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US Economic Sanctions at the Tipping Point

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The ever-expanding use of US sanctions to regulate the conduct of foreign companies trading in foreign markets has alienated US trading partners and could ultimately unleash a wave of counter-retaliation by foreign governments.  Although US politicians and the US media see these sanctions as lawful regulatory instruments rather than weapons of war, they involve a modern form of gunboat diplomacy using coercion rather than legal process to obtain foreign cooperation.  US trading partners thus far have found no effective response, but that may soon change, and in ways that will badly damage US interests and erode US power.

At some point, in the absence of US self-restraint, the tables will turn and foreign government adoption of their own coercive measures will create enormous challenges for US and global business.  The risk is not only or even largely to the primacy of the US dollar in world trade but rather the ability of US-based and multinational companies to access major markets whose governments at some point will no longer tolerate US encroachment on their sovereignty.

US sanctions programs seek to achieve US foreign policy and political objectives, often without regard to whether other countries share those objectives.  For example, when President Trump withdrew from the Iran nuclear deal in 2018, he said the deal was non-binding on him because it was signed by President Obama.  The fact that the European powers, China and Russia also had signed it, the UN Security Council had endorsed it, and Iran had not violated it did not deter the Trump Administration from re-imposing and expanding all of the previously waived US sanctions.  Under these coercive measures, the Administration has designated or threatened to designate foreign companies as US sanctions targets for engaging in entirely foreign business with Iran that has no connection to the United States.

The US sanctions rules have always applied differently to foreign companies than to US-based and US-owned companies. Since 1995, the so-called primary sanctions against Iran have prohibited the involvement of US persons in nearly all types of Iran-related business.  In more recent years, the US government has required even non-US companies to obey the primary sanctions whenever their transactions involve US persons, the US financial system or US-origin goods.  However, the US government has no law enforcement jurisdiction over transactions by non-US companies that do not involve any such US elements.

Critics of US sanctions policy often focus on the enormous fines imposed on foreign companies, particularly banks, for violating the primary sanctions, and the risk that such aggressive enforcement tactics will cause a foreign flight from US dollar-based trade and payments.  Although that risk is real, the fines relate only to activity within US law enforcement jurisdiction and leave foreign companies free to choose whether to continue transacting with US sanctions targets without involving any US elements and therefore with violating US law.

To overcome this jurisdictional hurdle, when the US government decided, beginning in 2010, that it wanted to deter certain types of entirely non-US business with Iran, it did so by labeling such business as “sanctionable” under so-called secondary sanctions that authorized the designation of foreign companies engaged in such non-US business as US sanctions targets.  During the Obama Administration, the secondary sanctions on Iran generally worked in parallel with European and UN sanctions against Iran’s nuclear proliferation drive, culminating in the multilateral negotiation of the Iran nuclear deal.  To strike that deal, the Obama Administration waived the secondary sanctions on Iran, while leaving most of the primary sanctions in place.

As a result of the Trump Administration’s restoration and expansion of the secondary sanctions on Iran and use of similar extraterritorial sanctions measures against a wide range of other targets, US sanctions policy now conflicts with European and global norms to an unprecedented degree.  Instead of respecting the sovereign right of our trading partners to decide how and with whom their companies cantransact from within their own territory and in their own currency, the US Treasury and State Departments dictate to foreign companies a complex series of sanctions red lines, entirely outside US jurisdiction. 

It matters not whether the sanctionable activity involves the US dollar or any other US elements because the US Treasury and State Departments do not need a US jurisdictional hook to put a foreign company on a US sanctions blacklist.  Instead, crossing a red line into sanctionable activity can trigger a US sanctions designation of the offending company, prohibiting their involvement in any business that involves US persons or other US elements.  Foreign purchases of Venezuelan crude oil, foreign participation in Russian pipeline projects and foreign transactions with literally thousands of persons blacklisted by the US government under a range of sanctions programs, even if unrelated to Iran (or Syria or North Korea),could all trigger a boycott of a foreign company by the US Government, without any need to tie the sanctionable activity to the United States.

Unlike the primary sanctions, which operate within the same legal structure as other US administrative and criminal laws, the secondary sanctions provide Treasury and State nearly complete freedom to strike preemptively against their foreign targets.  Although the target can attempt after-the-fact to demonstrate that they did not infringe any sanctions or negotiate a resolution, that process can take years, by which time the US blacklisting often has already put the target out of business. 

The impact of a US sanctions designation is supremely powerful because it not only terminates the target’s access to the US economy and US financial system, but also imposes a secondary boycott designed to force foreign firms to choose between business with the target or business with the US.  Following the designation, any foreign company that transacts with the blacklisted person, and thereby provides “material assistance” to them, could itself be blacklisted in turn, even if the alleged material assistance has no connection to the United States.  Thus, banks and many other companies globally will refuse any new business with, and run in the other direction from, anyone that US Treasury, through its Office of Foreign Assets Control, has put on the so-called Specially Designated Nationals list. Once blacklisted, the US sanctions target finds itself persona non grata not only in the United States, but most of the world.

In fact, the pressure on foreign companies to respect US sanctions red lines and avoid any sanctionable activity is often greatest within their own financial services community.  Before providing a large loan or underwriting securities, in any currency, for Asian or European companies, the participating banks typically will require an undertaking from the borrower or issuer not to engage in any sanctionable activity, as defined by the US government.  Even Chinese companies that prefer to list their shares on the Hong Kong Stock Exchange, rather than in New York, still need to address their US secondary sanctions risks as part of the listing process. 

The extraordinary deterrent effect of the US secondary sanctions contrasts with the historic failure of the Arab League’s long-running secondary boycott of Israel to deter companies in the United States and third countries from Israeli business.  This difference is easily explained.  First, companies that needed to choose between business with Israel or the countries that boycott Israel often have seen Israel as the greener pasture.  Second, the US and many other leading countries prohibited their nationals from supporting the Arab League secondary boycott.  As explained by the US Office of Antiboycott Compliance, the US antiboycott rules “have the effect of preventing US firms from being used to implement foreign policies of other nations which run counter to US policy.”

The hypocrisy of prohibiting US companies from complying with other countries’ secondary boycotts while threatening to boycott foreign companies for dealing, entirely outside US jurisdiction –with US embargoed countries and/or Specially Designated Nationals– is not the issue here.  Hypocrisy in foreign policy is nothing new. Historic international law principles and constraints also have not deterred the expansion in US secondary sanctions.  Instead, before either Congress or the Executive Branch will lose their voracious appetite for secondary sanctions, the cost-benefit analysis of these measures in economic and thus political terms will have to change in Washington.

In the current political environment, this change will occur only when foreign countries with sufficient market power impose sufficient counter-measures to make the US reconsider its approach.  Thus far, US trading partners, particularly in the EU, have relied primarily on their own version of the US antiboycott rules to threaten their nationals with domestic legal action if they comply with US secondary sanctions.  But these counter-measures have failed, for two principal reasons. 

First, most multinational companies, particularly in Europe, have no interest in tempting fate by crossing a US sanctions red line. In contrast, they know the domestic antiboycott laws to which they are subject, even if enforced, which they rarely are, would not have anything like the nuclear impact of a US sanctions designation. The EU’s blocking regulation in particular is widely viewed as no more than a political statement.  Second, many EU and other foreign companies to which these local antiboycott rules apply can typically justify their withdrawal from and avoidance of Iran, Cuba and other targets of unilateral US sanctions for business reasons, without expressly acknowledging they have done so in response to a US secondary boycott.

In the military realm, to deter a nuclear strike against them or their allies, the world’s major powers have developed their own nuclear deterrents. The strategy of mutually assured destruction has withstood the test of time.  Because it has proven to work, the same logic will ultimately prevail in the world of sanctions, led by China.

Last year, China announced that it would create its own “Unreliable Entity List” to punish firms whose actions were harmful to China’s national interests.  Although China has not yet put any companies on this list, it presumably would do so if OFAC puts a major Chinese company on the Specially Designated Nationals list and seeks to compel foreign as well as US companies to sever their ties with that Chinese company. Alternatively, China could find other ways to retaliate in kind, with the aim of restricting US access to China’s market sufficiently to match the harmful impact of US secondary sanctions on Chinese firms.

An eye for an eye and a tooth for a tooth.  If the retaliatory threat is both credible and commensurate in scope with the sanctions threatened by the US government, the US will have as much to lose as to gain by imposing a secondary boycott.  For this reason, the US has yet to impose a secondary boycott on any major Chinese company.  Instead, even under President Trump, the actions taken against Chinese companies generally seek to restrict their access to US markets and US technology under US trade, investment and export control laws; i.e., various forms of primary boycott. 

In such cases, the US requires foreign companies to exclude all or some US elements from their dealings with the Chinese target company, but does not threaten them with retaliation for their entirely non-US business with that Chinese company.  With the exception of some smaller Chinese companies that the US has listed as Specially Designated Nationals, the US Treasury and State Departments have not threatened to blacklist foreign companies for entirely non-US business with any leading Chinese company.  Moving in that direction against China would appear certain to trigger swift retaliation and thus mutually assured economic damage.

In contrast, the US Congress has enacted, and President Trump has implemented, a broad range of secondary sanctions against Russia intended to deter foreign companies from entirely non-US dealings with targeted Russian persons, companies and energy projects.  Although not comparable in either scope or extent of actual use to the US secondary sanctions against Iran, the ones on Russia have succeeded in deterring a range of foreign investment in and foreign business with Russia that the previously-imposed US and EU primary sanctions had failed to accomplish.

Although Russia has threatened to retaliate in kind, its economy is far smaller than China’s.  In 2015, when Russia put 60 US politicians on its version of a sanctions list in response to the initial wave of US sanctions against Russia, the late Senator John McCain quipped “I guess this means my spring break in Siberia is off, my Gazprom stock is lost and my secret bank account in Moscow is frozen.”A tooth for an eye has never provided an effective deterrent.

Apart from China’s credible defensive capability, it also has the ability to play offense.  If the US can retaliate against foreign companies for their entirely non-US dealings with US sanctions targets, what is to stop China from doing the same to US and other non-Chinese companies in response to their dealings with Taiwan or other future targets of Chinese sanctions?  What is to stop India from imposing a secondary boycott on Pakistan or Turkey on Cyprus?  The US can use its antiboycott law to prohibit US companies from cooperating, but only at the cost of losing their business with the boycotting country.

In sum, relying on secondary boycotts to achieve US policy objectives is dangerous not only because it invites retaliation but also because it invites imitation. The US therefore should use them cautiously rather than capriciously, recognizing that at some point the balance will tip and the costs might quickly begin to outstrip the perceived benefits. 

In particular, how much longer will the EU tolerate US insistence that EU companies abandon entirely non-US business with US sanctions targets before the EU adopts its own version of China’s Unreliable Entity List and directs EU companies to resist US pressure?  Like China, EU counter-retaliation could be both credible and commensurate in terms of the costs imposed on US interests.  EU self-restraint to date reflects its preference for rules-based diplomacy, but when that enables the US to encroach European sovereignty with impunity, even the EU at some point, if pushed too hard, will have to respond in kind.

If and when we reach the tipping point, what the world sees as US sanctions bullying will be met with a jab in America’s eye by a major US trading partner rather than foreign subservience.  Various potential scenarios come to mind.  Let’s assume a new and potentially more rational leadership takes the helm in North Korea, and South Korea as well as China quickly offer trade and investment even before any major and verifiable concessions by Pyongyang.  Let’s further assume the US, backed by Japan, rejects any such premature concessions and threatens to use its existing secondary sanctions against North Korea to blacklist any South Korea or Chinese company that supports their own government’s strategy of economic engagement.  When the foreign policy and domestic political stakes are that high, resistance to US secondary sanctions not only by China but also South Korea becomes inevitable, creating enormous risk of miscalculation, counter-retaliation and destabilizing after-shocks.

The effectiveness of US secondary boycotts to date appears to have created a misplaced confidence in Washington that ever-expanding use will not diminish their effectiveness or harm US interests.  Rather than continue along the current path, inciting US trade partners to copy our own tactics to our detriment as well as theirs, the US should develop a more restrained and strategic approach to preserve the usefulness of sanctions.  Coordinating US sanctions policies with America’s closest allies rather than trampling on their sovereignty would be a helpful starting point.

A US Sanctions Specialist, and partner at international law firm Clifford Chance, George Kleinfeld has 30+ years of experience in the fields of international economic regulation and foreign trade controls. He advises leading financial institutions, industrial enterprises, trading companies and global investors on US sanctions issues and compliance with US sanctions laws and regulations. He has participated in a wide range of US sanctions investigations and enforcement actions as well as designing compliance programs and providing compliance training and risk analyses for multinational corporations and financial institutions in Europe, the Middle East, Australia, Asia and the Americas. George also advises on compliance with US export controls and the Foreign Corrupt Practices Act and has obtained scores of national security clearances for foreign acquisitions of strategic US business assets from the Committee on Foreign Investment in the United States (CFIUS). The opinions within this commentary are his own and not that of his firm.

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America’s Two-Tiered Justice System

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The Constitution states only one command twice. The Fifth Amendment says to the federal government that no one shall be “deprived of life, liberty or property without due process of law.” The Fourteenth Amendment in 1868, uses the same eleven words, called the Due Process Clause, to describe a legal obligation of all states. These words have as their central promise an assurance that all levels of government must operate within the law and provide fair procedures to all its citizens.

In this politically divisive climate, the central promise has been broken with little to no assurance that one can trust the American democratic system where some courts have disavowed their responsibility to uphold the Constitution’s meaning of the laws passed by Congress. For instance, the Bill of Rights was passed because of concepts such as freedom of religion, speech, equal treatment, and due process of law were all deemed so fundamental to protect every legal resident in the nation; yet we are now witnessing politically charged judicial appointments eradicating these principles under which all persons and entities are accountable to equally enforce and independently adjudicate, as well as being consistent with international human rights.

On the heels of the Chinese coronavirus, there is an escalating epidemic of unequal justice and character assault where much of the news media is politically aligned with the rulers in turning a blind eye or complicit in the coverup; and in some cases, ravenously endorses the demise of what has essentially now become political dissidents falsely accused, intimidated, and jailed. While many Americans are attempting to scrape by in difficult times, they remain astute to the moral failure of the elites in power as well as the tacit elected opposition’s assiduous silence in whitewashing the legal duplicity. Historical trends over centuries of betraying the peasants eventually succumbs to a reckoning where the privileged corrupt politician and their corporate fascists will be exposed and held accountable in some fashion.  

Americans are confounded by the coronavirus decrees requiring masks to be worn for thee and not for me double standards. The politicians hammer away at enforcing mask mandates on the common folk, yet they do not adhere to their own edicts while attending fine dining with their elite backers. Speaker of the House Nancy Pelosi, Californian Governor Gavin Newsome, and Chicago Mayor Lori Lightfoot all violated their own mask mandates in public venues while the masked servants waited on them.

President Biden was caught on video walking maskless through a swanky Washington restaurant in violation of the District’s laws on facial coverings, yet regular citizens are subject to civil penalties which result in fines of $1000.00 or revocation of licenses during the COVID-19 emergency. In defending the emperor, White House press secretary Jen Psaki said we should ‘not overly focus on moments in time that don’t reflect overarching policy.’ These double standard by the progressives are a far cry from Americans being punished and ostracized all over the country for not wearing a mask.

Identity politics has resulted in two systems of justice – one where BLM rioting and looting is described by the media as peaceful demonstrations and where assaulting police has no criminal consequences; yet the January 6th actions at the Capital has resulted in the largest round up of protesters ever seen in America. It is estimated that the Federal Government has upwards to 70 rioters/trespassers in solitary confinement and they are only let out in a larger area for one hour at 2 am due to COVID. Some of those being held in detention have been charged with trespassing on restricted grounds, others with assault and obstruction, and some haven’t been charged with anything. There are no bail hearings for these political activists yet BLM and Antifa rioters typically spend one night in the brig and let out the next day to rejoin the frontlines of carnage.  

Senate Majority Leader Chuck Schumer has vocally pushed for the January 6th ‘insurrectionists’ to be added to the TSA no-fly list. Civil liberties are being trampled by exploiting insurrection fears with people in attendance no longer permitted to take a flight in their own country and they have not been convicted of a crime. This action by the government had previously only happened to suspect foreign terrorists, and now it is happening to Americans under suspicion. We see no similar actions taken against the militant Antifa anarchists who attacked and torched federal buildings in Portland.

Washington DC has essentially been abusing these inmates in captivity. There have been complaints on the nourishment of their fellow Americans where they are served white bread and a packet of tartar sauce. This is ultimately a violation of the 8th Amendment that prohibits the federal government from imposing excessive bail, nor cruel and unusual punishments, and from inflicting unduly harsh penalties. Some judges are expressing concern at the length of these pretrial incarcerations, however they’ve largely deferred to the Justice Department. Meanwhile anarchists who burn down buildings and shoot projectiles at police officers and federal buildings have charges dismissed. Justice is not equal.   

One female trespasser was shot dead by police during the Capital unrest and there was no outcry or charges against the officer. She was white and a Trump supporter. Federal prosecutors are not seeking criminal charges against the police lieutenant whose single shot killed Ashli Babbit, the 14-year veteran who served four tours with the US Airforce. If the unarmed Babbit committed any crime, it would have been for trespassing, a misdemeanor that should have seen her arrested and not slain. The lieutenant’s life was not at risk nor was he saving the lives of others as he stood with numerous police officers in riot gear and strapped with submachine guns. If a member of BLM was shot dead by police during an unlawful riot, there would have been an immediate racial outcry from political elites and from across the news media for justice followed by looting local retailers and ransacking a police precinct. The action by BLM is considered righteous violence whereas the slain Babbit had it coming to her.  

On a very disturbing and new level of injustice is the threatening actions being taken against parents of schoolchildren by the Department of Justice. Most Americans are familiar with the Patriot Act following 9-11 where the National Security Division conducts counterterrorism operations against foreign adversaries planning suicide bombings and stealing nuclear secrets. Now the Biden Administration, under Attorney General Merrick Garland, has turned the NSD’s crosshairs against everyday Americans conducting their civil duties and free speech as school board meetings.

Garland’s actions followed the National School Boards Association’s (NSBA) claim that American public schools and its education leaders are under immediate threats and intimidation as parents grow frustrated over the divisive neo-Marxist Critical Race Theory being injected into their children’s curricula. This is clearly an injustice to weaponize the DOJ and FBI investigators to intimidate and arrest parents under the same counterespionage to that of Al Qaeda and ISIS. Parents may be angry, but they are certainly not domestic terrorists in taking on the powerfully partisan school unions who somehow believe they are justified to influence civilization by indoctrinating their children.        

Garland’s poster boy for his hideous partisan support of the NSBA is a Virginia father who was arrested at a school board meeting when he attempted to raise the alarm over his young daughter being raped in the school washroom. The father became the symbol of angry parents confronting school officials when he was taken down by several police officers and apprehended for disorderly conduct and resisting arrest. He became vocally upset when school officials denied the attack on his daughter, but he was not physically confrontational.

The father said it is scary that our government will weaponize themselves against parents and they’re using my video across the nation to spread fear; while the school officials did not seem to want to listen to him regarding his daughter being assaulted by a boy wearing a skirt who took advantage of transgender rules to access the girl’s washroom. The boy has now been charged with two counts of forcible sodomy, one count of anal sodomy, and one count of forcible fellatio related to the incident at that school. At a later date, the same boy was charged for a similar attack at neighboring school where he allegedly forced a victim into an empty classroom where he held her against her will and inappropriately touched her.  Regardless of the raped daughter, Garland and the NSBA still have their video of the father being wrestled down to support the use of the FBI against parents and send a chilling effect on harmless dissent.  

The Russian collusion narrative against then President Donald Trump may seem dated, however it can never be swept aside or forgotten in what may well have been the biggest political scandal and injustice to a man in American history. The country endured four years investigating Russian collusion into the legitimacy of Trump’s 2016 presidential win with senate and congressional impeachment hearings over a Clinton-paid-for fake dossier, the biased Obama hatchet men overseeing the FBI and CIA shirking the law, a frenzied media that never let up on Trump’s guilt, and a special counsel comprised of Clinton partisans that turned over every leaf that eventually found the nearly crucified Trump to be innocent of the false charges. The former president had to withstand an incessant blitzkrieg of injustice through his entire presidency while leading the most powerful country in the world.   

On the hand, there is compelling evidence that President Joe Biden spent years while in government enriching himself through family ties, specifically his son Hunter, to the tune of millions of dollars in foreign money from China, Russia, and Ukraine. The foreign players simply used the unqualified son to leverage access to Biden while satisfying Hunter’s greed and questionable lifestyle. Biden has little to no ability to stand up to China or Russia knowing they are holding damaging transactions over his head. There have been no investigations into Biden’s quid-pro-quo against Ukraine or the transfer of tens of millions of dollars to Biden family members, no impeachments, and the news media buried these stories; including damaging information found on Hunter’s laptop during the 2020 presidential election. Had Trump and his sons engaged in these activities, there would have been a very different level of justice.   

What of this injustice that is making its mark on history? If we take a moment to think through the confusion of the moment and see the morale issue involved, then one may refuse to have this sense of justice distorted to grip power rather than for the good of the country. Those who have sown this unjust wind may eventually reap a whirlwind that provokes reform by convulsion of the people instead of a natural order of business. We must all remember that democracy lies with the people of this land and whether the nation will be stirred to stand for justice and freedom in this hour of distress and go on to finish in a way worthy of its beginning.  

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Biden’s Department of Justice: parents as domestic terrorists

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In recent developments in the United States, US Attorney General, Merrick Garland, and the FBI have put under the FBI radar parents as potential domestic terrorists. You heard it right. This is now a new formal legal policy contained in memos of the Department of Justice trying to reign in parents discussions on Biden’s new school curricula. They are not going after potential outbursts but outright terrorism. 

This is an attack on freedom of speech in the sense that parents have the right to discuss and disagree with the new Biden school curricula. This is where the issue originated: parts of Biden’s new school curricula are not accepted by many parents and if they disagree, the FBI treats them now as potential domestic terrorists as a matter of policy. Apart from a First Amendment case, this is also a case for international human rights law and I reported the development to the UN Special Rapporteur on freedom of speech this week hoping to get a statement.

The Department of Justice is referring to some constitutional provision on “intimidation of views” to override and take down one of the most firmly established rights, the right to freedom of speech, in quite frankly a ridiculous interpretation. Those parents that dare to speak up against controversial parts in the new text books could be investigated for domestic terrorism. This is the most incompetent interpretation on limitations of freedom of speech I have seen in awhile. 

Garland and the FBI have totally lost their marbles. The woke discussion is not funny to me anymore. It increasingly looks like a woke tyranny that has nothing to do with rights and equality anymore but simply serves as a vehicle to empower the FBI to run wild against regular people. This lunacy needs to be stopped.

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Iran poll contains different messages for Biden and Raisi

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“It’s the economy, stupid.” That is the message of a just-published survey of Iranian public opinion.

However, the substance of the message differs for newly elected hardline Iranian President Ebrahim Raisi and the Biden administration as Mr. Raisi toughens his negotiating position and the United States grapples with alternative ways of curbing the Islamic republic’s nuclear programme should the parties fail to agree on terms for the revival of the 2015 international agreement.

Iranians surveyed last month by Iran Poll and the University of Maryland’s Center for International and Security Studies were telling Mr. Raisi that they are looking to him to alleviate Iran’s economic and other problems and have little hope that a revived nuclear agreement will make the difference, given lack of trust in US and European compliance with any agreement reached.

The Iranians polled seemed in majority to endorse some form of Supreme Leader Ayatollah Ali Khamenei’s notion of a “resistance economy” as a way of blunting the impact of the US sanctions imposed by former President Donald J. Trump after he walked away from the nuclear agreement in 2018. Some 65 per cent of the responders said they favoured a self-sufficient economy; 54.2 per cent expected the economy to at least improve somewhat in the next three years.

A large number expressed confidence that Mr. Raisi would significantly lower inflation and unemployment, increase Iran’s trade with other countries, control the pandemic and root out corruption.

Meanwhile, 63 per cent suggested that Iran’s economic situation would be the same, if not better, if there were no return to the agreement and the government continued to pursue a civil nuclear programme. The figure seemed at odds with the 80 per cent who said Iran’s economic situation would improve if Iran and the United States returned to the agreement and both fulfilled their obligations under the deal.

The divergence may be a function of the fact that the poll, unsurprisingly, indicated that Iranians (64.7 per cent) had little trust in the United States living up to its commitments even though they expected the Biden administration to return to the deal (57.9 per cent). As a result, 73.1 per cent of those surveyed said Iran should not make concessions given that world powers would not live up to commitments they make in return.

At the same time, 63 per cent blamed the troubled state of the economy on domestic mismanagement rather than US sanctions. Only 34.4 per cent believed that the sanctions were the main cause of their economic difficulty. Iranians pointing the finger at the government rather than external forces was also reflected in the 60.5 per cent of those polled blaming Iran’s water shortages on mismanagement and bad policies.

The poll suggested that by emphasising domestic mismanagement, Iranians were going to judge Mr. Raisi on his success or failure in countering the debilitating effect of the sanctions even though 77.5 per cent of those surveyed said that the sanctions had a negative or somewhat negative impact on the economy.

Implicitly, Iranians were holding former Iranian President Hassan Rouhani responsible for the mismanagement given that Mr. Raisi only took office in August. Rated very favourable by 61.2 per cent of Iranians surveyed in 2015, Mr. Rouhani’s favorability dropped to 4.6 per cent in the most recent poll. By contrast, the favourable views of Mr. Raisi soared from 38.3 per cent in 2014 to 77 per cent last month. IranPoll and the Center have been conducting annual of surveys since 2014.

Mr. Raisi may have taken pleasure from that but more importantly, the poll implicitly suggested that he does not have much time to produce results before his significant public support starts to wane.

Of those polled, 66.7 per cent expected Mr. Raisi to improve Iran’s international standing, 55.7 per cent said he would be in a better position to negotiate with world powers, and 45.2 per cent predicted that he would enhance Iran’s security. Those expectations may have been to some degree validated in the public’s mind by last month’s acceptance of Iran’s application for membership in the Shanghai Cooperation Organization (SCO) that groups China, Russia, India, Pakistan and several Central Asian states.

The survey results seemed to suggest that ordinary Iranians were framing their message to the United States differently from the assessment of prominent scholars and analysts. The divergence may well be one primarily of timing but nonetheless has implications for policymaking in Washington. The message of the respondents to the poll was one of immediate impact while analysts and scholars appear to be looking at the middle term.

Without referring to the poll, Vienna-based economist and strategic consultant Bijan Khajehpour argued this week, seemingly contrary to the poll, that “mismanagement and the Covid-19 pandemic have both contributed to Iran’s poor economic performance in recent years, but it remains that US sanctions…will be the key factor in determining Iran’s future prospects.”

Mr. Khajehpour went on to say that “high inflation, capital flight and the erosion of household purchasing power alongside mismanagement of resources and the deterioration of the country’s infrastructure have the potential to spark more protests and further undermine the already faltering legitimacy of the Islamic Republic in the eyes of the public.”

No doubt, the jury is out on how Iranians respond if and when Mr. Raisi fails to live up to their expectations. If the past is any indication, Iranians have repeatedly taken to the streets at often substantial risk to liberty and life to make their discontent with government performance evident as they did with the low turnout in this year’s election that brought Mr. Raisi to power.

The risk of renewed protests was reflected in the fact that responses to various questions regarding the electoral system, the limited number of presidential candidates (because many were barred from running), and the public health system showed that it was often a slim majority at best that expressed confidence in the system.

Add to that the fact that 68 per cent of respondents to the poll said that the objectives of past protests had been a demand that officials pay greater attention to people’s problems.

Yet, at the same time, they were telling the United States that its efforts to generate pressure on Iranian leaders to moderate their nuclear and regional policies by imposing harsh sanctions had for now backfired. Iranians were backing a tougher negotiating position by the Raisi government.

Ultimately that could be a double-edged sword for Mr. Raisi. He has to prove that he can be tough on the United States and simultaneously improve the lives of ordinary Iranians. Failure to do so could have in Mr. Khajehpour’s words “unpredictable consequences.”

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