Tag Archives: economic sanctions

State of the Union, Biden Reflects on a Strong America

Proverbs 12:19: “The lip of truth shall be established for ever: but a lying tongue is but for a moment.”

Important Takeaways:

  • Biden Contends ‘We Are Stronger Today’ in State of the Union Address, GOP Says Pro-Family Revolution Coming
  • Biden began his speech by honoring all Ukrainians and the Ambassador of Ukraine, Oksana Markarova, who was in attendance with First Lady Jill Biden. “We the United States of America stand with the Ukrainian people,” the president said.
  • “Throughout our history, we’ve learned this lesson – when dictators do not pay a price for their aggression, they cause more chaos,”…
  • Biden said he’s enforcing economic sanctions and cutting off Russia’s largest banks from the international financial system.
  • The president addressed the brutal U.S. inflation spike which has reached a 40-year high as the economy tries to recover from the pandemic. “Lower your costs, not your wages,” he said. “Make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America. More jobs where you can earn a good living in America. And, instead of relying on foreign supply chains – let’s make it in America.”
  • Biden also addressed the state of the COVID-19 pandemic, making it his third big topic in the speech. “Because of your resilience and the tools we have, tonight I can say we are moving forward safely, back to more normal routines.
  • Biden concluded his address by declaring that America is the “strongest, freest, and most prosperous nation the world has ever known. We are stronger today than we were a year ago. And we will be stronger a year from now than we are today.”

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U.S., Russia set for Jan 10 security talks amid Ukraine tensions

By Trevor Hunnicutt and Andrew Osborn

WASHINGTON/MOSCOW (Reuters) -U.S. and Russian officials will hold security talks on Jan. 10 to discuss concerns about their respective military activity and confront rising tensions over Ukraine, the two countries said.

A spokesperson for U.S. President Joe Biden’s administration announced the date late on Monday, and said Russia and NATO were also likely to hold talks on Jan. 12, with a broader meeting including Moscow, Washington and other European countries set for Jan. 13.

Russian Deputy Foreign Minister Sergei Ryabkov confirmed those dates on Tuesday and said he hoped the talks with the United States in Geneva would start a process that would give Moscow new security guarantees from the West.

Such guarantees are a longstanding demand of Moscow, which alarmed the West by massing tens of thousands of troops near Ukraine in the past two months following its seizure of Ukraine’s Crimea peninsula in 2014 and its backing of separatists fighting Kyiv troops in eastern Ukraine.

The European Union demanded a say in any security deal.

“Any discussion about European security must happen in coordination with and participation of EU,” said EU foreign affairs chief Josep Borrell after talking to British foreign minister Liz Truss.

The Jan. 12 NATO meeting would be held in EU hub Brussels, Ryabkov said, while the Jan. 13 talks would involve the Vienna-based Organization for Security and Cooperation in Europe, which includes the United States and its NATO allies, as well as Russia, Ukraine and other ex-Soviet states.

CONCERNS ON THE TABLE

Russia has denied plans for an assault on Ukraine but says it could take unspecified military action if its security demands are not met.

Moscow, worried by what it says is the West’s re-arming of Ukraine, has said it wants legally-binding guarantees NATO will not expand further eastwards, and that certain offensive weapons will not be deployed to Ukraine or other neighboring countries.

The U.S. administration has threatened to impose economic sanctions if Russia attacks Ukraine. It says it cannot promise a sovereign state such as Ukraine would never join NATO.

“When we sit down to talk, Russia can put its concerns on the table, and we will put our concerns on the table with Russia’s activities as well,” said the spokesperson for the U.S. National Security Council, who declined to be identified. The spokesperson said no decisions would be made about Ukraine without Ukraine.

A U.S. official, speaking on the condition of anonymity, told Reuters the United States would keep the Harry Truman carrier in Europe for now rather than sending it to the Middle East.

The official said there were no plans to move it closer to Ukraine and despite the Russian troop buildup, there was still no U.S. warship in the Black Sea.

Biden on Monday signed into law a spending bill that, among other things, will provide $300 million for an initiative supporting Ukraine’s armed forces and billions more for European defense broadly.

Russia’s annexation of Crimea and support for the separatist uprising in the east of Ukraine resulted in Kyiv losing control of a swath of territory in a conflict it says killed 15,000 people.

Major combat ended with a ceasefire in 2015, but deadly clashes still take place regularly.

(Reporting by Trevor Hunnicutt and Andrew Osborn; Additional reporting by Maria Kiselyova, Olzhas Auyezov, Idrees Ali and Gabriela Baczynska; Editing by Himani Sarkar, Michael Perry, Peter Graff and Angus MacSwan)

Costco in Caracas: how Florida goods flood Venezuelan stores

By Shaylim Valderrama and Sarah Kinosian

CARACAS/MIAMI (Reuters) – While U.S. President Donald Trump wants to drive Venezuela’s socialist ruler out of power with economic sanctions, there has in fact been a burgeoning influx of American-bought goods from Nutella spread to Oreo cookies.

Many toiletries, food items and other imports became impossible to find during Venezuela’s economic implosion under President Nicolas Maduro. Yet now they line the shelves in scores of new U.S. dollar-only shops known as “bodegones”, providing an unlikely safety valve for Maduro.

The reason?

Venezuelan businessmen have taken advantage of his government’s quiet abandonment of price, currency and import controls to buy direct from U.S. wholesalers including Costco and Walmart.

The goods are delivered to Florida-based door-to-door services run by Venezuelans, according to 11 interviews with customs agents, operators and businessmen. The products move in bulk via shipping companies with bases in south Florida who have this year enjoyed a 100% exemption of import duties and waiver of some paperwork at the Venezuelan end, the sources added.

“Everything our customers want from the United Sates, we’ve managed to offer here!” enthused Hector Mambel, who runs a “bodegon” in Puerto Cabello port with a “Mini Walmart” sign outside using the same design as the U.S. giant he buys from.

The shift shows how Venezuela’s economy is evolving to survive sanctions that have hit oil exports.

The trade from Florida does not violate Trump’s sanctions because they target business with Maduro’s government not with private entrepreneurs. It has, however, bemused some Venezuelans used to constant “anti-imperialist” rhetoric.

“I don’t understand this government that speaks ill of the ‘gringos’ and yet we now see U.S. products abound in stores and everything is in dollars,” said teacher Ligia Martinez, 38, holding a bag with purchases of cereal, tuna and cake mix.

She bought the goods at a “bodegon” in the city of Valencia with dollar remittances sent from family abroad.

It was only last year, as the local bolivar currency depreciated precipitously amid hyperinflation, that Maduro lifted a longstanding prohibition on dollar transactions.

Though the goods in the corner-shops are out of reach for most bolivar-earning Venezuelans, a well-heeled elite with dollars makes for a viable business in indulgence products.

“I SELL EVERYTHING”

The “bodegones” are reminiscent of the dollar-only stores communist Cuba ran for foreigners in the 1990s.

Reuters found 120 new such stores in Caracas alone, primarily in middle class areas, outnumbering the 27 bolivar supermarkets in those areas. Competition has brought down the price of niche-market items such as boutique hair products.

The abundance on shelves contrasts with years of scarcity of basics from shampoo to milk borne out of socialist regulations that often forced merchants to sell below cost.

“Bodegon” owners often buy online or partner with door-to-door services who scour chains for knock-down prices.

“Our customers ask us to buy at Costco or (Walmart affiliate) Sam’s Club in the United States and we import what they ask for them,” said an operator of a shipping company that brings supplies from Miami to Caracas.

At least half of the stores Reuters visited sold products from Members Mark, which is Sam’s Club’s private brand, and Costco’s Kirkland brand. Popular items include pancake mix, Pringles, ketchup and cereal, often selling for double or more their U.S. price.

Some of the “bodegones” buy from wholesale importers, meaning they have to hike prices further for margins, so pancake mix for $6.50 or thereabouts in Costco goes for $14 to $20 in Venezuela depending on how many hands it has been through.

Some Venezuelans offer imports direct via Instagram.

“Everything I bring from Miami, I sell,” said one small online merchant, noting his compatriots’ love of foreign goods. “There’s more competition these days, but it’s still good business because Venezuelans are snobbish.”

Costco declined to comment, while Walmart did not respond to a request. Venezuela’s Information Ministry, tax authority and state port agency also did not respond to requests for comment.

Asked for its view of the trade, given the underlying aim of sanctions, the U.S. Treasury Department did not respond.

This year’s waiver of import duties and some documentation has been a boon to businessmen, used to crippling bureaucracy and regulations for years. “These imports move with ease, everything is exempted,” said one trader, who brings in products at La Guaira port outside Caracas.

The exemptions expire this month but may be extended.

Felipe Capozzolo, head of Consecomercio chamber of commerce, said the “bodegones” had become an unofficial part of “state policy” to enable Venezuela to stay supplied under sanctions and thus ease pressure on the government.

Maduro himself acknowledged the help from dollar transactions, saying last month they were an “escape valve” for the suffering economy. “I don’t view it badly … this process they call ‘dollarization’,” he said.

Though data has for years been scarce in Venezuela, local think tank Econalitica estimated that in October a remarkable 54% of transactions in main cities was in foreign currency.

Deisy Ruiz, a 47-year-old secretary is among them, buying Nutella for her 20-year-old son’s birthday at a store in the upscale Los Palos Grandes district of east Caracas.

“Just a little one – as a treat!” she said.

(Reporting by Corina Pons, Shaylim Valderram, Mayela Armas in Caracas, Sarah Kinosian in Miami, Tibisay Romero in Puerto Cabello and Valencia; Editing by Corina Pons, Brian Ellsworth and Andrew Cawthorne)

As options narrow on Syria, Trump prepares to drop sanctions hammer on Turkey

By Idrees Ali and Humeyra Pamuk

WASHINGTON (Reuters) – President Donald Trump’s administration is set to impose economic sanctions on Ankara, potentially as early as this week, for its incursion into northern Syria, one of the few levers the United States still has over NATO-ally Turkey.

Using the U.S. military to stop the Turkish offensive on U.S.-allied Kurdish fighters was never an option, defense officials have said, and Trump asked the Pentagon on Sunday to begin a “deliberate” withdrawal of all U.S. troops from northern Syria.

After Treasury Secretary Steven Mnuchin said on Friday that Trump had authorized “very powerful” new sanctions targeting Turkey, the administration appeared ready to start making good on Trump’s threat to obliterate Turkey’s economy.

On Sunday, Trump said he was listening to Congress, where Republicans and Democrats are pushing aggressively for sanctions action.

“Dealing with @LindseyGrahamSC and many members of Congress, including Democrats, about imposing powerful Sanctions on Turkey,” Trump said on Twitter, referring to the loyal Trump ally and U.S. senator who lambasted the president last week.

“Treasury is ready to go, additional legislation may be sought. There is great consensus on this. Turkey has asked that it not be done. Stay tuned!” he added.

A U.S. official, speaking on condition of anonymity, told Reuters that sanctions were “being worked out at all levels of the government for rollout.”

Trump is struggling to quell harsh criticism, including from some of his staunchest Republican backers, that he gave Turkish President Tayyip Erdogan a green light to attack the Kurds last Sunday when he decided to pull a small number of U.S. troops out of the border area.

Turkey’s offensive aims to neutralize the Kurdish YPG militia, the main component of the Syrian Democratic Forces (SDF) and seen by Ankara as a terrorist group aligned with Kurdish insurgents in Turkey. But the SDF has also been Washington’s key ally in fighting that has dismantled Islamic State’s jihadist “caliphate” in Syria.

Trump’s decision, rooted in his long-stated aim to get the United States out of “endless wars,” has prompted bipartisan concerns that it opens the door to the revival of Islamic State.

While sanctions appear to be the strongest tool of deterrence, the United States and its European allies could also ponder arms sales bans and the threat of war crimes prosecutions.

“Good decision by President @realDonaldTrump to work with Congress to impose crippling sanctions against Turkeys outrageous aggression/war crimes in Syria,” Graham tweeted.

‘MONUMENTAL FAILURE’

It is unclear what sanctions are in the order drafted last week, which Mnuchin said was ready for activation at any moment, and whether they would be as severe as what lawmakers are proposing.

Representatives Eliot Engel, the Democratic chairman of the U.S. House of Representatives Foreign Affairs Committee, and Mike McCaul, the committee’s senior Republican, introduced a bill last Friday that would sanction Turkish officials involved in the Syria operation and banks involved with Turkey’s defense sector until Turkey ends military operations in Syria.

It also would stop arms from going to Turkish forces in Syria, and require the administration to impose existing sanctions on Turkey for its purchase of a Russian S-400 missile-defense system.

Turkey’s Foreign Ministry said late on Friday that Turkey would retaliate against any steps aimed at countering its efforts to fight terrorism, in response to the announcement of possible U.S. sanctions against Turkey.

The United States has successfully gone after Turkey with sanctions and tariffs before, hitting Ankara last year to pressure authorities to return an American pastor on trial for terrorism charges.

The United States could look at targeting arm sales to Turkey, something a number of European countries have already done. France said on Saturday that it had suspended all weapon sales to Turkey and warned Ankara that its offensive in northern Syria threatened European security.

The White House could also look at increasing pressure on Turkey over reports of human rights abuses during the offensive, with a threat of war crimes prosecutions.

The United States is looking into reports that a Kurdish politician and captured Kurdish fighters were killed in northeastern Syria amid Turkey’s offensive, a State Department spokesman told Reuters, adding that Washington found the reports disturbing.

In response to the reports, the U.S. official said: “This is awful. All these are among the issues that is addressed

by our executive order,” referring to the sanctions.

Experts doubted that any of the U.S. punishments would make Erdogan change his mind, given his long-held belief that the Kurdish fighters in Syria threaten national security and whom Ankara sees as a branch of the Kurdistan Workers Party (PKK).

“This is a monumental failure on behalf of the United States,” said Aaron Stein, director of the Middle East program at the Foreign Policy Research Institute think tank.

Stein said it would be the Syrian government or Russia, not American sanctions, that could stop the Turkish operation.

“The only thing that will stop them is if the regime or the Russians move in significant numbers to where they stop,” Stein said.

The Syrian army will deploy along the length of the border with Turkey in an agreement with the Kurdish-led administration in northern Syria to help repel a Turkish offensive, the Kurdish-led administration said on Sunday.

The United States does have one person that Erdogan has long wanted extradited: the U.S.-based Muslim cleric Fethullah Gulen, accused by Turkey of orchestrating a failed 2016 military coup against Erdogan.

U.S. officials have said the courts would require sufficient evidence to extradite the elderly Gulen, who has denied any involvement in the coup and has lived in self-imposed exile in the United States since 1999.

(Reporting by Idrees Ali and Humeyra Pamuk; Editing by Mary Milliken and Peter Cooney)

‘We only want to sell our oil,’ Iran official says before nuclear talks

FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo

By Francois Murphy

VIENNA (Reuters) – Iran’s main demand in talks aimed at saving its nuclear deal is to be able to sell its oil at the same levels that it did before Washington withdrew from the accord a year ago, an Iranian official said on Thursday.

Iran is threatening to go over the maximum amount of enriched uranium it is allowed under the deal in retaliation for crippling U.S. economic sanctions imposed in the past year. It is just days away from that limit, diplomats say, and going over it could unravel the accord.

Senior officials from Iran and the deal’s remaining parties will meet in Vienna on Friday with the aim of saving the agreement. But with European powers limited in their ability to shield Iran’s economy from U.S. sanctions it is unclear what they can do to provide the large economic windfall Tehran wants.

“What is our demand? Our demand is to be able to sell our oil and get the money back. And this is, in fact, the minimum of our benefit from the deal,” the official told reporters on condition of anonymity.

“We are not asking Europeans to invest in Iran… We only want to sell our oil.”

European powers and Iran have set up a mechanism for barter trade called Instex that would net out amounts at either end but it is not yet operational and diplomats have said it will only be able to handle small volumes for items like medicine, not the large oil sales Iran is seeking.

“Europeans should either buy oil from us or give its money (price) to us,” the official said.

“Instex is a netting company. It is supposed to net the accounts between importers and exporters. And the only export of Iran to Europe is oil. So if they don’t buy oil from us there is no money to be netted between import and export.”

Until its demand is met, Iran will continue on its current path and go over limits of the deal one by one, starting with the uranium enrichment level, he said, adding that those steps could also be undone quickly, such as by ‘downblending’ enriched uranium with natural uranium to reduce its stock.

KILL THE DEAL?

Going over such central limits of the deal could prompt European powers to re-impose sanctions through a process known as ‘snapback’. The official said if that happened the deal would be dead.

“I believe and I think the Europeans are wise enough not to kill the deal for something which is easily reversible,” he said.

If the Europeans did, however, go to the U.N. Security Council to carry out the snapback process, that could prompt Iran to abandon its current policy of engagement and pull out of the nuclear Non-Proliferation Treaty (NPT) as North Korea did, he said.

“Going out of NPT doesn’t happen immediately. It needs three months’ notification in advance. Even in that scenario, there is still a chance for diplomacy,” he said.

(Reporting by Francois Murphy, Editing by Andrew Heavens, William Maclean)

Iran says U.S. sanctions on Khamenei mean end of diplomacy

FILE PHOTO: Iran's Supreme Leader Ayatollah Ali Khamenei waves his hand as he arrives to deliver a speech during a ceremony marking the 30th death anniversary of the founder of the Islamic Republic Ayatollah Ruhollah Khomeini in Tehran, Iran June 4, 2019. Official Khamenei website/Handout via REUTERS

By Parisa Hafezi

DUBAI (Reuters) – New U.S. sanctions against Iran’s supreme leader and foreign minister have closed off diplomacy, Iran said on Tuesday, blaming the United States for abandoning the only route to peace just days after the two foes came within minutes of conflict.

U.S. President Donald Trump signed an executive order imposing sanctions on Monday against Supreme Leader Ayatollah Ali Khamenei and other senior figures. Sanctions against Foreign Minister Mohmmad Javad Zarif are expected later this week.

The moves came after Iran shot down a U.S. drone last week and Trump called off a retaliatory air strike minutes before impact, which would have been the first time the United States had bombed Iran in decades of hostility between them.

Trump said he decided at the last minute that too many people would die.

“Imposing useless sanctions on Iran’s Supreme Leader and the commander of Iran’s diplomacy is the permanent closure of the path of diplomacy,” Iranian Foreign Ministry spokesman Abbas Mousavi said on Twitter.

“Trump’s desperate administration is destroying the established international mechanisms for maintaining world peace and security,” Mousavi tweeted.

In a televised address, President Hassan Rouhani said sanctions against Khamenei would have no practical impact because the cleric had no assets abroad.

Rouhani, a pragmatist who won two elections on promises to open Iran up to the world, described the U.S. moves as desperate and called the White House “mentally retarded” – an insult Iranian officials have used in the past about Trump but a departure from Rouhani’s own comparatively measured tone.

Rouhani and his cabinet run Iran’s day-to-day affairs, while Khamenei, in power since 1989, is Iran’s ultimate authority.

“The White House actions mean it is mentally retarded,” Rouhani said. “Tehran’s strategic patience does not mean we have fear.”

Russian Foreign Minister Sergei Lavrov said the situation around Iran was developing toward a dangerous scenario, RIA news agency reported.

“OPEN DOOR”

Trump’s hawkish national security adviser, John Bolton, visiting Israel, repeated earlier offers to hold talks, as long as Iran was willing to go beyond the terms of a 2015 nuclear deal with world powers which Trump abandoned last year.

“The president has held the door open to real negotiations to completely and verifiably eliminate Iran’s nuclear weapons program, its pursuit of ballistic missile delivery systems, its support for international terrorism and other malign behavior worldwide,” Bolton said in Jerusalem. “All that Iran needs to do is to walk through that open door.”

The United States has imposed crippling economic sanctions against Iran since last year, when Trump withdrew from an agreement between Tehran and world powers to curb Iran’s nuclear program in return for the lifting of sanctions.

The crisis has escalated sharply since last month, when the Trump administration tightened the sanctions, ordering all countries to halt purchases of Iranian oil.

That has effectively starved the Iranian economy of the main source of revenue Tehran uses to import food for its 81 million people, and left Iran’s pragmatic faction with no benefits to show for its nuclear agreement.

Washington says the 2015 agreement reached under Trump’s predecessor Barack Obama did not go far enough because it is not permanent and does not cover issues beyond the nuclear program, such as missiles and regional behavior.

Iran says there is no point negotiating with Washington when it has abandoned a deal that was already reached.

The downing of the U.S. drone – which Iran says was over its air space and the United States says was international skies – was the culmination of weeks of rising tensions that had begun to take on a military dimension.

The United States and some regional allies have blamed Iran for attacks on tankers in the Gulf, which Tehran denies. Washington’s European allies have repeatedly warned both sides of the danger that a small mistake could lead to war.

Russian Security Council Secretary Nikolai Patrushev came to Iran’s support, saying the drone was in Iranian airspace when it was shot down and that the evidence on the tanker attacks was of poor quality and unprofessional, not enough to draw conclusions.

During a visit to Jerusalem, Patrushev also said it was unacceptable to portray Iran as a threat to international security and called for restraint to help defuse the situation.

Washington says forcing Iran to the table is the purpose of its sanctions. Tehran has said it is willing to talk if the United States lifts the new sanctions first, although Tuesday’s statements appear to toughen that stance.

Trump is leaving a path open to diplomacy with Iran but Tehran would be making a mistake if it interprets his restraint over the downing of a drone as weakness, U.S. disarmament ambassador Robert Wood told a conference in Geneva.

“We will not initiate a conflict against Iran, nor do we intend to deny Iran the right to defend its airspace but if Iran continues to attack us, our response will be decisive,” he said.

U.S. officials have launched a diplomatic campaign to rally their allies in the face of the escalating crisis. Foreign Secretary Mike Pompeo jetted to the Middle East on Monday to meet leaders of Saudi Arabia and the United Arab Emirates, Gulf Arab states that favor the toughest possible line against Iran.

The U.S. envoy on Iran, Brian Hook, is visiting Europe, where he is likely to get a frostier reception from allies who support the nuclear deal. They believe Trump’s decision to quit the accord was a mistake that has strengthened Iran’s hardline faction, weakened its pragmatists and endangered regional peace.

Iran says it still aims to comply with the nuclear deal, but cannot do so indefinitely unless it receives some benefits. It has given European countries until July 8 to find a way to shield its economy from U.S. sanctions, or else it will enrich uranium to levels banned under the deal.

(Reporting by Parisa Hafezi; Writing by Peter Graff; Editing by Jon Boyle/Mark Heinrich)

U.S. warns Iran against space launches, ballistic missiles

FILE PHOTO: U.S. Secretary of State Mike Pompeo speaks at a news conference during the NATO foreign ministers' meeting at the Alliance's headquarters in Brussels, Belgium, December 4, 2018. REUTERS/Yves Herman

WASHINGTON (Reuters) – The United States issued a pre-emptive warning to Iran on Thursday against pursuing three planned space rocket launches, which it said would violate a U.N. Security Council resolution related to its ballistic missile activity.

Secretary of State Mike Pompeo said Iran had announced plans to launch in the coming months three rockets, called Space Launch Vehicles (SLV), which he said incorporate ballistic missile technology.

“The United States will not stand by and watch the Iranian regime’s destructive policies place international stability and security at risk,” Pompeo said in a statement.

“We advise the regime to reconsider these provocative launches and cease all activities related to ballistic missiles in order to avoid deeper economic and diplomatic isolation.”

Pompeo said such rocket launches would violate United Nations Security Council Resolution 2231, which endorsed a 2015 nuclear deal between Iran and world powers. It calls upon Iran not to undertake activities related to ballistic missiles capable of delivering nuclear weapons, including launches using such technology. It stops short of explicitly barring such activity.

U.S. President Donald Trump decided in May to pull out of the Iran nuclear deal.

Pompeo said Iran has launched ballistic missiles numerous times since the U.N. resolution was adopted. He said it test-fired a medium-range ballistic missile capable of carrying multiple warheads on Dec. 1.

“The United States has continuously cautioned that ballistic missile and SLV launches by the Iranian regime have a destabilizing effect on the region and beyond,” Pompeo said. “France, Germany, the United Kingdom, and many nations from around the world have also expressed deep concern.”

In July 2017, Iran launched a rocket it said could deliver a satellite into space, an act the U.S. State Department called provocative. Earlier that month, the United States slapped new economic sanctions on Iran over its ballistic missile program.

Iran says its space program is peaceful, but Western experts suspect it may be a cover for developing military missile technologies.

(Reporting by Doina Chiacu and Lesley Wroughton; Editing by Jeffrey Benkoe)

Iran threatens to hit U.S., Israel after Trump aide warns of ‘maximum pressure’

FILE PHOTO - Iranian cleric Ayatollah Seyed Ahmad Khatami delivers a sermon during Friday prayers in Tehran, Iran, May 26, 2017. TIMA via REUTERS

By Bozorgmehr Sharafedin and Dan Williams

LONDON/JERUSALEM (Reuters) – Iran warned on Wednesday it would hit U.S. and Israeli targets if it were attacked by the United States after President Donald Trump’s security adviser said Washington would exert maximum pressure on Tehran going beyond economic sanctions.

A U.S.-Iranian war of words has escalated since Trump withdrew Washington from the world powers’ nuclear deal with Iran in May, blasting it as flawed and reimposing sanctions to choke Iran’s economy and force it to renegotiate or change direction.

The U.S. turnaround, which scrapped a wary detente between Iran and the United States after decades of hostility, has drawn defiance from Tehran despite renewed unrest over economic privations and has unnerved other big powers where businesses have been debating whether to divest from Iran.

U.S. National Security Adviser John Bolton told Reuters the return of U.S. sanctions was having a strong effect on Iran’s economy and popular opinion.

“There should not be any doubt that the United States wants this resolved peacefully, but we are fully prepared for any contingency that Iran creates,” Bolton said during a visit to Israel, Iran’s enemy in the Middle East.

U.S. sanctions dusted off this month targeted Iran’s car industry, trade in gold and other precious metals, and purchases of U.S. dollars crucial to international financing and investment and trade relations. Farther-reaching sanctions are to follow in November on Iran’s banking sector and oil exports.

European powers have been scrambling to ensure Iran secures enough economic benefits to persuade it to stay in the deal. This has proven difficult, with many European firms keen to avoid financial penalties by the Trump administration.

“We expect that Europeans will see, as businesses all over Europe are seeing, that the choice between doing business with Iran or doing business with the United States is very clear to them,” Bolton said.

“So we will see what plays out in November. But (Trump) has made it very clear – his words – he wants maximum pressure on Iran, maximum pressure, and that is what is going on.”

Asked at a news conference later whether the United States had discussed any plans with ally Israel on how to capitalize on economic protests in Iran and if these posed any tangible threat to the Tehran government, Bolton said:

“Just to be clear, regime change in Iran is not American policy. But what we want is massive change in the regime’s behavior … We are going to do other things to put pressure on Iran as well, beyond economic sanctions.” He did not elaborate.

“PRICE OF WAR”

A senior Iranian cleric seen as close to Supreme Leader Ayatollah Ali Khamenei told worshippers at Eid holiday prayers in Tehran: “The price of a war with Iran is very high for America.

“They know if they harm this country and this state in the slightest way the United States and its main ally in the region, the Zionist regime (Israel), would be targeted,” Ahmad Khatami said.

Iran’s Revolutionary Guards have said it could strike Israeli cities with missiles if it were threatened. Iran also has proxies in the region including Lebanon’s Hezbollah.

The Revolutionary Guards said on Wednesday they would continue increasing Iran’s defensive capabilities not surrender to U.S. pressure to scrap its ballistic missile program.

Last week, Khamenei – who has the ultimate say on Iranian policy – said the United States would avoid outright conflict because of Iranian military might.

“There will be no war…We have never started a war and they will not confront Iran militarily,” he said.

Trump’s campaign to isolate Iran and cripple its economy has put the old adversaries back on a collision course that European signatories to the nuclear accord fear will raise the risk of a broader Middle East war.

DEAL ‘SOFT ON IRAN’

Under the 2015 deal, Iran curbed its contested uranium enrichment program under U.N. monitoring and won an end to global sanctions in return.

Trump has condemned the deal as too soft on Tehran and would not stop it developing a nuclear bomb, though U.N. nuclear non-proliferation inspectors have repeatedly certified Iranian compliance with its terms.

Khatami, the prominent Iranian cleric, also said Trump’s offer of talks was unacceptable as he was demanding Tehran give up its ballistic missile program and scale back regional influence. Neither issue was covered by the 2015 agreement.

“Americans say you should accept what we say in the talks. So this is not negotiation, but dictatorship,” Mizan news agency quoted Khatami as saying.

Trump has said Iran must stop meddling in wars in Syria and Yemen, part of a foreign policy supporting regional allies in conflict with proxies of U.S.-backed Gulf Arab kingdoms.

Tehran has not given an inch to Trump’s pressure despite an economy beset by high unemployment and inflation and a rial currency that has lost half its value since April.

Thousands of Iranians have protested against price rises of some food items, a lack of jobs and state corruption. The protests over the cost of living have often turned into anti-government rallies.

“I think the effects, the economic effects certainly, are even stronger than we anticipated,” Bolton said.

“But Iranian activity in the region has continued to be belligerent: what they are doing in Iraq, what they are doing in Syria, what they are doing with Hezbollah in Lebanon, what they are doing in Yemen, what they have threatened to do in the Strait of Hormuz.”

The Strait is a strategic waterway for oil shipments which Iran’s Revolutionary Guards have threatened to block in response to Trump administration calls to ban all Iranian oil exports.

(Writing by Mark Heinrich; Editing by Janet Lawrence)

Russia tells Washington curbs on its banks would be act of economic war

The U.S. dollar sign is seen on an electronic board next to a traffic light in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

By Andrew Osborn and Andrey Ostroukh

MOSCOW (Reuters) – Russia warned the United States on Friday it would regard any U.S. move to curb the activities of its banks as a declaration of economic war which it would retaliate against, stepping up a war of words with Washington over spiraling sanctions.

The warning, from Prime Minister Dmitry Medvedev, reflects Russian fears over the impact of new restrictions on its economy and assets, including the rouble which has lost nearly six percent of its value this week on sanctions jitters.

Economists expect the economy to grow by 1.8 percent this year. But if new sanctions proposed by Congress and the State Department are implemented in full, something that remains uncertain, some economists fear growth would be almost cut to zero in future.

In a sign of how seriously Russia is taking the threat, President Vladimir Putin discussed what the Kremlin called “possible new unfriendly steps by Washington” with his Security Council on Friday.

Moscow’s strategy of trying to improve battered U.S.-Russia ties by attempting to build bridges with President Donald Trump is backfiring after U.S. lawmakers launched a new sanctions drive last week because they fear Trump is too soft on Russia.

That, in turn, has piled pressure on Trump to show he is tough on Russia ahead of mid-term elections.

On Wednesday, the State Department announced a new round of sanctions that pushed the rouble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.

Separate legislation introduced last week in draft form by Republican and Democratic senators, dubbed “the sanctions bill from hell” by one of its backers, proposes curbs on the operations of several state-owned Russian banks in the United States and restrictions on their use of the dollar.

Medvedev said Moscow would take economic, political or other retaliatory measures against the United States if Washington targeted Russian banks.

“I would not like to comment on talks about future sanctions, but I can say one thing: If some ban on banks’ operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war,” said Medvedev.

“And it would be necessary, it would be needed to react to this war economically, politically, or, if needed, by other means. And our American friends need to understand this,” he said, speaking on a trip to the Russian Far East.

Pedestrians walk by an electronic board showing currency exchange rates of the U.S. dollar against Russian rouble in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

Pedestrians walk by an electronic board showing currency exchange rates of the U.S. dollar against Russian rouble in Moscow, Russia August 10, 2018. REUTERS/Maxim Shemetov

FEW GOOD RETALIATORY OPTIONS

In practice, however, there is little Russia could do to hit back at the United States without damaging its own economy or depriving its consumers of sought-after goods, and officials in Moscow have made clear they do not want to get drawn into what they describe as a mutually-damaging tit-for-tat sanctions war.

The threat of more U.S. sanctions kept the rouble under pressure on Friday, sending it crashing past two-year lows at one point before it recouped some of its losses.

The Russian central bank said the rouble’s fall to multi-month lows on news of new U.S. sanctions was a “natural reaction” and that it had the necessary tools to prevent any threat to financial stability.

One tool it said it might use was limiting market volatility by adjusting how much foreign currency it buys. Central bank data showed on Friday it had started buying less foreign currency on Wednesday, the first day of the rouble’s slide.

The fate of the U.S. bill Medvedev was referring to is not certain.

The full U.S. Congress will not be back in Washington until September, and even then, congressional aides said they did not expect the measure would pass in its entirety.

While it was difficult to assess so far in advance, they said it was more likely that only some of its provisions would be included as amendments in another piece of legislation, such as a spending bill Congress must pass before Sept. 30 to prevent a government shutdown.

(Additional reporting by Tom Balmforth in Moscow and Patricia Zengerle in Washington Writing by Andrew Osborn Editing by William Maclean)

U.S. revives sanctions to further damage Iran’s economy

FILE PHOTO: A man walks past an anti-U.S. mural in Tehran, Iran October 13, 2017. Nazanin Tabatabaee Yazdi/TIMA via REUTERS

By Lesley Wroughton

WASHINGTON (Reuters) – The Trump administration expects economic sanctions that it is re-imposing on Iran this week to further cripple the Iranian economy and will aggressively enforce the measures, senior U.S. administration officials said on Monday.

The so-called snapback sanctions, due to come into force early on Tuesday, would target Iranian purchases of U.S. dollars, metals trading and other dealings, coal, industrial-related software and its auto sector.

Iran’s rial currency has lost half its value since April under the threat of revived U.S. sanctions. The plunge in the currency and soaring inflation have sparked sporadic demonstrations in Iran against profiteering and corruption, with many protesters chanting anti-government slogans.

President Donald Trump is aiming to cut off the Iranian leadership’s access to resources, the officials said. The United States also plans to re-introduce potentially more damaging sanctions on Iranian oil in November.

But the U.S. sanctions strategy has several weak spots, especially a reluctance by Europe and China to curtail business with Iran.

The European Union voiced regret on Monday at the looming U.S. sanctions.

Trump warned on Monday of “severe consequences” for people or entities that fail to wind down economic activities with Iran.

“The United States is fully committed to enforcing all of our sanctions, and we will work closely with nations conducting business with Iran to ensure complete compliance,” he said in a statement.

If Iran wants to avoid the reimposition of sanctions it should take up Trump’s offer to negotiate, White House national security adviser John Bolton said on Monday.

Asked on Fox News what Iran’s leaders could do, Bolton said: “They could take up the president’s offer to negotiate with them, to give up their ballistic missile and nuclear weapons programs fully and really verifiably not under the onerous terms of the Iran nuclear deal, which really are not satisfactory.”

“If Iran were really serious they’d come to the table. We’ll find out whether they are or not.”

The sanctions now being brought back were among those lifted under the 2015 deal between world powers and Tehran on curbing Iran’s nuclear program.

Foes for decades, the United States and Iran have been increasingly at odds over Iran’s growing political and military influence in the Middle East since Trump took office in January 2017.

Trump announced this May he would withdraw the United States from the Iran nuclear deal.

Iranian Foreign Minister Mohammad Javad Zarif said on Monday that Trump and U.S. allies Israel and Saudi Arabia have become isolated by their hostile policies toward Tehran, state TV reported.

“Their oppressive policies and violent measures have made them isolated … The world has distanced itself from their hostile policies against Iran,” Zarif was quoted as saying.

The sanctions aim to modify Iran’s behavior and not bring about a “regime change” targeting President Hassan Rouhani, the U.S. officials said. They said the Iranian government’s handling of social and labor protests was a concern.

EUROPE WORRIED

The European Union expressed concern at the new U.S. move.

“We deeply regret the re-imposition of sanctions by the U.S.,” the bloc said in a joint statement with the foreign ministers of France, Germany, and Britain.

One EU measure to mitigate the impact of U.S. sanctions, known as the blocking statute, will come into force on Tuesday.

One U.S. official said the administration was deeply concerned about reports of Iran’s violence against unarmed citizens. “The United States supports the Iranian people’s right to peacefully protest against corruption and oppression without fear of reprisal,” the official added.

The U.S. officials added that Trump was ready to meet with Iran’s leaders at any time to try to forge a new agreement.

Trump “will meet with the Iranian leadership at any time to discuss a real comprehensive deal that will contain their regional ambitions, will end their malign behavior and deny them any path to a nuclear weapon,” one official said.

Asked about possible exemptions to the sanctions, officials said they would examine any requests on a case-by-case basis.

(Reporting by Lesley Wroughton and Lisa Lambert in Washington and Robert-Jan Bartunek and Alissa de Carbonnel in Brussels; Writing by Alistair Bell; Editing by Howard Goller and James Dalgleish)