At the end of December, a series of protests against economic policies erupted in Iran. As they spread, their scope expanded to include political opposition. But when President Trump tweeted his support for the protesters and criticism of the government, pro-government marchers filled the streets. 

Yet, on January 3, the head of Iran's Revolutionary Guards, Major General Mohammad Ali Jafari, announced the defeat of the "sedition" in the country. 

Next, the Trump administration placed sanctions on five subsidiaries of the Shahid Bakeri Industrial Group - a defense group that is a key producer of Iran's ballistic missiles and that is already under US sanctions.

What is going on in Iran?

US struggle for new sanctions and regime change

In 2015 the nuclear accord (JCPOA) offered Iran relief from US, UN and multilateral sanctions on energy, financial, shipping, automotive and other sectors. The primary sanctions were lifted after the International Atomic Energy Agency's certification that Iran had complied with the agreement. Yet, secondary sanctions on firms remained in place, along with sanctions applying to US companies, including banks.

Then Washington opted for a U-turn. Following the House of Representatives, the Senate unanimously extended the Iran Sanctions Act for a decade in late 2016. Despite the Obama sanctions relief, most Democrats reversed their positions.

When President Trump arrived in the White House, he began developing a far more muscular policy against Iran to benefit from Saudi economic and geopolitical support. Last May, he signed a $350 billion arms deal with Saudi Arabia, which has been followed by a push to counter Iran's regional and strategic weapons programs. 

In October, two months before the Iranian protests, the Trump administration designated for sanctions additional missile and IRGC-related entities, while threatening to cease implementing the JCPOA. 

Along with economic pressures, Trump has seized covert operations. After he made the conservative Iran hawk Mike Pompeo the head of the CIA, the abrasive uber-hawk Michael D'Andrea became the head of CIA's Iran operations. After the 9/11 attacks, he was involved in the capture of Osama bin Laden, the interrogation program that was condemned as inhumane and ineffective in the 2014 Senate report, political assassinations and ramped up drone programs which have unleashed waves of anti-American sentiment in Pakistan and Yemen.

Iran's recent events bear D'Andrea's covert signature. 

Iran's quest for economic stabilization

Between 2010 and 2013, the sanctions hurt Iran's economy contributing to the fall of crude oil exports from 2.5 million barrels per day to 1.1 million by mid-2013. That was compounded by the plunge in oil prices since early 2014. 

Sanctions relief has enabled Iran's oil exports to return to nearly pre-sanctions levels, boosting economic growth to 7% in 2016. Iran has regained access to some $115 billion in hard currency held abroad. Foreign energy firms have begun making new investments in Iran's energy sector and major aircraft manufacturers have sold Iran's commercial airlines new passenger aircraft. The relief also contributed to the political victory of Iran's President Hassan Rouhani in the May 2017 presidential election.

Growth has also begun to broaden to the non-oil sector. Real GDP growth is projected to reach 4.2% in 2017/18 and is expected to be sustained over the medium-term if financial sector reform takes hold. 

In Iran, the 2009 protests were led by urban middle class. In contrast, recent demonstrations have been fueled by discontent in rural areas and small cities; the core constituencies of former president Mahmoud Ahmadinejad, who seeks a political comeback and was arrested for inciting unrest against the government. 

It is this economic unease, coupled with budget leaks, that is being further stirred by new US sanctions and alleged destabilization efforts - which aim to undermine Iran's ongoing policy recalibration in the Middle East. 

Shifting toward East

Only two weeks before the protests, Iran's media reported that the country would join the Russia-led Eurasian Economic Union (EEU) in early 2018, which would increase the Union's population to 260 million and make its economy as large as that of India.

Even more important is Iran's proposed role in the evolving One Road One Belt initiative (OBOR). Through the worst days of the 2010-16 sanctions, major Asian countries remained engaged in Iran's economy. In the coming years, the same countries are likely to support Iran to diversify its economy away from oil and gas and to become a major regional trading hub.

Recently, China and South Korea's oil imports have reached or surpassed pre-sanction levels, while purchases by Japan and other Asian countries have been slower to rebound. At the same time, China's share of Iran's global trade has climbed from 20% in 2010 to 31% in 2016. Moreover, foreign direct investment in Iran has soared, growing five-fold to $12.2 billion in 2016.

Soon Trump must decide whether to recertify Iran's compliance with the 2015 nuclear deal with world powers, to waive US nuclear-related sanctions that were suspended under the JPOA, or to withdraw from the JPOA - all of which would penalize Iran's economy, again.

Since it penalizes rightful compliance, US credibility is crumbling across the Middle East. Washington can slow Iran's participation in OBOR initiatives and its reintegration in the world economy but it cannot stop Iran from taking its rightful place in the family of nations.

Dr Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore).

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

This is an abbreviated version of the original commentary which was released by China-US Focus on January 15, 2018.

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