Saturday 4 August, 2018 Update: Iran Braces

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With the return of US sanctions rapidly approaching, the Iranian people are facing austere days on the horizon. The nation has been hit hard by high inflation, and a depressed currency, sparking sporadic protests against the government across Iran in the past week. The latest demonstrations are not as large, or widespread as those that rocked Iran in January of this year, however, that can change quickly as the effects of US sanctions begin to be felt. Iranian President Hassan Rouhani is facing heavy pressure from hardliners, as well as middle class Iranians, for what they perceive as the failure of his economic policies. Economic dissatisfaction was simmering in Iran even before the US pulled out of the JCPOA and announced that sanctions against Tehran would be imposed once again, likely beginning in August, 2018. The sanctions expected to be put back into effect on 7 August will include restrictions on Iran’s purchase of US dollars, along with its trade in gold, and other precious metals. Tehran’s nightmare scenario is that US sanctions will cut Iranian oil exports dramatically by the end of the year, likely putting its national economy into an unrecoverable tailspin. Should this scenario become reality, the regime understands it will not survive the backlash of the Iranian people.

Therefore, the Iranian regime is looking beyond its borders for relief. The military exercise currently underway around the Strait of Hormuz is a clear demonstration of Iran’s ability to close the waterway and choke the global economy. The timing of the exercise is not coincidental. Tehran wants Washington to understand what could lie ahead if US sanctions threaten to cripple Iran’s economy, or jeopardize the survival of the regime. Call it blackmail, or a not-so-subtle reminder, the fact is that cutting off access to the Strait of Hormuz is the most powerful card in Iran’s deck and if pushed, it will likely not hesitate to use it.

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