Research & Analysis

Iran-US relations and the Corona Virus crisis

Iran has asked the International Monetary Fund (IMF) for emergency funding (it is for the first time since 1962, that Iran has sought IMF assistance) to fight the deadly Corona Virus outbreak (COVID19).

 As of Saturday, March 14, 2020, Iran reported over 600 deaths (611) and over 12000 cases arising out of the deadly virus. Iran is the third most affected country after China and Italy. A number of prominent personalities including the country’s Vice President, Eshaq Jahangari and two other senior cabinet members have been detected with the virus.

On Wednesday, March 4, 2020, The IMF Managing director, Kristilina Georgieva had stated, that developing countries will be supported in their efforts to take on the Corona Virus, through the Rapid Financial Instrument. The IMF announced a 50 Billion USD Aid package, with the aim of specifically assisting ‘low income’ and ‘emerging market’ economies. (on Monday, World Bank had announced a package of 12 Billion to deal with the epidemic).

Iran’s Central Bank chief Abdolnaser Hemmati in a statement on Thursday stated that he had written to the IMF, requesting $5 billion in emergency funding, via its Rapid Financing Instrument. In a tweet on Thursday, the Iranian Foreign Minister Javad Zarif urged the IMF to release this amount immediately. The Iranian Foreign Minister also said that Iran was facing a severe shortage of medicines and equipment. US sanctions on Iran, which have prevented it from selling oil, as well as banking sanctions have had a detrimental impact on the country’s economy. Iran in a letter to the UN Secretary-General, Antonio Guerres stated that US sanctions should be suspended keeping in mind the current crisis.

Iran’s apprehensions

Even if the IMF were to agree to release 5 Billion USD for Iran. There are a number of obstacles that may result in Iran not being able to get the 5 Billion USD from the IMF. First, US is part of the IMF’s decision-making board (interestingly, in his tweet Zarif had stated that the IMF/IMF board should act responsibly) and even if IMF agrees to disburse the amount, given the strains between Washington and Tehran it is quite possible, that US will veto such a move by the IMF. If Trump is willing to annoy US allies like EU (on Wednesday, Trump took a decision to suspend flights from 26 Schengen countries to the US, for a period of 30 days without consulting the EU), there is no reason why he will adopt a nuanced approach towards Iran.

Second, the Financial Action Task Force (FATF) has blacklisted Iran which means, that even if IMF agrees to provide the loan, banks and financial institutions can block such transactions.

Corona Virus is an opportunity for the US to exhibit statesmanship and maturity, and also lower the tensions with Iran. While Trump has claimed to be open towards engaging with the Iranians, and seems to have changed his approach towards Tehran, he has not really exhibited much statesmanship in dealing with Tehran. Ever since the killing of Iranian General Qasem Soleiman (a major general in the Islamic Revolutionary Guard Corps), in a drone attack, in January 2020, ties went further downhill.

Opportunity for the US

This is an opportunity for the US, to send a positive message to the international community, and to also distinguish between the Iranian public and the political class. China’s messaging with regard to helping the international community has been far better. On March 12, 2020, a team of Chinese doctors reached Italy (Italy, which is the worst-hit nation after China, had requested the latter for assistance). A number of Italian leaders have also criticised EU countries for being slow in reacting to Italy’s call for assistance.

Positive steps taken by China

What is also significant is that at a time, when Washington and Beijing have been engaged in unnecessary mud-slinging with regard to the virus, with the US Secretary of State, Mike Pompeo, dubbing the Corona Virus as ‘Wuhan Virus’, and a senior Chinese diplomat responding, by calling it a ‘conspiracy’ by the US Army, on Friday, March 13, 2020, Chinese billionaire Jack Ma in a tweet stated, that he would donate one million face masks and 500,000 coronavirus testing kits to the US. Earlier, Jack Ma’s charitable foundation, and his China-based company’s foundation, the Alibaba Foundation, have already donated supplies to a number of countries including  Japan, Korea, Italy, Iran, and Spain.

Conclusion

In case, the US does not agree to provide immediate assistance to Iran, other countries should step in including US allies like the UK, EU member states and Japan. It is also important for multilateral organizations to show their teeth and not allow petty politics to come in the way of the fight against COVID 19. The Corona Virus is a clear reiteration of the point, that while there may be numerous problems with economic globalization, we live in a truly interconnected world however much we may try to obliterate this fact. Humanity should trump petty politics, and bickering and this is an opportunity to revive the true spirit of ‘Internationalism’.


Tridivesh Singh Maini is a New Delhi-based Policy Analyst. He is associated with The Jindal School of International Affairs, OP Jindal Global University, Sonepat, Haryana. He is a former SAV Visiting Fellow (Winter 2016) with the Stimson Centre, Washington DC. Mr Maini was also an Asia Society India-Pakistan Regional Young Leaders Initiative (IPRYLI) Fellow (2013-14), and a Public Policy Scholar with The Hindu Centre for Politics and Public Policy, Chennai (November 2013-March 2014). His research interests include; the role of Punjab in India-Pakistan ties, the Belt and Road Initiative (BRI) and the changing nature of Indian federalism. He is a contributor for a number of publications including; The Hindu, The Diplomat, Modern Diplomacy and The Geopolitics.

 

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About the author

Tridivesh Singh Maini

Tridivesh Singh Maini is a New Delhi-based Policy Analyst. He is associated with the Jindal School of International Affairs, OP Jindal Global University, Sonepat, Haryana. He is a former SAV Visiting Fellow (Winter 2016) with the Stimson Centre, Washington DC. Mr Maini was also an Asia Society India-Pakistan Regional Young Leaders Initiative (IPRYLI) Fellow (2013-14), and a Public Policy Scholar with the Hindu Centre for Politics and Public Policy, Chennai (November 2013-March 2014). His research interests include; the role of Punjab in India-Pakistan ties, the Belt and Road Initiative (BRI) and the changing nature of Indian federalism. He is a contributor for a number of publications including; The Hindu, The Diplomat, Modern Diplomacy and The Geopolitics.