Trump Talks Up Credit Line for Iran, But No Sign of Imminent Policy Change
By Michael Lipin August 28, 2019
U.S. President Donald Trump's newly-stated openness to other nations offering Iran short-term loans to help it cope with punishing U.S. sanctions appears unlikely to become official U.S. policy anytime soon, analysts say.
Trump made his first public expression of interest in the idea at a Monday news conference with his French counterpart Emmanuel Macron in Biarritz, France, where they had attended a G-7 summit.
Macron had told the conference that Iran might accept Trump's demand to negotiate a new deal to curb its nuclear program and other perceived malign behaviors if world powers offer Tehran some form of "economic compensation … in terms of lines of credit or reopening certain economic sectors."
Asked by a reporter what he thought of that idea, Trump said Iran may need a "short-term letter of credit or loan … to get them over a very rough patch."
Iran has seen its inflation and unemployment soar since last year, when Trump began toughening U.S. sanctions as part of his pullout from a 2015 deal in which world powers offered Iran sanctions relief in return for curbing its nuclear activities. Trump had rejected the deal as not tough enough on Iran.
Trump told the reporters he was talking about a new "letter of credit" that would be offered to Iran by "numerous countries", excluding the U.S. He also said the potential loan program would be "secured by oil" and would be "paid back immediately and very quickly."
There has been no public comment from the Trump administration on the details of the loan program discussed by the president. But U.S. Secretary of State Mike Pompeo, speaking to U.S. network NBC on Tuesday, responded to a question about Trump's loan remarks by saying that "when the Iranian leadership chooses to comply" with conditions set by the president, the U.S. will be "happy to provide them the resources and the capital they need to be a successful country." Pompeo had prefaced his response by saying the U.S. wants Iran to be a "normal nation" and the Iranian people to be "successful in changing the behavior of their leadership."
Iran has vowed to resist U.S. sanctions and demanded their removal before agreeing to meetings or negotiations with the Trump administration. U.S. officials have vowed to keep expanding the sanctions as part of a campaign of "maximum pressure" on Iran to accept U.S. demands.
In another sign that a credit line for Iran is not ready for official endorsement by world powers, an EU spokesperson responsible for diplomatic discussions with Iran on the margins of the G-7 summit declined to discuss with VOA Persian the specifics of a loan program.
"We support and welcome any diplomatic efforts to find the way out of the crisis, deescalate the situation in the region and preserve the JCPOA," the spokesperson said, referring to the acronym of the 2015 Iran nuclear deal that the EU still supports.
Michael O'Hanlon, foreign policy research director at Washington's Brookings Institution, told VOA Persian in a Tuesday interview that Trump's talk of a credit line for Iran may have been intended to point out that if Iran has humanitarian or medicine needs, short-term loans could be a way to supply those needs even while the country is under U.S. sanctions. "But the pressure will continue. He's not really interested in easing the economic pain that Iran is feeling today. He wants that pain to intensify and to endure," added O'Hanlon.
In another VOA Persian interview, Doug Bandow, a senior foreign policy analyst at the Cato Institute, said he believes Trump recognizes that Tehran needs financial help. "He doesn't want them to get the money from conventional means because he wants to maintain his policy of maximum pressure," Bandow said. "He's looking for an alternative, but I'm not convinced this one will work."
Bandow said he doubts Iran will accept loans in place of selling its oil to international customers. Iran relies on oil exports for most of its revenue, but its exports have been cut significantly since Washington unilaterally banned all nations from buying Iranian crude in May as part of the U.S. sanctions campaign.
"And who wants to give a loan (to Iran) unless you are guaranteed that the oil (that secures the loan) will be sold and Iran will pay (the loan) back. Otherwise (the creditors) are going to get stuck with a great big IOU (from Iran)," Bandow added.
Ilan Berman, senior vice president of the American Foreign Policy Council, said developing a credit line for Iran is a mistake. "Any alleviation of pressure would give the Iranian regime breathing room and harden its position ahead of any negotiations," Berman told VOA Persian. "The Trump administration's pressure is very clearly working, and it wouldn't make strategic sense to lessen it or to roll it back in advance of getting anything tangible from Iran."
This article originated in VOA's Persian Service.
VOA Persian's Katherine Ahn and White House Bureau Chief Steve Herman contributed.
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