Trump blames Iran for tanker attacks, stoking fears of confrontation

Still image taken from a video appears to show two tankers at sea, one of which has a large plume of dark smoke in the Gulf of Oman. PRESS TV/IRIB/via REUTERS

By Parisa Hafezi and Makini Brice

DUBAI/WASHINGTON (Reuters) – U.S. President Donald Trump blamed Iran on Friday for attacks on two oil tankers at the entrance to the Gulf despite Tehran’s denials, stoking fears of a confrontation in the vital oil shipping route.

Iran has dismissed earlier U.S. charges that it was behind Thursday’s attacks that crippled two tankers. It has previously suggested it could block the Strait of Hormuz, the main route out for Middle Eastern oil, if its own exports were halted.

Thursday’s blasts followed similar attacks a month earlier on four tankers, which Washington also blamed on Tehran.

They come at a time of escalating confrontation between the United States and Iran. Last month Washington sharply tightened sanctions against Tehran, which in response has threatened to step up its nuclear activity.

Asked how he planned to address Tehran and prevent any further incidents, Trump told Fox News: “We’re going to see.” He also said that any move to close the Strait of Hormuz would not last long.

Nevertheless, Trump, who last year pulled the United States out of an agreement between world powers and Tehran to curb Iran’s nuclear program in return for the lifting of sanctions, said that he was open to negotiations with Iran.

“We want to get them back to the table,” Trump said. “I’m ready when they are.” He added that he was in “no rush”.

Iran has repeatedly said it will not re-enter talks with the United States unless it reverses Trump’s decision to withdraw from the nuclear deal.

The U.S. military released a video on Thursday it said showed Iran’s Revolutionary Guards were behind the blasts that struck the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous in the Gulf of Oman, at the mouth of the Gulf.

Iran said the video proved nothing and that it was being made into a scapegoat.

“These accusations are alarming,” Foreign Ministry spokesman Abbas Mousavi said.

Iran has accused the United States and its regional allies such as Saudi Arabia and the United Arab Emirates of “warmongering” by making accusations against it.

Tehran and Washington have both said they have no interest in starting a war. But this has done little to assuage concerns that the two arch-foes could stumble into a conflict.

Oil prices surged on Thursday, reflecting the jitters, although they have since given up some of those gains.

U.N. Secretary-General Antonio Guterres told the U.N. Security Council on Thursday the world could not afford “a major confrontation in the Gulf region”.

China, the European Union and others have called for restraint from all sides. In a notable signal that close U.S. allies are wary of Washington’s position, Germany said the U.S. video was not enough to apportion blame for Thursday’s attack.

The U.S. military said black-and-white footage it filmed from a U.S. aircraft showed Iran’s Guards on one of their patrol boats drawing up to the Kokuka Courageous and removing an unexploded limpet mine from its hull.

Britain said it took the matter “extremely seriously” and, if Iran was involved, “it is a deeply unwise escalation”.

The Japanese-owned tanker, abandoned by its crew, was being towed to a port in the United Arab Emirates on Friday, after a Dutch firm said it had been appointed to salvage the ships.

The second tanker, the Front Altair, which was set ablaze by a blast, was still languishing at sea, although the fire that had charred the hull had been put out.

“ALARMING”

Last month Washington revoked waivers that had allowed some countries to continue importing Iranian oil, effectively ordering all countries to blacklist Iran or face sanctions themselves.

Iran’s crude exports fell to about 400,000 barrels per day (bpd) in May from 2.5 million bpd in April 2018, starving Iran’s economy of its main source of revenues.

Iran says it is still abiding by the terms of the nuclear deal, but cannot do so indefinitely unless it receives some of the economic benefits that were promised. Last month it said it would boost enrichment of uranium, a move that could potentially lead to it building up a stockpile prohibited under the deal.

Washington has also blamed Iran or its proxies for attacks on May 12 that crippled four oil tankers in the same area, and has said Tehran was behind May 14 drone strikes on two Saudi oil-pumping stations. Tehran has denied all those charges.

There have been conflicting accounts of the cause of Thursday’s blasts. An initial report that Kokuka Courageous was struck by a torpedo was dismissed by a source familiar with the issue. The owner of the tanker, which carried methanol, later said it was hit by two “flying objects”.

A source has said a magnetic mine could have caused the explosion on Front Altair, which had a cargo of naphtha.

“UNWISE ESCALATION”

Iranian TV showed 23 crew in Iran believed to be from Front Altair on Friday, and said its experts would assess whether they could return to the ship. The crew from Kokuka Courageous were picked up and handed to a U.S. Navy ship on Thursday.

The Trump administration said in May it would send troops and other forces to the Middle East, citing Iranian threats, a move Tehran has called “psychological warfare”.

The administration argues that the nuclear deal, negotiated under Trump’s predecessor Barack Obama, was too limited, and says re-imposing sanctions will force Tehran back to the table to make more concessions.

Most U.S. allies in Europe and Asia disagree and say pulling out of the deal was a mistake that will empower hardliners in Iran and hurt the pragmatic faction that promised Iranians economic benefits in return for opening up to the world.

Thursday’s attack took place while Prime Minister Shinzo Abe of Japan – a big buyer of Iranian oil until it was forced by the new U.S. sanctions to stop – was visiting Tehran on a peacemaking mission, bringing a message from Trump.

Iran dismissed Trump’s message, details of which were not made public. “I do not see Trump as worthy of any message exchange, and I do not have any reply for him, now or in future,” Iranian Supreme Leader Ali Khamenei said.

(Reporting by Parisa Hafez, Maher Chmaytelli and Ghaida Ghantous in Dubai, Makini Brice, Susan Heavey, Phil Stewart and Lesley Wroughton in Washington; Bart Meijer in Amsterdam; Victoria Klesty in Oslo; Writing by Edmund Blair and Peter Graff; Editing by Janet Lawrence and Gareth Jones)

Turkey chafes at U.S. pressure over Russian defenses

FILE PHOTO: A view shows a new S-400 "Triumph" surface-to-air missile system after its deployment at a military base outside the town of Gvardeysk near Kaliningrad, Russia March 11, 2019. REUTERS/Vitaly Nevar/File Photo

By Daren Butler

ISTANBUL (Reuters) – Turkey said on Tuesday a U.S. House of Representatives’ resolution condemning Ankara’s purchase of Russian defense systems and urging potential sanctions was unacceptably threatening.

Relations between the two NATO members have been strained on several fronts including Ankara’s plans to buy Russia’s S-400 air defense systems, the detention of U.S. consular staff in Turkey, and conflicting strategy over Syria and Iran.

The standoff threatens to bring U.S. sanctions, which would hurt Turkey’s already recession-hit economy, and raise questions over its role in the North Atlantic Treaty Organization.

The resolution, introduced in May and entitled “Expressing concern for the United States-Turkey alliance”, was agreed in the House on Monday.

It urges Turkey to cancel the S-400 purchase and calls for sanctions if it accepts their delivery, which may come as soon as July. That, the resolution said, would undermine the U.S.-led transatlantic defense alliance.

In response, Turkey’s Foreign Ministry said in a statement that its foreign policy and judicial system were being maligned by “unfair” and “unfounded” allegations in the resolution.

“It is unacceptable to take decisions which do not serve to increase mutual trust, to continue to keep the language of threats and sanctions on the agenda and to set various artificial deadlines,” it added.

PILOT PROGRAM WOUND DOWN

President Tayyip Erdogan’s government faces a balancing act in its ties with the West and Russia, with which it has close energy ties and is also cooperating in neighboring Syria.

The United States is also pressuring Turkey and other nations to isolate Iran, including blocking oil exports.

U.S. officials said on Monday the training of Turkish pilots on F-35 fighter jets had come to a faster-than-expected halt at an air base in Arizona, as Ankara’s involvement was wound down over the S-400 controversy.

The United States says Turkey’s acquisition of Russia’s S-400 air defenses poses a threat to Lockheed Martin Corp’s F-35 stealth fighters, which Turkey also plans to buy.

“We rarely see it in foreign affairs, but this is a black and white issue. There is no middle ground. Either Mr. Erdogan cancels the Russian deal, or he doesn’t,” Eliot Engel, chairman of the House Committee on Foreign Affairs, said on the House floor on Monday.

“There is no future for Turkey having both Russian weapons and American F-35s. There’s no third option.”

Regardless of the U.S. warnings, Turkey appeared to be moving ahead with the S-400 purchase. Erdogan said last week it was “out of the question” for Turkey to back away from its deal with Moscow.

(Reporting by Daren Butler; Editing by Jonathan Spicer and Andrew Cawthorne)

U.S. to stop training Turkish F-35 pilots because of Russia deal: sources

FILE PHOTO: A Lockheed Martin F-35 aircraft is seen at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo

By Phil Stewart and Humeyra Pamuk

WASHINGTON/ISTANBUL (Reuters) – The United States has decided to stop accepting any more Turkish pilots who had planned to train in the United States on F-35 fighter jets, three U.S. officials said, in a sign of an escalating dispute over Ankara’s plans to purchase Russian air defenses. The two NATO allies have sparred publicly for months over Turkey’s order for Russia’s S-400 air defense system, which Washington says poses a threat to the Lockheed Martin Corp F-35 stealthy fighters, which Turkey also plans to buy.

The United States says Turkey cannot have both, but had avoided taking steps to curtail or halt planned training of Turkish pilots in the program, a reprisal that could be seen as an embarrassment in Turkey.

The three U.S. officials, who spoke to Reuters this week on condition of anonymity, left open the possibility the decision could be reversed, perhaps if Turkey altered its plans. They said the decision so far only applied to upcoming rounds of Turkish pilots and maintenance crews who would have normally trained in the United States.

Reuters was first to report the U.S. decision on pilots, which traders said pressured the Turkish lira on Friday.

A spokesman for Turkey’s Defense Ministry declined comment on Friday.

The Pentagon declined comment on whether it would accept new Turkish pilots. But it has stressed discussions are taking place with Ankara on potentially selling Turkey Patriot missile defenses, which are made by Raytheon Co.

The United States also has threatened to halt training of Turkish pilots and maintenance crews already in the United States, two of the officials said. Reuters reported last week that the step was being seriously considered.

One official said the pilots in the United States could be removed by the end of July.

Four Turkish pilots are currently training at Luke Air Force Base in Arizona. Two additional Turkish pilots are there working as instructors. Beyond those six Turkish officers, there are an additional 20 Turkish aircraft maintainers at the base undergoing training as well, the U.S. military says.

Turkey has expressed an interest in buying 100 of the fighters, which would have a total value of $9 billion at current prices.

STRAINED RELATIONSHIP

If Turkey were removed from the F-35 program, it would be one of the most significant ruptures in recent history in the relationship between the two allies, experts said.

Strains in their ties already extend beyond the F-35 to include conflicting strategy in Syria, Iran sanctions and the detention of U.S. consular staff in Turkey.

The disclosure of the decision on the pilots follows signs that Turkey is moving ahead with the S-400 purchase. Defense Minister Hulusi Akar said on May 22 that Turkish military personnel were receiving training in Russia to use the S-400, and that Russian personnel may go to Turkey.

President Tayyip Erdogan said on Tuesday it was “out of the question” for Turkey to back away from its deal with Moscow.

Erdogan said the United States had not “given us an offer as good as the S-400s.”

The Turkish lira declined as much as 1.5% on Friday before recovering some losses. The currency has shed nearly 10% of its value against the dollar this year in part on fraying diplomatic ties and the risk of U.S. sanctions if Turkey accepts delivery of the S-400s.

Kathryn Wheelbarger, one of the Pentagon’s most senior policy officials, said last week that Turkey’s completion of the transaction with Russia would be “devastating,” dealing heavy blows to the F-35 program and to Turkish interoperability within the NATO alliance.

“The S-400 is a Russian system designed to shoot down an aircraft like the F-35,” said Wheelbarger, an acting assistant secretary of defense. “And it is inconceivable to imagine Russia not taking advantage of that (intelligence) collection opportunity.”

(Reporting by Phil Stewart and Humeyra Pamuk; Additional reporting by Dominic Evans, Mike Stone and Ece Toksabay; Editing by Mary Milliken, Peter Cooney and Howard Goller)

Saudi Arabia seeks Arab unity over Iran after attacks

Iraq's President Barham Salih arrives to attend the meeting for the Gulf Cooperation Council (GCC), Arab and Islamic summits in Jeddah, Saudi Arabia May 30, 2019. The Presidency of the Republic of Iraq Office/Handout via REUTERS

By Aziz El Yaakoubi and Marwa Rashad

MECCA, Saudi Arabia (Reuters) – Saudi Arabia prepared to hold emergency Arab summits on Thursday to deliver a strong message to Iran over regional security after attacks on Gulf oil assets this month as American officials said a U.S. military deployment had deterred Tehran.

Saudi Arabia and the United Arab Emirates, which have lobbied Washington to contain foe Shi’ite Muslim Iran, have said they want to avoid war after drone strikes on oil pumping stations in the kingdom and the sabotage of tankers off the UAE.

Riyadh accused Tehran of ordering the drone strikes, which were claimed by Yemen’s Iran-aligned Houthi group. U.S. national security adviser John Bolton said on Thursday that evidence of Iran being behind the tanker attacks would be presented to the United Nations Security Council as early as next week.

Tehran denies any involvement in either one.

Saudi Foreign Minister Ibrahim al-Assaf said ahead of the two late night summits of Sunni Muslim Gulf leaders and Arab leaders, that the attacks must be addressed with “strength and firmness”.

“While summit leaders are likely to discuss how best to avoid a war, King Salman is equally determined to defend Saudi and Arab interests amid increasing tensions between the U.S. and Iran,” Prince Turki al-Faisal, former Saudi intelligence chief and envoy, wrote in an opinion piece published by Al Arabiya.

Tensions have risen between the United States and Iran after Washington quit a multinational nuclear deal with Iran, re-imposed sanctions and boosted its military presence in the Gulf.

Bolton has said that Iranian mines were “almost certainly” used in the tanker attacks, which he described as being connected to the strike on pumping stations on the kingdom’s East-West pipeline and a rocket attack on Baghdad’s Green Zone.

An Iranian official dismissed Bolton’s remarks as “a ludicrous claim”. The Islamic Republic has said it would defend itself against any military or economic aggression.

DETERRING IRAN

Bolton and the U.S. special envoy for Iran, Brian Hook, told reporters on Thursday that a repositioning of U.S. military assets in the region had succeeded in deterring Iran.

Bolton, speaking in London, said it would be a big mistake if Iran or its surrogates in the region attacked U.S. interests. Hook told a news conference call that the United States would respond with military force if that happens.

Last week the Pentagon announced the deployment of 900 additional troops to the Middle East and extended the stay of another 600 service members, after speeding up deployment of an aircraft carrier strike group and sending bombers and additional Patriot missiles.

The United States and the UAE, which hosts a U.S. air base, on Wednesday activated a defense cooperation agreement signed earlier this year.

Gulf states have a joint defense force under the Gulf Cooperation Council (GCC), but the 39-year-old alliance has been fractured by a dispute that has seen Saudi Arabia, the UAE, Bahrain and non-GCC Egypt impose a political and economic boycott on Qatar since mid-2017.

Saudi King Salman invited Qatar’s ruler, whose country is home to the largest U.S. military base in the region, to the summits. Doha is sending Prime Minister Sheikh Abdullah bin Nasser Al Thani, the highest level Qatari official to visit the kingdom since the rift.

Iraq and Oman, which have good ties with Tehran and Washington, have said they are working to reduce tensions. Doha, which shares a giant gas field with Iran, has offered to help.

Iranian Foreign Minister Mohammad Javad Zarif said on a trip to Iraq this month that Tehran wanted balanced ties with Gulf neighbors and had proposed signing a non-aggression pact with them.

UAE newspaper Gulf News said in an editorial, which are usually state-approved, that the offer was “bizarre” and that Gulf states were not buying Iran’s “‘nice neighbor’ routine”.

(Additional reporting by Guy Faulconbridge in London, Lisa Barrington, Sylvia Westall and Maher Chmaytelli in Dubai and Eric Knecht in Doha; Writing by Ghaida Ghantous; Editing by William Maclean, Andrew Cawthorne and Frances Kerry)

Iran sees no prospect of negotiations with U.S.: foreign ministry

FILE PHOTO: A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of the U.S., Iran, China, Russia, Britain, Germany, France and the European Union during Iran nuclear talks at the Vienna International Center in Vienna, Austria, July 14, 2015. REUTERS/Carlos Barria/File Photo

LONDON (Reuters) – Iran sees no prospect of negotiations with the United States, a foreign ministry spokesman said on Tuesday, a day after U.S. President Donald Trump said a deal with Tehran on its nuclear program was possible.

Washington withdrew last year from a 2015 international nuclear deal with Tehran, and is ratcheting up sanctions in efforts to strangle Iran’s economy by ending its international sales of crude oil.

Trump said on Monday: “I really believe that Iran would like to make a deal, and I think that’s very smart of them, and I think that’s a possibility to happen.”

Asked about Trump’s comments in a news conference in Tehran, Iranian Foreign Ministry spokesman Abbas Mousavi was quoted as saying by the semi-official Fars news agency: “We currently see no prospect of negotiations with America.”

“Iran pays no attention to words; What matters to us is a change of approach and behavior.”

Trump also said that United States was not looking for regime change in Iran, adding that “we are looking for no nuclear weapons.”

Iranian Vice President Eshaq Jahangiri said on Tuesday the country was not allowed to pursue the development of nuclear weapon as this was banned by Supreme Leader Ayatollah Ali Khamenei, Iran’s highest authority.

Tensions have risen between Iran and the United States since Washington deployed a carrier strike group and bombers and announced plans to deploy 1,500 troops to the Middle East, prompting fears of a conflict.

(Reporting by Bozorgmehr Sharafedin; Editing by Andrew Heavens and John Stonestreet)

North Koreans paying bribes to survive: U.N. report

North Koreans are forced to pay bribes to officials to survive in their isolated country where corruption is "endemic" and repression rife, the U.N. human rights office said on Tuesday in a report that Pyongyang dismissed as politically motivated.

By Stephanie Nebehay

GENEVA (Reuters) – North Koreans are forced to pay bribes to officials to survive in their isolated country where corruption is “endemic” and repression rife, the U.N. human rights office said on Tuesday in a report that Pyongyang dismissed as politically motivated.

The report said officials extorted money from a population struggling to make ends meet, threatening them with detention and prosecution – particularly those working in the informal economy.

The Democratic People’s Republic of Korea (DPRK), the formal name for North Korea, rejected the report, saying it was “politically motivated for sinister purposes”.

“Such reports are nothing more than fabrication … as they are always based on the so-called testimonies of ‘defectors’ who provide fabricated information to earn their living or are compelled to do so under duress or enticement,” its Geneva mission said in a statement to Reuters.

North Korea blames the dire humanitarian situation on U.N. sanctions imposed for its nuclear and ballistic missile programs since 2006. But the report said that the military receives priority funding amid “economic mismanagement”.

“I am concerned that the constant focus on the nuclear issue continues to divert attention from the terrible state of human rights for many millions of North Koreans,” Michelle Bachelet, U.N. High Commissioner for Human Rights, said in a statement.

“The rights to food, health, shelter, work, freedom of movement and liberty are universal and inalienable, but in North Korea they depend primarily on the ability of individuals to bribe State officials,” she said.

Four in 10 North Koreans, or 10.1 million people, are chronically short of food and further cuts to already minimal rations are expected after the worst harvest in a decade, a U.N. assessment said earlier this month.

“The threat of arrest, detention and prosecution provide State officials with a powerful means of extorting money from a population struggling to survive,” the U.N. rights office report said.

CASH OR CIGARETTES

Bribery is “an everyday feature of people’s struggle to make ends meet”, said the report, entitled “The price is rights”. It denounced what it called a “vicious cycle of deprivation, corruption and repression”.

It is based on 214 interviews with North Korean “escapees”, mainly from the northeastern provinces of Ryanggang and North Hamgyong, bordering China. They were the first to be cut from the public distribution system that collapsed in 1994, leading to a famine estimated to have killed up to 1 million, it said.

“As my father still had to work at a state firm that could no longer afford giving rations, we survived by selling taffy and liquor my mom made,” Ju Chan-yang, a 29-year-old defector, told a news conference hosted by the U.N. rights office in Seoul on Tuesday.

Ju, who defected to the South in 2011, said she also made a living by selling banned South Korean and U.S. products in the underground economy. Sometimes she had to bribe authorities.

“If you get caught and don’t have bribes to pay, you could get executed, just like my relatives,” she said.

Many North Koreans pay bribes of cash or cigarettes not to have to report to state-assigned jobs where they receive no salary, thus allowing them to earn income in rudimentary markets, the report said.

Others bribe border guards to cross into China, where women are vulnerable to trafficking into forced marriages or the sex trade, it added.

“North Korea is a society where all of its members are involved in corruption because they’re forced to do illegal acts only to survive,” said Lee Han-byeol, who came to the South in 2001 and now runs a group that helps defectors.

Bachelet urged North Korean authorities to stop prosecuting people for engaging in legitimate market activity and to allow them freedom of movement within the country and abroad. China should not forcibly repatriate North Koreans, she added.

The United States called on North Korea this month to “dismantle all political prison camps” and release all political prisoners, who it said numbered between 80,000 and 120,000. North Korea denies the existence of such camps.

(Reporting by Stephanie Nebehay; Additional reporting by Hyonhee Shin in SEOUL; Editing by Hugh Lawson, Andrew Heavens and Darren Schuettler)

Shortages plague Cuba as U.S. sanctions sharpen economic woes

FILE PHOTO: People buy chicken in a supermarket in Havana, Cuba May 13, 2019. REUTERS/Sarah Marsh

By Sarah Marsh

HAVANA (Reuters) – Israel Hidalgo and his wife left home around 7:30 a.m. to reach a supermarket across Havana, Cuba because they heard it might be selling chicken, a staple of the Cuban diet increasingly scarce on the shortage-plagued island.

After Cuba started limiting sales this month, partly blaming tightened U.S. economic sanctions on the Communist-run island, the couple wanted to buy as much as possible and lined up for three hours under the Caribbean sun to get tickets guaranteeing them their rations.

Inside, they lined up again to collect two bags of chicken thighs each, as fellow shoppers elbowed one another in pursuit of their own rations, and headed for the checkout feeling like they had won the lottery.

“We were born in this revolution and are used to rough times,” said Hidalgo, a 61-year old blacksmith. “We are bracing ourselves for it to get worse.”

Long lines outside shops with mostly bare shelves are increasingly common in Cuba, and the government has indeed signaled that things are going from bad to worse.

Cuban President Miguel Diaz-Canel, in a speech last month, accused the Trump administration of engaging in an “asphyxiating financial persecution that makes the import of goods and resources of primary necessity particularly difficult.”

The degree to which new U.S. sanctions, due in part to Cuba’s support for Venezuelan President Nicolas Maduro, have compounded its economic woes is open to debate.

The economy had already stagnated in recent years in tandem with the implosion of strategic ally Venezuela, resulting in cuts in fuel and energy use by state entities and this year shortages of basic goods such as bread, chicken and eggs.

But the increase in sanctions, which have hit the key tourism sector and added to investor and bank jitters about dealing with Cuba, has some economists predicting the economy will slip from stagnation into a full-blown recession later this year.

The economy has averaged 1% annual growth over the last three years, compared with the 5% to 7% rate economists say is needed to recover fully from the depression caused by the fall of its former benefactor, the Soviet Union, in 1991.

“While the crisis will not be as bad as in the 1990s, it will have a worrying social impact on the most vulnerable households, which are already on subsistence salaries,” said Pavel Vidal, a former Cuban central bank economist who teaches at Colombia’s Universidad Javeriana Cali.

Bracing for harder economic times, the government has resorted to what it knows best to manage the crisis and prevent social unrest: more control.

Interior Commerce Minister Betsy Diaz said two weeks ago the government would “temporarily” ration sales of a handful of basic products like eggs on a monthly basis, using ration books distributed after the 1959 Revolution, and limit the sale of others like chicken to ensure everyone gets their fair share.

“A CRITICAL MOMENT”

Some Cuban economists say the developing crisis stems fundamentally from an inefficient centrally-planned economy that imports more than two thirds of its food needs. Calling rationing little more than a short-term solution, they say the government must open up to a series of market-oriented economic reforms before the crisis deepens.

“This could be a critical moment that generates the consensus necessary to apply changes,” said Vidal. “The government needs to give more space to the private sector and investment.”

Cuba has enacted some economic reforms in recent years, including expanding the private sector from 2010 onward and introducing a new foreign investment law that cut taxes by around 50% in 2014.

But local economists like Omar Everleny say the reforms undertaken have been too cautious so far. The government has backtracked on overhauls of areas like agriculture and the dominant public sector remains deeply inefficient.

Cuba was already behind on an estimated $1.5 billion (£1.1 billion) in short-term commercial debt and warning of austerity before U.S. President Donald Trump started the latest round of tightening of the decades-old U.S. trade embargo.

Aid from Venezuela, in the form of subsidized oil, had long masked the true extent of Cuba’s economic problems, but it started to fall from 2015 when a drop in oil prices roiled that OPEC nation’s economy.

Venezuela’s crude shipments to Cuba are now about half what they were four years ago, and they could soon fall further. Last month, the United States also began targeting vessels and companies that ship oil to the island from Venezuela for sanctions, threatening the energy grid and transportation.

U.S. sanctions against its old Cold War foe are also hitting the two bright spots in the otherwise glum economy: tourism and foreign investment. Both had boomed briefly after the announcement of a Cuba-U.S. detente in 2014.

Tourism revenues dropped by 4.6% in 2018, according to official data released last month. The announcement in 2017 of tighter travel restrictions on U.S. citizens played a role.

“At one point U.S. visits dropped more than 40 percent,” Cuban Tourism Minister Manuel Marrero told Reuters, adding he still hoped tourism would grow this year.

Meanwhile the Trump administration has activated a long dormant law under which Cuban-Americans can sue foreign companies that profit from their properties nationalized during the first years of the 1959 Revolution.

Western diplomats and businessmen have called the threat of potentially costly U.S. court battles another clear disincentive for banks and outside investors to do business with Cuba.

The United States has also threatened to further tighten restrictions on travel and to impose a cap on cash remittances to Cuba, measures that could hit the economy hard.

SIEGE MENTALITY

Cuba’s government has said it will continue moving down the path toward reform. But it has failed to respond so far to calls from the island’s entrepreneurs for basic changes such as the creation of wholesale markets for the private sector, and the right to import and export.

Instead of opening the economy further, some Western diplomats and analysts say there is risk Cuba’s leadership will adopt a siege mentality in the face of increased U.S. hostility. That could mean turning to allies like Russia, Vietnam and China for help to muddle through while keeping its stranglehold on economic life.

“The U.S. sanctions could be counterproductive,” said one diplomat who asked not to be identified. “Cuba has historically closed up at times like these.”

Cubans are not going hungry like they did during the so-called “Special Period” after the collapse of the Soviet Union. But they are increasingly connected to the rest of the world via the internet and foreign travel, and many have grown weary of government attempts to blame the U.S. embargo for the bulk of their country’s woes.

“We are in total freefall,” said Hidalgo’s wife, Carmen Lozano, 55, clinging to her two bags of rationed chicken. “They should have allowed free production and sales from the beginning of the revolution.”

Inequality has risen in recent years in Cuba and many believe the economic crisis could have a more disproportionate impact now than it might have in the past.

In a country where the government’s claim to legitimacy rests to a large extent on ensuring a certain level of equality, the authorities seem well aware that most people lack the cash to stock up on whatever basics they need on the black market.

“The government’s new rationing program is trying to address that simmering discontent by making the small quantities of goods that are in stock more widely available,” said William LeoGrande, a professor of government at American University.

“The government understands that discontent over the economy is their biggest political vulnerability so they will do everything they can to maintain supplies of basic goods.”

(Reporting by Sarah Marsh; Additional Reporting by Marc Frank and Nelson Acosta; Editing by Daniel Flynn and Tom Brown)

Why U.S.-Iran tensions could quickly escalate into a crisis

FILE PHOTO: A Iranian Revolutionary Guard boat is seen near the U.S. aircraft carrier USS George H. W. Bush in the Strait of Hormuz as U.S. Navy helicopters hover nearby on March 21, 2017. REUTERS/Hamad I Mohammed/File Photo/File Photo

By Phil Stewart and Michelle Nichols

WASHINGTON/UNITED NATIONS (Reuters) – Three years ago, when Iran’s military captured 10 U.S.sailors after they mistakenly strayed into Iranian waters, U.S. Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif jumped on the phone in minutes and worked out the sailors’ release in hours.

Could a similar crisis be so quickly resolved today?

“No, Zarif said in a recent interview with Reuters. “How could it be averted?”

Zarif and the current Secretary of State, Mike Pompeo, have never spoken directly, according to Iran’s mission at the United Nations. They instead tend to communicate through name-calling on Twitter or through the media.

“Pompeo makes sure that every time he talks about Iran, he insults me,” Zarif said.  “Why should I even answer his phone call?”

The open rancor between the nations’ two top diplomats underscores growing concern that the lack of any established channel for direct negotiation makes a military confrontation more likely in the event of a misunderstanding or a mishap, according to current and former U.S. officials, foreign diplomats, U.S. lawmakers and foreign policy experts.

The Trump administration this month ordered the deployment of an aircraft carrier strike group, bombers and Patriot missiles to the Middle East, citing intelligence about possible Iranian preparations to attack U.S. forces or interests.

“The danger of an accidental conflict seems to be increasing over each day,” U.S. Senator Angus King, a political independent from Maine, told Reuters as he called for direct dialogue between the United States and Iran.

A senior European diplomat said it was vital for top U.S. and Iranian officials to be on “speaking terms” to prevent an incident from mushrooming into a crisis.

“I hope that there are some channels still existing so we don’t sleepwalk into a situation that nobody wants,” said the diplomat, speaking on condition of anonymity. “The rhetoric that we have is alarming.”

State Department spokeswoman Morgan Ortagus declined to address how the administration would communicate with Iran in a crisis similar to the 2016 incident, but said:  “When the time to talk comes, we are confident we will have every means to do so.”

The administration’s “maximum pressure campaign” against Iran, she said, aims to force its leaders to the negotiating table.

“If the Iranians are willing to engage on changing their ways to behave like a normal nation,” Ortagus said, “we are willing to talk to them.”

TWITTER DIPLOMACY

In 2016, Kerry and Zarif knew one another well from the complex negotiations to reach a 2015 pact to limit Iran’s nuclear capabilities.

Three years later, top-level diplomatic relations have all but disintegrated in the wake of the Trump administration’s withdrawal from the nuclear pact, its tightening of sanctions on Iranian oil, and its recent move to designate part of Iran’s military as a terrorist group.

U.S. military officials cite growing concern about Iran’s development of precise missiles and its support for proxy forces in Syria, Iraq, Yemen and beyond.

In the absence of direct talks, Twitter has become a common forum for U.S. and Iranian officials to trade biting barbs. On Wednesday, an advisor to Iranian president Hassan Rouhani fired off a tweet at Pompeo castigating him for provoking Iran with military deployments.

“You @SecPompeo do not bring warships to our region and call it deterrence. That’s called provocation,” the advisor, Hesameddin Ashena, tweeted in English. “It compels Iran to illustrate its own deterrence, which you call provocation. You see the cycle?”

That followed a Trump tweet on Sunday threatening to “end” Iran if it sought a fight, and a long history of bitter insults traded by Pompeo and Zarif.

Pompeo in February called Zarif and Iran’s president “front men for a corrupt religious mafia” in a tweet. That same month, another official at Pompeo’s State Department tweeted: “How do you know @JZarif is lying? His lips are moving.”

Zarif, in turn, has used the social media platform to condemn Pompeo and White House National Security Adviser John Bolton’s “pure obsession with Iran,” calling it “the behavior of persistently failing psychotic stalkers.”

‘AMERICANS HAVE OPTIONS’

U.S. officials, diplomats and lawmakers said they doubted Zarif would refuse to take a call from Pompeo in a crisis, given the risks for Iran in any conflict with the U.S. military.

In a Tuesday briefing with reporters, Pompeo appeared to dismiss concerns about Washington’s ability to communicate and negotiate with Iran.

“There are plenty of ways that we can have a communication channel,” Pompeo said.

Diplomats say Oman, Switzerland and Iraq are nations with ties to both countries that could pass messages.

“It’s a little bit like the Israelis – when they need to get messages to people, they can get messages to people,” said a second senior European diplomat.

Representative Michael Waltz – the first U.S. Army Green Beret elected to Congress, said he favored the diplomatic freeze as a way to force Iran into serious negotiations.

“If you don’t have diplomatic isolation, you’re having one-off talks, that lessens the pressure,” said Waltz, who is also a former Pentagon official.

But indirect message-passing can be too cumbersome in a fast-moving crisis, said Kevin Donegan, a retired vice admiral who oversaw U.S. naval forces in the Middle East as commander of the Fifth Fleet when the U.S. sailors were captured by Iran.

Such dealings through intermediaries “require time and will not allow an opportunity to de-escalate a rapidly unfolding tactical situation,” said Donegan, now a senior adviser at the Center for Strategic and International Studies, who added that he was not commenting on current U.S. policy.

Donegan and Waltz both said it would be helpful to have some kind of hotline between the U.S. and Iranian militaries, but Donegan and other experts were skeptical Iran would agree to such an arrangement.

BACK CHANNELS THROUGH OMAN, IRAQ & RUSSIA?

On May 3 – after Washington became alarmed by intelligence indicating that Iran might be preparing for an attack on the United States or its interests – it sent messages to Iran via “a third party,” one U.S. official said, speaking on condition of anonymity.

Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff, also told Congress on May 8 that messages had been sent to “to make sure that it was clear to Iran that we recognized the threat and we were postured to respond.”

Waltz said Dunford told lawmakers at a closed-door hearing that he had sent a message to Qassem Soleimani – the influential commander of the Revolutionary Guards’ Quds Force – warning him that Iran would be held directly accountable if one of its proxy forces attacks Americans.

“The message now was: ‘We’re not going to hold your proxies accountable'” if they attack U.S. citizens or forces in the region, he said. “‘We’re going to hold you, the regime, accountable.'”

Another official said the United States had authorized Iraq “to let the Iranians know that there is no plausible deniability about attacks on Americans in Iraq” after U.S. intelligence flagged preparations for a possible attack by Iran-backed militias in Iraq.

Joseph Votel, the now retired four-star general who oversaw U.S. troops in the Middle East until March, noted earlier this year that the U.S. military might be able to indirectly get a message to Iranian forces through an existing hotline with Russia meant to avoid accidental conflicts in Syria.

“The Iranians can talk to the Russians,” he said.  “We have a well-established professional communication channel with the Russians.”

But the prospect of relying on the Russian government to get United States out of a crisis with Iran is hardly reassuring to many current and former officials in the United States.

“That would be a risky choice,” said Wendy Sherman, an undersecretary of state in the Obama administration.

(Reporting by Phil Stewart and Michelle Nichols; Editing by Brian Thevenot)

Half of American adults expect war with Iran ‘within next few years’: Reuters/Ipsos poll

FILE PHOTO: A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of the U.S., Iran, China, Russia, Britain, Germany, France and the European Union during Iran nuclear talks at the Vienna International Center in Vienna, Austria, July 14, 2015. REUTERS/Carlos Barria/File Photo

By Chris Kahn

(Reuters) – Half of all Americans believe that the United States will go to war with Iran “within the next few years,” according to a Reuters/Ipsos public opinion poll released on Tuesday amid increased tensions between the two countries.

While Americans are more concerned about Iran as a security threat to the United States now than they were last year, few would be in favor of a pre-emptive attack on the Iranian military. But if Iran attacked U.S. military forces first, four out of five believed the United States should respond militarily in a full or limited way, the May 17-20 poll showed.

Historically tense relations between Washington and Tehran worsened in May after U.S. President Donald Trump hardened his anti-Iran stance and restored all sanctions on Iranian oil exports following his decision a year ago to pull the United States out of a 2015 international nuclear accord with Tehran.

The United States moved an aircraft carrier and forces to the Gulf region in response to intelligence that Iran may be plotting against U.S. interests, an assertion Iran denies.

Nearly half – 49% – of all Americans disapprove of how Republican Trump is handling relations with Iran, the poll found, with 31% saying they strongly disapprove. Overall, 39% approve of Trump’s policy.

The survey showed that 51% of adults felt that the United States and Iran would go to war within the next few years, up 8 percentage points from a similar poll published last June. In this year’s poll, Democrats and Republicans were both more likely to see Iran as a threat and to say war was likely.

Iran was characterized by 53% of adults in the United States as either a “serious” or “imminent” threat, up 6 percentage points from a similar poll from last July. In comparison, 58% of Americans characterized North Korea as a threat and 51% characterized Russia as a threat.

Despite their concerns, 60% of Americans said the United States should not conduct a pre-emptive attack on the Iranian military, while 12% advocate for striking first.

If Iran attacked, however, 79% said that the U.S. military should retaliate: 40% favored a limited response with airstrikes, while 39% favored a full invasion.

Both the United States and Iran have said they do not want war, although there have been bellicose statements from both.

Despite Trump’s decision to withdraw, the poll showed 61% of Americans still supported the 2015 deal between Iran and world powers to curb Iran’s potential pathway to a nuclear bomb in return for sanctions relief. Republicans also favored the accord negotiated by the Democratic administration of President Barack Obama, with a little more than half saying they supported it.

Gulf allies and U.S. government officials have said they believe Iran-backed groups are responsible for a series of attacks on shipping and pipelines in the Gulf in the last week.

Trump has said he would like to negotiate with the Islamic Republic’s leaders. Iranian President Hassan Rouhani rejected talks on Tuesday and has said “economic war” is being waged against Iran.

The Reuters/Ipsos poll was conducted online in English throughout the United States. It gathered responses from 1,007 adults, including 377 Democrats and 313 Republicans, and has a credibility interval, a measure of precision, of 4 percentage points.

To see a copy of the full poll results and methodology, click here: https://tmsnrt.rs/2WUpjFT

(Reporting by Chris Kahn; Editing by Mary Milliken and Grant McCool)

North Korea says “biggest issue” in U.S. ties is impounded ship

North Korea's ambassador to the United Nations Han Tae Song attends an interview with Reuters at the United Nations in Geneva, Switzerland, May 22, 2019. REUTERS/Denis Balibouse

By Stephanie Nebehay

GENEVA (Reuters) – The U.S. seizure of a North Korean cargo ship is the biggest stumbling block to improving bilateral relations, a senior North Korean official said on Wednesday, warning Washington against using the “logic of strength” against Pyongyang.

The Trump administration must make a “big decision” on lifting sanctions before stalled nuclear negotiations can resume, Han Tae Song, North Korea’s ambassador to the U.N. in Geneva, added in an interview.

“It would be the greatest miscalculation if America thought my country is among the countries where American-style logic of strength or pressure might work,” Han, who is also North Korea’s disarmament ambassador, told Reuters.

North Korea, under U.S. and U.N. sanctions for its nuclear and missile programs, has stepped up a campaign for the return of the ship, which Washington says it seized over accusations it was used for coal shipments in violation of the curbs.

The country has warned Washington that the impounding of the “Wise Honest” ship had violated its sovereignty and could affect “future developments” between the two countries.

“Yes, (it is) the biggest issue,” Han said of the vessel, which U.S. officials say is en route to American Samoa. “It is because it is the infringing upon the sovereignty of our country.”

Han described the seizure as a “wanton violation of international law” and demanded its immediate return.

Han said he had no information on its cargo, but on the consequences of a U.S. failure to return the ship, he said: “We don’t want, the Americans also don’t want and the international community don’t want the situation again worsening.”

At their second summit meeting in February, talks broke down between U.S. President Donald Trump and North Korean leader Kim Jong Un, stalling moves toward denuclearization.

Han said his country’s short-range missile tests carried out earlier in May were a “routine checking of our national defense capabilities”, indicating that they would continue.

“WE ARE NOT OBSESSED” OVER MORE TALKS

The U.N. Security Council has unanimously strengthened sanctions on North Korea since 2006 in a bid to choke funding for Pyongyang’s nuclear and ballistic missile programs, banning exports including coal, iron, lead, textiles and seafood, and capping imports of crude oil and refined petroleum products.

Asked whether North Korea was ready to resume nuclear negotiations with the United States, Han referred to Kim’s speech to the Supreme People’s Assembly in April.

“If they don’t change their minds, if they don’t make a big decision, we are not obsessed over another round of talks with the USA, out of (being) thirsty for lifting sanctions,” Han said.

“That’s why our leader said that if they made a big decision, there will be another round of talks with America.”

Han said that North Korean grain production was lower last year following drought, leading to a “shortage of food”.

U.N. agencies, including the World Food Programme (WFP), are providing food assistance, from donor contributions, he said.

“If there is food aid, it’s ok. But if there is no food aid, then we have to manage ourselves.”

Asked whether the food shortages were manageable, he replied: “It is manageable, but the problem is U.N. sanctions.

“We can’t transact for importing the food through banking systems, that is the main problem.”

(Reporting by Stephanie Nebehay, Editing by William Maclean)