Oil is well for Syria as US cosies up to Iran on nuclear deal

  • 5 Jul 2022

The Assad regime, already receiving sanctions waivers from Biden, may become one of the beneficiaries of the new deal between Washington and Tehran.

( AP )

US President Joe Biden's administration has decided to make broader concessions to Iran in order to boost the negotiation process for reviving the 2015 nuclear deal, the Joint Comprehensive Plan of Action (JCPOA), which stalled this spring due to different views on the political aspect of the potential agreement. Channel 12 Israeli TV sources reported Washington's willingness to give the green light for Iranian oil tankers to transport raw materials to Syria.

According to insiders, an important element of the agreement would be Israel's willingness not to obstruct the transit of fuel. Syria's neighbour, according to these reports, for the first time accepted a scenario without escalation with regard to tankers if the US presents total guarantees of control over the security situation, and the Iranian side, in turn, ensures transparency. The Israelis have repeatedly accused their regional opponent of trying to transport not only resources but also weapons to the Assad regime by sea.

This softening of Israel's stance on oil transit is in line with information recently published by Israeli daily Yediot Ahronot, according to which opinion on the need to reinstate the JCPOA within the local military establishment is changing. Indeed, a number of Israeli generals have reportedly expressed support for reinstating the nuclear deal because, in their estimation, even a bad agreement would be preferable to the absence of it: the latter indicates that an escalatory scenario is inevitable.

However, the local press noted that there is still considerable opposition to the idea of reviving the JCPOA among senior members of Mossad, including David Barnea, director of the intelligence agency. This part of the Israeli elite believes that the renewed deal would only delay Iran getting a military atom for a couple of months. But one way or another, Hebrew-language publications indicate, that views on a return to the JCPOA are gradually evolving in Israel.

Dormant sanctions

With the help of European diplomacy, the dialogue on the nuclear dossier has been given another impetus. This was revealed following talks between Iranian Foreign Minister Hossein Amir-Abdollahian and EU High Representative for Foreign Affairs and Security Policy Josep Borrell. "It is important for the government that Iran takes full advantage of the economic benefits. We will seek to resolve the contradictions through negotiations," the Islamic Republic's diplomatic chief acknowledged the other day.

But Western capitals are also economically interested in clarifying the situation around the nuclear talks. On the sidelines of the G7 summit in Germany, French officials said that all formal contradictions over the Iranian atom had been resolved—the problem lay only in political demands. "There is a knot that needs to be untied in order to get Iranian oil back on the market," an unnamed French official told reporters.  “We also have Venezuelan oil, which also has to come back."

Both mitigations of the sanctions ban on Russian exports and the crisis with fuel prices in America depend on it. However, market experts argue that the Biden administration could have achieved the desired effect without a formal deal with the government of Ebrahim Raisi. All the US supervisors need is not to impede the shady flow of Iranian raw materials, which would give a major chance to relatively stabilise the energy market situation, these estimates indicate.

This position was expressed not so long ago by Mike Muller, head of the Asian office of the Swiss-Dutch Vitol Group, who stressed that if the current team in the White House has a medium-term goal to bring down the cost of gas at home, they could simply ignore the situation with the flow of "sanctioned barrels". Especially since, hypothetically, such a "dormant" sanctions regime could only be maintained by Biden until November, when the US midterm congressional elections are due to take place.

Without a "resistance economy"

The potential revival of the JCPOA would provide new opportunities for the Iranian private sector, notes Barbara Slavin, the director of the Future of Iran Initiative at the Washington-based Atlantic Council. "It will revitalise trade between Iran and its neighbours," the expert expresses confidence. Among those partners in need of intensifying non-sanctioned economic contacts with the Islamic Republic is Syria. There is a view that oil transit was precisely one of the topics of Assad's visit to Tehran in May.

Especially since the US sanctions toolkit is gradually losing relevance for the Syrian regime as well. This is supported by the promotion of an energy deal between Egypt, Jordan, Syria and Lebanon, which should bring legal revenues to the economy of Damascus. The critics also point to the fact that Biden has actually refused to impose broad restrictions on senior financiers in Assad's leadership, while his predecessor Donald Trump blacklisted over 100 such officials in 2020 alone.

Damascus would only benefit from making the Iranian or Russian economy less susceptible to sanctions, argues Randa Slim, the director of the Conflict Resolution at the American Middle East Institute. "Lifting sanctions would allow Tehran to benefit from unforeseen increases in oil prices and strengthen its financial position to help rebuild Syria," she argues. Syrian companies doing business with Iran will no longer face the risk of falling under restrictive measures, she says. 

Nevertheless, a side effect of the potential restoration of the JCPOA would be that Tehran and its regional partners would lose a serious mobilisation resource: the traditional narrative about the relevance of building a "resistance economy" would be weakened, even if Biden's concession would be presented as an act of surrender. However, this cannot but reassure the Syrian authorities about the prospects for further softening of US pressure policy, and this will probably force them to adapt their foreign policy to such scenarios.