Iran Sanctions - The Debate Intensive



Aff – Iran SanctionsACAC – Plan Plan: The United States should end its use of secondary sanctions on the Islamic Republic of Iran.AC – Advantage 1Advantage 1 is InstabilitySanctions make war with Iran inevitable – the Solemani assassination put tensions at a breaking pointPatterson 20 – [(Margot, reporter for a wide variety of newspapers and magazines, an editor with “The Prague Post,” and a senior writer, then opinion and arts editor at “The National Catholic Reporter” for seven years) "U.S. sanctions against Iran continue a decades-long failed policy," America Magazine, 1-30-2020, ] TDIThe Trump administration’s “maximum pressure” campaign against the Islamic Republic of Iran took a lethal turn with the U.S. killing of Iranian Gen. Qassim Suleimani and several others on Jan. 3 in Baghdad. The targeted killing increases the prospect of war between Iran and the United States and was itself an act of war. Not inaccurately, Iran called it an act of “international terrorism.”The administration argued that the killing of Soleimani was taken to prevent “imminent attacks,” but that justification soon fell apart, with President Trump eventually tweeting that whether attacks were imminent “doesn’t really matter.” It does matter in international law, and by violating both international and U.S. law, the assassination sets a dangerous precedent for other nations to follow. It is another marker of the decline in decency and respect for law since the war on terror began almost 20 years ago, a war that has led to signal failures in Iraq and Afghanistan yet shows no sign of ending, propelled by both imperialism and intellectual inertia that few in either party challenge.Since withdrawing the United States from the Joint Comprehensive Plan of Action, adopted under the Obama administration and commonly known as the Iran nuclear deal, the Trump administration has imposed crushing sanctions on Iran aimed at reducing its oil exports to zero (by threatening secondary sanctions against any other country doing business with Iran). The new sanctions are unprecedented in their scope and severity and have hit hard. Oil exports have plummeted and the country is in a deep recession. The International Monetary Fund reports that Iran’s gross domestic product already fell an estimated 4.8 percent in 2018 and shrank by almost 10 percent in 2019. The sanctions pose an existential threat to Iran, now accused of attacking the oil assets of other countries with drones in hopes those countries will put pressure on the Trump administration to ease up on its maximum pressure campaign.The long-term objective of the campaign is unclear. Many argue that there isn’t one, that Mr. Trump has simply subcontracted U.S. foreign policy to key donors and favored foreign allies like Israel, Saudi Arabia and the United Arab Emirates, all of which are happy to see Iran perpetually isolated, sanctioned and punished. While the president has airily spoken of reopening negotiations with Iran, experts are skeptical that the administration has given any serious thought to how it would negotiate a more comprehensive accord.Both Secretary of State Mike Pompeo and former National Security Advisor John Bolton have been outspoken proponents of regime change in Tehran. Inasmuch as there is a strategy behind the pressure campaign, it appears to be forcing regime change in Iran by making life so untenable for ordinary Iranians they revolt against their government. This is unlikely, but if it does occur, what happens then? Few knowledgeable observers see much planning by the administration for what comes after. Should the regime fall, the most probable scenario is instability, violence, chaos and thousands (perhaps millions) of Iranians fleeing to other countries already overburdened by refugees.Another failed state in the Middle East hardly seems desirable, yet voices inside and outside of Congress have been agitating for war with Iran for the last decade or more. Though Mr. Trump came to office proclaiming no more “stupid” wars in the Middle East, that goal is not universally shared by his administration. Mr. Bolton is out, but Mr. Pompeo is a militarist and reportedly one of the strongest advocates for the killing of General Soleimani. While the immediate response from Iran to that U.S. attack was measured and proportionate—two missile attacks on U.S. bases in Iraq, which received warning ahead of time so the no lives were lost—the response is unlikely to end there. With the United States bludgeoning its economy and killing its leaders, the Islamic Republic is going to have to take countermeasures. The two countries are in an escalatory cycle with no off-ramp in sight. Leaders of both countries say they do not want war, but the logic of their actions is taking them farther down the path to it.There are no administrative checks – Pompeo will encourage a first strike or invasion and Iran is probing in the status quoPatterson 19 – [(Margot, reporter for a wide variety of newspapers and magazines, an editor with “The Prague Post,” and a senior writer, then opinion and arts editor at “The National Catholic Reporter” for seven years) "U.S. Imperialism, Iran and the Context for War," , 8-9-2019, ] TDIThe Trump administration’s effort to drive Iran’s oil exports down to zero is the most sweeping attempt yet by the United States to devastate Iran’s economy and trigger regime change. The imposition of secondary sanctions, which threatens access to the U.S. market to foreign companies and foreign countries doing business with Iran, has sent the Iranian economy tumbling and forced the Islamic Republic to resort to asymmetric military measures to break an untenable status quo. Since May, a succession of incidents in the Persian Gulf have ratcheted up tensions between the United States and Iran and raised the risk of a military confrontation.That may be what key advisors in the Trump administration want. Secretary of State Mike Pompeo and National Security Advisor John Bolton are both militarists known for advocating for regime change in Iran. Pompeo has advanced the disingenuous claim that an operational link exists between Al Qaeda and Iran as a way to have the 2001 Congressional authorization for the use of military force that the Bush administration used to go to war in Iraq apply to Iran. At the direction of Bolton, the Pentagon has updated war plans that call for 120,000 U.S. troops going to the Middle East in case of hostilities. An unrepentant war hawk, Bolton is one of the architects of the 2003 U.S. invasion of Iraq and urged President George W. Bush to invade Iran as well.Not a few analysts see parallels between what the Trump administration is doing now and the lead up to the U.S. invasion of Iraq. While another U.S. war in the Middle East seems unthinkable, Bolton regards the Iraq invasion differently than do most other Americans, including his boss, Donald Trump, said Trita Parsi, the founder of The National Iranian American Council and the author of Treacherous Alliance: The Secret Dealings of Israel, Iran and the United States and two books on U.S.-Iranian relations under President Obama.“John Bolton does not believe the last war in Middle East was a debacle,” Parsi said “He thinks it is a stunning success. While that war obviously did not lead to democracy in Iraq. Bolton does not care about that. The fact that it destabilized the region and spread radicalism has little effect on his analysis. What matters to him is that the United States showed its ability and willingness to use disproportionate force and punish any country that it believed is standing in its way. The end result is that Saddam is no longer there, and as a result the geopolitical chessboard has changed. Iraq is no longer capable of posing a threat to the United States or to any specific ally. The fact that it led to the death of half a million Iraqis, and 4,000 to 5, 000 Americans, is not particularly important in his mindset.”Israel, Saudi Arabia and the United Arab Emirates, Iran’s regional rivals, all want Iranian power checked, the Islamic Republic isolated, and any opportunity for a U.S.-Iran rapprochement squelched. Slavin and Pillar said the leaders of those three countries, as well as Trump’s biggest donors, are exerting an outsize influence on President Trump, whose decisions on foreign policy are determined largely by domestic politics, personal relationships and economic advantage. Since Trump reached the White House, Iran has been consistently and loudly denounced, accused of transgressions the International Atomic Energy Agency and the United States’ own intelligence community have denied.Gary Sick, who served on the National Security Council during the Carter administration and is executive director of Columbia University’s Gulf/2000 Project, noted that while the Trump administration constantly excoriates Iran, it never says what Iran can do and why it must be stopped. “They never make that statement because Iran really can’t do very much,” he said. “They can harm us in the region. They can’t touch us here at home. Their threat to us is quite marginal whereas our threat to them is really existential. There’s an attempt to bring down the government of Iran, its whole financial system, their banking system, and commercial, and its ability to produce and export goods.”Sanctions also lock in Iranian proliferation – they prevent necessary checks on nuclear compliance, which means waiver removal spurs proliferationKaplan 20 – [(Fred, national-security columnist for Slate and an author) "Does Trump Want Iran to Try to Go Nuclear?," Slate Magazine, 5-28-2020, ] TDIThe odd thing about this decision is that those companies were helping to prevent Iran from reviving its nuclear program. With the waivers removed, the brakes will be lifted, and Iran is likely once again to enrich uranium at levels approaching what’s needed to build bombs. The Post quotes Kelsey Davenport, director of nonproliferation policy at the Arms Control Association, as saying, “The Trump administration is shooting itself in the foot with this move.”This would be true if Trump’s prime motive in dealing with Iran were to block it from going nuclear. But the move makes perfect sense if his larger aims are to put the final nail in the coffin of the Iran nuclear deal, which his nemesis, Barack Obama, negotiated in 2015—and to crush the Iranian regime, in part by forcing it to get back in the nuclear business, which would provide an excuse for Trump to bomb its facilities and perhaps other targets too.The 2015 accord—which was signed by the U.S., Iran, and five other countries, then codified into a U.N. resolution—required Iran to dismantle nearly all of its nuclear infrastructure, in exchange for which the other countries would lift most of their economic sanctions against the Islamic Republic. (Some sanctions, penalizing Iran for its ballistic missiles and its support of terrorists, would remain.) When Trump pulled out of the deal in 2018 (against the advice of his top advisers at the time), he reimposed the sanctions—then, one year later, imposed “secondary sanctions” against other countries that did business with Iran.However, even Trump’s most hawkish advisers on the subject realized that not all business with Iran should be canceled or penalized. One aspect of the 2015 deal called for Russia to take away spent fuel from Iranian reactors and return it in a form that could not be used to make bombs. Another article allowed Iran to import uranium enriched to the level of 20 percent purity, which was required for operations at the Tehran Research Reactor. Still another clause allowed other countries to help modify Iran’s Arak heavy-water research reactor so it’s unable to produce plutonium, another path to atomic weapons. If those activities were halted, Iran would have no choice but to enrich its own uranium to 20 percent or to process plutonium. A foreign presence at the nuclear sites also helps ensure that Iran is abiding by the deal—supplementing the inspections by the International Atomic Energy Agency. So Trump waived the sanctions on those transactions.These are the waivers that Trump has now decided to cancel. After a 60-day period, allowing the foreign companies to wind down their programs, the United States will apply sanctions if they continue to help Iran—even though they’re stopping Iran from going nuclear.According to the Post, some U.S. officials, including Iran hawks, argued against lifting the waivers. But Secretary of State Mike Pompeo fiercely made the case in favor—and, as often happens, won the day. He’d pushed for taking the action in March, but Treasury Secretary Steven Mnuchin argued for keeping the waivers in place. Trump extended them for another 60 days. When that period expired, Pompeo pounced and, this time, prevailed.Pompeo has long been an insistent advocate of regime change in Tehran, and he has shrewdly pushed Trump in that direction at key moments. With Trump keen to excite his base in the run-up to the 2020 election, Pompeo apparently saw the expiration of the 60-day extension as an ideal time for a push.The 2015 deal barred Iran from enriching uranium at levels above 3.67 percent over the subsequent 15 years. Enrichment below this level—much too low to produce an A-bomb—is permitted not only by the deal but also by the Non-Proliferation Treaty, which Iran signed long ago. Weapons-grade uranium requires enrichment of 90 percent purity. But once enrichment reaches 20 percent, it doesn’t take much effort or time to get to 90.If the Iranians start enriching uranium to 20 percent, or start undoing the modifications at the Akar heavy-water reactor, Pompeo will no doubt sound the alarm that they are on the verge of becoming a nuclear-armed state—and push for action to prevent that. He will make this push with no support from European or Asian allies and much bitterness from his own colleagues within the Trump administration. The next move would be up to Trump, who may have to decide between bombing Iran or letting Iran approach the verge of going nuclear. If he faces this dilemma, it will be the result of his own decisions—first, to pull out of the deal; second, to lift the sanction waivers. It’s not too late now to reconsider the latter—for his own good, as well as for the rest of us.Iran can proliferate – they have the means and the motiveSanger and Broad 20 – [(David E, national security correspondent and a senior writer; William, science journalist and senior writer at The New York Times) "Iran Crosses a Key Threshold: It Again Has Sufficient Fuel for a Bomb," NY Times, 3-3-2020, ] TDIWASHINGTON — Iran’s growing stockpile of nuclear fuel recently crossed a critical threshold, according to a report issued Tuesday by international inspectors: For the first time since President Trump abandoned the 2015 nuclear deal, Tehran appears to have enough enriched uranium to produce a single nuclear weapon, though it would take months or years to manufacture a warhead and deliver it over long distances.The International Atomic Energy Agency, which monitors nuclear capabilities and reports to the United Nations, also documented for the first time how Iran’s leadership blocked its inspectors from visiting three critical sites where there was evidence of past nuclear activity.The agency’s newly appointed director, Rafael Mariano Grossi, an Argentine diplomat who has spent most of his life working on nuclear issues, said it was urgent for “Iran immediately to cooperate fully with the agency” by allowing it access to the sites, and to answer additional questions “related to possible undeclared nuclear material and nuclear-related activities.”In response, Iran said it rejected the agency’s new rounds of questions because it had been cleared of responsibility to answer for its nuclear past. Iran, the report quoted Tehran as saying, “will not recognize any allegation on past activities and does not consider itself obliged to respond to such allegations.”Taken together, the findings and the demand for more intrusive inspections take the standoff between Washington and Tehran into new territory.Mr. Trump’s decision to abandon what he called a “terrible” deal has backfired for now. Iran has moved from complying with the accord’s strict limits on uranium production to beginning to rebuild its stockpile.Iran’s leaders appear to have allowed the IAEA to document these violations, which are likely to drive home the fact that it is responding to Mr. Trump’s pressure campaign with one of its own.“The situation is a paradox,” Mr. Grossi said in a recent interview in Washington, his first since taking over at the IAEA. “What we’re verifying is the gradual diminishing compliance with the agreement we’re supposed to be verifying.”So far, experts note, the evidence suggests that Iran’s actions are incremental and calculated to pressure European governments and the Trump administration, rather than rushing for a bomb.Mr. Trump and Secretary of State Mike Pompeo have insisted that, over time, the decision to abandon the deal and reimpose harsh sanctions — drastically cutting Iran’s oil revenues — would force the country to abandon all of its nuclear capabilities.But the numbers suggest a different reality.In 2016, Iran shipped out of the country 97 percent of its stockpile of uranium fuel, enough to make more than 14 weapons. It stayed well below the one-bomb threshold through most of 2019, confining itself to a stockpile of 300 kilograms, or 660 pounds.But now, in its effort to pressure Europe to undermine the American economic sanctions, Iran is back in the fuel-making business.The latest figures, contained in a confidential report to the agency’s 171 member states, show that for the first time since the nuclear accord went into effect, the country has surpassed 1,000 kilograms, or 2,200 pounds, of uranium fuel enriched up to 4.5 percent. If further enriched, to 90 percent, that is enough fuel to produce a single nuclear weapon, a step the Iranians insist they would never take.Iranian proliferation goes nuclear – spirals into regional war and spurs proliferation cascades across the Middle EastChilton and Hoshovsky 20 – [(Kevin, led U.S. Strategic Command and has participated in the Jewish Institute for National Security of America’s Generals and Admirals Program; Harry, policy analyst at JINSA’s Gemunder Center for Defense and Strategy) "Avoiding a nuclear arms race in the Middle East," Defense News, 2-13-2020, ] TDIThis raises two immediate concerns. First, should Iran race for the bomb, it is almost inevitable that the United States and/or Israel will take preventative military action to stop it from crossing that fateful threshold. This could easily spiral into a regional war as Iran activates its various proxy forces against the United States and its allies.Second, an Iranian nuclear breakout attempt could spur a proliferation cascade throughout the Middle East, beginning with Saudi Arabia.Mohammed bin Salman, the Saudi crown prince, openly stated in 2018 that if Iran developed nuclear weapons, Riyadh would quickly “follow suit.” One suggested approach would see Saudi Arabia purchase a nuclear power reactor from a major supplier like South Korea and then build a reprocessing plant that would yield enough weapons-grade plutonium in five years.A half-decade delay isn’t optimal, however, when the goal is achieving nuclear deterrence quickly. Thus, there is the so-called Islamabad option.This refers to Riyadh’s role in financing Pakistan’s nuclear weapons program and an alleged commitment from Islamabad that it would repay the favor. While Pakistani and Saudi officials have denied any such understanding, there is the possibility that the two could work out an arrangement where Islamabad could deploy some of its nuclear arsenal on Saudi soil following a successful Iranian breakout.Although this maneuver would draw sharp, international criticism, in theory, it would allow Riyadh to remain in good standing vis-a-vis the nuclear nonproliferation treaty. Nevertheless, Pakistan might not be willing to play spoiler against a nuclearized Iran. If it is, Middle Eastern geopolitics would become extremely unstable.If Saudi Arabia acquires nuclear weapons, many believe Turkey would follow suit. Last September, Turkish President Recep Tayyip Erdogan declared that he “cannot accept” the argument from Western nations that Turkey should not be allowed to attain nuclear weapons. In 1958, Charles de Gaulle proclaimed that a nation without nuclear weapons “does not command its own destiny”; two years later, France tested its first bomb. Erdogan’s comments echo those earlier remarks and raise the possibility that Ankara could become the second NATO member to leave the alliance’s nuclear umbrella in favor of its own independent arsenal.Those proliferation cascades undermine deterrence and cause nuclear war – this is predictive of what a multi-nuclear Middle East would look likeKrepinevich 13 – [(Dr. Andrew F, the President of the Center for Strategic and Budgetary Assessments) “Critical Mass: Nuclear Proliferation in the Middle East,” 2013, ] TDIAs more countries over time develop nuclear capabilities and build up their nuclear arsenals, the competition will evolve from an Israeli-Iranian affair to a multi-state rivalry. For illustrative purposes we will assume that in the 2025-2030 timeframe, Iran, Saudi Arabia, Turkey, and perhaps Egypt and/or Iraq have nuclear arsenals in the low double-digit range (i.e., ten to forty weapons). What form might a nuclear competition among these powers and Israel assume? The remainder of this chapter attempts to shed some light on this issue, and its potential implications, with emphasis on those affecting regional stability.The challenge of preserving stability when confronted with military competition among five nuclear-armed states within the Middle East and with other powers external to the region engaged in a Great Game for influence is formidable. At first blush, one thing seems apparent: many Cold War-era metrics for assessing the competition and gauging where it might be headed appear to be of little utility; in fact, they may actually prove misleading and dangerous. The same can be said of those looking to apply Cold War-era arms control metrics as a way of keeping the peace in general and avoiding nuclear use in particular. During the Cold War, many nuclear strategists came to view nuclear parity (the possession of roughly equivalent arsenals capable of inflicting roughly equivalent levels of destruction) between the United States and the Soviet Union as stabilizing. The perception of these strategists is that the rough equivalence contributed to the tradition of non-use of nuclear weapons, and was thus desirable. Parity enabled both sides to avoid the perception of being inferior to their rival, and perceptions are critical to deterrence and to preserving the confidence of one’s allies and security partners. If accepted by both sides, parity could enable them to avoid the cost and instability associated with “racing” toward ever-larger arsenals. Accordingly, maintaining parity was a major objective of U.S.-Soviet (and later U.S.-Russian) arms control negotiations. Yet irrespective of its merits, parity is not an option for states engaged in an n-player competition. Each competitor cannot have a nuclear force equivalent to all the others. Even if the competition should solidify into two coalitions so as to mimic the two-player Cold War competition, questions would almost certainly arise regarding the willingness of a coalition partner that has not been attacked to risk its own destruction by using its nuclear weapons in response to an attack on its ally. Indeed, these concerns were raised during the Cold War, and formed a major justification for France pursuing its own force de frappe. 93 In a Middle Eastern “n-player” competition, all nuclear powers would be challenged to establish an “assured destruction” capability against all the other regional nuclear powers, another Cold War desideratum, given their relatively modest economies. An “assured destruction” capability in an n-state competition would require that each state have weapons sufficient to survive an initial attack by all potential rivals and still be able to devastate the countries of all attackers. It would also require that the source of the attack be reliably identified. As noted earlier, this may prove difficult given likely limitations on these states’ ability to field advanced early warning systems. For example, would Israel be able to determine with confidence the owner of a ballistic missile launched from a location along the Iranian-Turkish border? The origin of any cruise missile launched from a sea-based platform? Even assuming a state could identify the source (or sources) of an attack, could its command and control systems survive the attack sufficiently intact to execute a retaliatory strike? A decapitation strike could preclude an “assured destruction” retaliatory strike even if sufficient weapons survive to execute one. This, in turn, raises the possibility of a “catalytic” war—one that is initiated between two states by a third party. Given a proliferated Middle East as described above, the chances that a regime would incorrectly attribute the source of an attack cannot be easily dismissed. To the extent cyber weapons can introduce false information into a state’s decision-making process, the risks of catalytic war only increase. Further complicating matters, the early warning requirement following a proliferation cascade could be multidirectional, and at some point perhaps 360 degrees, especially if nuclear rivals begin deploying a portion of their nuclear forces at sea. Early warning requirements would be stressed even further (and the costs of such a system increase correspondingly) if a neighboring state (e.g., Iran in the case of Turkey or Iraq; Turkey in the case of Israel; etc.) were to acquire nuclear weapons. In this case warning times would be even more compressed than in an Israeli-Iranian competition. Owing to its proximity to Iran, Saudi Arabia, for example, could have less than five minutes to react to an Iranian ballistic missile attack no matter how advanced its early warning and command and control systems are. As noted earlier in this assessment, regardless of what assumptions are made regarding a regional nuclear power’s early warning system, given the short ballistic missile flight times it seems likely that preserving command and control of the state’s nuclear forces while under attack will prove challenging. States might be tempted to adopt a launch-on-warning posture, but this requires both early warning and a highly responsive command and control system. Should a state determine that it will not be able to launch-on-warning and instead attempt to “ride-out” a nuclear first strike and retaliate, it would still need its command and control system to function effectively in the wake of the nuclear attack. Absent a highly resilient command and control system, a state’s ability to launch a retaliatory nuclear strike may require nuclear release authority to be diffused to lower-level commanders. But again, absent an effective early warning system it may not be possible to determine the attack source with confidence in a region with multiple nuclear powers. Independently, Saudi proliferation goes nuclear – asset theft, misalignment, and further proliferation cascadesYadlin 18 – [(Amos, chief of Israeli military intelligence from 2006 to 2010 and is now the director of the Institute for National Security Studies) "The Saudis Want a Nuclear Program. The Israelis Are Concerned.," Cipher Brief, 3-20-2018, ] TDIIn fact, the major driving factor for Saudi Arabia to acquire nuclear technology is its concern regarding its Iranian arch-rival’s ambitions to produce nuclear weapons. Crown Prince Mohammed bin Salman of Saudi Arabia made no secret of his country’s interest in matching Iran when he said, “Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt if Iran developed a nuclear bomb, we will follow suit as soon as possible.”Riyadh is concerned that Iran’s successful breakout to the bomb would not only pose an existential threat to the kingdom if Iran should choose to use such weapons, but more generally it would embolden Tehran to become even more subversive in the region – compounding the pre-existing challenges to the stability of the House of Saud. Therefore, the Saudis seek to position themselves close enough to the bomb in order to deter the Iranians from breaking out by conveying the message that Tehran will derive little if any strategic advantage from going nuclear as Riyadh will soon follow.But the Saudi interest in acquiring advanced nuclear capabilities presents significant dangers for both the broader international non-proliferation regime as well as Israel’s national security. First, given the internal and external challenges that the Saudi regime faces, possible future instability could lead to its nuclear assets falling into the wrong hands; one need look no further than Iran to find an example in which Washington’s nuclear cooperation with its then-ally more than 50 years ago continues to haunt both the U.S. and Israel today.Second, in a region in constant flux, it is also possible that just as Saudi Arabia’s interests shifted to align with those of Israel, they could once more become misaligned, and Israel could then find itself with a U.S.-constructed security threat of existential proportions.Third, beyond Saudi Arabia’s borders, a permissive U.S.-Saudi nuclear cooperation agreement could damage non-proliferation efforts in the region and may even cause a cascade that includes Turkey, Egypt and the Emirates, turning the Middle East into a “nuclear cauldron.”AC – Advantage 2Advantage 2 is the European UnionThe European Union remains vulnerable to secondary sanctions – the status quo is characterized by fragmentation and piecemeal negotiation that forfeits all leverage to the United StatesGeranmayeh and Rapnouil 19 – [(Ellie, senior policy fellow and deputy head of the Middle East and North Africa programme at the European Council on Foreign Relations; Manuel Lafont, senior policy fellow and head of the Paris office of the European Council on Foreign Relations until June 2019)? "Meeting the challenge of secondary sanctions," ECFR.EU, 6-25-2019, ] TDIWashington maintains that its secondary sanctions are not extraterritorial but rather present foreign companies with a choice between access to markets in the US or in the targeted country.The importance of the US market, in both absolute and relative terms, is enough to change the business decisions of most major European companies. But even small and medium-sized enterprises (SMEs) that may have no direct exposure to the US market still need to use banks that want to retain access to the US dollar, US financial markets, and their US clients. As a consequence, Europe is also vulnerable due to the integration of its financial markets with the much larger US one – and not just through its extensive trade, investment, and technological relationship with the US.Other aspects of the financial system – such as the role in transactions of Visa, Mastercard, and other US companies (which can be leveraged in sanctions on individuals), or the impact of US sanctions policy on SWIFT – only exacerbate this vulnerability.The relatively passive European response to US secondary sanctions has also increased this vulnerability. According to one former US Treasury official, the Trump administration and some members of Congress see Europeans as posing far less of a challenge to the enforcement of the measures than, for instance, the Chinese. In response to US sanctions on Iran under Obama, China set up a financial payments system that ran parallel to dollar-denominated channels, drawing the interest of countries that would like to set up their own systems of this kind, such as Russia. In comparison, Europe’s most forceful response has been to establish the Instrument for Supporting Trade Exchanges (INSTEX), which is currently confined to facilitating the kind of humanitarian trade with Iran that is permissible under US sanctions.However, Europe is not alone in feeling the pressure of US secondary sanctions. For decades, China, India, Russia, and Turkey have attempted to bypass the impact of such US unilateral measures. Yet, in response to the latest wave of US secondary sanctions on Iran, each of these countries has felt more exposed to US sanctions – even though they (especially Russia and China) have less exposure to the US than Europe. The impact of this has been seen in the notable drop in trade between Iran and China in the initial months after the US reimposed sanctions in November. China, India, and Turkey have also seemingly linked negotiations with the US over exemptions to these sanctions to an array of political factors, such as China-US trade talks. China is looking closely at European plans for establishing a special purpose vehicle (SPV) and European officials privately note that China has expressed interest in collaborating on such a mechanism to trade with Iran.[8]In large part, the US does not take Europe seriously due to the continent’s political fragmentation. Many European countries – particularly, but not exclusively, those in the east – are careful to avoid a confrontation with the US over secondary sanctions out of fear of undermining transatlantic relations. This phenomenon would likely play an even bigger role in other cases, such as sanctions targeting Russia, on which European divisions run deeper.These intra-European differences are also evident on the tactical level: some European countries having sought preferential arrangements with the US through exemption requests. This approach not only provided minimal, piecemeal US waivers on oil imports in November 2018 but also ran against other EU members’ call for collective rather than bilateral negotiation of exemptions. In any case, such waivers are intended to be limited in scope and duration to prevent Europe and Iran from establishing longer-term business ties. Indeed, the US announced in April that it would not prolong its waivers to Italy and Greece (as well as a handful of non-EU countries) to continue purchases of Iranian oil .Those secondary sanctions erode EU diplomatic influenceGeranmayeh and Rapnouil 19 – [(Ellie, senior policy fellow and deputy head of the Middle East and North Africa programme at the European Council on Foreign Relations; Manuel Lafont, senior policy fellow and head of the Paris office of the European Council on Foreign Relations until June 2019)? "Meeting the challenge of secondary sanctions," ECFR.EU, 6-25-2019, ] TDIGiven all these vulnerabilities, the EU has struggled to determine its economic and strategic relationship with Iran. What is at stake here is not Europe’s relationship with the US – at least, no more than in any case in which the EU protects its trade interests or imposes its competition policy decisions on US companies. Rather, this is about Europe’s ability to freely determine its foreign policy without being coerced, or seeing its economic actors being coerced, into following another power’s policy.In responding to secondary sanctions, the union needs to understand how it can use interdependence to rebalance the relationship without undermining transatlantic relations, and to share risks between member states in a fashion that promotes European unity. Should it fail to uphold one of its major foreign policy achievements, the JCPOA case would set a terrible precedent for the EU’s ambition to be an autonomous and credible actor.Arguably, the transatlantic dispute over Iran has already diminished Europe’s diplomatic influence: third countries are now liable to ask why they should negotiate with European capitals if Washington, through its secondary sanctions, has the final say on European policy. Accordingly, the EU’s sanctions will lose some of their value as an autonomous foreign policy tool – if it cannot effectively lift them when its goals and conditions are met – even as it increasingly adopts such measures.A broader risk lies in the fact that the current US administration can act more aggressively even while it goes against an agreement signed by its predecessor and remains mostly isolated on the international stage. This underlines the credibility of US sanctions and the reality that a similar situation could arise again.This risk is not just hypothetical. Until recently, the US only resorted to secondary sanctions in cases involving relatively closed economies, such as those of North Korea, Libya, Iran, and Cuba. However, in 2017, Congress passed legislation that imposed secondary sanctions on Russia, including the country’s energy sector. There is a real possibility that the US will further expand this legislation through what some of its supporters call the “sanctions bill from hell”. This bill is meant to target the Russian energy and banking sectors in ways that present what former US official Richard Nephews calls a “real risk of secondary sanctions application”.Meanwhile, OFAC has continued to add Russian entities to its list of targets of secondary sanctions. This can have a significant impact on European companies, as demonstrated by the unintended economic effects on commodities markets – and on European economic interests – of the inclusion on the list of firms linked with billionaire Oleg Deripaska, especially aluminium giant Rusal. Washington’s focus on Moscow is particularly worrying for an EU that engages in roughly ten times more trade with Russia than the US does, and that includes member states that see the Russian-owned Nord Stream 2 pipeline as important to their energy security.[9] Recent US threats to disconnect Russia from SWIFT over its role in the Ukraine conflict have alarmed at least some EU member states.Finally, the risk for Europe would not only be that of direct tension with the US. One can envision a scenario in which similar economic statecraft could be used against European interests by other powers, including those without the same level of economic and financial integration. China could try to leverage economic asymmetries or dependencies against Europe through trade restrictions (on, for example, products such as rare earths). Europeans should take this risk all the more seriously because China, while denying that it uses sanctions, already resorts to several types of coercive economic measure – de facto and informally, at least.Europe would also be especially vulnerable to a sanctions war between great powers due to its reliance on the global economy and a rules-based international order. The EU may well have been naive to assume that this order and the economic relationships it underpins could be insulated from great power competition and coercive strategies. However, the EU must now recognise that persistent international tension over US sanctions and other extraterritorial measures – such as those that have been developed in the fight against corruption or financial crime, or to control foreign investments – can harm long-term European interests. Such a scenario would both lead to the fragmentation of the global economy and weaken collective security and multilateral cooperation, especially if most or all major powers began to use secondary sanctions.Reinvigorating EU influence and diplomacy stops multilateral backsliding prompted by the United States – that solves existential threatsBarfod 19 – [(Mikael, Visiting Professor at the University of Huddersfield) "Can the European Union Save Multilateralism?," May 2019, ] TDIScience increasingly claims that that we will hardly survive on this planet unless we can agree on a set of common solutions to its main problems. Mankind has basically got its back against the wall when it comes to climate, energy, water and other resources, pandemics, pollution, regulation of technology, numerous socio-economic challenges such as growing inequality and migration. Without multilateral organizations seeking global solutions, it will be almost impossible for the countries of the world to find common solutions to international or planet-wide problems, which no country can handle on its own.Donald Trump entered the international scene in 2017. His electoral promise of “America First” is now supported by a philosophy that “national sovereignty rules”. He sees international relations not as sustained international cooperation for mutual benefit but rather as a zero-sum game.Mr Trump has threatened Europe, China, and other countries with trade wars and has shown little concern for human right abuses by authoritarian regimes around the world. He has also shown contempt and disregard for the institutions and principles of both NATO and the EU. He has directed US withdrawal from a host of multilateral institutions and programmes, including:The Paris climate dealThe Trans-Pacific PartnershipUN female reproduction programmesThe Iran nuclear dealThe UN Global Compact for Migration.The Universal Postal Union (UPU) (dating from 1874)Trump has also cut back US aid to the UN High Commissioner for Refugees and support to the Relief and Works Agency for Palestine. There will probably be more to come.The UN founding fathers started during the chaos of World War II to rebuild multilateralism into the shape of the UN. But today, who can effectively replace a USA withdrawing from its multilateral commitments? There is in my opinion only one actor that can aspire to fill the vacuum currently left by the US, the European Union. There are several reasons why:The EU is committed to effective multilateralism. Support for the UN remains a cornerstone of European Union policy. The Union’s unwavering political support of the UN is an expression of its commitment to effective multilateralism.The EU is the only fully participant non-state actor in the UN.The EU is the largest financial contributor to the UN. Collectively, the European Union and its Member States remain by far the largest financial contributor to the UN, providing 30% of all contributions to the budget and 31% of peace-keeping activities in addition to substantial contributions towards voluntary funding.The EU supports the UN reform agenda. The European Union has actively supported UN reform with the idea that the UN should be better equipped to face such modern threats as irregular conflicts, global pandemics, climate etc. The reform debate, which is still ongoing, shows a clear tendency towards regional/sub-regional representation to boost the legitimacy of the UN and provide broader input to the organization. Some may object that the European Union has been hampered by the lack of a common position among EU Member States on the future of the UN Security Council (UNSC), where two member-states, UK and France, currently have permanent seats and one, Germany, is desperate to get one. There is an obvious solution: the European Union is the best choice for representing its member states on the UNSC and the European region in accordance with well-defined coordination procedures.Those outweigh and turn the disad – multilateralism solves COVID, reverses economic decline, and stops climate changeRobinson 20 – [(Mary, First woman President of Ireland and former UN High Commissioner for Human Rights) "Multilateralism is not an option, it is the only path," Elders, 6-11-2020, ] TDIThe crises we are living through at the moment – COVID-19, the associated prospect of sustained economic slowdown and high unemployment, the climate emergency, entrenched and systemic racism, gender inequality and oppression – are all too complex and multi-faceted for any one nation to tackle them on its own.Multilateralism matters to all states, big or small. We need to see it as a lifesaver, as the UN’s founders envisioned back in 1945 with their determination to “save the world from the scourge of war”. But in recent years, the system of institutions, regulations and norms built up over the past seventy-five years has been subject to sustained and deliberate attack.This is myopic and self-harming. A regression from a rules-based system into power-based strategies will not result in a safer, more predictable or propitious environment for any country.This is why The Elders – the group of independent global leaders founded by Nelson Mandela in 2007, of which I have today the honour to be Chair – have produced a new report on the nature of contemporary multilateralism, and how it can be defended and strengthened both in today’s challenging climate, and in the years and decades ahead.Our report begins with the recognition that multilateralism and respect for a global rules-based system has underpinned peace, security, health and prosperity across large swathes of the world for the past seventy-five years. The UN embodies these principles and remains an indispensable actor in facing contemporary existential threats from pandemics to climate change and nuclear proliferation. In January of this year, I travelled to Washington DC with Ban Ki-moon, former UN Secretary-General and today Deputy Chair of The Elders, to participate in the unveiling of the “Doomsday Clock” maintained by the Bulletin of the Atomic Scientists as a measurement of existential global threats. The hands of the clock were moved forward to 100 seconds to midnight, the narrowest setting ever since its first unveiling in 1947, because of the acute threats posed to the future of humanity by the climate crisis and the escalation of a new arms race between the nuclear powers. Even though COVID-19 now rightly commands our attention, these other threats have not gone away. In recent weeks, we have seen further alarming moves by the United States that weaken the global architecture of arms control and non-proliferation, including its announcement that it intends to withdraw from the Open Skies Treaty, and even reports that it has been considering a resumption of nuclear testing.These decisions demand an urgent and robust response, and no responsible leader can claim that COVID-19 provides an excuse for inaction on the nuclear front. All states should exert whatever pressure they can to convince the US Administration to agree to extend New START for five years; its expiry would mean there was no binding agreement on arms control between the two nuclear superpowers – the US and Russia – and thus a severe risk to global peace.2020 should have also been the occasion for the Non-Proliferation Treaty Review Conference, which had to be postponed due to COVID-19. The NPT is critical both in preventing nuclear proliferation and moving towards the ultimate elimination of all nuclear weapons. All parties to the Treaty should not waste the time afforded by this postponement but take concrete steps to meet their obligations on disarmament. Those bearing the heaviest responsibility are of course the five Permanent Members of the UN Security Council, who I regret to say have consistently failed to live up to their obligations on disarmament under Article 6 of the NPT. It remains inevitable of course that debates on the future of multilateralism need to be reassessed and reframed in light of our collective experiences to date of this devastating pandemic. COVID-19 knows no borders and pays no heed to national sovereignty. It has swept through every part of the world since the beginning of 2020, leaving a devastating cost; first and foremost in human lives, but also in terms of economic growth, political momentum and social inequality.This terrible pandemic is a test of our common humanity. We can see how it is exacerbating existing profound socio-economic, racial and gender inequalities, both within and between countries. Only a coordinated multilateral response can deliver testing and a vaccine at scale, and only a renewed commitment to the values and institutions of the UN can enable us to build back better and protect the rights and dignity of all global citizens.A global crisis demands a global response. Yet the virus has struck at a time when the multilateral system was already under attack from populists, nationalists and isolationists. COVID-19 causes extinction McPherson 4/13 [(Guy R, Professor Emeritus at University of Arizona) "Will COVID-19 Trigger Extinction of All Life on Earth?" Earth & Environmental Science Research & Reviews, April 13, 2020] TDISmall lives matter. Indeed, the “human body contains about 100 trillion cells, but only maybe one in 10 of those cells is actually — human” [1]. We are comprised of bacteria and other tiny living organisms, as well as non-living entities such as viruses. One such virus has captured the attention of the world, and with good reason. The novel coronavirus could trigger extinction of humans, and therefore the extinction of all life on Earth. I frequently hear and read that COVID-19 is a nefarious attempt by the so-called “elite” among us to depopulate the burgeoning human population on Earth. Other conspiracy theories abound, including COVID-19 as an attempt to further reduce human rights, promote expensive medical therapies, and otherwise enrich the wealthy at the expense of the bamboozled masses. I do not doubt the ability of the informed wealthy to fleece the ignorant masses. Nor do I doubt the ability of the informed wealthy to turn virtually any situation into an opportunity for monetary gain. A quick glance at the past two centuries provides plenty of examples. However, I doubt the monetarily wealthy among us are interested in accelerating human extinction, even for financial gain. As I explain below, the ongoing reduction in industrial activity as a result of COVID-19 almost certainly leads to loss of habitat for human animals, hence putting us on the fast track to human extinction. I doubt the knowledgeable “elite” are interested in altering the sweet deal they are experiencing with the current set of living arrangements. The aerosol masking effect, or global dimming, has been described in the peer-reviewed literature since at least 1929 [2, 3]. Coincident with industrial activity adding to greenhouse gases that warm the planet, industrial activity simultaneously cools the planet by adding aerosols to the atmosphere. These aerosols block incoming sunlight, thereby keeping cool our pale blue dot. Reducing industrial activity by as little as 35 percent is expected to cause a global-average temperature rise of 1 degree Celsius within a few weeks, according to research on the aerosol masking effect [4]. Such research was deemed collectively too conservative by a paper in the 17 January 2019 issue of Science [5]. As pointed out by the lead author of the latter paper on 22 January 2019 “Global efforts to improve air quality by developing cleaner fuels and burning less coal could end up harming our planet by reducing the number of aerosols in the atmosphere, and by doing so, diminishing aerosols’ cooling ability to offset global warming” [6]. The cooling effect is “nearly twice what scientists previously thought,” and the paper by Rosenfeld et al. [5] cites the conclusion by Levy et al. [4], indicating as little as 35% reduction in industrial activity drives a 1 C global-average rise in temperature, thereby suggesting that as little as a 20% reduction in industrial activity will drive a 1 C spike in temperature within a few weeks [7]. Additional, recent support for the importance of the aerosol masking effect comes from [8, 9]. Furthermore, loss of aerosols exacerbates heat waves [10]. Human extinction might have been triggered several years ago when the global-average temperature of Earth exceeded 1.5 C above the 1750 baseline. According to a comprehensive overview published by European Strategy and Policy Analysis System in April, an “increase of 1.5 degrees is the maximum the planet can tolerate; … at worst, [such a rise in temperature above the 1750 baseline will cause] the extinction of humankind altogether” [11, 12]. Earth’s global-average temperature hit 1.73 C above the 1750 baseline by April, 2018 the highest global-average temperature experienced by Homo sapiens on Earth [13, 14]. A prolonged economic crisis causes warLiu 18 – [(Qian, China-based economist) "From economic crisis to World War III," New Europe, 11-13-2018, ] TDIThe next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict.The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates.But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labour markets to tax systems, fertility patterns, and education policies.Policymakers have utterly failed to pursue such reforms, despite promising to do so. Instead, they have remained preoccupied with politics. From Italy to Germany, forming and sustaining governments now seems to take more time than actual governing.Greece, for example, has relied on money from international creditors to keep its head (barely) above water, rather than genuinely reforming its pension system or improving its business environment.The lack of structural reform has meant that the unprecedented excess liquidity that central banks injected into their economies was not allocated to its most efficient uses. Instead, it raised global asset prices to levels even higher than those prevailing before 2008.In the United States, housing prices are now 8% higher than they were at the peak of the property bubble in 2006, according to the property website Zillow. The price-to-earnings (CAPE) ratio, which measures whether stock-market prices are within a reasonable range, is now higher than it was both in 2008 and at the start of the Great Depression in 1929.As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications. A decade of regular adrenaline shots, in the form of ultra-low interest rates and unconventional monetary policies, has severely depleted their power to stabilise and stimulate the economy.If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterised also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war.For example, during the Great Depression, US President Herbert Hoover signed the 1930 Smoot-Hawley Tariff Act, intended to protect American workers and farmers from foreign competition. In the subsequent five years, global trade shrank by two-thirds. Within a decade, World War II had begun.To be sure, WWII, like World War I, was caused by a multitude of factors; there is no standard path to war. But there is reason to believe that high levels of inequality can play a significant role in stoking conflict.According to research by the economist Thomas Piketty, a spike in income inequality is often followed by a great crisis. Income inequality then declines for a while, before rising again, until a new peak – and a new disaster. Though causality has yet to be proven, given the limited number of data points, this correlation should not be taken lightly, especially with wealth and income inequality at historically high levels.This is all the more worrying in view of the numerous other factors stoking social unrest and diplomatic tension, including technological disruption, a record-breaking migration crisis, anxiety over globalisation, political polarisation, and rising nationalism. All are symptoms of failed policies that could turn out to be trigger points for a future crisis.Voters have good reason to be frustrated, but the emotionally appealing populists to whom they are increasingly giving their support are offering ill-advised solutions that will only make matters worse. For example, despite the world’s unprecedented interconnectedness, multilateralism is increasingly being eschewed, as countries – most notably, Donald J. Trump’s US – pursue unilateral, isolationist policies. Meanwhile, proxy wars are raging in Syria and Yemen.Against this background, we must take seriously the possibility that the next economic crisis could lead to a large-scale military confrontation. By the logic of the political scientist Samuel Huntington, considering such a scenario could help us avoid it because it would force us to take action. In this case, the key will be for policymakers to pursue the structural reforms that they have long promised while replacing finger-pointing and antagonism with a sensible and respectful global dialogue.Even a sustained period of weak growth is sufficient for our impactHillebrand and Closson 15 – [(Evan, Professor of International Economics, Patterson School of Diplomacy; Stacy, Distinguished Visiting Professor, Patterson School of Diplomacy) “Energy, Economic Growth, and Geopolitical Futures: Eight Long-Range Scenarios,” MIT Press, 2015, 43-44] TDIThe second scenario is marked by low energy prices, weak economic growth, and global disharmony. The United States and the European Union falter because their macroeconomic policies never come to grips with unsustainable budget deficits caused by rising transfer payments in the face of declining working-age populations. Recurrent financial crises afflict the OECD countries and wreak havoc on the developing world. China is never able to establish the conditions of secure property rights, impartial rule of law, and transparent governance for modem economic growth.The result is high volatility and low-trend economic growth in the world's biggest economies, which drives down growth abroad and has a debilitating effect on geopolitical stability. Illiberal trade policies are ramped up everywhere, which slows growth further and breeds ill-will and mistrust among nations. Weak economic growth leads to low energy demand, which, when combined with new supplies of conventional and unconventional energy sources, leads to a sharp drop in energy prices.This is a tumultuous multipolar world. Oil producers in the Middle East resort to desperate policies to retain power, and Iran emerges as the regional power after a short but exceedingly violent regional war. After decades of economic decline and rising unrest, Russia experiences a revolution by disparate groups of aggrieved liberal parties. Asian countries form a new alliance to resist pressure from an aggressive China. Africa does not reap the expected rewards from oil production. Instead, poor governance leads to weak economic performance, and many African nations are mired in conflict over water resources and drought-induced famine. The international community fails to adequately address the underlying problems.Climate change causes extinction – their defense doesn’t assume co-extinctionsStrona and Bradshaw 18 – [(Giovanni, Ecologist at the Research Centre for Ecological Change - University of Helsinki and works for the European Commission, Joint Research Centre; Corey, Matthew Flinders Fellow in Global Ecology at Flinders University of South Australia) “Co-extinctions annihilate planetary life during extreme environmental change,” 11-13-2018, pg. 1-2] TDIBeing in the midst of the sixth mass extinction1 , it is fitting to quantify the relative contribution of different mechanisms driving catastrophic biodiversity loss. Drivers directly related to anthropogenic modifications of the biosphere are apparent and well-described: habitat destruction, over-exploitation, and biotic invasions2 . Similarly, the effects of environmental change (e.g., temperature rise, increased droughts, ocean acidification, et cetera) can be easily interpreted — when the environmental conditions of a certain locality become incompatible with the tolerance limits of inhabiting species, in many cases these will go locally extinct, just like fish in an aquarium with a broken thermostat (even if there are counter examples of species that have been capable of rapid adaptation to novel environmental conditions3 ). Yet, there are other, more complicated mechanisms that can exacerbate species loss. In particular, it is becoming increasingly evident how biotic interactions, in addition to permitting the emergence and maintenance of diversity, also build up complex networks through which the loss of one species can make more species disappear (a process known as ‘co-extinction’), and possibly bring entire systems to an unexpected, sudden regime shift, or even total collapse4–9 . In a simplified view, the idea of co-extinction reduces to the obvious conclusion that a consumer cannot survive without its resources. Because resource and consumer interactions in natural systems (e.g., food webs) are organized in various hierarchical levels of complexity (e.g., trophic levels), it follows that the removal of resources could result in the cascading (bottom-up) extinction of several higher-level consumers8,10. Several studies based on either simulated or real-world data suggest that we should expect most events of species loss to cause co-extinctions5 , as corroborated by the worrisome, unnatural rate at which populations and species are now disappearing11, and which goes far beyond what one expects as a simple consequence of human endeavour1 . In fact, even the most resilient species will inevitably fall victim to the synergies among extinction drivers2 as extreme stresses drive biological communities to collapse. Furthermore, co-extinctions are often triggered well before the complete loss of an entire species12, so that even oscillations in the population size of a species could result in the local disappearance of other species depending on the frst13.This makes it difficult to be optimistic about the future of species diversity in the ongoing trajectory of global change, let alone in the case of additional external, planetary-scale catastrophes. A previous study14 contended this idea by using the remarkable tolerance of tardigrades to extreme temperature, pressure, and radiation as a reference to calculate the likelihood of global sterilization on an Earth-like planet following different, dramatic astrophysical events. The stunning conclusion of that study is that life on our planet has the potential to survive asteroid impacts, supernovae, and gamma-ray bursts14. This ostensibly reassuring news highlights how some scientists still tend to disregard the role of co-extinctions within collapsing communities in driving global biodiversity loss, while focusing on individual species’ tolerance limits as the only criteria relevant to species survival in a changing world. Ecologists know the optimism is not supported quantitatively, but can we estimate the magnitude of the bias? 1AR1AR – Regime Moderation CP Regime moderation fails and the CP boosts Iranian hardlinersFathollah-Nejad and Naeni 20 [(Ali F-N is a non-resident foreign policy fellow at the Brookings Institute in the Center for Middle East Policy. Amin N has a MA in ME Studies from the University of Tehran and conducts research there regarding Iranian politics and foreign policy.) “What explains the decline of Iran’s moderates? It’s not Trump.” Brookings Institute. June 15, 2020. ] TDILast month, Iran inaugurated a?new parliament with a hardline majority?elected in a late February ballot with the lowest voter turnout since the 1979 revolution. Conservatives even swept the capital city, Tehran, while the leading moderate secured just 95,393 votes in a metropolitan area with a population of over 13 million. Why have Iran’s moderates and reformists lost public support, and what will this mean for Iran’s foreign policy?Conventional wisdom claims that the main cause for the moderates’ declining position was U.S. pressure on the Rouhani administration, with some analysts describing Trump’s “maximum pressure” campaign as a gift for Iranian hardliners.?In such a view, Washington’s re-imposition of sanctions gave Iran’s hardliners “what they wanted” and “by putting the hardliners in the driver’s seat in Tehran, Trump made the current crisis inevitable.”?This argument also credits?U.S. pressure with strengthening “the hand of hardline Iranian factions, in the clerical and judicial establishment as well as in the Revolutionary Guards.” In the same vein,?forecasts for Iran’s 2021 presidential election?insist that the White House’s policies have created “impossible circumstances” for a reformist candidate to win. These facile explanations disregard Iran’s internal politics and vastly overstate the importance of Washington to shaping outcomes within Iran.It is simplistic to attribute the weakening of Iran’s moderates to Trump’s pressure policy. Indeed, there are significant domestic factors. First, 10 months before Trump decided to withdraw the U.S. from the nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), Rouhani’s choice of second-term cabinet members turned out to be quite conservative, contrary to his supporters’ expectations. For instance, Rouhani failed to fulfill?promises to choose a woman?for at least one ministry, disappointing crucial constituents.In fact, the nationwide uprising in early 2018 (referred to in Iran as the Dey protests) in about a hundred cities and towns — i.e. five months before Trump exited the deal and re-imposed sanctions — constituted a turning point in Iranians’ views toward the moderate faction. That upheaval started out of socio-economic grievances, but?it went beyond economic demands. The majority of reformists condemned the people who took to the streets, shocking many. Hamidreza Jalaeipour, a prominent reformist activist, described protesters as “vultures” (karkas);?he denied having done so?after a social media backlash. Abbas Abdi, another reformist,?blamed?the protests on “reactionary countries of the region,” characterizing the protests as “riot and destruction” that required a harsh response. And above all, a statement by the Association of Combatant Clerics headed by Mohammad Khatami, the former reformist president who is known as the leader of the reformist camp,?echoed those sentiments: “The recent tragic events in the country show that opportunists and rioters are abusing public gatherings and peaceful protests by creating chaos, insecurity, destroying public property, insulting religious and national sanctuaries, and even killing innocent people. They pursue the filthy intention of enemies.” Such condemnations intensified when people began chanting: “Reformist, hardliner, the game is now over.”These reactions prompted many Iranians to move away from the moderates. According to Sadegh Zibakalam, a prominent University of Tehran politics professor, “the reputation of reformists?has gone with the Dey protests,” turning them into the “big losers” of those protests.?In another interview, he said that the reformists have not had a “specific strategy for the last 22 years” and “now reforms died.” In other words, while moderates have long emphasized their support for civil society, many saw their reactions to the Dey protests as similar to the hardliners’. In this context, Ebrahim Asgharzadeh, a top reformist activist,?acknowledged:?“I agree that reformists who taste power, sometimes become conservative, and this conservatism is a plague of reformism.” ?In this vein, Mohammad-Reza Khatami, a reformist member of Iran’s outgoing parliament (former president Khatami’s brother),?said?that reformists are the “safety valve” of the Islamic Republic, adding: “People’s hopes in the reformists are diminishing day by day.” Many Iranians have become frustrated with their choice in recent years to vote for moderates “to achieve peace and tranquility.”1AR – Econ DANo internal link between sanctions and regional influenceKatzman 20 [(Kenneth Katzman is a Specialist in Middle Eastern Affairs and conducts research for the US Congress.) “Iran Sanctions.” Congressional Research Service. ] TDIIn explaining its decision to withdraw from the JCPOA, the Trump Administration asserted that the easing of sanctions during 2016-18 caused Iran to expand its regional activities. However, neither the imposition, lifting, nor reimposition of strict sanctions - nor the ban on Iran’s transfer of arms stipulated in Resolution 2231 - has appeared to affect Iran’s regional behavior. Iran intervened extensively in Syria, Iraq, and Yemen during the 2011-2015 period when sanctions had a significant adverse effect on Iran’s economy. Iran has remained engaged in these regional conflicts after sanctions were eased in early 2016, and since U.S. sanctions were reimposed in late 2018. It can be argued that Iran’s regional activities have varied not according to the imposition of lifting of sanctions but according to the opportunities to expand its influence that are provided by the region’s conflicts.Iranian economy is too far gone – the plan doesn’t reverse itDadpay 6/19 [(Assoc. prof of finance at U of Dallas’ College of Business.) “Iran’s economy in desperate need of solutions.” Al-Monitor. June 19, 2020. ] TDIFacing declining oil prices and rigid sanctions by the United States, the Iranian government needs to find new ways to fund its public spending. The solutions might prove unpopular both with the public and the powerful elites.According to the US Energy Information Administration (EIA), Iran has the world’s fourth-largest deposits of oil and the world’s second-largest deposits of natural gas. These vast resources have prompted many Iranians to believe their country is wealthy, and its wealth will never end. Few point out that Iran’s abundant oil and natural gas resources can translate into wealth only if there is a market for them. And these days, what Iran lacks for its vast oil and natural gas resources is a market. And even if Iran regains its market, few are optimistic about the oil market performance as long as the coronavirus pandemic ravages the global economy.In May 2018, US President Donald Trump announced that the United States would leave the nuclear agreement with Iran. Since then, the United States has been pursuing a pressure campaign with sanctions on Iran’s oil exports. By September 2018, Iran exports fell to 1.9 million barrels per day from a peak of 2.7 million per day in June 2018. By April 2019, Iran’s oil exports dropped to 1 million barrels per day, and by October 2019, Iran’s average oil exports hit just 260,000 barrels per day. The sanctions have cost Iran billions of dollars in revenues.Iran’s oil production reached 3.8 million barrels per day of crude oil in 2017, as well as 7.2 trillion cubic feet of dry natural gas, earning $55 billion in net oil export revenues. Iran experienced an increase of 21.8% in its net oil export revenues in 2018, pocketing $67 billion. Its war-ravaged neighbor Iraq, with the world’s fifth-largest deposit of oil, earned $91 billion in net oil export revenues in the same year marking a 38% increase compared to 2017. According to the EIA, Iran’s net oil export revenues for the first six months of 2019 reached $20 billion, while Iraq earned $52 billion during the same time. As Iran’s government oil revenues declines, its spending did not change. It continued to pay subsidies, directly and indirectly, accepting a widening budget deficit.There is little wonder why Iranians are experiencing a very high inflation rate these days. According to the Central Bank of Iran, Iran’s economy is experiencing an average inflation rate of 41.3%. According to the World Bank, inflation has been alarmingly high for food items, with the consumer price index for meat products rising by 116%. The Rouhani administration needs money, and it needs lots of it. Its step to increase gasoline prices in November 2019 was an act of desperation to mend its deficits. The decision brought to the streets scores of angry citizens and resulted in nationwide protests, which turned bloody quickly. The budget deficit was standing at two-thirds of the Iranian government’s annual budget. And this was before the novel coronavirus spread to Iran. The pandemic has deepened Iran’s economic recession, but it has not created it.When the coronavirus outbreak hit Iran, it imposed a challenge on an economy already in crisis. The government mostly funds Iran’s health-care system. As the cost of dealing with coronavirus cases increased, the government requested permission to withdraw 1 billion euros from the National Development Trust Fund to address the economic impact of the spread of the virus that causes COVID-19. However, many found the number to be insufficient — the diminished effectiveness of any help from the government due to augmented inflation and condensed economic activities notwithstanding. Iran’s chances of an economic recovery are dim. Even if the sanctions are lifted, the global demand for crude oil is drastically contracted due to the global economic recession. The EIA predicts that OPEC will continue to lose net oil export revenues for the rest of 2020. The demand for Iran’s crude oil is further weakened by the fact that its major clients — India and China — have already found new suppliers. If President Hassan Rouhani and his Cabinet think an understanding with the United States will end Iran’s economic problems, one must remind them of the realities of the global market. They are already looking for other sources of revenue.Sanctions empower and embolden Iran hardliners in the IRCGZiya 19 [(Mohammad Hossein, strategic consultant and researcher originally from Iran. He currently serves as chief editor at Saham News and has previously advised many U.S. organizations on their policy and strategy toward Iran) “The fall or rise of the IRGC?,” Middle East Institute, April 24, 2019] TDIOn Monday, April 9th, President Donald Trump officially designated the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization (FTO). While this move may create new obstacles for the IRGC outside of Iran, it could well embolden and empower it at home.The IRGC and politicsThe IRGC was originally established in the aftermath of the Iranian Revolution in 1979, but its political and economic role in Iran has expanded considerably in recent years. From 2005 to 2013, under President Mahmoud Ahmadinejad, it gained a tremendous amount of power with the support of the supreme leader, Ayatollah Ali Khamenei, and has continued to expand its political activities in the years since. In the 2013 presidential elections, four of the six candidates competing with Hassan Rouhani were ex-IRGC members. Rouhani’s win was a setback, and several IRGC members (and ex-members) lost parliamentary and provincial elections as well.With a conservative stance on military, economic, security, and ideological issues, the IRGC represents the strongest and most influential opposition to President Rouhani. It thrives on insecurity, economic uncertainty, and political chaos, since in a secure, democratic society there is no basis for military rule. While Rouhani works to enhance democracy and the rule of law, the IRGC has aimed to destabilize the country further so it can expand its control.The position of supreme leader has been a particular point of contention. President Rouhani has aspirations to succeed Khamenei, but there are significant barriers to this. He would, for instance, have to gain the trust and loyalty of the IRGC, which sees itself as “the custodian of the revolution” and has immense influence at every level of Iran’s power structure. But the IRGC ardently opposes Rouhani’s bid, and its Information Department and the judiciary are waging a quiet war against him by limiting his public communications on social media. Radical pro-IRGC MPs are challenging bills put forward by his government and some have even initiated impeachment proceedings against him.Following the signing of the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, in 2015 Rouhani began the slow process of normalizing relations with the U.S. In a speech, he emphasized the importance of dialogue with the international community. This drew an immediate and sharply negative response from Ayatollah Khamenei, and the IRGC backed up his words by launching mid-range ballistic missiles with “Death to Israel” written on them. Rouhani alleged this was a deliberate effort to derail the deal. He had staked his presidency on it in no small part and its collapse would mean the failure of his social and economic plans, as well as his foreign policy goals.The Guards confront Rouhani’s governmentDuring his second term, however, Rouhani, fought back, sidelining members of his administration that were ex-IRGC and appointing a general from the Iranian Army to the post of secretary of defense, which is usually held by one from the IRGC. He also took steps to prevent money laundering by banks controlled or backed by the IRGC by introducing legislation to bring Iran into compliance with standards from the Financial Action Task Force on Money Laundering. In return, on July 15, 2017 the IRGC arrested Rouhani’s brother, Hossein Fereydoon, and the brother of his first vice president, Mehdi Jahangiri, on Oct. 6, 2017 on corruption charges. In addition, hardliners close to the supreme leader and the IRGC worked to foment protests in late 2016 and early 2017. This was followed by a foreign currency crisis that saw the value of the rial fall sharply and the subsequent introduction of a fixed exchange rate in April 2018. All of this put a great deal of pressure on the government.Furthermore, issues such as regional proxy wars and missile tests, as well as the larger threat that President Trump might pull out of the JCPOA, took a growing toll on Rouhani, and he found himself facing hostility on both fronts, at home and abroad.In Iran, there are, in effect, two separate governments: The “elected” one of President Rouhani and a second one spearheaded by the supreme leader and operated by the IRGC. The IRGC has been running this “shadow government” for some time now. According to Mostafa Tajzadeh, former vice secretary of state, the balance between the two is growing more fragile by the day. In April 2018, at the beginning of the foreign currency crisis, he tweeted, “We are approaching a no-return point in which one of the two governments will eliminate the other. The Shadow Government will either take complete control of the country and come out of the shadows or has to retreat from economic and foreign policy arenas.”The IRGC and the JCPOAThe IRGC has long opposed the JCPOA. The agreement threatens its self-interest, as it would ultimately lead to a repeal of sanctions and a reduced risk of conflict, thereby reducing its outsized role in Iran’s economy and politics. In the absence of sanctions, foreign investors could finance large-scale projects in areas like infrastructure, and the government wouldn’t need to hand them over to organizations like Khatam al-Anbia that are fully owned by or linked to the IRGC.After signing the JCPOA, Rouhani’s government canceled two large contracts, awarded under Ahmadinejad, with Khatam al-Anbia worth a total of $2.6 billion, and the IRGC had another $25 billion worth of contracts in the oil and gas sector that were also at risk. Rouhani defended the move: “We have given the economy to a so-called government that has guns, media, and everything, and no one has the audacity to compete with it.”The U.S. withdrawal from the Iran nuclear deal in 2018 and the reimposition of sanctions came as a major blow to Rouhani. His loss of influence was most clearly illustrated in late February 2019 when his administration was unaware of a visit by Syrian President Bashar al-Assad to Tehran. Rouhani was informed only an hour before Assad arrived.It is too early to predict how President Trump’s decision to designate the IRGC as an FTO will play out since the actual implications are not yet clear. Nonetheless, the move has already emboldened the IRGC domestically. It has used the classification to force reformers, centrists, and even President Rouhani to show their public support. Abdollah Ramezanzadeh, a former government spokesperson who was imprisoned in 2009 for supporting the Green Movement, tweeted, “Despite all differences and disagreements in local and national matters, we are all united against an illogical foreign threat and support our armed forces.”Looking aheadIran now faces uncertainties on many fronts. President Trump’s declaration may be the last straw that prompts Iran to pull out of the JCPOA altogether, and it could even lead to further regional conflict or an all-out war. In either case, the likely winners are the radicals, in both Iran and the U.S. The 1980-88 Iran-Iraq war was instrumental in empowering radicals and the IRGC in Iran, and another conflict would further cement the country’s militarization and the suppression of internal opposition.In early January 2018, demonstrations erupted over economic difficulties and were subsequently heavily suppressed. Those demonstrations and Trump’s recent declaration have helped to redraw Iran’s political landscape, marginalizing pragmatists and centrists in favor of more radical elements inside and outside of Iran. Politicians who had hoped to reform Iranian society now have the difficult decision of either conforming to the new reality or opposing the system altogether. For the time being it seems that Rouhani and the centrist/reformer Parliament have become subservient in implementing the policies of Ayatollah Khamenei and the IRGC. Over the last 30 years, the IRGC’s power has steadily increased, and it grows with each crisis – real or fabricated. A continuous cycle of crises may eventually lead the public to acquiesce to handing over power to an IRGC general to end the downward trajectory. As such, the likelihood that an IRGC general will be at the helm of the government in 2021 is increasing.No Iran war or great power draw inTrofimov 1/5/20 [(Yaroslav Trofimov is an award-winning author and journalist who serves as Chief Foreign-Affairs Correspondent at The Wall Street Journal. Previously he wrote a weekly column on the Greater Middle East, Middle East Crossroads, in The Wall Street Journal.) Iran Lacks Allies in Confronting the U.S. January 5, 2020. ] TDIInstead of leaving, President Trump now is sending thousands more American troops to the Middle East to confront Iran. As for Russia and China, they have shown little desire to get embroiled in an increasingly unpredictable conflict.This means that despite the feverish talk of Gen. Soleimani’s death sparking a World War III, Iran nowadays can only count on itself—and on the network of irregular Shiite militias and proxies that the Quds Force commander had nurtured in Lebanon, Iraq, Syria, Yemen and beyond.“Iran is one of the most strategically lonely countries in the world. It considers dozens of countries around the world its adversary, and its only reliable friend has been the Assad regime in Syria,” said Karim Sadjadpour, an Iran specialist at the Carnegie Endowment for International Peace in Washington.As for Russia, Mr. Sadjadpour added, “it benefits from an isolated, anti-American Iran that can’t exploit its energy resources.”While observers say Beijing and Moscow would be happy to watch the U.S. get bogged down even deeper in the Middle East—a diversion that would give them a freer hand in their own neighborhoods—they have no appetite for exposing themselves to the risks of a possible confrontation.“Russia doesn’t have the slightest intention of getting involved in this squabble, and is trying to distance itself from it as far as possible—even though it will keep expressing support for Iran with very loud declarations,” said Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies, a Moscow think tank that advises Russia’s defense establishment.“Short-term at least, this is all beneficial to Russia: oil prices are up, and the Iranians—a very difficult partner—are being forced to become much more cooperative,” he added.Iran’s strategic isolation perhaps explains a tone of caution that has accompanied its denunciations of Gen. Soleimani’s death. Iranian Armed Forces spokesman Brig. Gen. Abolfazl Shekarchi on Saturday promised a revenge that will be “tough”—but “not hasty,” an indication that Tehran may seek to avoid an immediate escalation that could risk sparking an all-out war with the U.S.“Iran is talking about a response, a revenge, and not about initiating a war,” said Abas Aslani, senior fellow at the Center for Middle East Strategic Studies in Tehran.Should such a direct conflict erupt, he added, “I don’t think Iran expects Russia and China to start a war with the U.S. on its behalf. The help they may offer to Iran is different: political support, support in some international institutions. Whether that can also be applicable to providing Iran with some equipment, that is the question.”Iran certainly craves military hardware to replace its obsolete warplanes, ships and tanks—but neither Russia nor China can legally supply such equipment until October at the earliest, the date when United Nations sanctions on most military sales to Tehran are set to expire.Russia did deliver an S-300 air-defense system to Iran in 2016, but even that happened after six years of delays that ended only as a result of Moscow’s alienation from the West following its invasion of Ukraine.In their official reactions, both Moscow and Beijing condemned the strike against Gen. Soleimani—but stopped short of pledging to do anything about it.Russian Foreign Minister Sergei Lavrov said in a phone call Friday with Secretary of State Mike Pompeo that the killing “grossly violates the norms of international law” and urged Washington to “solve all problems at the negotiating table,” according to a Russian foreign ministry statement.China’s foreign minister, Wang Yi, a day later told his Iranian counterpart that Beijing condemns “the military adventurist act by the U.S.” and that China will continue to “play a constructive role in safeguarding peace and security in the Gulf region.”Though China has promised to invest hundreds of billions of dollars in Iran’s oil and gas infrastructure, so far U.S. economic sanctions on Iran have hobbled such plans.Russia and Iran have teamed up in Syria—with Russian warplanes using Iranian airspace and even briefly operating out of an air base in Iran—but as the Syrian regime stabilized and Moscow found a new accommodation with Turkey in recent months, Moscow’s and Tehran’s interests there have begun to diverge.Both Moscow and Beijing maintain friendly ties with Iran’s archenemies in the region: Saudi Arabia and Israel.Russia’s and Iran’s mutual history is rife with hostility. Russians remember the murder of Russia’s ambassador and playwright Alexander Griboedov when the Russian embassy in Tehran was sacked in 1829, and the Islamic Republic’s support for anti-Soviet rebels in Afghanistan in the 1980s.Looming in Iran’s national memory are lands that Russia annexed from the Persian Empire over the centuries, and the Soviet military invasions and occupations of Iran in 1920 and 1941.“Nobody in Russia really cares about Iran, the society doesn’t see Iran as a partner, and certainly not as a friend worth dying for,” said Alexander Gabuev, chair of the Russia in the Asia-Pacific program at the Carnegie Moscow Center.Both Russia and China, he added, are secretly delighted by the rise of tensions between the U.S. and Iran, hoping that a conflict in the Middle East would give them a few years of respite by distracting American attention away from their own core areas of interests in Eastern Europe and Asia, respectively.Even though China is now the biggest buyer of Middle Eastern oil, experts in the country’s security and foreign-policy establishment have long argued that Beijing should resist the temptation of getting involved in the volatile region—in part because oil has continued to flow despite the political shocks of recent decades.“The Middle East presents a falling significance in the grand strategy of China,” Niu Xinchun, director of the Institute of Middle East Studies at CICIR, a think tank affiliated with China’s Ministry of State Security, wrote in a 2017 policy paper. “As a matter of fact, since 2011, many Middle Eastern countries have descended into civil war at the same time, which failed to exert material impacts on China’s economy.”China’s participation in the December naval exercises with Iran is “more symbolic than substantial,” added Zhu Feng, director of the Institute of International Studies at Nanjing University. “I don’t think China has any interest in getting involved in the escalation of tensions there.”1AR – Oil DAOil market volatility is here to stay McBride 6/4 [(Rob, Sr. Director of Strategy and Analytics at Enverus. He previously managed natural gas trading at Hess and BNP Paribas, and served as the director of business development of energy markets products at Bloomberg LP.) "Risk Analysts Take Note — High Oil Market Volatility Is Here To Stay," Enverus, 6/4/2020] TDI2020 has been quite a roller coaster ride—and it’s not even halfway over yet.To be sure, in recent weeks WTI crude reached a little bit of oil price stability compared to what we have been experiencing. But by no means is market volatility in the rearview mirror. In fact, the kind of volatility WTI experienced is likely here to stay for quite some time. We can expect to continue seeing volatility for the rest of this year and next.Volatile market ripples are spreading these effects across all commodities. Trade shops that manage risk across multiple commodities will find that these issues only compound themselves and continue to add to confusion and volatility.What are the key energy market themes today?Unprecedented times. If I have to use the phrase “unprecedented times” one more time, it will be too soon. There is no measurement stick in history to compare what we’re currently going through.Remember OPEC and the price war? The Saudi-Russia price war has ended. But it was the catalyst for the market volatility this year.Demand-destroying impacts of COVID-19. Most of us didn’t travel anywhere for weeks as global lockdowns were in effect.Prisoner’s dilemma amid breakeven crude prices. We’ve seen green shoots of demand coming back. The market is rallying back into the $40s, is the enthusiasm too soon?Forty-dollar oil—to drill or not to drill? In the $40 price range, operators will go forward with drilling (or not drilling) decisions. Forty dollars doesn’t solve all problems.Uncertainty will lead to “unprecedented” volatility … and managing forward curves will be more important than ever.The volatility is not measured in months or years, but in days, hours, and minutes.Crude oil prices have had a year to remember. We started out the year at healthy near-term prices of more than $60 a barrel. Around March is when the Saudi-Russia oil price war began, and that caused a huge collapse. But even a nearly 50% drop in prices doesn’t look too astounding when compared to the historic negative price plunge in mid-April.Here’s a little historical perspective of the volatility experienced in WTI markets.In the chart above, you see the 2018 forward curve in blue, the 2019 forward curve in red, and 2020 in orange. For 2018 and 2019, the forward curve snapshot was gathered mid-year. In all three cases, the forward markets were showing a strong and steep backwardation, or a market where forward prices are weaker than prompt-delivered supplies, which is often the case when demand is expected to continue to grow.Here’s what happened next. The chart above introduces the WTI forward curve in March 2020—the volatility that seemed strong previously was suddenly dwarfed by what came next. The Saudi-Russia price war brought on an extreme contango, which means that market is expecting near term oversupply necessitating the incentive to store for future use.Let’s now introduce the May WTI futures contract on its expiration date—April 20, 2020. By this point, the COVID-19 pandemic had set in and obliterated demand. What we once thought was very strong volatility looks very tame compared to what we’re seeing nowadays.The final chart shows where the WTI futures market returned to in June. It looks like a recovery now, but it’s certainly too early to say there’s any guarantee that demand has returned.So, where does that leave us today? Today, managing your volatility and managing your risk is literally more important than it ever has been before. These events are likely to repeat themselves over the next 12 months. While we may not see another negative futures settlement, it is not necessarily ruled out. It had never happened before, but it may happen going forward. And we certainly could experience negative physical prices again in the field.What does oil demand look like now across the globe?In 2019, we were continuing our very steady increase in demand. What was expected to happen, a continuation to the slow growth, was obliterated.The annual demand destruction we’re expecting for 2020 has never happened before. Our Enverus base case now shows a total 8.7 MMBbl/d hit to global crude demand. A longer outbreak in 2020 could drop demand by a stunning 11.4 MMBbl/d. Three to four years out, we are still not recovering to the demand levels we were expecting before the pandemic hit.COVID spikes make volatility inevitable – production cuts are not enough Tan 4/23 [(Weizhen, Markets Editor at CNBC’s Asia Pacific headquarters in Singapore. In that role she oversees and reports on key Asian asset categories, international markets, central banks, global trade and macroeconomic trends) "Rebound in oil is just a 'breather' and crude prices will likely turn negative again, analysts say," CNBC, 4/23/20] TDI Oil prices recovered from earlier losses overnight, but it might not be a rebound and could simply be markets taking a “breather,” analysts said, warning that crude prices could turn negative again.That’s because the underlying issues with weak demand and storage running out have not been resolved, and will continue to put pressure on energy prices.U.S. oil prices as well as international benchmark Brent crude have see-sawed this week. The May contract for U.S. benchmark West Texas Intermediate dived deep into negative territory earlier this week, for the first time in its history, and traded at negative $37.63 per barrel. That meant producers had to pay traders to take the oil off their hands.While the Brent tumbled overnight to its lowest since 1999, at $15.98, it did not enter into negative territory.Overnight, however, the June contract for WTI surged 19% to settle at $13.78 per barrel. Analysts attributed that to tensions in the Persian Gulf as U.S. President Donald Trump threatened to “shoot down and destroy” Iranian gunboats if they “harass” American ships.“I’m not even calling this a rebound. I think oil prices are taking a breather,” Vandana Hari, founder of Vanda Insights, which provides analysis on global energy markets. WTI last traded at $15.66 per barrel on Thursday afternoon, a far cry from levels around $60 at the beginning of this year.“As it happened, it’s not really managed to prop prices up too much,” she told CNBC on Thursday, referring to the U.S.-Iran tensions. “I think the geopolitical tensions element ... at this point to the markets is extremely small.”Instead, Hari pointed to the key factor of global lockdowns as the current pandemic continued to take its toll, which would continue to weaken demand and hurt oil prices.“The downward pressure on oil prices still remains immense. What has turned dramatically in terms of market sentiment, especially this week ... is that the demand sentiment has turned much more negative because of the continuing lockdowns,” she said.“Countries that have found a flattening of the curve ... are being extremely cautious. A lot of countries are seeing some sort of a resurgence in infection rates. Essentially, what we have is a picture of a world that doesn’t know its way out of this pandemic and the associated lockdowns.”ANZ Research’s John Bromhead also said in a note on Thursday: “News that President Trump had ordered the Navy to shoot down Iranian gunboats may have been the spark that started the rebound. But the backdrop is poor with weak demand and rising inventories.”Could crude prices turn negative again?Oil demand has been badly hit as travel restrictions remain in place in many countries and people are told to stay home. Both air and vehicular travel have come to a virtual standstill, among other factors.That plunging demand has caused oil supply to rapidly build up — and main storage facilities are quickly running out of capacity.It has hit U.S. crude particularly hard, with the country’s main storage facility at Cushing, Oklahoma set to be full within weeks. Tanks in that facility, a major trading hub for crude oil, are likely to reach full tank capacity by mid-May, according to an estimate by American global investment management, BlackRock.The lack of storage is one main factor pushing down the nearer-term May contract for WTI, which expired on Tuesday, to negative. The collapse of WTI into negative prices is unprecedented.In the near term, unless production is cut, the limited capacity to store oil will likely put pressure on crude prices, analysts say. It could even bring the June contract for U.S. crude — which has last above $15 a barrel — into negative levels as well, according to them.“There is a possibility that the circumstances seen early this week could repeat itself for the June WTI contract, given the oil storage issues plaguing the market that look to persist, at least in the short term,” Peter Kiernan, lead analyst for energy at The Economist Intelligence Unit, told CNBC in an email.Brent oil may not be as badly affected by storage issues as it is transported by sea, said Kiernan. Brent is priced on an island in the North Sea roughly 500 meters from the water, where tanker storage is accessible. In contrast, WTI is landlocked and 500 miles from water, making it tougher for global markets to take delivery.Nemo Qin, senior analyst at investment platform eToro, said that other factors, such as an oversupply of oil without further production cuts, could still pressure Brent prices. “Although the OPEC and Russia and other non-OPEC oil-producing countries recently reached a historic agreement to scale back production, this will still not be enough to manage the global oversupply of oil,” he told CNBC via email.With an estimated record of 160 million barrels of oil now held in floating storage on ships, oil traders are scrambling to find alternative storage options for crude both on land and at sea, Reuters reported on Friday, citing unnamed shipping sources.“Unless global lockdown measures are eased, or a further production cuts are agreed upon, there is a very real possibility that we’ll see a free-fall in the price of Brent Oil futures, and a chance that it will trade at a negative price in the short term,” Qin said.Plan doesn’t cause price shocks – Iran can’t produce enough to flood the market Rosenberg 1/6 [(Eric, Ten years of experience in banking, corporate finance, and corporate accounting; founder of Denver Flash Mob; MBA in finance from the University of Denver and bachelor's in finance from University of Colorado at Boulder) "How Iran Impacts The Price and Supply of Oil," Investopedia, 1/6/2020] TDIIranian Production CapacityDue to the sanctions, Iran's ability to produce oil has declined over time. Oil production requires expensive equipment that is slow to deploy and expensive to maintain, and the aging oil infrastructure in Iran has severely limited production capacity.Iran is believed to have stored around 25 million barrels of oil, but that amount is not enough to flood the market and drive a steep decrease in prices. If the sanctions are lifted, production will slowly ramp up to pre-sanction levels, which by itself still will not cause a significant change in the market.One expert estimates that it will take a full year to add 500,000 barrels per day to current production. Iran does have large oil reserves, but it will take some time to access them.Influence on Oil PricesWhen the nuclear deal with Iran was announced in 2015, oil prices fell about 2%, but the decline was only temporary. While traders initially feared that Iran could flood the market, we now know that it simply does not have the ability to do so immediately.Furthermore, countries like the U.S. and China have become more efficient producers of their own oil. In 2018, the U.S. became a net exporter of oil given the increase in shale production and other methods.The Bottom LineIran does not have the global influence on oil prices it once had in the 1970s and 1980s. Economic sanctions have hurt its ability to produce at capacity just as other developed countries have improved and increased their own oil production. Recent tensions between Iran and the U.S. are also likely to put more pressure on Iran's production capabilities despite the recent rise in the price of crude oil.Countries respond with cooperation not conflictSabah 4/12 [(Daily, a Turkish pro-government daily, published in Turkey. Available in English, German, Arabic and Russian and owned by Turkuvaz Media Group, Daily Sabah published its first issue on 24 February 2014) "Oil price stability needed for predictability, volatility must end, energy minister says," Daily Sabah, 4/12/20] TDIStability in oil prices is needed for the predictability of its global market and the volatility in price must end immediately, Turkey's Energy and Natural Resources Minister Fatih D?nmez said Saturday."All actors, whether they are oil-producing or consuming countries, feel that there should be cooperation and solidarity in the supply and demand sides of the oil market," said D?nmez during a G-20 energy ministers teleconference Friday. It was also attended by officials from the International Energy Agency (IEA), International Energy Forum (IEF) and Organization for Economic Cooperation and Development (OECD).The impact of the novel coronavirus (COVID-19) on global markets, social life and economic activities around the world was the main topic of the conference, D?nmez told Anadolu Agency (AA)."Price volatility in recent weeks was the main concern," of the meeting, he said. "Rather than high or low oil prices, lack of projection and volatility in oil prices have a higher negative impact on the market."He added that while there was a supply-and-demand balance of 100 million barrels per day (bpd) before COVID-19, now there is a decline of 20 million bpd on the demand side.This is due to the stalled global transportation industry since two-thirds of the global crude output is used in transportation and the rest is used mostly in petrochemistry, he added.D?nmez told how earlier Friday the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries agreed to curb their total production by 10 million bpd, which could later increase to 13-14 million bpd after more countries join in.Led by Saudi Arabia, 13 members of OPEC and 10 oil-producing countries of non-OPEC including Russia agreed to curb their total oil production from May 1 to June 30.Low oil prices boost investments in renewables Hanley 3/27 [(Steve, writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him) "Oil Price Volatility Will Give A Boost To Renewables," CleanTechnica, 3/27/20] TDI Everyone loves low prices, but what the business community values most of all is predictability. The recent volatility in global oil markets — spearheaded by a fight to the death between Saudi Arabia and Russia — has sent the price of oil plunging to lows not seen in years. You might think that is good news for electrical energy generators who rely on fossil fuels, but that may not be true.Thermal generating plants typically have a planned service life of 30 to 50 years. The financing that makes building new facilities possible relies on stable prices during the term of the loans. Disruptions that detract from that stability are bad for investors even if lower prices result, but lower average internal rates of return as a result.Valentina Kretzschmar, vice president of corporate research for Wood Mackenzie, writes in a recent research note, “Could low oil prices slow down global growth in renewables? Historically, the oil price has shown no correlation with investment in renewables. The installation of both wind and solar continued to increase through the last oil price downturn.” She offers the chart below as proof.Renewables vs OilImage credit: Wood MackenzieThe upward trajectory of renewables is attributable primarily to investors being able to predict a stable rate of return over time. The internal rate of return is “the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. [It] is used to evaluate the attractiveness of a project or investment. If the IRR of a new project exceeds a company’s required rate of return, that project is desirable. If IRR falls below the required rate of return, the project should be rejected,” according to Investing Answers.In addition to price stability, low oil prices are also making investments in renewables more appealing. Kretzschmar says, “At US$60/bbl, solar and wind assets — with average returns of 5-10% IRR — have found it difficult to compete with expected double digit returns for oil and gas. But at the current oil price, returns from oil and gas are now in line with what investors can expect from low risk solar and wind projects.” Price parity and stability may be the formula that turbocharges the renewable energy industry in coming years.Renewables key to solve warming Amin 18 [(Adnan Z., Director-General, Inernational Renewable Energy Agency (IRENA)) "Renewables are the key to a climate-safe world," IRENA, 11/26/18] TDILimiting the global temperature rise to well below 2°C this century is one of the defining challenges of our age. Two thirds of greenhouse gas emissions come from energy-related sources. This makes the transition to sustainable energy the decisive factor in tackling climate change.Renewable energy, together with energy efficiency, form the cornerstone of the world’s mitigation strategy. They represent a safe, reliable, affordable and immediately deployable pathway to a low-carbon future that can achieve over 90 per cent of the energy-related CO2 emission reductions needed to meet climate goals. Avoiding the worst effects of global warming will require us to source at least 85 per cent of global power from renewables, with a minimum of two thirds of total energy from renewable sources – wind, solar, geothermal, hydro, bioenergy and the burgeoning tidal technology – by 2050. This means that we must utilise the solutions available to stimulate systemic transformation towards a digitalised, decentralised and decarbonised energy paradigm. ................
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