The US withdrew from the P5+1 deal earlier this year, but all other parties remain, and intend to keep up their respective commitments. European nations are concerned the US attempts to undermine the deal with new sanctions will fuel instability across the region.
The European Union has already committed to try to save the nuclear deal, and has passed legislation aiming to protect European companies who don’t comply with US sanctions. A lot of companies are still backing away, however, apparently unsure how well the EU will follow through on this.
The US is facing resistance from other signatories of the deal too, however. China has already ruled out complying with US demands that they stop buying Iranian oil. China buys about 35% of Iran’s exported oil, and likely will continue to do so.
Iran Scrambles to Ready Economy for US Sanctions
With US sanctions against Iran officially going back into place on August 6, the Iranian government is scrambling to take some last minute measures to shore up their economy, and particularly their currency, before the sanctions start to hit.
Iran wants to make sure that what foreign currency does flow overseas is strictly allocated to a handful of important industries. The fall of prices for the rial has been heavy related to the surge in the price of gold, as economic uncertainty has many Iranians running to precious metals, and gold imports surged in recent weeks.
US sanctions aim to limit, if not totally eliminate, Iran’s access to foreign markets. That also has Iran trying to make some last-minute purchases while they know they still can. Five new planes were purchased from ATR for the state airline. It’s far short of the new fleet of airliners Iran initially sought, but the best they can do with the US blocking Boeing and Airbus from fulfilling contracts.
Since the August 6 date has been known for months, it’s likely much of the market reaction to the sanctions is already factored in to Iran’s currency pricing. China’s refusal to comply with US sanctions, likewise, is a sign that Iran won’t be totally cutoff from world markets. Still, it will take awhile before the full extent of the US attempt, and its effectiveness, is known.