Iranian Supreme Leader Ayatollah Ali Khamenei appears in the wake of recent anti-government protests to have put his weight behind President Hasan Rouhani’s repeated calls for reduced military and Revolutionary Guards involvement in the economy.
Mr. Khamenei signalled his support by ordering the military and the Guards to start divesting from commercial holdings and businesses not related to their core tasks except for construction projects considered essential by the government.
The order serves not only to address protesters’ grievances that were sparked in part by losses suffered by millions of Iranians a result of the collapse of fraudulent financial institutions with links to the Guards and other public institutions. The financial entities lured investors with high interest rates that they could not pay.
Mr. Khamenei’s order could also sweeten Iranian efforts to persuade Europe to put in place legal measures that would allow it to invest in the Islamic republic even if the United States imposes new sanctions and withdraws from the 2015 international agreement that curbed Iran’s nuclear program.
Europe shares many of the United States’ concern about the role of the Guards in Syria, Yemen, Iraq and elsewhere in the Middle East and the fact that it runs Iran’s ballistic missile program but has insisted that the agreement should be maintained.
A target of US sanctions, the Guards reportedly are not opposed to a reduced stake that analysts say accounts for as much as 30 percent of the Iranian economy. The Guards operate, among others, Khatam al Anbia, a huge construction company with tens of thousands of employees that is involved in civil development, the oil industry and defense businesses. The Guards build roads, operate ports, manage telecommunication networks, and own business in sectors as far flung as finance and medical.
The “top brass have realized that running companies is actually not their competency. The poor management has been a drag on the economy and–as seen in the recent #IranProtests–a risk to internal security and to the prestige of the armed forces,” said Esfandyar Batmanghelidj, an Iran analyst, commentator and business consultant.
In a world in which everything is interlinked, disinvestment by the Guards and military as well as other public institutions like the Social Security Organization, Iran’s largest pension fund, would involve privatization in a country that has found it difficult to attract foreign investment because of the threat of a re-imposition of US sanctions conditionally lifted as part of the nuclear agreement.
US President has threatened not to renew US sanctions relief in May if Europe and the US Congress failed to work towards an agreement with Iran on an addition to the nuclear accord that would restrict Iranian missile testing and development, provide for expanded inspections of Iranian facilities, and extend prohibitions on nuclear-weapons work. Iran insists that the accord cannot be renegotiated.
Europe has been pressing the Trump administration not to walk away from the accord. Iranian officials have suggested that Tehran would adhere to the nuclear deal in case of a US walkout provided that it served its interests.
For Iran to see continued merit in the deal, it would have to believe that European companies would remain interested in investing in the Islamic republic. That would require the European Union adopting legislation that would shield European companies from US secondary sanctions that would target non-American entities invested in Iran.
Privatization of military and Guards-owned companies, given Iran’s undercapitalized financial markets and its small pool of viable domestic investors, would depend on foreign investors, who in turn are unlikely to risk being penalized by potential renewed secondary US sanctions.
“Europe should put in place a viable contingency plan if the United States continues backtracking on the deal and let Washington know it’s ready to use it… Europe will need to present a package (together with China and Russia) that can entice Iran to continue abiding by the core elements of the current nuclear agreement,” said Iran expert Ellie Geranmayeh.
Writing in Foreign Policy, Ms. Geranmayeh argued that Europe should initially attempt to secure from the United States exceptions to the potential sanctions modelled on the US penalties imposed on Russia that provide relief from enforcement for European companies.
“If Washington refuses this approach, European governments should publicly warn that in any instance where the U.S. Treasury actively enforces secondary sanctions targeting European companies dealing with Iran, the European Union will revive measures similar to its ‘blocking regulation’,” Ms. Geranmayeh argued.
The blocking regulation adopted by the European Union in 1996 thwarted then US President Bill Clinton’s attempt to force Europe and others to abide by US sanctions on Libya, Iran and Cuba. The regulation made it illegal for European companies to abide by US sanctions, gave them legal cover to refuse payment of US fines, and opened the door to the EU penalizing US companies in retaliation.
In practice, European companies, if forced to choose between doing business with the United States or Iran, would likely opt to steer clear of the Islamic republic. The EU would be banking on the expectation that the Trump administration would ultimately opt to compromise in a bid to avoid a deterioration of trans-Atlantic relations.
In announcing Mr. Khamenei’s support for reducing the stake in the economy of the military and the Guards, Iranian defense minister Amir Hatami cautioned that “the degree of our success depends on market conditions and the possibility of divestment.”
Said Mr. Batmanghelidj: “If success in privatization is to be achieved…Iran’s equity market investors will need foreign investors to help carry the burden and unlock the opportunity.”
With little insight into what entities will be put up for sale, European investors, even if the EU puts legal protections in place or cuts a deal with the United States, like their Russian and Chinese counterparts, are likely to take a wait-and-see attitude. That could put efforts to reduce the military and Guards’ economic stake in jeopardy, catching it between the rock of lack of Iranian transparency and the hard place of weak domestic financial markets and a limited pool of investors.
If that were not enough, Saudi efforts to counter Iran could further dampen foreign investor appetite. In a sign of the times, South Korean construction company POSCO Engineering & Construction in which Saudi Arabia’s Public Investment Fund has a 38 percent stake cancelled a $1.6 billion contract to build a steel mill in Iran because of objections by the company’s two Saudi board members.
Qatar World Cup offers lessons for human rights struggles
It’s a good time, almost 12 years after the world soccer body, FIFA, awarded Qatar the 2022 World Cup hosting rights and five months before the tournament, to evaluate the campaign to reform the country’s erstwhile onerous labor system and accommodate fans whose lifestyles violate restrictive laws and/or go against deeply rooted cultural attitudes.
Ultimately the balance sheet shows a mixed bag even if one takes into account that Qatari autocracy has proven to be more responsive and flexible in responding to pressure by human rights and labour groups than its Gulf brothers in the United Arab Emirates and Saudi Arabia.
On the plus side, the initial wave of condemnation of the country’s repressive kafala labour system that put employees at the mercy of their employers persuaded Qatar to become the first Gulf state, if not the first Arab state, to engage with its critics.
Engagement meant giving human rights groups and trade unions access to the country, allowing them to operate and hold news conferences in Qatar, and involving them in drafting reforms and World Cup-related model labour contracts. This was unprecedented in a region where local activists are behind bars or worse and foreign critics don’t even make it onto an inbound flight.
The reforms were imperfect and not far-reaching enough, even if Qatar introduced significant improvements in the conditions for unskilled and semi-skilled workers.
Furthermore, on the plus side, the hosting rights sparked limited but nonetheless taboo-breaking discussions that touched on sensitive subjects such as LGBT rights and the granting of citizenship to non-nationals.
Qataris openly questioned the granting of citizenship to foreign athletes so they could be included in the Qatar national team for the 2016 Olympics rather than medical personnel and other professionals who had contributed to national welfare and development.
Hosting the World Cup has further forced Qatar, albeit in a limited fashion, to come to grips with issues like LGBT rights that do not simply violate the country’s laws but go against its social grain to produce an inclusive tournament.
In some ways, that may have been more difficult than reforming the labour regime if one considers the difference between standing up for democratic freedoms that may have broad public support and the recognition of LGBT rights. In contrast to democratic rights, opposition to LGBT rights is deeply engrained in Qatar and other Muslim societies. It would likely be socially rejected, even if they were enshrined in law.
The difference means that the defense of LGBT and other socially controversial rights forces activists and human and LGBT rights groups to rethink their strategies and adopt alternative, more long-term approaches.
It also means that they will have to embrace less Western-centric attitudes frequently prevalent in the campaign to reform Qatar’s labour system. Those attitudes were evident in debates that were also often skewed by bias, prejudice, bigotry, and sour grapes.
Moreover, the criticism often failed to consider the context. As a result, achieving results and pushing for reform was, to a degree, undermined by what appeared to be a ganging up on Qatar and a singling out of the Gulf state.
Labour is an example. Human rights groups and trade unions treated onerous labour conditions in Qatar, even if the World Cup turned it into a prime target, as uniquely Qatari rather than a global problem that manifests itself in other parts of the world such as Southeast Asia and even Western democracies like Britain. Recent reporting by The Guardian showed that expatriate medical and caregiver personnel face similar curtailing of rights and abuse in Britain.
By the same token, Qatar was taken to task for being slow in implementing its reforms and ensuring that they were applied not only to World Cup projects but nationwide.
The fact is that lagging enforcement of policies and legal changes is a problem across the broad spectrum of Qatari policies and reform efforts, including the Gulf state’s high-profile, fast-paced, mediation-driven foreign policy.
Qatar’s handling of illegal recruitment fees paid by workers is a case in point.
The Supreme Committee for Delivery & Legacy, the Qatari organizer of the World Cup, has obliged companies it contracts to repay the fees without workers having to provide proof of payment. Companies have so far pledged to repay roughly USD$28.5 million to some 49,000 workers, $22 million of which have already been paid out.
It is a step the government could apply nationally with relative ease to demonstrate sincerity and, more fundamentally, counter the criticism.
Similarly, in response to complaints raised by human rights groups and others, the government could also offer to compensate families of workers who die on construction sites. Again, none of these measures would dent Qatari budgets but would earn the Gulf state immeasurable goodwill.
‘Effort and patience’ required to restore Iran nuclear agreement
Despite diplomatic engagements, restoring the so-called Iran nuclear agreement continues to be hindered by political and technical differences, the UN political and peacebuilding chief told the Security Council on Thursday.
In the landmark accord, formally known as the Joint Comprehensive Plan of Action (JCPOA) – reached in 2015 between Iran, the United States, China, France, Russia, and the United Kingdom – Iran agreed to dismantle much of its nuclear programme and open its facilities to international inspections in exchange for sanctions relief.
In 2018, then-President Trump withdrew the US from the agreement and reinstated the sanctions.
“Achieving the landmark JCPOA took determined diplomacy. Restoring it will require additional effort and patience,” said UN political affairs chief, Rosemary DiCarlo.
Although the landmark Joint Commission to restore the Plan resumed in November 2021, she acknowledged that despite their determination to resolve the issues, the US and other participants are yet to return to “full and effective implementation of the Plan, and [Security Council] resolution 2231”.
Appealing to both
Together with the Secretary-General, she urged Iran and the US to “quickly mobilize” in “spirit and commitment” to resume cooperation under the JCPOA.
They welcomed the reinstatement by the US in February of waivers on nuclear non-proliferation projects and appealed to the country to lift its sanctions, as outlined in the Plan, and extend oil trade waivers.
Together they also called on on Iran to reverse the steps it has taken that are inconsistent with its nuclear-related commitments under the Plan.
While the International Atomic Energy Agency (IAEA) has been unable to verify the stockpile of enriched uranium in Iran, it estimates that there is currently more than 15 times the allowable amount under the JCPOA, including uranium enriched to 20 and 60 per cent, which Ms. DiCarlo called “extremely worrying”.
Moreover, on 8 and 20 June, IAEA reported that Iran had started to install additional advanced centrifuges at the Fuel Enrichment Plant at Natanz and began feeding uranium into advanced centrifuges at the Fuel Enrichment Plant at Fordow.
In his latest report, IAEA Director General Rafael Grossi, informed the Council that the UN agency’s ability to verify and confirm the peaceful nature of Iran’s nuclear activities are key to the JCPOA’s full and effective implementation.
Iran’s decision to remove site cameras and place them and the data they collected under Agency seals, “could have detrimental implications”.
Improved relationships ‘key’
Bilateral and regional initiatives to improve relationships with Iran remain “key” and should be encouraged and built upon, according to Ms. DiCarlo.
Additionally, Member States and the private sector are urged to use available trade instruments to engage with Iran and Tehran is requested to address their concerns in relation to resolution 2231 (2015) on its nuclear issues.
The senior UN official also drew attention to annex B of the resolution, updating ambassadors in the Council on nuclear-related provisions, ballistic missiles and asset freezing.
We hope that diplomacy will prevail – UN political chief
Triumph for multilateralism
“The JCPOA was a triumph for non-proliferation and multilateralism,” said the UN political affairs head.
However, after many years of uncertainty, she warned that the Plan is now at “a critical juncture” and encouraged Iran and the US to build on recent momentum to resolve remaining issues.
“The Secretary-General is convinced there is only one path to lasting peace and security for all Member States, and that is the one based on dialogue and cooperation,” she said. “We hope that diplomacy will prevail”.
In Iran’s best interest
Olof Skoog, Head of the European Union Delegation to the UN, speaking in his capacity as the Coordinator of the Joint Commission established by the JCPOA, to the Security Council, recognized the negative economic consequences that the US’ withdrawal from the JCPOA has had on Iran but affirmed that restoring the agreement is “the only way” for the country to reap its full benefits.
He reminded that the Plan would comprehensively lift sanctions, encourage greater international cooperation, and allow Iran to reach its “full economic potential”.
“It is, therefore, important to show the necessary political will and pragmatism to restore the JCPOA,” said Ambassador Skoog who, while acknowledging the sense of urgency, counselled against “escalatory steps” and to preserve sufficient space for the diplomatic efforts to succeed.
Dynamic diplomacy: From SCO to BRICS
The tree of Iran’s balanced foreign policy approach is on the verge of being a one-year-old child. Stronger than before, Iran is pursuing dynamic diplomacy in a variety of cities such as Doha, Ashgabat, and other capitals. Baghdad will also join the list soon.
While Iran’s top negotiator Ali Bagheri Kani is engaged in intensive negotiations in Qatar with the United States through the European Union delegation, Iran’s President Ebrahim Raisi and his oil and foreign ministers are in Ashgabat pursuing transit diplomacy as well as the legal regime of the Caspian Sea with the littoral states.
Prior to his departure for Ashgabat on Wednesday, Raisi spoke to reporters about the purpose of his visit to Turkmenistan.
“This visit is taking place at the invitation of the esteemed president of the brotherly and friendly country of Turkmenistan in order to attend the Caspian Sea littoral states summit,” he remarked.
The President called the Caspian Sea a common heritage and capital for the littoral states with more than 270 million people.
“We have good relations with the littoral states of the Caspian Sea, but in addition to reviewing the legal regime of the Caspian Sea and peaceful use of the sea for the purpose of improving security at the sea, what will be discussed at the sixth summit of the Caspian Sea littoral states is cooperation between countries in the fields of transport, transit, trade, management of marine living resources, environment, as well as preventing the presence of outsiders in the sea, which is also agreed upon by all coastal countries.”
Prior to the beginning of the summit, Raisi met Serdar Berdimuhamedow, Turkmenistan’s President, as well as Chairman of the People’s Council of Turkmenistan, Gurbanguly Berdimuhamedow.
During the meeting with the President of Turkmenistan, Raisi pointed out that the implementation of the memoranda of understanding and cooperation documents signed by the two countries during Berdimuhamedow’s recent visit to Tehran will accelerate promotion of cooperation between the two countries.
Later, Raisi met with the Azerbaijani President, Ilham Aliyev.
During the meeting, Raisi reminded Aliyev that the presence of the Israeli regime in any part of the world undermines security there.
The president also had a brief meeting with his Russian counterpart Vladimir Putin on the sidelines of the summit.
There’s little doubt that Tehran has not put all its eggs into the basket of the JCPOA revival, as it actively seeks to establish trade relations with the neighbors. It’s short-sighted thinking to assume that Iran has to wait for the United States to return to the JCPOA, while it can enjoy the benefits of regional alliances such as the Shanghai Cooperation Organization (SCO), or BRICS (Brazil, Russia, India, China, and South Africa).
On Monday, Iran’s former Foreign Ministry spokesman Saeed Khatibzadeh, who was holding his last presser, told the Tehran Times correspondent that Tehran has submitted a membership request to the BRICS secretariat via Foreign Minister Hossein Amir Abdollahian. While dynamically trailing balanced and active diplomacy with the neighbors, Tehran is awaiting Washington’s serious political decisions to return to the Joint Comprehensive Plan of Action (JCPOA).
Source: Tehran Times
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