Turkey Ideally Placed to Defeat Trump Sanctions on Iran

Juan Cole claims Turkey, Iraq, and China will defy Trump sanctions. But saying and doing are two different things.

Juan Cole, Informed Comment, says Turkey, Iraq and China defy Trump on new Iran Sanctions, Act to Hold Tehran Harmless.

Let me first point out the EU said the same thing, but it won't. China might, but how does that get goods to Iran?

Iraq by itself is meaningless. It would also imply cooperation between Iraq and Iran.

India is more interesting. The Financial Tribune reported India to Revive Rupee Payment for Iran Oil Imports. That is from the First Iranian English Economic Daily, but the headline rings true. I do not doubt it a bit. Here are some interesting snips:

> India is looking to revive a rupee trade mechanism to settle part of its oil payments to Iran, fearing foreign channels to pay Tehran might choke under pressure from US sanctions, two government sources said.

> During a previous round of sanctions, India devised a barter-like scheme acceptable to Washington to allow it to make some oil payments to Tehran in rupees through a small state bank.

> Iran used the funds to import goods from India, Reuters reported. We are looking at reviving rupee mechanism ... We have to prepare ourselves, one of the sources told Reuters, adding that the current payment mechanism might not work from November.

> Refiners in India currently use State Bank of India and Germany-based Europaeisch-Iranische Handelsbank AG to buy Iranian oil in euros, according to IOC and other companies.

Oil Trades Directly in Euros

Read that last line carefully. Please note that Iranian oil trades directly in euros, not dollars.

India purchased oil both in Rupees and in euros, directly from Iran.

No one needs dollars to buy oil.

Is this hash settled once and for all? Unfortunately, no. Petrodollar conspiracy proponents will never stop making idiotic claims that people get sucked into.

With that, let's move on.

India Preparing for Cut in Oil Imports from Iran

Reuters reports India Preparing for Cut in Oil Imports from Iran.

> India's oil ministry has asked refiners to prepare for a 'drastic reduction or zero' imports of Iranian oil from November, two industry sources said, the first sign that New Delhi is responding to a push by the United States to cut trade ties with Iran.

> India has said it does not recognise unilateral restrictions imposed by the United States, and instead follows U.N. sanctions. But the industry sources said India, the biggest buyer of Iranian oil after China, will be forced to take action to protect its exposure to the U.S. financial system.

> India's oil ministry held a meeting with refiners on Thursday, urging them to scout for alternatives to Iranian oil, the sources said.

That is the difference between saying and doing. It is entirely believable that India will establish another Rupee exchange mechanism. However, it appears unlikely India will use it.

Let's return to Juan Cole.

Turkey, Iraq and China defy Trump on New Iran Sanctions

> The Trump administration is unlikely to have the same success in getting other countries to boycott Iranian petroleum as did the Obama administration in 2012-2015, though its officials are making a full court press in that regard.

> Proof came in the form of statements from the Turkish, Iraqi and Chinese governments yesterday. Turkish Economy Minister Nihat Zeybekci was scathing on Trumps aggressive moves against Iran. Turkey, he said, is not bound by the new US sanctions, which are unilateral. Reuters reports him saying in Ankara, The decisions that the United States makes are not binding on us. We would be bound by any decisions taken by the United Nations.

> Then Zeybekci, who is certainly speaking for newly reelected Turkish president Tayyip Erdogan, put the sting in the tail: We will try to pay attention so that Iran, which is a friend and brother country, doesnt experience injustice or is wronged in these matters.

> Turkey isnt just not cooperating with Washington on this issue, it is actively defying Trump and Pompeo and promising to run interference for Iran. This stance comes despite the conflict in Syria between Turkey and Iran, where they took opposite sides (though that conflict is winding down and likely few would make policy just on that basis anyway).

> Iraq also says that the change in Washington policy toward Iran will not affect its plans for economic cooperation with Tehran. The logistics of oil transport are such that it makes sense for Iraq to send Kirkuk oil to a refinery in Kermanshah for Iranian consumers, and to accept refined Iranian petroleum into south Iraq at the other end of the country.

> Russia had plans to invest $50 bn. in the Iranian hydrocarbon sector, and while some of those plans may now be shelved, Washington should not count on much cooperation from Vladimir Putin, who has an active battlefield alliance with Iran in Syria.

> Most important of all, Chinas massive Sinopec oil company says it needs Iranian oil for its new provincial refineries and has no plans to cut back.

Saying vs. Doing

Can we accept the headline as fact? The correct answer is no.

India and the EU said they would defy sanctions, then backed down.

Is it possible?

Yes. Turkey holds a lot of cards.

Synopsis

Turkey, in and of itself, is not a major global player. But Turkey has a critical land connection to both Iran and the EU.

If the US sanctioned Turkey it could take over US military bases or deny US air rights. Sanctioning Turkey would also drive the country straight into the arms of Russia.

And unless Trump sanctioned Turkey, the country could get goods easily through Greece or Bulgaria and pass them straight to Iran. This would be a huge boon to a country struggling financially with massive inflation.

If Turkey allows goods into Iran, would Trump bomb either country? That seems highly doubtful.

It only takes one major country to stand up to Trump for this whole thing to collapse or backfire spectacularly.

China is a huge global player, but China has no means of getting goods to Iran. Iran would have Yuan, but what would it do with them?

Domino Effect

If Turkey does go ahead with this threat, might not India, Russia, and Georgia join the party?

Yes, perhaps. Trump would have to then sanction India, China, Turkey, Russia, and Georgia.

You can see where this is headed. But, it has to start somewhere. As I said, saying and doing are different matters.

I cannot stand Turkish president Recep Tayyip Erdoğan, but he could do the whole world a big favor by standing up to Trump.

Mike "Mish" Shedlock

Comments (13)
No. 1-13
Kinuachdrach
Kinuachdrach

This would carry some more weight if the map did not reference the long-gone USSR.

There are so many other elements to this situation -- China & Russia both have their own problems with Islam; Turkey has its problems with Kurds; Iran and Iraq fought a horrible war within living memory, leaving horrible scars; Russia and Turkey were enemies for much of their histories. And of course all of those parties are a lot closer to deliverable Iranian nuclear weapons than the US.

President Trump obviously lives in the minds of some US commentators … but for much of the rest of the world, he is only one factor in a very complex environment.

2banana
2banana

Turkey is a NATO ally. You are talking madness for some discounted oil. Play stupid games, how is this for an scenario - the Kurds then get a homeland of all of Eastern Turkey with an American no fly zone and support. And then America moves to a Kurd airbase. Turkey gets kicked out of NATO and loses the 90% funding America provides.

And PS - Turkey and Russia hate each other with a history of war between them.

All for some discounted Iranian oil?


If the US sanctioned Turkey it could take over US military bases or deny US air rights. Sanctioning Turkey would also drive the country straight into the arms of Russia.

Tengen
Tengen

You should have paid more attention to that Iran/Iraq history, Kinu.

When they fought in the 80s, Saddam, being part of the minority Sunnis, purposely put his Shia majority in harms way during the war. The Iraqi Shia didn't want to fight Iran in the first place, so they only went through the motions. This didn't produce good results, which is a big part of why we greenlighted the use of chemical weapons for Iraq and looked the other way whenever they used them.

Since the fall of Saddam, Iraq has been led by its Shia majority, first by Al-Maliki and now Al-Abadi. This year, the rise of Al-Sadr's coalition portends even closer ties to Iran.

Even your China/Russia observations fall flat when you consider that China's Muslims (Uyghur and Hui) are Sunni, as are Russia's Muslims (Tatars and Chechens). These people don't have much to do with Iran.

Tengen
Tengen

Erdogan is a bit of a wild card, sort of like Orange Julius. He can be mercurial, but I figure if he can have his goons beat up American protestors in Washington and get away with it, he can pull this off too.

Remember that Erdogan asserts that Trump called HIM to apologize for the whole DC clash! This rings true when you consider that the US DOJ subsequently dropped all charges against the 11 of the 15 members of Erdogan's entourage who had been facing assault and other charges. As far as I know, nothing happened to the remaining four either.

wootendw
wootendw

"China might, but how does that get goods to Iran? "

Neither country is land-locked. Neither is India. Shipping by water is cheaper than over land. Am I missing something?