Zarif on the Impact of Sanctions: The Situation Will Become Very Difficult

Mohammad Javad Zarif, Iran's Foreign Minister, stated on Wednesday regarding the impact of U.S. sanctions on Iran's economy that "the situation will become very difficult," as "the role of the U.S. dollar in the international financial system is extensive and pervasive." In an interview with the BBC, Zarif also added that the commitments made by Europeans to mitigate the severe impacts of these sanctions on Iran's economy are "probably better than what was expected." He emphasized that the main issue is the implementation of these commitments, and the patience of the Islamic Republic will not last forever. Iran currently faces dire economic conditions, with the national currency's value having dropped several times over a short period, and the price of the U.S. dollar in Iranian markets rising from 3,500 tomans to a range of 13,000 to 19,000 tomans. Zarif's emphasis on the "pervasive" role of the dollar and the impact of sanctions comes as Ayatollah Ali Khamenei, the Supreme Leader of the Islamic Republic, recently criticized the government's mismanagement, stating that "the factor for the decline in the rial's value is not external, but internal." Subsequently, on October 25, Ali Akbar Velayati, an advisor to the Supreme Leader, stated that "part of our problems will be solved with the rupee (India's currency), the ruble (Russia's currency), and the yuan (China's currency), and we will no longer need the dollar." Following the U.S. withdrawal from the JCPOA on May 8, the first round of sanctions against Iran was implemented on August 6, with the next round set to begin on November 4. However, the other five countries in the nuclear agreement have stated that they will remain in the JCPOA; these countries welcomed the opening of financial payment channels for Iran, especially the establishment of a special purpose vehicle (SPV) to facilitate financial transactions with Iran. In his interview on Wednesday, Zarif referred to these efforts, stating that Theresa May, the British Prime Minister, and Emmanuel Macron, the French President, "and everyone else have said they are committed to the JCPOA and committed to ensuring that Iran benefits from it." He continued that these commitments are "probably better than what was expected," but stressed that the important issue is "turning these political commitments into executable mechanisms." Federica Mogherini, the EU's foreign policy chief, expressed hope last Wednesday that the special mechanism to facilitate trade cooperation with Iran would be implemented "before November," about a month away. In his BBC interview, Iran's Foreign Minister warned that they would "be patient a little longer." He had previously warned that if European efforts regarding the JCPOA commitments prove fruitless, Iran would exit the nuclear agreement. U.S. President Donald Trump has repeatedly emphasized his desire to meet with his Iranian counterpart, and the next question from the BBC host to Zarif referred to this topic. Zarif responded that "nothing is impossible, but the result of a meeting between Presidents Rouhani and Trump would only be a photo opportunity and the publication of a two-page document." Previously, the Supreme Leader of the Islamic Republic had declared the nuclear negotiations a mistake, stating that "the Imam prohibited negotiations with the U.S., and I will prohibit it too."