In sixteen days, Joe Biden will become the US president. Many issues are waiting for him to be handled, and in terms of foreign policy, one of the priorities will definitely be Iran.
Under the Trump administration, the American government imposed sanctions on Iran from multiple areas. Their assets and oil revenues in foreign banks had been frozen, oil trade declined, and accessing humanitarian aids to cope with Covid-19 restricted.
Last year on January 3, 2020, the leader of the Quds Force Kasım Süleymani, also been killed, and during his death anniversary, Iranian officials threatened the US. In response, the American officials announced that the US aircraft carrier USS Nimitz would remain in the Persian Gulf.
Moreover, Iranian officials declared that they would increase enriched uranium to 20%, which is above the nuclear deal agreement signed with the Obama administration six years ago. The statement of the Iranian government claims that it will be used for peaceful reasons. However, the government also states that Iran will not let the United Nations monitor its nuclear activities anymore if the United States does not lift the sanctions. So, their attitude remains uncooperative.
While accelerating its nuclear energy investments, Iran also works on its oil production capacity. According to Bloomberg, Iranian oil companies will receive $1.2 billion to increase their oil output. Furthermore, in the recent OPEC meeting, Iran was exempt from limiting oil production due to sanctions.
Finally, Iran continues to support the Maduro government in Venezuela, another sanctioned country by the United States, by supplying gasoline and military equipment to support the regime that faces fuel shortages. Under these circumstances, they seem to put pressure on Joe Biden's administration to lift sanctions.
During the election campaigns, Biden's approach to the Iran issue was cooperative, and he was claiming that his aim will be to renewing the nuclear deal with the Iranian government. However, agreeing on the same principles will be challenging for both parties. Biden administration may choose to continue with the sanction policies.
The development of technology and globalization enabled policymakers to apply broader sanctions to target states regarding different aspects. Freezing financial assets, damaging trade flows, or halting technology transfer becomes vital tools for sanction policies. It has been widely used by the United States and the European Union.
The popularity of imposing sanctions to solve diplomatic conflicts comes from several reasons. According to Hufbauer and Jung's "What's new in economic sanctions?" article, the authors explain that the United States chooses sanction policy because it creates far fewer casualties than military conflicts. On the other hand, the European Union imposes sanctions because it is the only available tool with bearable economic and political costs for the countries (Hufbauer, 2020).
However, the sanction policy creates a burden on many secondary states that would like to continue relations with the target state. In the last years, the European Union criticized the American government for interfering with their foreign policy by imposing restrictions on their business with Iran. The European Union also formed an alternative system named INSTEX (Instrument In Support of Trade Exchanges) to continue their trade with Iran using the Euro instead of the US Dollar. The European Union also had different opinions on helping Iran to deal with Coronavirus when the United States did not want them to help the country. Despite that policy, the EU sends medical supplies to Iran. Russia and China are also supporting Iran to survive American sanctions. Tanker trackings show that oil trade with China continued long after the sanctions were implemented.
Under these circumstances, neutralizing Iran through diplomatic channels seems like a huge challenge for the new administration. Biden's approach to the situation will be crucial for the Middle East politics and oil and natural gas sector.
References:
Hufbauer, G. C., & Jung, E. (2020). What's new in economic sanctions?. European Economic Review, 130, 103572.
Motevalli, G., & Shahla, A. Iran Says It’s Started Process of Producing 20% Enriched Uranium. https://www.bloomberg.com/news/articles/2021-01-04/iran-says-it-s-started-process-of-producing-20-enriched-uranium?sref=zLh0kxzp.