Flags of inconvenience: noose tightens around Iranian shipping

FILE PHOTO: Iranian oil tanker Grace 1 sits anchored after it was seized earlier this month by British Royal Marines off the coast of the British Mediterranean territory on suspicion of violating sanctions against Syria, in the Strait of Gibraltar, southern Spain July 20, 2019. REUTERS/Jon Nazca/File Photo

By Jonathan Saul, Parisa Hafezi and Marianna Parraga

LONDON/DUBAI/PANAMA CITY (Reuters) – Somewhere on its journey from the waters off Iran, around Africa’s southern tip and into the Mediterranean, the Grace 1 oil tanker lost the flag under which it sailed and ceased to be registered to Panama. Iran later claimed it as its own.

The ship carrying 2 million barrels of Iranian crude was seized by British Royal Marines off Gibraltar, raising tensions in the Gulf where Iran detained a UK-flagged ship in retaliation.

Grace 1 remains impounded, not because of its flag but because it was suspected of taking oil to Syria in breach of EU sanctions, an allegation that Iran denies.

Yet Panama’s move on May 29 to strike it from its register mid-voyage was part of a global squeeze on Iranian shipping.

Nations that register vessels under so-called “flags of convenience” allowing them to sail legally have de-listed dozens of tankers owned by Iran in recent months, tightening the economic noose around it.

In the biggest cull, Panama, the world’s most important flag state, removed 59 tankers linked to Iran and Syria earlier this year, a decision welcomed by the United States which wants to cut off Tehran’s vital oil exports.

Panama and some other key flag states are looking more closely at the thousands of ships on their registers to ensure they comply with U.S. sanctions that were re-imposed against Iran last year and tightened further since.

A Reuters analysis of shipping registry data shows that Panama has de-listed around 55 Iranian tankers since January, Togo has de-listed at least three and Sierra Leone one.

That represents the majority of its operational fleet of tankers, the lifeblood of the oil-dominated economy, although Iran may have re-registered some ships under new flag states.

When a vessel loses its flag, it typically loses insurance cover if it does not immediately find an alternative, and may be barred from calling at ports. Flags of convenience also provide a layer of cover for a vessel’s ultimate owner.

International registries charge fees to ship owners to use their flags and offer tax incentives to attract business.

Iran said it still had plenty of options.

“There are so many shipping companies that we can use. In spite of U.S. pressure, many friendly countries are happy to help us and have offered to help us regarding this issue,” said an Iranian shipping official, when asked about tankers being de-listed.

Some nations have expressed caution, however. The world’s third-biggest shipping registry, Liberia, said its database automatically identified vessels with Iranian ownership or other connections to the country.

“Thus, any potential request to register a vessel with Iranian connection triggers an alert and gets carefully vetted by the Registry’s compliance and management personnel,” the registry said.

Liberia said it was working closely with U.S. authorities to prevent what it called “malign activity” in maritime trade.

IRANIAN FLAG

In many cases Iran has re-listed ships under its own flag, complicating efforts to move oil and other goods to and from the dwindling number of countries willing to do business with it.

Some shipping specialists said the Iranian flag was problematic because individuals working for the registry in Iran could be designated under U.S. sanctions, and so present a risk for anyone dealing with vessels listed by them.

“Most insurance companies or banks will not be able to deal with the Iranian flag as it is in effect dealing with the Iranian state,” said Mike Salthouse, deputy global director with ship insurer the North of England P&I.

Customs officials may also sit up and take notice.

“One of the problems with an Iranian-flagged ship is that there is a 50 percent chance that a customs officer will undertake a search, which means the cargo will be delayed,” said a U.N. sanctions investigator, who declined to be named. “These all add to the costs.”

A former U.S. diplomat said Washington was often in contact with Panama and other flag states to keep vessel registries “clean”.

“We are continuing to disrupt the Qods Force’s illicit shipments of oil, which benefit terrorist groups like Hezbollah as well as the Assad regime (in Syria),” said a spokesman at the U.S. State Department.

Qods Force refers to an elite unit of Iran’s Islamic Revolutionary Guards Corps that is in charge of the Guards’ overseas operations, and Hezbollah is an Iran-backed, heavily armed Shi’ite Muslim group that forms part of Lebanon’s coalition government.

“Nearly 80 tankers involved in sanctionable activity have been denied the flags they need to sail,” the spokesman added.

FALSE FLAGS

De-flagging Iranian ships is just one way the international community can squeeze Iran.

U.S. sanctions on oil exports aim to reduce Iran’s sales to zero. Iran has vowed to continue exporting.

In the first three weeks of June Iran exported around 300,000 barrels per day (bpd), a fraction of the 2.5 million bpd that Iran shipped before President Donald Trump’s exit in May last year from the 2015 nuclear deal with major powers.

Egypt could also complicate life for Tehran if it denies passage to tankers heading to the Mediterranean through the Suez Canal. The alternative route around Africa, taken by Grace 1 before its seizure, is far longer.

Refinitiv shipping data showed the Masal, an Iranian-flagged oil tanker, anchored in the Suez Canal’s waiting zone on July 6. It stayed there until July 12, when it began to sail south. It exited the Red Sea on July 17 and docked at Larak Island, Iran on July 23.

Two Egyptian intelligence sources told Reuters that the tanker was halted in the Red Sea in July by authorities “without anyone knowing the reason”.

A second senior Iranian government official involved in shipping declined to comment when asked about the Masal.

The Suez Canal Authority’s spokesman said Egypt did not bar vessels from crossing the canal except in times of war, in accordance with the Constantinople Convention. He declined to comment further.

Britain tightened the screw when it seized the Grace 1 supertanker on July 4, accusing it of violating sanctions against Syria.

Two Iranian-flagged ships have been stranded for weeks at Brazilian ports due to a lack of fuel, which state-run oil firm Petrobras refuses to sell them due to U.S. sanctions. Two more Iranian ships in Brazil could also be left without enough fuel to sail home.

A recent incident off Pakistan’s coast last month points to the lengths Iran has gone to in order to keep trading.

The Iranian cargo carrier Hayan left from the Iranian port of Bandar Abbas on June 3 and set sail for Karachi on Pakistan’s coast, according to ship tracking data from maritime risk analysts Windward.

On June 7, it changed its name to Mehri II and its flag to that of Samoa, the data showed, as it made its way toward Karachi port.

Six days later, the vessel conducted a ship-to-ship transfer of its unknown cargo further up Pakistan’s coast.

The ship then returned home, changing its flag back to Iran and its name back to Hayan.

Imran Ul Haq, spokesman for the Pakistan Maritime Security Agency, said they had no information when asked about the Iranian ship’s activity.

Iran has frequently used ship-to-ship transfers to move oil and oil products since U.S. sanctions were reimposed.

Shipping data also show that a separate Iranian-owned cargo ship, the Ya Haydar, has been sailing around the Gulf and reporting its flag as that of Samoa.

Samoa denies allowing Iran to register any ships under its flag.

“The said vessels Hayan or Ya Haydar are not, and have never been listed, nor registered on the Samoa’s registry of vessels,” said Anastacia Amoa-Stowers of the Maritime department at Samoa’s Ministry of Works, Transport & Infrastructure.

“Given there are currently no Iranian ships listed on Samoa’s registry, there is no action to de-list a vessel. Additionally, there has never been any Iranian ships listed on Samoa’s vessel registry – previously and at present.”

Amoa-Stowers said Samoa was a closed registry, meaning that any foreign vessel flying its flag was doing so illegally.

The second senior Iranian government official involved in shipping declined to comment when asked about the two vessels.

A spokeswoman with the International Maritime Organization said the UN’s shipping agency had received information from Samoa which has been circulated to member states.

(Additional reporting by Lesley Wroughton in Washington, Syed Raza Hassan in Karachi, Edward McAllister in Dakar, Alphonso Toweh in Monrovia, John Zodzi in Lome, Praveen Menon in Wellington, Yousef Saba and Sami Aboudi in Cairo; Editing by Mike Collett-White)

Trump accuses Iran of secret nuclear enrichment, says sanctions to be cranked up ‘substantially’

FILE PHOTO - A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of the U.S., Iran, China, Russia, Britain, Germany, France and the European Union during the Iran nuclear talks at the Vienna International Center in Vienna, Austria July 14, 2015. REUTERS/Carlos Barria/File Photo

By Doina Chiacu and Francois Murphy

WASHINGTON/VIENNA (Reuters) – President Donald Trump accused Iran on Wednesday of secretly enriching uranium for a long time and said U.S. sanctions would be increased “substantially” soon, as the U.N. nuclear watchdog held an emergency meeting on Tehran’s breach of a nuclear deal.

Washington used the session of the International Atomic Energy Agency’s 35-nation Board of Governors to accuse Iran of extortion after it inched past the deal’s limit on enrichment levels, while still offering to hold talks with Tehran.

Iran says it is reacting to harsh U.S. economic sanctions imposed on Tehran since Trump pulled out of world powers’ 2015 nuclear accord with the Islamic Republic last year, and says all its steps were reversible if Washington returned to the deal.

“Iran has long been secretly ‘enriching,’ in total violation of the terrible 150 Billion Dollar deal made by John Kerry and the Obama Administration,” Trump said on Twitter.

“Remember, that deal was to expire in a short number of years. Sanctions will soon be increased, substantially!”

While Iran was found to have had covert enrichment sites long before the nuclear accord, the deal also imposed the most intrusive nuclear supervision on Iran of any country, and there has been no serious suggestion Iran is secretly enriching now.

The deal confines enrichment in Iran to its Natanz site, which was itself exposed in 2003. Any clandestine enrichment elsewhere would be a grave breach of the deal. It was not immediately clear from Trump’s comments whether he was referring to previous, long-known activities or making a new allegation.

The U.S. statement, made just hours before Trump’s tweet, made no mention of either secret enrichment or an imminent tightening of sanctions.

Iran’s IAEA ambassador said in a German newspaper interview published on Wednesday that Tehran intended to preserve the nuclear deal with major powers if all other signatories honored their commitments under it.

“Everything can be reversed within a single hour – if all of our partners in the treaty would just fulfill their obligations in the same way,” Gharib Abadi was quoted by the weekly Die Zeit as saying.

In the past two weeks Iran has breached two limits pivotal to the 2015 deal, which aimed to extended the time Iran would need to obtain enough fissile material for a nuclear weapon, if it chose to do so, to a year from around 2-3 months.

President Hassan Rouhani said on Wednesday the Islamic Republic’s moves were permissible under the deal, rebuffing a warning by European powers to continue compliance.

The Trump administration says it is open to negotiations with Iran on a more far-reaching agreement on nuclear and security issues. But Iran says it must first be able to export as much oil as it did before the U.S. withdrawal.

Tensions between Washington and Tehran have risen sharply, culminating in a plan for U.S. airstrikes on Iran last month that were called off at the last minute.

“There is no credible reason for Iran to expand its nuclear program, and there is no way to read this as anything other than a crude and transparent attempt to extort payments from the international community,” said a Trump administration statement issued at the closed-door session of the IAEA board in Vienna.

“We call on Iran to reverse its recent nuclear steps and cease any plans for further advancements in the future. The United States has made clear that we are open to negotiation without preconditions, and that we are offering Iran the possibility of a full normalization of relations.”

Iran says it will continue to breach the deal’s caps one by one until it receives the economic windfall – trade and investment deals with the wider world – promised under terms of the agreement.

IRAN RAISING ENRICHMENT LEVEL

In a separate closed-door meeting with member states on Wednesday, IAEA inspectors confirmed that Iran was now enriching uranium to 4.5% purity, above the 3.67% limit set by its deal. This would be Iran’s second breach of the deal in as many weeks, diplomats familiar with the figures said.

However, that is still far below the 20% to which Iran refined uranium before the deal, and the roughly 90% needed to yield bomb-grade nuclear fuel.

“The latest steps indicate that Tehran’s leadership has made a decision to move onto the offensive to create leverage vis-a-vis the international community and bring about a solution to its constraints,” a Western intelligence source told Reuters.

Washington is set on isolating Iran to force it to negotiate stricter limits on its nuclear program and, for the first time, to address calls to curb its ballistic missile program and its role around the conflict-ridden Middle East.

EUROPEAN POWERS IN DILEMMA

Diplomats from several countries on the IAEA board said that while fiery exchanges between the Iranian and U.S. envoys were likely at the meeting at agency headquarters, they did not expect the board to take any concrete action.

While Iran has breached the terms of the deal which the IAEA is policing, the IAEA is not a party to the deal and Iran has not violated the Safeguards Agreement binding it to the agency.

Britain, France and Germany are considering their next move, torn between the urge to show their displeasure at Iran’s breach of the deal and wanting to keep alive a pact that signatories in 2015 touted as vital to preventing wider war in the Middle East.

(Additional reporting by Parisa Hafezi in Dubai and Tassilo Hummel in Berlin; Editing by Mark Heinrich)

Iran says it has breached 2015 nuclear deal’s stockpile limit

FILE PHOTO: Iran's Foreign Minister Mohammad Javad Zarif sits for an interview with Reuters in New York, New York, U.S. April 24, 2019. REUTERS/Carlo Allegri/File Photo

By Parisa Hafezi and Francois Murphy

DUBAI/VIENNA (Reuters) – Iran has breached the limit of its enriched uranium stockpile set in a 2015 deal with major powers, Foreign Minister Mohammad Javad Zarif said on Monday, according to the ISNA news agency, defying a warning by European co-signatories to stick to the deal despite U.S. sanctions.

Zarif confirmed that Iran had exceeded the relevant limit of 300 kg of uranium hexafluoride (UF6), but Foreign Ministry spokesman Abbas Mousavi said Iran’s steps to decrease its commitments to the nuclear deal were “reversible”.

The International Atomic Energy agency (IAEA) said that its inspectors were verifying whether Iran had accumulated more enriched uranium than allowed.

“Our inspectors are on the ground and they will report to headquarters as soon as the LEU (low-enriched uranium) stockpile has been verified, a spokesman for the U.N. agency said.

Enriching uranium to a low level of 3.6% fissile material is the first step in a process that could eventually allow Iran to amass enough highly-enriched uranium to build a nuclear warhead.

Last Wednesday, the IAEA verified that Iran had roughly 200 kg of low-enriched uranium, just below the deal’s 202.8 kg limit, three diplomats who follow the agency’s work told Reuters. A quantity of 300 kg of UF6 (uranium hexafluoride) corresponds to 202.8 kg of LEU.

After talks on Friday in Vienna, Iran said European countries had offered too little in the way of trade assistance to persuade it to back off from its plan to breach the limit, a riposte to U.S. President Donald Trump’s decision last year to quit the deal and reimpose economic sanctions.

Mousavi urged them on Monday to step up their efforts. “Time is running out for them to save the deal,” state TV quoted him as saying.

The deal between Iran and six world powers lifted most international sanctions against Iran in return for restrictions on its nuclear work aimed at extending the time Iran would need to produce a nuclear bomb, if it chose to, from roughly 2-3 months to a year.

ISRAEL WORRIED

Iran says its nuclear program is solely for peaceful purposes, including generating power. Its regional adversary Israel, which Iran does not recognize, says the program presents it with an existential threat.

Joseph Cohen, head of the Israeli intelligence agency Mossad, urged the international community to stop Iran from “stepping up enrichment”.

“Just imagine what will happen if the material stockpiled by the Iranians becomes fissionable, at military enrichment grade, and then an actual bomb,” he told the Herzliya security conference before Zarif’s announcement.

“The Middle East, and then the entire world, will be a different place. Therefore, the world must not allow this to happen.”

In May, Washington piled pressure on Tehran by ordering all countries to halt imports of Iranian oil, and tensions have been growing in the Gulf ever since.

Washington has dispatched extra forces to the Middle East, and U.S. fighter jets came within minutes of conducting air strikes on Iran last month after Tehran downed an unmanned American drone.

In a speech on Monday broadcast on state TV, Iranian Zarif said: “Iran will never yield to pressure from the United States … If they want to talk to Iran, they should show respect …

“Never threaten an Iranian … Iran has always resisted pressure, and has responded with respect when respected.”

Trump has called for negotiations with Iran with “no preconditions”, but Tehran has ruled out talks until the United States returns to the nuclear pact and drops its sanctions.

(Additional reporting by Babak Dehghanpisheh in Geneva; Francois Murphy in Vienna, Jeffrey Heller in Jerusalem; Writing by Parisa Hafezi; Editing by Kevin Liffey)

Tanker attacks seen as calibrated but risky Iranian response to U.S. sanctions

FILE PHOTO: An Iranian navy boat tackles a fire on an oil tanker after it was attacked in the Gulf of Oman, June 13, 2019. Tasnim News Agency/Handout via REUTERS

By Babak Dehghanpisheh

GENEVA (Reuters) – If, despite its firm denials, Iran was behind attacks on two oil tankers in the Gulf last week and a further four last month, they represent a calibrated yet risky pushback against a U.S. sanctions squeeze, regional experts say.

The targeting of six vessels on a major artery for world oil supplies was a vivid reminder of the stakes involved in the standoff pitting Iran against the United States and its regional allies.

The latest two attacks, on Thursday, were much more complex than last month’s because the tankers were moving rather than at anchor as previously, said Hossein Aryan, a military analyst who served 18 years in Iran’s navy before and after the 1979 Islamic revolution.

Two government security sources, one American and one European, also noted the sophistication of the attacks, which damaged the tankers without seriously injuring anyone. They told reporters this indicated deliberate calculation.

The two sources, who declined to be named, said the attacks appeared designed to show that Iran could create chaos if it wanted to but at this point did not want to, perhaps in the hope of persuading the United States and other antagonists to back off rather than trigger conflict.

They did not provide direct evidence of Iranian involvement, but the United States and Saudi Arabia have blamed Iran publicly for both sets of attacks.

Whereas some U.S. sources said they believed Iran encouraged allied militants or militia to carry out last month’s attacks, the U.S. military has released a video and still images which it says show Iran’s Revolutionary Guards removing an unexploded limpet mine from one of the latest vessels to be targeted.

Tehran expressed concern over the May attacks and said the footage released after the latest ones by the United States military proved nothing and Iran was being made a scapegoat.

Germany said last week the video was not enough to apportion blame, while Britain said no other state or non-state actor could have been responsible. U.N. Secretary-General Antonio Guterres called for an independent investigation.

The head of the company which owns the Japanese tanker hit said last week its crew had reported flying objects damaged the ship, but Aryan said whoever attacked it and a Norwegian tanker had attached magnetic limpet mines with a timer when they were anchored or using a boat or marine drone when they were moving.

Iran’s military said on Monday that if it decided to block the Strait of Hormuz, a vital gateway in the Gulf for the oil industry, it would do so publicly, and both Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani have said Iran does not want war.

Tehran has been at pains to underline its capabilities, however.

“If attacked, we can make the maritime regions unsafe for the aggressors,” said an Iranian official who spoke on condition of anonymity due to the sensitivity of the situation.

BACKFIRED?

Ali Vaez, director of the Iran Project at the Crisis Group think-tank, and other regional sources said that if Iran was responsible, it was clearly trying to show it could threaten global oil supply with a view to deterring the U.S. and its allies from further ratcheting up the pressure.

Saudi Arabia, the Emirates and other regional rivals are backing U.S. efforts to cut off Iran’s oil exports with pledges to boost their own oil production to keep prices stable. But a fifth of the world’s oil passes through the Gulf of Oman and the attacks hit vessels on both sides of the waterway.

“The message being sent by Iran is that we can disrupt operations on east and west. If they can’t export, no one should,” said a Gulf industry source who asked not to be identified.

U.S. President Donald Trump withdrew from a 2015 international nuclear deal last year and reimposed sanctions, aiming to push Tehran to negotiate over its ballistic missile program and regional policy, which Washington says is destabilizing the Middle East.

Washington then sent an aircraft carrier, B-52 bombers and Patriot missiles to the region last month in a show of force against what U.S. officials say are Iranian threats to its troops and interests there.

Acting U.S. Defense Secretary Patrick Shanahan announced on Monday the deployment of about 1,000 more troops to the Middle East for what he said were defensive purposes, citing concerns about a threat from Iran.

Vaez said Tehran did not appear to have been cowed so far.

“The irony is that the U.S. maximum pressure strategy was supposed to temper Iranian behavior,” he said. “In practice, however, it has clearly backfired.”

LOW COST

Iran could use “relatively inexpensive asymmetric attacks to inflict costly damage,” according to Tom Sharpe, a former commander in Britain’s Royal Navy who is now a communications consultant.

“They have jet skis and fast boats that are trained for swarm attacks and just one £1,000  jet ski could disable a £1 billion warship,” he told Reuters.

Sharpe said the United States and Western allies were prepared to tackle such attacks.

But the ability of Iran-linked groups to strike goes beyond the Strait of Hormuz.

In the same week that the four oil tankers were attacked off the coast of the Emirates last month, Yemen’s Iran-aligned Houthis struck two oil pumping stations within Saudi Arabia with armed drones.

A few days later, a rocket was fired near the U.S. embassy in Baghdad, which had already evacuated non-emergency staff a week after U.S. Secretary of State Mike Pompeo made a surprise trip to Baghdad to talk to Iraqi officials about U.S. concerns of threats from Iran-backed militias.

Two Iran-backed Iraqi paramilitary groups said talk of threats was “psychological warfare” by Washington.

During the Iran-Iraq war in the 1980s, both Iran and Iraq attacked tankers and merchant ships in the Gulf, which drew the United States into the conflict.

Iran learned lessons from that period, which became known as the “Tanker War,” and now has many more tools at its disposal, such as mines and speed boats, to use in asymmetric warfare to send a signal, Aryan said.

“That signal is to show to the Arab states and to the United States that, despite all their military might and presence in the region, the lines of communication in the region are vulnerable, and to show that vulnerability.”

The danger for Iran, if it is pursuing that strategy, is that a small incident could quickly escalate, observers say.

“This is an extremely risky strategy,” said Ali Alfoneh, senior fellow at the Arab Gulf States Institute in Washington. “The gamble of Islamic Republic strategists … may end up provoking a war Iran can ill afford.”

(Reporting By Babak Dehghanpisheh; additional reporting by Mark Hosenball in Washington, Julia Payne in London and Parisa Hafezi and Rania El Gamal in Dubai; editing by Philippa Fletcher)

Europeans reject “ultimatums” from Iran as it eases nuclear curbs

FILE PHOTO: Iranian President Hassan Rouhani attends talks in the Black Sea resort of Sochi, Russia, Feb. 14 2019. Sergei Chirikov/File Photo

BERLIN (Reuters) – European countries said on Thursday they wanted to preserve Iran’s nuclear deal and rejected “ultimatums” from Tehran after Iran scaled back curbs on its nuclear program and threatened moves that might breach the pact.

Iran announced steps on Wednesday to ease curbs on its nuclear program, in response to new U.S. sanctions imposed after Washington abandoned the deal a year ago.

Tehran’s initial moves do not appear to violate the accord yet, but President Hassan Rouhani said that unless world powers protect Iran’s economy from U.S. sanctions within 60 days, Iran would start enriching uranium beyond permitted limits.

“We reject any ultimatums and we will assess Iran’s compliance on the basis of Iran’s performance regarding its nuclear-related commitments…,” read a statement issued jointly by the European Union and the foreign ministers of Britain, France and Germany.

“We are determined to continue pursuing efforts to enable the continuation of legitimate trade with Iran,” said the European states, adding that included getting a special purpose vehicle aimed at enabling business with Iran off the ground.

The 2015 nuclear deal requires Iran to curb its nuclear program in return for the elimination of international sanctions. It was signed by the United States, Britain, France, Germany, Russia and China.

HARDLINERS

The administration of President Donald Trump abandoned the agreement a year ago and imposed U.S. sanctions, which it has ratchetted up this month, effectively ordering all countries to halt all purchases of Iranian oil or face their own sanctions.

The move creates a dilemma for Washington’s European allies which say they share its concerns about Iranian behavior but think the Trump administration’s tactics are likely to backfire.

The European allies have opposed the U.S. decision to abandon the nuclear deal, which they say plays into the hands of hardliners in Iran and undermines pragmatists within the Iranian leadership who want to open the country up to the world.

French President Emmanuel Macron called on Thursday for the nuclear deal to be extended to cover other issues of concern to the West, such as Iran’s regional policies and missile program, rather than jettisoned.

“Leaving the 2015 nuclear agreement is a mistake because it is undoing what we have already done. That’s why France is remaining and will remain a part of it and I deeply hope that Iran will remain,” Macron said.

“We contributed to negotiating this deal. France at the time had even pushed for it to be more demanding than what the United States was ready to accept. It is a good deal and a good base. It needs to be completed,” he said.

European countries have tried to develop a system to allow outside investors to do business with Iran while avoiding falling foul of U.S. sanctions. But in practice, this has failed so far, with all major European companies that had announced plans to invest in Iran saying they would no longer do so.

Iran has always denied that it was seeking a nuclear weapon.

Tehran says it wants to abide by the nuclear deal. A spokesman for Iran’s Atomic Energy Organisation said on Thursday Tehran’s goal was to bring the agreement “back on track”.

But Tehran has also maintained that it will leave the deal, known as the JCPOA unless it receives more economic support.

“We have not left the JCPOA so far, but we have put such a move on our agenda and that would happen step-by-step,” Deputy Foreign Minister Abbas Araqchi was quoted as saying by state-run PressTV on Wednesday night.

Supporters of the nuclear deal, including Trump’s predecessor Barack Obama and European allies, say the pact extends the time it would take Iran to make a nuclear weapon if it decided to do so, and guarantees that it would be caught.

Lifting sanctions would show ordinary Iranians the benefits of cooperating with the world and make it harder for hardliners to roll back reforms, they argue.

The Trump administration argues that the nuclear deal was flawed because it is not permanent, does not address Iran’s missile program and does not punish Iran for what Washington considers meddling in regional countries.

France, led by Macron, says those issues would be easier to tackle in a future agreement if the existing deal is kept in place. Iran has always said its missile program and regional policies are sovereign issues and not negotiable.

Trump’s hardline stance is supported by Israel and by Arab allies of the United States such as Saudi Arabia and the United Arab Emirates, which consider Iran a foe and gain leverage over global oil prices from having its exports taken off the market.

(Reporting by Madeline Chambers and Bozorgmehr Sharafedin, Writing by Peter Graff, Editing by William Maclean)

Gaza-Israel border falls quiet after 3 days long deadly surge of rocket fire

Rockets are fired from Gaza towards Israel, in Gaza May 5, 2019. REUTERS/Mohammed Salem

By Nidal al-Mughrabi and Ari Rabinovitch

GAZA/JERUSALEM (Reuters) – A surge in deadly violence in the Gaza Strip and southern Israel petered out overnight with Palestinian officials reporting that Egypt had mediated a ceasefire on Monday ending the most serious spate of cross-border clashes for months.

The latest round of fighting erupted three days ago, peaking on Sunday when rockets and missiles from Gaza killed four civilians in Israel. Israeli strikes killed 21 Palestinians, more than half of them civilians, over the weekend.

Two Palestinian officials and a TV station belonging to Hamas, Gaza’s Islamist rulers, said a truce had been reached at 0430 a.m. (0130 GMT), apparently preventing the violence from broadening into a conflict neither side seemed keen on fighting.

Israel did not formally confirm the existence of a truce with Hamas and its allied Gaza faction Islamic Jihad, militants that it, like much of the West, designates as terrorists.

Officials in Prime Minister Benjamin Netanyahu’s government spoke in more general terms of a reciprocal return to quiet, with one suggesting that Israel’s arch-enemy Iran – a major funder for Islamic Jihad – had been behind the Gaza escalation.

Suffering under renewed U.S. sanctions and Israeli strikes against its military assets in Syria, Iran may have seen stoking Palestinian violence as a way of telling Israel, “we will get back at you through (Islamic) Jihad and Gaza”, Israeli Energy Minister Yuval Steinitz told the Israeli radio station 90 FM.

Israel’s military said that more than 600 rockets and other projectiles – over 150 of them intercepted – had been fired at southern Israeli cities and villages since Friday. It said it shelled or carried out air strikes on some 320 militant sites.

The violence abated before dawn, just as Gazans were preparing to begin the Muslim holy month of Ramadan.

Rocket sirens in southern Israel, which had gone off continuously over the weekend, sending residents running for cover, did not sound on Monday and there were no reports of new air strikes in Gaza.

Egypt and the United Nations, who have served as brokers in the past, had been trying to mediate a ceasefire.

LEVERAGE

The violence began when a sniper from the Palestinian militant group Islamic Jihad fired across Gaza’s fenced border at Israeli troops on routine patrol, wounding two soldiers, according to the Israeli military.

Islamic Jihad accused Israel of delaying implementation of previous understandings brokered by Egypt in an effort to end violence and ease the economic hardships of blockaded Gaza.

This time both Islamic Jihad and Hamas appeared to see some leverage to press for concessions from Israel, where annual independence day celebrations begin on Wednesday and with the Eurovision song contest due to kick off in Tel Aviv – the target of a Gaza rocket attack in March – next week.

Some 2 million Palestinians live in Gaza, the economy of which has suffered years of Israeli and Egyptian blockades as well as recent foreign aid cuts and sanctions by the Palestinian Authority, Hamas’ West Bank-based rival.

Israel says its blockade is necessary to stop arms reaching Hamas, with which it has fought three wars since the group seized control of Gaza in 2007, two years after Israel withdrew its settlers and troops from the small coastal enclave.

One of Islamic Jihad’s leaders in Gaza said on Sunday that the group was trying to counter efforts by the United States to revive peace negotiations between Israel and the Palestinians.

U.S. President Donald Trump’s Middle East team has said it will unveil its peace plan in June, after Ramadan is over. Peace negotiations have been moribund since 2014.

“What the resistance is doing now is the most important part of confronting Trump’s deal. We all have to get united behind the decision by the resistance to fight,” Islamic Jihad’s Jamil Eleyan said in a statement.

Israeli military spokesman Lieutenant-Colonel Jonathan Conricus said that over the past few weeks Islamic Jihad had been trying to perpetrate attacks against Israel in order to destabilize the border. “This isn’t some local initiative, it is part of a strategic choice to escalate matters,” Conricus said.

During the eight-year civil war in Syria, Iran’s military has built a presence there backing President Bashar al-Assad.

Israel regards Iran as its biggest threat and has vowed to stop it from entrenching itself in Syria, its neighbor to the north, repeatedly bombing Iranian targets in Syria and those of allied Lebanese Hezbollah militia.

Trump’s national security adviser John Bolton said on Sunday the administration was deploying a carrier strike group and bombers to the Middle East in response to troubling “indications and warnings” from Iran and to show the United States will retaliate with “unrelenting force” to any attack.

(Additional reporting by Dan Williams and Maayan Lubell in Jerusalem; Writing by Maayan Lubell; Editing by Mark Heinrich)

Turkey says buying Russian defense system should not trigger U.S. sanctions

FILE PHOTO: New S-400 "Triumph" surface-to-air missile system after its deployment at a military base outside the town of Gvardeysk near Kaliningrad, Russia. Picture taken March 11, 2019. REUTERS/Vitaly Nevar/File Photo/File Photo

By Humeyra Pamuk

WASHINGTON (Reuters) – Turkey’s purchase of a Russian air defense missile system should not trigger U.S. sanctions because Ankara is not an adversary of Washington and remains committed to the NATO alliance, Defense Minister Hulusi Akar said on Monday.

Speaking at a U.S.-Turkey conference in Washington amid rising tensions between the two NATO allies over Ankara’s plan to buy the Russian S-400 missile system, Akar adopted a relatively conciliatory tone and urged to resolve issues via dialogue.

“Turkey is clearly not an adversary of the United States,” Akar said and added that therefore its procurement of the S-400 system should not be considered within the scope of U.S. sanctions designed to target America’s enemies.

U.S. Secretary of State Mike Pompeo said last week that Washington had told Ankara it could face retribution for buying the S-400s under a sanctions law known as Countering America’s Adversaries Through Sanctions Act (CATSAA).

“This procurement decision does not signify a change in Turkey’s course. I’d like to reiterate strongly that there is no change in Turkey’s commitment to NATO,” Akar said.

FILE PHOTO: A Lockheed Martin F-35 aircraft at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo/File Photo

FILE PHOTO: A Lockheed Martin F-35 aircraft at the ILA Air Show in Berlin, Germany, April 25, 2018. REUTERS/Axel Schmidt/File Photo/File Photo

The disagreement over the F-35 is the latest of a series of diplomatic disputes between the United States and Turkey including Turkish demands that the United States extradite Islamic cleric Fethullah Gulen, differences over Middle East policy and the war in Syria, and sanctions on Iran.

Turkish President Tayyip Erdogan has refused to back down from Ankara’s planned purchase of a Russian S-400 missile defense system that the United States has said would compromise the security of F-35 aircraft, made by Lockheed Martin Corp . Turkey has said it will take delivery of the S-400s in July.

In early April, the United States halted delivery of equipment related to the stealthy F-35 fighter aircraft to Turkey, marking the first concrete U.S. step to potentially blocking the delivery of the jet to the NATO ally.

Akar said Turkey was puzzled by the move and expected U.S. and other partners in the program to fulfill their obligations.

“We firmly believe that linking the S-400 to the F-35 project is unfortunate … We are one of the investors and partners and not just a buyer. We have invested over $1 billion … and fulfilled all our obligations,” he said.

Akar repeated Turkey’s offer to hold technical talks with the United States to address “technical concerns” over the S-400 purchase.

Turkey is also assessing a renewed offer from the United States to buy Patriot missile defense systems, Akar added.

“Recently we received the restated offer for the Patriots. This offer is now on the table, we are studying it carefully,” he said.

(Reporting by Humeyra Pamuk; Additional reporting by Ezgi Erkoyun in Istanbul; Editing by Dominic Evans and Phil Berlowitz)

Hezbollah warns U.S. over sanctions against Iran and allies

FILE PHOTO: Hezbollah leader Sayyed Hassan Nasrallah addresses supporters via a screen in Beirut, Lebanon, September 20, 2018. REUTERS/Aziz Taher/File Photo

BEIRUT (Reuters) – Lebanon’s Hezbollah raised the prospect of retaliation by Iran and its allies over U.S. sanctions, saying on Wednesday that all options were on the table were Washington to take steps that “threaten our nation”.

Sayyed Hassan Nasrallah, leader of the heavily armed Iranian-backed Shi’ite group, said the United States’ move this week to designate Iran’s Revolutionary Guards as a terrorist organization reflected a failure of U.S. policy in the Middle East.

Iran and its allies, which include Hezbollah, had so far made do with condemnation in response to the U.S. sanctions, said Nasrallah, before adding that this was “not a permanent and fixed policy”.

“There are measures which, if taken by the Americans … who said they will remain without response?” he said in a televised speech delivered to an event for Hezbollah’s wounded fighters.

“There will be an appropriate response for sure,” he said. Iran and its allies held “many strong cards”, he added.

Hezbollah was founded by the Revolutionary Guards in 1982 and has long been designated as a terrorist group by the United States. U.S. President Donald Trump’s administration has tightened sanctions against Hezbollah as part of its wider regional policy to counter Iran.

U.S. Secretary of State Mike Pompeo said on Wednesday that Trump would continue to increase pressure on Iran.

(Reporting by Beirut bureau; Editing by Giles Elgood)

Oil prices hit 2019 highs on OPEC cuts and U.S. sanctions

FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringe

By Dmitry Zhdannikov

LONDON (Reuters) – Oil prices rose to new 2019 highs on Tuesday, supported by OPEC supply cuts and falling output from Iran and Venezuela because of U.S. sanctions.

Brent crude oil futures were up 16 cents at $67.70 a barrel at 1415 GMT, having earlier risen to a 2019 peak of $68.20, their highest since November 2018.

U.S. West Texas Intermediate (WTI) futures were at $59.17, up 8 cents from their last settlement. They also touched their highest since November at $59.57.

The Organization of the Petroleum Exporting Countries on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June.

OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a sharp price drop that began in the second-half of 2018 on booming U.S. production and fears of a global economic slowdown.

Saudi Arabia has signaled that OPEC and its allies could continue to restrain oil output until the end of 2019.

“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.

Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.

Venezuela has suspended its oil exports to India, one of its key export destinations, the Azeri energy ministry said on Tuesday, citing Venezuela’s oil minister.

Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch in the future. May Brent prices were around $1.20 a barrel more expensive than for December delivery.

(GRAPHIC: Brent crude oil forward curves – https://tmsnrt.rs/2FlM7YZ)

Outside OPEC, analysts are watching U.S. crude oil production that has risen by more than 2 million barrels per day (bpd) since early 2018, to about 12 million bpd, making the United States the world’s biggest producer ahead of Russia and Saudi Arabia.

Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.

Bank of America Merrill Lynch said that economic “risks are skewed to the downside” and it is forecasting global demand growth of 1.2 million bpd year on year in 2019 and 1.15 million bpd in 2020.

The bank said it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019 and $65 and $60 a barrel in 2020.

(Reporting by Henning Gloystein; Editing Joseph Radford and David Goodman)

As Maduro holds on, Venezuela opposition eyes negotiated transition

FILE PHOTO: Venezuela's President Nicolas Maduro attends a rally in support of his government and to commemorate the 61st anniversary of the end of the dictatorship of Marcos Perez Jimenez next to his wife Cilia Flores in Caracas, Venezuela January 23, 2019. Miraflores Palace/Handout via REUTERS/File Photo

By Brian Ellsworth and Sarah Marsh

CARACAS (Reuters) – Venezuela’s opposition is trying to convince ruling Socialist Party officials to join a transition government, shifting focus as it seeks to unseat President Nicolas Maduro, who has clung to power in the face of growing international pressure and U.S. sanctions.

Last month, Venezuelan opposition leader and Congress chief Juan Guaido invoked the constitution to assume the interim presidency after declaring Maduro’s reelection in May 2018 illegitimate. He swiftly received recognition from the United States and Latin American powers.

In an effort to secure the backing of Venezuela’s military, Guaido proposed an amnesty for officers who turn on Maduro’s government.

But defections have been minimal and top brass has declared allegiance to Maduro, dimming hopes of a quick end to an economic disaster that has prompted millions of desperate Venezuelans to flee abroad, fueling a regional humanitarian crisis.

Amid fears the changes have stalled, opposition leaders have begun to talk in the past week about bringing ruling Socialist Party stalwarts into a potential transition government.

“This transition requires a large national agreement between the country’s political forces,” Edgar Zambrano, vice president of the opposition-run National Assembly, said in an interview.

Zambrano said any transition must include “Chavismo,” the left-wing movement founded by Venezuela’s late leader Hugo Chavez, who hand-picked Maduro as his successor.

People attend a protest of the public transport sector against the government of Venezuela's President Nicolas Maduro in Caracas, Venezuela February 20, 2019. REUTERS/Andres Martinez Casares

People attend a protest of the public transport sector against the government of Venezuela’s President Nicolas Maduro in Caracas, Venezuela February 20, 2019. REUTERS/Andres Martinez Casares

“You cannot disappear Chavismo and you cannot go from persecuted to persecutor. This is not political revenge,” he said.

It was not immediately clear how actively the opposition is building bridges. Opposition leaders say they maintain contact with government officials and military officers but keep such talks confidential to avoid affecting those involved.

Maduro says he is the victim of a U.S.-orchestrated coup attempt and has refused to resign.

Many rank-and-file opposition supporters hope to see Maduro and his allies exiled or behind bars, and would be frustrated by attempts to bring them into the transition.

Guaido’s decision to assume the interim presidency revitalized Venezuela’s fragmented and disillusioned opposition and led to a flurry of street protests.

Hopes of quick change were fueled by diplomatic support from numerous countries and tough U.S. sanctions on Venezuela’s vital oil industry, which has bankrolled Maduro’s government.

Some in the opposition quietly predicted a military pronouncement in favor of Guaido as early as Jan. 23, the day he proclaimed himself president at a rally in Caracas. Top military officials were silent for hours after Guaido’s pronouncement, leading to speculation that Maduro was frantically negotiating with officers not to switch sides.

Yet only a handful of active officers backed Guaido. Expectations of a quick military proclamation have given way to concerns over a slow and complicated path forward, both in Caracas and Washington.

“I don’t think (Washington) understood the complexities of the target, of Venezuela: all the overlapping security that Maduro has available; the things at his disposal,” said one former U.S. administration official in touch with current officials.

WHAT ABOUT JUSTICE?

The idea of a unity in Venezuela was in fact included in a little-noticed provision of a Transition Law passed by the National Assembly last month.

Venezuela’s four main opposition parties all back the idea, but in the past week have increasingly discussed the issue.

“People must understand that Chavismo is not just Maduro,” legislator Stalin Gonzalez said in an interview with Reuters last week, in comments that sparked a backlash on social media.

Some opposition supporters say they would be open to middle-ranking or dissident socialists being included in an interim government, but not the top brass.

“They must pay for what they have done,” said Maria Elena Fonseca, who at age 78 struggles to make ends meet despite working as a psychologist. Like countless Venezuelans, Fonseca has seen her income eroded by hyperinflation that now tops 2 million percent annually.

Fonseca receives remittance from her daughter abroad, who is among the estimated 3 million Venezuelans who have fled the once-prosperous nation since 2015.

“It’s not about revenge: it’s about justice,” she said.

STALLING MOMENTUM?

Back channels between the two sides are considerably better developed than might be expected from 20 years of acrimonious politics and the constant slew of vitriolic social media commentary.

Gonzalez and other young legislators developed relationships with Socialist Party politicians in 2016. The two sides coexisted in the legislature until Maduro backed the creation in 2017 of an all-powerful, government-controlled Constitution Assembly with the aim of sidelining Congress.

Guaido’s team is wielding a stick as well as a carrot. It has held massive protests nationwide over the past month and will face off with authorities when it attempts to bring humanitarian aid into the country on Saturday.

Meanwhile, Washington’s crippling sanctions on the oil sector are expected to take effect in the coming weeks, cutting off funding to Maduro.

The risk, however, is that a standoff will drag on for months, disillusioning opposition supporters while allowing Maduro to blame an escalating economic crisis on the U.S. sanctions.

“The longer times passes and the opposition doesn’t pose a legitimate threat to Maduro, the more confident he will get,” said Raul Gallegos, an analyst with the consultancy Control Risks. He noted that Cuba, Zimbabwe and Iran all resisted international opprobrium and sanctions for decades.

“Chavistas are willing to drive this country into a level of despondency and reduce the economy to a level Venezuela hasn’t seen in decades as long as they can remain in power,” he said.

(Reporting by Brian Ellsworth and Sarah Marsh; Additional reporting by Luc Cohen and Matt Spetalnick in Washington’; Editing by Daniel Flynn and Leslie Adler)