"The Art Of Exiting The Deal": What Happens Next?

Despite the brief media confusion this morning, at 2pm ET this afternoon, Trump unveiled his latest skill, namely the "art of exiting the deal" when he announced that he will pull the US out of the "unacceptable" Iran nuclear deal by not re-signing the sanctions waiver, while instituting the "highest level of sanctions" against Iran, even if Trump did not explicitly unveil new sanctions besides those which already existed. At the same time, Trump explicitly left the door open for a new deal, so there is the possibility - reflected in the oil price - that as one deal ends, a new one may be negotiated.

There was more confusion over the timing of next steps, where as Treasury Secretary Steven Mnuchin announced, "Sanctions will be reimposed subject to certain 90 day and 180 day wind-down periods. At the conclusion of the wind-down periods, the applicable sanctions will come back into full effect. This includes actions under both our primary and secondary sanctions authorities."

Adding to the complexity of the deal unwind is that the US decision was unilateral, with the rest of JCPOA signatory countries - Germany, UK, China, France and Russia - committed to remain in the deal. While we await responses from all signatories, so far the EU's reaction has been the most vocal, with Europe vowing to uphold the Iran deal despite the US exit. How this can be implemented in practice despite Trump's warning that any nations that transact with Iran will also be subject to sanctions, remains to be seen.

Further complicating matters is Iran's stated desire to remain in the deal, and continue under the terms of the Nuclear Deal.

  • IRAN SAYS WILL START TALKS WITH EUROPEAN NATIONS, CHINA, RUSSIA
  • ROUHANI: FROM NOW ON, JCPOA IS BETWEEN IRAN AND 5 COUNTRIES
  • IRAN IS COMMITTED TO ITS OWN OBLIGATIONS, U.S. IS NOT: ROUHANI

Iran's reaction is understandable as a prompt, unilateral withdrawal from the deal risks crippling Iranian oil exports while raising the risk of an Israeli attack on its military and/or research facilities.

Adding to the hesitancy about immediate consequences, Bloomberg adds that the “snap-back” of penalties on Iran isn’t immediate, instead kicking in over six months. That could allow time to negotiate a new accord to replace or supplement the deal agreed to during Barack Obama’s presidency.

Still, Trump’s order blocks new contracts immediately and sets 90- and 180-day clocks for companies with existing Iranian business commitments. By August or November, they’ll have to comply with a broad array of sanctions targeting the Iranian Central Bank and Iran’s financial sector, oil industry, shipping and other economic pressure points.

Trump also made clear he expects to achieve a new deal that lifts the penalties.

“The fact is they are going to want to make a new and lasting deal, one that benefits all of Iran and the Iranian people, ” Trump said. “When they do, I am ready, willing and able.”

Unless Trump is satisfied or changes course, here is what will happen, courtesy of Bloomberg:

August Sanctions

The first deadline is Aug. 6. By then, companies must wind down holdings of Iranian sovereign debt or Iranian currency. Any person or company that assists the Iranian government with acquiring or purchasing U.S. dollar banknotes also will be subject to sanctions by that date.

Sanctions also snap back into place Aug. 6 on Iran’s trade in gold and other precious metals, graphite and coal, metals such as aluminum and steel, the country’s automobile sector and luxury products such as Iranian-origin carpets and caviar.

November Sanctions

Sanctions targeting companies doing business with Iran’s oil industry are reinstated Nov. 4, including penalties against foreign financial institutions that conduct significant transactions with the Central Bank of Iran.

On top of that, the U.S. will impose sanctions on Iran’s energy sector and on petroleum-related transactions with firms including National Iranian Oil Company, Naftiran Intertrade Company, and National Iranian Tanker Company.

RBC Capital Markets chief commodities strategist Helima Croft said that “depending on the enforcement rate” she expects Iranian oil exports to be curtailed by between 200,000 and 300,000 barrels per day. By comparison, 1 million to 1.5 million barrels were removed from the market daily when the Obama administration and other world powers jointly sanctioned Iran to force it to the negotiating table before 2015.

The U.S. advised countries that want to avoid sanctions on their financial institutions to reduce their volume of crude oil purchases from Iran during the 180-day wind-down period. The State Department will determine on a case-by-case basis whether countries have sufficiently cut their Iranian imports.

* *  *

That's not all, however, as it is possible that "more sanctions will follow as new information comes to light,” White House National Security Adviser John Bolton told reporters in a briefing following Trump’s announcement. “And that’s something we should pursue vigorously because we want to put as much economic pressure on Iran as we can and deny them the revenues they would have gotten from the transactions we’re not eliminating.” He didn’t specify what other industries or companies could be targeted.

An immediate consequence of Trump's withdrawal is that billions of dollars of deals will be scuttled even before the sanctions fully take effect. All the uncertainty will have a “potentially devastating chilling effect” on business, said Tony Blinken, a former deputy secretary of State under Obama.

One major U.S. exporter may be especially impacted: Boeing. The company has signed a $3 billion deal for 30 737 Max jets with Iran Aseman airline and a $16.6 billion deal with national carrier Iran Air for 80 aircraft.

“That deal would be in jeopardy and thousands of jobs in various locations of the U.S. would be in jeopardy,” Jane Harman, CEO of The Woodrow Wilson International Center for Scholars and a former Democratic House member from California, said in congressional testimony on Tuesday.

“We will consult with the U.S. government on next steps,” Gordon Johndroe, a Boeing vice president, said in a statement.

Airbus Group SE’s contract with Iran for 100 jetliners worth about $19 billion at list prices could also be endangered, as could a 20-year, $5 billion agreement Total SA and China National Petroleum Corp. signed to develop part of Iran’s South Pars offshore gas field.

* * *

Looking at the regional fallout, now that the JCPOA deal in its original format no longer exists, it gives Israel a motive to launch a "preemptive" attack, as it can claim it is merely doing so now before Iran has fully developed nuclear weapons; meanwhile Iran's new bff, Saudi Arabia, also has its eyes on Iran, which has become a proxy state for non-western forces in the region, including Russia and China, and thus is destabilizing to the existing status quo.

Yet even if it were to "remain" in the deal, Iranian oil output would likely be impaired modestly, with some estimating anywhere between 200k and 500kb/d being taken offline, and send the price of oil higher; that said, much of this has already been priced into the market. This was confirmed by WTI staying around $70 after the Trump announcement. An analysis by the Center for Strategic and International Studies concluded that the loss of Iranian volumes would be more likely to be replaced by US condensate and light oil barrels ‘if’ Iranian condensate/light ends are covered by the sanctions. "And even in that case, price discounts would be assumed if alternative light sources from Libya, Angola, and Nigeria were to reenter the market in volume." Meanwhile, China might continue to import some oil from the United States to appease the president and deflect trade imbalance challenges.

The question then shifts to how Iran's geographic neighbors may react, starting with...

Israel: as we noted earlier, PM Netanyahu wasted no time to express his pleasure with Trump's announcement which took place just one week after the PM held an ornate and theatrical show, "proving" that Iran may have been developing nuclear powers:

  • NETANYAHU CONGRATULATES TRUMP ON CORRECT DECISION
  • NETANYAHU HAILS TRUMP'S 'BRAVE' DECISION TO LEAVE NUKE DEAL

As we discussed yesterday, the collapse of the deal in its current format may prompt Israel to launch a "preemptive" attack on Iran, which is one again "free" to develop nuclear weapons. All Israel would need is just the right provocation, or "false flag" event to frame the next middle eastern war as one of Iranian aggression.

* * *

Saudi Arabia: the Muslim country has once again found itself on the same side as Israel, amid the ongoing challenge for regional dominance and influence. Conveniently, in the upcoming proxy war between Iran/Syria on one hand and Israel/Saudi Arabia on the other, the Saudis have the backing of Trump and Europe, while Iran has the support of Russia, Turkey, Syria - of course, and most recently, China. Just like Israel, now that the deal is no more, Riyadh may also stage a false flag attack against itself (either blaming Iran or Iran-influenced Houthi rebels). Yet while such an extreme confrontation may not be especially likely, at least in the immediate future, it is guaranteed that Saudi Arabia together with Israel will do everything in their power to suppress Iran in every way possible.

* * *

Syria and Yemen: both war-torn nations are ideologically aligned with Iran, with Tehran military support and/or an Iranian-funded militia active in the two nations. The two nations are also directly and indirectly fighting Saudi Arabia and Israel, which have been arming and funding insurgent/rebel forces in the two countries. As such, it is likely that should the conflict with Iran escalate, than the regional wars involving Syria and Yemen will follow suit.

* * *

Europe: Unlike the US, Europe has expressed a desire to continue working under the parameters of the Nuclear Deal as Europe has been a happy client of Iranian oil exports which it tends to buy at below market prices. And while Iran will likely continue to export its oil to Europe (as well as Asia), it remains to be seen how strict Trump will be in his threats to crack down on any nation that engages Iran. However, one thing is certain: Iran - which will again be kicked out of SWIFT - will likely never again use US Dollars as the underlying currency in any deals or transactions.

* * *

Russia: Moscow has repeatedly warned the US not to exit the deal, and in this way Putin is aligned with Europe. Russia will continue to provide weapons to Iran/Syria in exchange not so much in exchange for commodities but to make sure that Russia preserves a critical middle eastern regional outpost and zone of influence in Iran, together with Syria.

* * *

China: for now Beijing's intentions in the middle east remain unknown. That may change very soon as the posturing ahead of the next proxy war escalates.

Comments

Jesus von Einstein TheSilentMajority Tue, 05/08/2018 - 16:01 Permalink

When it came out that an Israeli security company was digging up dirt on Obama officials in order to discredit the Iran deal, you’d think that fingers would be pointed at Netanyahu, who’s been meddling in our foreign policy for years. No, the press can’t connect the dots. It treats the tale as another instance of Trump being corrupted.

http://mondoweiss.net/2018/05/israel-interfering-politics/

 

edit:  www.whatreallyhappened.com

 

 

In reply to by TheSilentMajority

two hoots spyware-free Tue, 05/08/2018 - 17:33 Permalink

Imagine this idea:

Russia, Iran, Syria and any other belligerent entity stops all hostile action and goes home.  No more war, no more conflict, no more presentable reason for it.  Spending resources, like China, on building their economic power/wealth/stability and who knows, maybe each total disbanding of all military, only security forces.  This leaves no one for the US, Israel, to oppose.  A continuation on any such unprovoked aggression would be immediately obvious and bring, maybe, world pressure.  It would also expose any hidden agendas.  But it may just bring calm to the region.   Not well thought out but a concept to work with/consider.

 

In reply to by spyware-free

J S Bach Muh Raf Tue, 05/08/2018 - 18:06 Permalink

I'm still convinced that it's not Israel that calls the shots, but their Lord Of The Flies Rothschild in England.  The lust for money (and thus, power) - along with the threat of losing it - is what impels 99.9% of ALL political leaders.  Real power flows from the fount of currency issuance.  Proverbs states that the borrower is beholden to the lender.  Never forget that.  Until that cabal of (((satanic families))) and their diabolic system of world usury are eliminated, nothing will improve for the human animal.  Israel is just their pirate redoubt under the guise of a "sovereign" nation.  In truth, their "nation" is everywhere one of the parasites bores in the diaspora.  

In reply to by Muh Raf

MoreSun Enoughalready Tue, 05/08/2018 - 18:48 Permalink

While the synagogue of satan aka so-called israel agitates for more and more wars.

They are also Destroying your rights of FREE SPEECH:

"As is expected in this upside-down world of ours, while Mamma Merkel roams free to wreak havoc and cause more rapes and deaths of Germans at the hands of her sainted and untouchable Turd World "migrants," Ursula (89) and Monika (60's) -- with the gleeful approval of Jews all over the world -- are condemned to waste away a few years in German prisons for their thought-crime of Holocaust Denial" ™. Boy-oh-boy, the "usual suspects" sure do make it difficult for decent people of good will not to "hate" them, don't they?"

Dear God please effect the release of these women: Ursula Haverbeck, Monika Schaefer, Sylvia Stoltz from their jew supremacist terrorist oppressors !

http://tomatobubble.com/haverbeck_schaefer.html

In reply to by Enoughalready

Polynik3s J S Bach Tue, 05/08/2018 - 18:32 Permalink

Israel is a Rothchild fiefdom. Jews are so confused as to think that they are Semites and Hebrew. 

Some people make fun of Zionist Christians as being delusional, but the  Jews are way confused. Jews don't realize that their Talmud is Babylonian Black Majik and their god is Rothschild's patron god Lucifer.

It doesn't matter if you are atheist and consider invisible gods ludicrous, these wealthy families serve and are rewarded by a being that exists on another plane. If it helps, think of Jews as worshipping Cthulhu.

In reply to by J S Bach

fx two hoots Tue, 05/08/2018 - 17:37 Permalink

At this point, I don't care anymore whether the Trumptard gets impeached or not. he has betrayed all of us to the hilt. Millions voted for him to avoid hitlary - and they got hitlary squared in return.

Fuck Trump,  and his brain-dead zionist  family (kushner, ivanka...).

I couldn't care less if the deep sh!t shoots him at some point. He has become the deep sh!t's willing tool. A warmonger for the neocons , a lakai of Bibi and the zionist scum. I am done with the lying pos  orange asshole.

Impeach the orange clown already and end this charade.

As bad as Obozo and GWB were, the Trumptard tops even  them in terms of studpidity and neocon warmongery. Fucking unbelievable.

In reply to by two hoots

fx gmrpeabody Wed, 05/09/2018 - 05:03 Permalink

Libtard? LOL!

I was very happy seeing Trump win over Killary and really had some hope for the US and for the world when the Donald took office.

That hope is all gone. Trump has sided with the neocons and the zionist scum , face it. There is nothing positive about that and I am done with the lying POS ever since that become clear beyond any doubt.

 

But I guess, peope like you will still hang on to the trumptard no matter what, even when he shoves  a giant tomahawk missile up your ass and screws you left and right.

In reply to by gmrpeabody

fx Thethingreenline Wed, 05/09/2018 - 05:10 Permalink

" Pence is hawkish as Trump....maybe more so. "

 

probably he is. But very few people like pence and everybody would be pretty sure about what we are up to with a president pence. With Trump, many people still hang on and want to believe that is all only 4d-chess and that the trumptard actually doesn't mean it. Far easier to oppose  pence and any crap he might be doing than Trump with his constant smoke and mirrors.

And, Pence certainly has a better understanding of the consequences of his actions and decisions than Trump. The Donald is totally clueless in everything geopolitics and that makes him a real danger . Error of miscalculation is sky high. I don't want to imagine what may have happened to the World during the Cuban missile crisis if there wasn't JFK but the Trumptard in the white house at that time. Very likely that nuclear armageddon would have followed, given Trumpos obvious preference for military "solutions", displays of military power and glory and all that. And his lack of any understanding and knowledge of global political dynamics and interconnectivity.

In reply to by Thethingreenline

HRClinton fx Tue, 05/08/2018 - 21:59 Permalink

As someone here said earlier today... getting Trump was worse than having had Hillary, because...

Hillary could NOT have achieved these anti-Russian, pro-Zio-Globallust goals. She either would have fallen short, or have had a civil uprising.

The Ashki Global-Lusts knew this. Thus Sheldon Adelson (a 1-issue Zionist) backed Trump's campaign.

Trump was, as someone else here also said "a new Air Freshener and Whitewash for this Old Outhouse".

He managed to "extend & pretend" the Zio con, by conning those who WANTED to be conned: Believers. People who wanted to believe in the American Way (of a bygone era). Hopium for Republicans and bamboozled Libertarians.

In reply to by fx

Setarcos two hoots Tue, 05/08/2018 - 18:31 Permalink

Please let me know which rock you hide under.   Meanwhile the facts are these,  1) The belligerent entities are the U$, Israel and Saudi Arabia.  2) The defensive entities are Syria, Iran, Russia and Lebanon.

I know that you have a geography deficit, but the U$A is thousands of miles off base illegally and, in any case, the most stupid thing any country can do is disarm and/or appear weak, because then the U$A and its NATO satraps will move in, destroy it, kill the leader, steal the wealth and leave chaos behind, e.g. Yugoslavia, Afghanistan, Iraq, Libya and too many others to list.

In reply to by two hoots

emorybored Setarcos Tue, 05/08/2018 - 21:30 Permalink

That Afghan war was a real windfall for the US, to say nothing of the bountiful harvests of Libya, Yugoslavia, Iraq, etc. Is there a Yugo in every garage? Did the US harvest scientific expertise and natural resources from the Taliban/Afghanistan respectively? Did the US crush the Libyan economy? I'll make the last one easy, hint ; look what lead up to the 2003 end of Ghadaffi's nuclear aspirations. GL  https://quizlet.com/116086723/the-search-for-peace-and-new-technology-f…

In reply to by Setarcos

Mustafa Kemal two hoots Tue, 05/08/2018 - 18:51 Permalink

"Russia, Iran, Syria and any other belligerent entity stops all hostile action and goes home."

Are you referring to US, Israel, and our proxies?

Please tell us, where is Syria belligerant? For that matter, where is Russia or Iran belligerent.

 

Maybe you dont see it, but the Neocons need war and they cant do regime change with a country that is certified to be behaving.  

In reply to by two hoots

OverTheHedge BrownCoat Tue, 05/08/2018 - 23:26 Permalink

The Syrian Arab army should call it a day, and reach across the devide to ISIS, Al Qaida and all the other head-choppers, and have a nice game of footy, just like this Brits and the Germans did in ww1.

Do you think the head-choppers will go home too? 

Life would truly be so much nicer if evil murderers didn't go around murdering evily, but they do, constantly. They are easy to spot: drenched in blood up to the elbows, and sitting in governments all around the west.

In reply to by BrownCoat