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The tightening of U.S. sanctions against Iran and the administration’s objective to restrict its oil exports could be causing internal strife among Iran’s leadership and leading the country to seek new economic ties.

In light of the increasing economic pressure, Iran’s economy and finance minister Farhad Dejpasand met on March 18 with Chinese officials for bilateral talks on boosting economic ties.

The United States seeks to cut Iran’s crude exports by 20 percent to below 1 million barrels per day starting in May, two sources told Reuters this month. In addition, the U.S. said that Iran lost $10 billion in oil revenue due to sanctions, a State Department official announced on March 13.

In a March 17 op-ed in Arab News, Majid Rafizadeh wrote that Iranian President Hassan Rouhani’s surprise visit to Iraq this month sought to increase economic ties in light of the increasing U.S. sanctions. The Iranian rial has continued to dive and dropped another 30 percent since the beginning of the year, noted Rafizadeh.

Internal tensions and the Zarif ‘resignation’

Amir Toumaj, an independent Iran analyst based in Washington, D.C., told JNS that Iranian Foreign Minister Javad Zarif’s resignation stunt, where he resigned only for Rouhani to reject the move, was meant to push back against being marginalized.

It was speculated that Zarif resigned after he was kept out meetings with visiting Syrian President Bashar Assad.

“While it may have somewhat stabilized Zarif’s position, it won’t meaningfully change the fundamental dynamic of foreign-policy decision-making, which is dominated by supreme leader Ali Khamenei and the IRGC,” said Toumaj.

After Zarif said that money-laundering was pervasive in Iran, he was attacked by officials at the highest levels, and Rouhani did not defend him, added Toumaj.

During the latest visit by Assad, it was IRCG commander Qasem Soleimani who accompanied Assad on meetings with Khamenei and his senior staff. “Soleimani blamed Rouhani’s staff—most likely referencing Chief of Staff Mahmoud Vaezi, who is known for having a rivalry with Zarif—for not inviting the foreign minister to the meeting.”

It was apparent that Rouhani and Zarif had no reason to be at the meeting between Khamenei and Assad since it is obvious to the world that the presidency is practically irrelevant on foreign-policy files like Syria, where Khamenei and Soleimani are the main players, assessed Toumaj.

Last year, Khamenei dispatched his foreign-policy adviser, Ali Akbar Velayati, as envoy on an important trip to Russia. Many wondered why Zarif was not sent. Furthermore, continued Toumaj, “Zarif was embarrassed after the Europeans arrested an intelligence operative using his cover as a diplomat in a bombing plot in Paris. And there were other plots that were foiled, all of this while Zarif was trying to foster good ties with Europe over salvaging the Iran nuclear deal,” known as the Joint Comprehensive Plan of Action, or JCPOA.

Europeans say the Paris plotter acted on orders from a senior official in the intelligence ministry. “Previous assassinations on European soil were approved by top officials, including Khamenei. It is highly unlikely that the latest attempts were rogue,” said Toumaj.

The Financial Action Tast Force (FATF), the inter-governmental body established in 1989 to regulate the combating of money-laundering and terrorist financing, gave Iran a deadline of June to comply with its demands or face “increased supervisory examination for branches and subsidiaries of financial institutions based in Iran.”

Toumaj and others have speculated that opposition to FATF has also factored into Zarif’s decision. Zarif has had little progress with the FATF, which the U.S. administration says is crucial for Iran to be connected to the global financial system. “Khamenei and the IRGC have voiced opposition and are skeptical of Zarif’s approach to end Iran’s financial chokehold by the FATF.

“It is very hard to imagine that FATF would accept Tehran’s exemption for designated terrorist groups such as Hamas and Hezbollah,” said Toumaj.

JCPOA and the Europe gambit

When it comes to the Iran nuclear deal and Europe, Zarif is attempting to persuade Europe to break with the United States on sanctions and continue economic relations. However, Zarif “knows that Europe is unlikely able to deliver on Tehran’s demand to expand trade in areas where the U.S. has imposed sanctions,” argued Toumaj.

Rouhani, by rejecting the resignation letter, showed that he needs Zarif.

“Khamenei approves of Zarif, especially because he keeps Europe and the U.S. divided,” he said. “Zarif knows his Western audience well and perpetuates the perception that there are ‘moderates’ in Iran that the West should support as a matter of policy.”

“Moderates” and “hardliners” may and do disagree on certain foreign-policy issues, he explained, but “there is a consensus on some of the key issues, and ultimately, Khamenei has the final word on all matters of foreign policy with the IRGC having significant influence.”

Therefore, as economic pressure continues to be amped up and Tehran suffers greater fiscal hardship as a result, it can be expected the domestic unrest will increase, and as a result, Rouhani’s administration would be made the scape goat.

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