U.S. Urges Countries to Cut Iranian Oil Imports

June 26, 2018
Updated

State Department sealOn June 26, a senior State Department official said the United States was asking countries to cut their oil imports from Iran to “zero” by November 4. “I’ve been in Europe and Asia garnering support for our Iran strategy,” the official said. “We’re going to isolate streams of Iranian funding and looking to highlight the totality of Iran’s malign behavior across the region.” The Trump administration has indicated that it will impose tighter restrictions on Iran than in the past. In 2012, when the United States last sanctioned Iranian oil exports, countries were allowed to reduce their imports gradually in exchange for waivers from U.S. penalties. The following are excerpts from the briefing.

 

Senior State Department Official On U.S. Efforts to Discuss the Re-imposition of Sanctions on Iran With Partners Around The World

SENIOR STATE DEPARTMENT OFFICIAL: Over the past few weeks, as you probably have known, I’ve been in Europe and Asia garnering support for our Iran strategy. I’ve been – an interagency team of State and Treasury officials have been explaining the new direction of our policy to our allies, working to garner their support for it. We’re going to isolate streams of Iranian funding and looking to highlight the totality of Iran’s malign behavior across the region.

I am back in Europe this week between engagements, as you may hear from the street scene behind me, working on this subject. We remain engaged with the E3 throughout this process, and we are going to continue to branch out in new countries and reach new partners as the weeks go forward.

QUESTION: Is the U.S. pushing allies to cut oil imports to zero?

SENIOR STATE DEPARTMENT OFFICIAL: Yes.

QUESTION: And that’s by November 5th?

SENIOR STATE DEPARTMENT OFFICIAL: Yes. The 4th, I think, but yes.

QUESTION: And are there any waivers that are expected to be granted in that process?

SENIOR STATE DEPARTMENT OFFICIAL: I think a pretty accurate representation of where the Secretary and the President stand on that is a line from the Secretary’s speech of a few weeks ago, I think on May 21st. We view this as one of our top national security priorities. I would be hesitant to say zero waivers ever. I think the predisposition would be no, we’re not granting waivers.

QUESTION: I’m just curious if there is anything in the last few weeks that you can point to that shows any interest by any of our allies in joining us on this. Your colleague Wess Mitchell was on the Hill this morning kind of suggesting it’s too soon to tell, but it seems like everyone in Europe is pushing as hard as they can for us to not enforce secondary sanctions, and that there has been essentially no expressions of interest in joining us in some type of new pressure campaign. So I’m wondering if there are other indications you can point to that suggest to you otherwise. Thanks.

SENIOR STATE DEPARTMENT OFFICIAL: I would say a couple of things. One is that I am continually struck by the amount of business that is falling out of Iran. Peugeot and others simply view Iran as too risky a place to do business. And I think, frankly, that is a result of at least partially the President’s decision on May 8th. Now, Iran also has a terrible investment climate. It is a place where it is not easy to make money, as one of our partners said. But genuinely companies respect secondary sanctions, by my experience.

I will also say on the diplomatic front – so that’s some kind of effect achieved. I will say on the diplomatic front, we have had secondary sanctions in place with regards to Iran since 1996, the Iran Libya Sanctions Act. We’ve had secondary sanctions in place with regards to Cuba for a few years before that. This is – these are discussions we are extremely used to having. We have a lot of diplomatic muscle memory for urging, cajoling, negotiating with our partners to reduce their investments to zero. I think even – I think – and that message is one that is sometimes challenging, but these are serious diplomatic relationships we have. Our allies are aware of our concern. They share it. They want to work with us. I mean, this is – I don’t want to get into the substance of each discussion I’ve had, but for the vast majority of countries they are willing – they are willing to adhere and support our approach to this because they also view it as a threat, and it’s gotten worse in 2015, not better, on the regional activity side.

QUESTION: I was wondering if you were having – finding a very receptive audience in talking with people about Iran coming under more scrutiny under the FATF and SWIFT organizations. And also, if you could say a little something about what do you think – what do you think – what do you make of the protests that have been – we’ve been seeing among the Bazaaris in the last 24 hours or so over the faltering economy? Thank you.

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, thanks, Carol, for calling in. I appreciate it. I think let me – so let me start with my most boring answer first. On the FATF, I think that’s a better question for Treasury to answer.

On the protests, there have been, as I’m sure you’ve followed this, since December there have been this kind of sporadic and – sporadic bursts of protest amplitude and amongst a reasonable level of discontent, and every month it seems there is a new protest blowing up, there’s a new protest erupting over a completely unrelated cause. In this city it is a change in administration – administrative jurisdiction. In this city it’s an issue of truckers’ rights. In this city it’s linked to the Bazaaris and the challenge of getting foreign currency or hard currency.

But what I think that this all – these are all heuristic of the same basic issue, which is that Iranians are basically fed up with the regime squandering the nation’s wealth on not particularly productive or enriching adventures abroad. And by the way, it’s – nodes that are doing it are getting rich while doing it. So I think there’s a level of friction that people have with regard to the regime’s activity and behavior on the enrichment of the military clerical elite and the squeezing out of the life of the economy because of its actions, because of how much of the economy it controls, because the sanctions its activities abroad incurred. That’s why we see these – that’s why we see these chants erupting – no to – forget about Syria, focus on us, that kind of stuff.

So I think there’s a lot of causes. I think basically the fact that Iranians are tired of this situation, and this situation exists because of their regime’s behavior.

QUESTION: I was wondering, in your discussions particularly with China and Iran, whether you’ve managed to convince them to cut off all oil imports from Iran. You said you weren’t going to offer any waivers. Have they accepted that? What is the plan of action now, looking for new supplies? Have they agreed to take perhaps more oil from the United States?

SENIOR STATE DEPARTMENT OFFICIAL: I will say I think you’re going to be disappointed in my answer because we haven’t been to China yet. And I thought you said Iran, but as I’m talking I realize you might have said Japan.

QUESTION: I said India.

SENIOR STATE DEPARTMENT OFFICIAL: India. Well, then you’re going to be even more disappointed because I haven’t been to China or India yet. They’re coming up.

QUESTION: Are you going to ask them to completely cut off and then to find other supplies? Have you come up with any kind of ideas as to new supplies? What about from the United States?

SENIOR STATE DEPARTMENT OFFICIAL: Yes, absolutely. So I can’t speak to the domestic production side, but we will be engaging, kind of in the next segment coming up here in a week or so, with our Middle Eastern partners to ensure that the global supply of oil is not adversely affected by these sanctions. But yes, we are asking them to go to zero, absolutely yes.

QUESTION: You were in Japan and made that request of them. Can you tell us what Japan’s answer was?

SENIOR STATE DEPARTMENT OFFICIAL: Yeah, look, I don't think the Japanese answer was any – was particularly different than other oil-importing countries. This is a challenge for them. This is not something that any country that imports oil from Iran – Japan has a reasonably low level of oil imports as it happens from Iran – wants to do voluntarily, because we’re asking them to make a policy change. So the reason they are willing to do that, in my view, is because of their relationship with us and their – and I think they understand increasingly – not increasingly – I think they genuinely understand that the Secretary and the White House aren’t kidding about this, that as part of our maximum pressure economic campaign, the sanctions are going to come back on, and that’s going to be the environment post November 4.

OPERATOR: And our next question comes from the line of Ian Talley. Your line is open.

QUESTION: Can I just first – a couple housekeeping questions, just to clarify exactly what you’re saying. You expect all countries to reduce their – or all Iranian imports to zero by November 4th? Secondly – and you said you’re not going to say never, but you are not going to be granting waivers. I’m just wondering then – those are the two housekeeping questions. Finally, are you telling your allies – plan to tell China and India that their companies risk secondary sanctions on November 5th if they fail to meet that requirement? And have you asked anything from the Turks yet on oil imports?

SENIOR STATE DEPARTMENT OFFICIAL: The last question first – yes, we’ll certainly be asking the Turks the same thing, but we haven’t visited there yet. Two, on China, India – yes, certainly. Their companies – their companies will be subject to the same sanctions that everybody else’s are if they engage in those sectors of the economy that are sanctionable, where there were sanctions imposed prior to 2015. And yes, we will certainly be requesting that their oil imports go to zero, without question.

QUESTION: Two quick questions, just to follow up on that. Did – do all these countries have to reduce their Iranian oil imports to zero by November 4th, or they have to begin reducing by November 4th? And then my other just more broad question: The President has repeatedly said that he’s seen a change already in Iran’s behavior in the region. Can you point to specifically what he’s referring to? Because I think most independent analysts would say there hasn’t been a change in Syria, in Yemen or elsewhere.

SENIOR STATE DEPARTMENT OFFICIAL: I’d refer you to the White House on the second one. I haven’t seen the quote. On the – oh gosh, now I forgot what the first part of the question was.

QUESTION: Whether or not these countries have to reduce all Iranian oil imports to zero by November 4th or begin to reduce by November 4th?

SENIOR STATE DEPARTMENT OFFICIAL: Oh, no. They should be begin – they should be reducing now. No, that is a by November 4th. That is why we’re – that is why we’ve given – that’s why we’ve offered this window since May 8th – since May 8th, as sort of a drawdown period. No, without question, they should be reducing – they should be – and that’s what we’ve been telling them in our bilateral meetings. They should be preparing now to go to zero.

 

**UPDATE: On July 2, a State Department official said the United States would work with countries on a case-by-case to reduce their imports of Iranian oil.**

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