Nov 5, 2018

Trump's Iran bet might be a long shot

Illustration: Sarah Grillo/Axios

President Trump has risked a split with America's closest allies and a possible ramp up in Iran's aggression, or even its nuclear program, in pursuing the hardline policies that culminated today in the restoration of sanctions on the country's oil, shipping and financial sectors.

Why it matters: The administration is betting the sanctions will hit the Iranian economy hard and force the regime to change course (or, perhaps, to change). The sanctions will indeed be painful, particularly as the SWIFT global payments system has now announced it’s cutting off several Iranian banks. But experts are far from convinced the pain will cause the regime to move in the direction Trump would like to push it.

The latest...

  • Secretary of State Mike Pompeo argued today that the sanctions will reduce Iran's capacity to "destabilize" the region. He’s demanding what amounts to a full capitulation from Tehran before any new deal is signed, and says the U.S. wants to “restore democracy” in the Islamic Republic. He hasn’t gone so far as to call for regime change, but has walked up to the line.
  • President Hassan Rouhani said today that Iran “will proudly break the sanctions,” which he says only hurt the Iranian people and which Iran is preparing to evade, including by repainting oil tankers and turning off their location devices.
  • The EU, France, Germany and the U.K. issued a joint declaration on Friday expressing “deep regret” over Trump’s decision and an “unwavering” commitment to the 2015 nuclear deal.

What they’re saying...

  • The Atlantic Council’s David Mortlock told reporters today there is now “similar economic pressure” as existed before the 2015 nuclear deal, “but much less diplomatic and political isolation” since the Trump administration is acting alone. Thus, Trump and Pompeo are demanding far more from Iran with considerably less leverage.
  • Holly Dagres, also from the Atlantic Council, added that hardliners in Tehran who railed against the 2015 deal, claiming the U.S. “would show its true colors,” have now been “strengthened," complicating matters further.
  • Robert Malley of the The International Crisis Group writes for Axios Expert Voices that "historically, there is little evidence that Iran’s economic performance correlates with its regional policy."
  • Similarly, CFR President Richard Haass told the NY Times, “there is nothing about the history of sanctions that suggests they can coerce any country into doing something big and dramatic. And this is a government that is unlikely to want to be seen as being coerced. That goes against the DNA of the Iranian revolution.”

What to watch...

  • These sanctions will inevitably hurt many ordinary Iranians. Shortages of medicine have already been reported. The Trump administration is betting Iranians will blame their government.
  • Behnam Ben Taleblu of the Foundation for Defense of Democracies writes for Axios Expert Voices that "there is a growingconsensus among analysts that Tehran will likely attempt to wait out the Trump administration and refrain from breaching the nuclear deal. Should Tehran hunker down and play for time, the Trump administration will need to find creative ways to tighten the sanctions belt such that time will cost the regime money, and lots of it."
  • Laura James of Oxford Analytica writes that "although Tehran is unlikely to violate the 2015 nuclear agreement, as both sides' positions harden the military may recommence naval confrontations in the Persian Gulf and expand missile development and testing." Iranian obstinance, she notes, “could move the Europeans closer to the U.S. position” over time.

Worth noting: Danish authorities have accused Iran of trying to assassinate a separatist leader living in Denmark, following a similar accusation from France. The Europeans have managed to silo off the nuclear issue from such tensions — for now.

Go deeper

The Fed rescues Wall Street, but Main Street is another story

llustration: Aïda Amer/Axios

In less than a month, the Federal Reserve has unleashed a multi-trillion dollar tour de force to buoy the U.S. economy against the COVID-19 pandemic.

Why it matters: While it has steadied the markets, the Fed is poorly equipped to offset the hit being absorbed by small business owners and the close to 17 million Americans who have filed for unemployment in just the past three weeks.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 5 a.m. ET: 1,605,548 — Total deaths: 95,758 — Total recoveries: 355,983Map.
  2. U.S.: Total confirmed cases as of 5 a.m. ET: 466,299 — Total deaths: 16,686 — Total recoveries: 26,522Map.
  3. 2020 latest: Top conservative leaders are concerned the Trump administration isn't addressing the virus' long-term economic impact.
  4. Public health latest: U.S. has expelled thousands of migrants under a CDC public health orderDr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  5. Business latest: After another 6.6 million jobless claims, here's how to understand the scale of American job decimation.
  6. 1 "SNL" thing: "Saturday Night Live" will return this weekend in a remotely produced episode.
  7. What should I do? Hydroxychloroquine questions answeredPets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Automakers lay out back-to-work playbook for coronavirus pandemic

Magna employees in China adapting to a new normal at work. Images courtesy of Magna

The auto industry is sharing detailed return-to-work guidelines on how to shield employees from the coronavirus as it prepares to reopen its own factories in the coming weeks.

Why it matters: We might not shake hands again, but sooner or later, most of us will return to our jobs, whether in a factory, office or public venue within close proximity of others. Reestablishing an environment where employees feel comfortable and can remain healthy will be a daunting challenge for every employer.