its security situation. Iran shot down a US drone in June 2019. Moreover, since May, a number of attacks against oil tankers departing or anchoring in the Arabian Peninsula as well as against oil infrastructure in Saudi Arabia occurred. While Tehran denies responsibility, the incidents call to mind earlier statements by the Iranian President. In December 2018, Rouhani warned that "If one day they want to prevent the export of Iran's oil, then no oil will be exported from the Persian Gulf". Effectively, Iran now pursues a "lose-lose" strategy, which seeks to inflict costs for the US and its allies in the region over its sanctions-policy against Iran as well as to build leverage for potential negotiations in the future. Effectively, Iran now pursues a "lose-lose" strategy, which seeks to create a nexus between US economic sanctions (esp. against Iranian oil), nonproliferation, and regional security. Ultimately, Tehran thereby hopes to inflict costs for the US and its allies in the region over the sanctions-policy against Iran as well as to build leverage for potential negotiations in the future. Against this backdrop, the paper will discuss: - The run up to May 2019- The US exit from the JCPOA & sanctions- Tehran's "strategic patience"- Europe's unsuccessful efforts at sanctions-relief* Main events since May 2019- Iran's reduced JCPOA compliance- Regional security situation* The rationale behind Iran's new approach- Under "strategic patience", the US "maximum pressure" campaign had no costs for Washington and its allies- Tehran's efforts to inflict a price for the sanctions-policy- Tehran's efforts to showcase its capabilities / highlight vulnerabilities of neighboring countries- Tehran's efforts to build leverage for future negotiations* Why Iran feels vindicated- US hesitant to confront Iran militarily- UAE changing policy (dispatching delegations to Iran, easing restrictions on Iranian business in Dubai, changing policy in Yemen)- Saudi Arabia apparently reaching out to Iran via Iraq- EU did not trigger the JCPOA dispute mechanism