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Maersk latest company to shun Iran as EU scrambles to save nuclear deal

FILE PHOTO: The Maersk ship Adrian Maersk is seen as it departs from New York Harbor in New York City, U.S., June 27, 2017. REUTERS/Brendan McDermid/File Phot

COPENHAGEN (Reuters) – Shipping group A.P. Moller-Maersk on Thursday joined a growing list of companies preparing to call a halt to doing business with Iran, casting doubts on whether European leaders can keep alive a nuclear deal with Tehran.

Maersk’s move comes a day after French energy group Total and other European companies signaled they could exit Iran ahead of a reimposition of sanctions following the United States’ decision to pull out of the Iran accord.

French President Emmanuel Macron said on Thursday that the European Union must protect European Union companies doing business with Iran from U.S. sanctions.

But Macron, joining EU leaders for a summit in Bulgaria, also said he recognized that big companies would want to protect their own interests.

“International companies with interests in many countries make their own choices according to their own interests. They should continue to have this freedom,” he said.

U.S. President Donald Trump’s decision to abandon the 2015 nuclear accord with Iran means European countries that have since invested in the country will be at risk once new sanctions come into effect.

Maersk Chief Executive Soren Skou said: “With the sanctions the Americans are to impose, you can’t do business in Iran if you also have business in the U.S., and we have that on a large scale.”

“I don’t know the exact timing details, but I am certain that we’re also going to shut down (in Iran),” Skou told Reuters in an interview following Maersk’s first-quarter earnings.

MSC, the world’s second biggest container shipping group after Maersk, said on Wednesday it would stop taking new booking for Iran.

Other companies which have warned they would wind down business in Iran following reinstated sanctions include German insurer Allianz, Siemens and Danish oil product tanker operator Maersk Tankers, previously owned by the Maersk conglomerate.

Maersk’s Skou said higher oil prices which followed the U.S. withdrawal were hitting its container shipping business because of higher bunker fuel prices.

Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping ever closer to $80 per barrel. [O/R]

(Reporting by Stine Jacobsen and Jacob Gronholt-Pedersen; Editing by Jon Boyle and Jane Merriman)

Merkel defends nuclear deal, Iran says won’t ‘surrender’ to U.S.

German Chancellor Angela Merkel speaks during the 2018 budget debate at the lower house of parliament Bundestag in Berlin, Germany, May 16, 2018. REUTERS/Hannibal Hanschke

By Bozorgmehr Sharafedin

LONDON (Reuters) – German Chancellor Angela Merkel pushed back on Wednesday against Washington’s rejection of the Iran nuclear deal, saying the accord helped outside powers worried about Tehran’s regional role to pursue their concerns with the Islamic Republic.

Iran reiterated it would not surrender to U.S. pressure and would resist U.S. “plots”, following President Donald Trump’s abandonment of the 2015 agreement last week.

Repudiating the result of more than a decade of diplomacy, Trump complained that the deal does not cover Iran’s ballistic missiles, its role in regional wars or what happens after the pact begins to expire in 2025.

Major European countries share Trump’s concerns but argue that the nuclear deal is the best way to stop the increasingly influential regional power from obtaining an atomic weapon.

Merkel reasserted a defense of the deal in remarks to lawmakers in the Bundestag lower house of parliament.

“The question is whether you can talk better if you terminate an agreement or if you stay in it … we say you can talk better if you remain in it,” she said.

“This agreement is everything other than ideal, but Iran is, according to all the knowledge of the international nuclear authorities, sticking to the commitments of the agreement.”

The deal between Iran and six world powers lifted most international sanctions in 2016 in return for Tehran curbing its nuclear program, under strict surveillance by the U.N. nuclear watchdog.

Trump last week announced he planned to reimpose an array of sanctions lifted by the accord, and the U.S. Treasury on Tuesday imposed sanctions on Iran’s central bank governor, three other individuals and an Iraq-based bank.

Iran meanwhile said the new U.S. sanctions were an attempt to derail efforts to save the deal.

“With such destructive measures, the American government is trying to influence the will and decision of the remaining signatories of the JCPOA (nuclear agreement),” Iranian Foreign Ministry spokesman Bahram Qasemi was quoted as saying by Fars news agency.

Iran has described the sanctions as illegal and has warned that if talks to rescue the accord fail, it would ramp up its nuclear program to a level more advanced than before.

Iranian President Hassan Rouhani said Trump expected Tehran to leave the deal after the U.S. withdrawal, but Tehran had refused to follow that plan by trying to save the deal with its remaining signatories.

“Trump played his first card, but miscalculated the second move,” Rouhani was quoted as saying by the ISNA agency.

GUARANTEES

He also said Iran would not surrender to U.S. pressures.

“They think they can make the Iranian nation surrender by putting pressures on Iran, by sanctions and even threats of war… The Iranian nation will resist against the U.S. plots,” Rouhani was quoted as saying by ISNA news agency.

However the top advisor to Iran’s Supreme Leader Ali Khamenei said he doubted Tehran’s talks with European nations to save the deal would be successful.

“I doubt that the talks with the Europeans will be fruitful. I hope we see good results, but …. we should become self-sufficient,” Ali Akbar Velayati said, Fars news agency reported.

European powers this week vowed to shore up the deal by trying to keep Iran’s oil and investment flowing, but admitted they would struggle to provide the guarantees Tehran seeks.

British, French and German foreign ministers met in Brussels on Tuesday to see how they can save the nuclear deal without the United States, but appeared hard-pressed over how their companies could continue doing business with Iran once Washington begins to reimpose sanctions.

Iranian Foreign Minister Mohammad Javad Zarif said his meeting with European Union officials in Brussels had been a good start, but he wanted to see guarantees materialize.

The Europeans and Iranians have tasked experts to come up with measures quickly and will meet again in Vienna next week.

Reuters reported on Wednesday that a senior Iranian official has met Chinese oil buyers this week to ask them to maintain imports after U.S. sanctions kick in.

(Reporting by Bozorgmehr Sharafed, additional reporting by Michelle Martin in Berlin, Editing by Raissa Kasolowsky, William Maclean)

Iran says could remain in nuclear deal if its interests guaranteed: TV

FILE PHOTO: Iranian President Hassan Rouhani speaks during a meeting with Muslim leaders and scholars in Hyderabad, India, February 15, 2018. REUTERS/Danish Siddiqui/File Photo

By Parisa Hafezi

ANKARA (Reuters) – President Hassan Rouhani hinted on Monday that Iran could remain in its 2015 nuclear deal with world powers even if the United States dropped out but Tehran would fiercely resist U.S. pressure to limit its influence in the Middle East.

U.S. President Donald Trump, a long-time critic of the deal reached between Iran and six powers in 2015 before he took office, has threatened to pull out by not extending sanctions waivers when they expire on May 12, unless European signatories of the accord fix what he calls its “flaws”.

Under the agreement with the United States, France, Germany, Britain, Russia and China, Iran strictly limited uranium enrichment capacity to satisfy the powers that it could not be used to develop atomic bombs. In exchange, Iran received relief from sanctions, most of which were rescinded in January 2016.

Rouhani said the Islamic Republic had been preparing for every possible scenario, including a deal without Washington – which would still include the other signatories that remain committed to it – or no deal at all.

“We are not worried about America’s cruel decisions … We are prepared for all scenarios and no change will occur in our lives next week,” Rouhani said in a speech broadcast live on state TV.

“If we can get what we want from a deal without America, then Iran will continue to remain committed to the deal. What Iran wants is our interests to be guaranteed by its non-American signatories … In that case, getting rid of America’s mischievous presence will be fine for Iran.”

“If they want to make sure that we are not after a nuclear bomb, we have said repeatedly that we are not and we will not be,” said Rouhani, who engineered the nuclear accord to ease Iran’s isolation.

“But if they want to weaken Iran and limit its influence whether in the region or globally, Iran will fiercely resist.”

Tehran has made repeated threats to walk away if Trump does, but several Iranian officials told Reuters last week that as long as Tehran was not excluded from the global financial and trading system, it could consider respecting the accord.

Diplomats say Tehran would rather the deal remain intact out of concern about a revival of domestic unrest over economic hardships that mounted over the years sanctions were in place.

EUROPEAN POWERS VOW TO UPHOLD DEAL

Britain, France and Germany remain committed to the accord and, in an effort to address U.S. complaints, want to open talks on Iran’s ballistic missile program, its nuclear activities beyond 2025 – when pivotal provisions of the deal expire – and its role in the wars in Syria and Yemen.

Whatever Trump decides, France, Britain and Germany will stick to the deal because it is the best way to stop Iran developing a nuclear bomb, French Foreign Minister Yean-Yves Le Drian said on Monday after meeting his German counterpart.

German Foreign Minister Heiko Maas said the deal, which is being policed by U.N. nuclear inspectors, “makes the world safer”, and would do everything possible to uphold it.

British Foreign Secretary Boris Johnson, now in Washington for talks, said the deal had weaknesses but these could be remedied. “…At this moment Britain is working alongside the Trump administration and our French and German allies to ensure that they are,” he said in a commentary in the New York Times.

“I am sure of one thing: every available alternative is worse. The wisest course would be to improve the handcuffs rather than break them.”

Even if Trump rejects a possible remedy being worked out by U.S. and European officials and decides to bring back sanctions, the most drastic U.S. measures targeting Iran’s oil sales will not immediately resume.

There are at least two avenues potentially offering more time for talks after May 12.

The agreement has a dispute resolution clause that provides at least 35 days to consider a claim that any party has violated its terms. That can be extended if all parties agree.

And if Trump restores the core U.S. sanctions, under U.S. law he must wait at least 180 days before reimposing penalties on banks of nations that do not slash purchases of Iranian oil.

Iran’s clerical rulers have repeatedly ruled out reducing its sway across the region, as demanded by the United States and its European allies. Tehran says its missile capabilities are purely defensive and nuclear ambitions only civilian in nature.

The U.N. nuclear watchdog says it is maintaining the “world’s most robust verification regime” in Iran and has repeatedly said Tehran is complying with the deal terms.

(Additional reporting by John Irish, Michelle Martin and Joseph Nasr in Berlin, Michael Holden in London; Writing by Parisa Hafezi; Editing by Mark Heinrich)

China says 32 nationals killed when bus falls off bridge in North Korea

By Ben Blanchard

BEIJING (Reuters) – Thirty-two Chinese tourists and four North Koreans died when a bus crashed off a bridge in North Korea, China’s foreign ministry said on Monday, with two Chinese nationals in critical condition.

Chinese tourists make up about 80 percent of all foreign visitors to North Korea, says a South Korean think-tank, the Korea Maritime Institute, which estimates that tourism generates revenue of about $44 million each year for the isolated country.

Chinese diplomats visited the scene of Sunday’s crash in North Hwanghae province, the foreign ministry said.

State television’s main Chinese-language news channel showed images of a crashed blue bus with its wheels in the air, in footage taken in pouring rain in the dark.

It also showed at least one person being treated in hospital.

Chinese Foreign Ministry spokesman Lu Kang told reporters he could not give additional details of the accident as an investigation was under way.

Chinese President Xi Jinping had asked the Foreign Ministry and Chinese embassy to take “all necessary means” to handle the accident, the ministry said in a later statement.

In a separate statement, China’s health ministry said it was sending a team of medical experts, along with equipment and drugs, to North Korea, to help treat survivors.

The North Hwanghae province that borders South Korea is home to Kaesong, an ancient Korean capital thronged by tourists.

North Korea is a popular, if offbeat, tourist destination for Chinese, especially those from the country’s northeast.

China said more than 237,000 Chinese visited in 2012, but stopped publishing the figures in 2013.

China is North Korea’s most important economic and diplomatic backer, despite Beijing’s anger at Pyongyang’s repeated nuclear and missile tests and support for strong United Nations sanctions against North Korea.

North and South Korea are in the final stages of preparations for a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-In at the border truce village of Panmunjom on Friday.

(Reporting by Ben Blanchard; Editing by Nick Macfie)

North Korea says will stop nuclear tests, scrap test site

North Korean leader Kim Jong Un watches the launch of a Hwasong-12 missile in this undated photo released by North Korea's Korean Central News Agency (KCNA) on September 16, 2017. KCNA via REUTERS

By Soyoung Kim and Cynthia Kim

SEOUL (Reuters) – North Korea said on Saturday it would immediately suspend nuclear and missile tests, scrap its nuclear test site and instead pursue economic growth and peace, ahead of planned summits with South Korea and the United States.

North Korean leader Kim Jong Un said his country no longer needed to conduct nuclear tests or intercontinental ballistic missile tests because it had completed its goal of developing the weapons, the state-run Korean Central News Agency (KCNA) said.

Kim is scheduled to hold talks with South Korean President Moon Jae-in next week and with U.S. President Donald Trump in late May or early June.

The pledge to halt the development of nuclear weapons, initiated by his grandfather, would mean a significant reversal for Kim, 34, who for years has celebrated such weapons as a pillar of his regime’s legitimacy and power.

A testing freeze and commitment to close the test site alone would fall short of Washington’s demand that Pyongyang completely dismantle all its nuclear weapons and missiles.

But announcing the concessions now, rather than during summit meetings, shows Kim is serious about denuclearisation talks, experts say.

“The northern nuclear test ground of the DPRK will be dismantled to transparently guarantee the discontinuance of the nuclear test,” KCNA said after Kim convened a plenary session of the Central Committee of the ruling Worker’s Party on Friday.

The North’s official name is the Democratic People’s Republic of Korea (DPRK).

The Pyunggye-ri site is North Korea’s only known nuclear test site. All of its six underground tests were conducted there, including the last and largest in September.

APPLAUSE FROM TRUMP

Trump welcomed the statement and said he looked forward to a summit with Kim.

“North Korea has agreed to suspend all Nuclear Tests and close up a major test site. This is very good news for North Korea and the World – big progress! Look forward to our Summit,” Trump said on Twitter.

South Korea said the North’s decision signified “meaningful” progress toward denuclearisation of the peninsula and would create favorable conditions for successful meetings with it and with the United States.

China, North Korea’s sole major ally, has been frustrated by its defiant development of weapons and welcomed the announcement, saying it would ease tension and promote denuclearisation.

“The Chinese side believes that North Korea’s decision will help ameliorate the situation on the peninsula,” a foreign ministry spokesman, Lu Kang, said in a statement.

The Russian Foreign Ministry said it welcomed the announcement by North Korea and called on the United States and South Korea to reduce their military activity in the region.

Japanese Prime Minister Shinzo Abe also welcomed the North Korean statement but said it must lead to action.

“What’s important is that this leads to complete, verifiable denuclearisation. I want to emphasize this,” Abe told reporters.

Australia and Britain were also cautious.

The British government said in a statement that Pyongyang’s commitment was a positive step and hoped it indicated “an effort to negotiate in good faith”.

Australian Foreign Minister Julie Bishop said “verifiable steps” would be needed to ensure testing had indeed been halted.

The European Union’s foreign affairs chief Federica Mogherini said North Korea’s move was a positive step and called for an “irreversible denuclearisation” of the country.

German Foreign Minister Heiko Maas said North Korea’s announcement was a step in the right direction but it must “disclose its complete nuclear and missile program in a verifiable way”.

EVIDENCE

“We’re all looking for evidence that Kim is really serious about negotiations, and announcements like this certainly suggest he is, and that he is trying to make clear to the world that he is,” said David Wright, co-director of the Global Security Program at the Union of Concerned Scientists.

North Korea has said its nuclear and missile programs are necessary deterrents against U.S. hostility. It has conducted missile tests with the aim of being able to hit the United States with a nuclear bomb.

North Korean leader Kim Jong Un inspects the long-range strategic ballistic rocket Hwasong-12 (Mars-12) in this undated photo released by North Korea’s Korean Central News Agency (KCNA) on May 15, 2017. KCNA via REUTERS

The tests and escalating angry rhetoric by Trump and Kim raised fears of war until, in a New Year’s speech, the North Korean leader called for a reduction in military tensions.

He sent a delegation to the Winter Olympics in the South in February, leading to a thaw in relations with his old enemies.

Nam Sung-wook, professor of North Korean Studies at Korea University in Seoul, said it was “sensational” that Kim had personally declared plans to suspend nuclear development, but added that his remarks left questions.

“It still does not seem clear if it means whether the North will just not pursue further development of its nuclear programs in the future, or whether they will completely shut down ‘all’ nuclear facilities. And what are they going to do with their existing nuclear weapons?” Nam said.

Many U.S. officials and experts doubt Kim’s sincerity about denuclearising, viewing the recent flurry of diplomacy as a ploy to win relief from economic sanctions.

U.N. Security Council sanctions imposed on North Korea after its first nuclear test in 2006 and extended over the past decade have banned critical exports such as coal, iron ore, seafood and textiles while limiting oil imports.

That has threatened the policy of “byungjin” – simultaneous military and economic development – that Kim has adopted since taking power in 2011.

Koh Yu-hwan, professor of North Korean Studies at Dongguk University in Seoul, said he did not believe Pyongyang was ready to give up its nuclear weapons.

“Kim is just saying that now that the nuclear development is complete, he will put all the efforts toward building an economy,” Koh said.

(Additional reporting by Heekyong Yang and Ju-min Park in SEOUL, Idrees Ali and David Brunnstrom in WASHINGTON and Alana Schetzer in MELBOURNE; Editing by Robert Birsel, Raju Gopalakrishnan and Andrew Roche)

Russia: our response to U.S. sanctions will be precise and painful

FILE PHOTO: A view shows a tower of the Kremlin (R) and the Foreign Ministry headquarters (back) in Moscow, Russia March 16, 2018. REUTERS/Maxim Shemetov/File Photo

MOSCOW (Reuters) – Valentina Matvienko, the speaker of the Russian upper house of parliament, said on Wednesday that Moscow’s response to U.S. sanctions will be targeted and painful, Russian news agencies reported.

The United States this month added several Russian firms and officials to a sanctions blacklist in response to what it said were the Kremlin’s “malign activities”. Moscow says those sanctions are unlawful and has warned that it will retaliate.

“No one should be under any illusions,” Matvienko, who is closely aligned with the Kremlin, was quoted as saying by the Interfax news agency.

“Russia’s response to the sanctions, our so-called counter-sanctions, will be precise, painful, and without question sensitive for exactly those countries that imposed them (the sanctions) on Russia,” she was quoted as saying.

“Sanctions are a double-edged sword and those who impose them should understand that sanctions against countries, especially those like Russia, will carry with them risks of serious consequences for those who impose them.”

Lawmakers in the lower house of the Russian parliament have drawn up legislation that would give the government powers to ban or restrict imports of U.S. goods and services ranging from medicines to software and rocket engines. However, the Kremlin has not yet said if it backs such measures.

A senior U.S. administration official said on Monday President Donald Trump has delayed imposing additional sanctions on Russia and is unlikely to approve them unless Moscow carries out a new cyber attack or some other provocation.

(Reporting by Maria Kiselyova; Writing by Christian Lowe; Editing by Catherine Evans)

Russian retailers warned of price increase after ruble tumbles

MOSCOW (Reuters) – European electronic and household goods manufacturers have warned Russian retailers of a possible 5 to 10 percent rise in prices after the ruble tumbled this week due to U.S. sanctions, retailers said on Tuesday.

Eldorado, which operates over 400 stores in Russia, said the hikes may mean it has to adjust its retail prices.

“Suppliers have already started warning of a possible 5-10 percent adjustment in prices,” a spokesperson for Eldorado told Reuters, adding that the warnings had primarily come from European manufacturers that do not produce goods in Russia.

A spokesperson for M.Video <MVID.MM>, which operates a network of 424 stores, also said that some of its suppliers had told them of plans to raise prices by between 5 and 10 percent.

The ruble <RUB=> fell sharply on Monday as investors took fright after a new round of U.S. sanctions against Moscow, targeting officials and businessmen around Russian President Vladimir Putin.

The ruble extended its losses on Tuesday, shedding over 3 percent of its value against the dollar, as investors continued a sell-off of assets fueled by fears that Washington could impose more sanctions and a realization that Russian credit and market risks had substantially increased.

(Reporting by Olga Sichkar; Editing by Adrian Croft)

‘Russia in the doldrums?’: new U.S. sanctions to weigh on recovery

By Jack Stubbs and Polina Nikolskaya

MOSCOW (Reuters) – An escalation in U.S. sanctions against Moscow risks derailing a fragile recovery in Russia’s economy, which had just begun to take hold after the Kremlin’s last confrontation with the West in 2014, analysts and investors said on Monday.

The United States imposed major new sanctions against Russia on Friday, striking at senior Russian officials and some of the country’s biggest companies in one of Washington’s most aggressive moves to punish Moscow for its alleged meddling in the 2016 U.S. election and other “malign activity”.

“One gets the impression that since 2014 we have been convinced that sanctions are painless for our economy,” said Kirill Tremasov, head of research at Loko-Invest and former director of the Russian Economy Ministry’s forecasting department.

“This is completely groundless. What happened on Friday opens a new stage in relations with Western countries. We have found ourselves in a new reality. And it is very, very serious.”

Analysts and investors in Moscow said the sanctions could consign Russia to years of low growth, frustrating government efforts to stimulate a rebound from a two-year downturn brought on by low oil prices and Western sanctions over Moscow’s role in the Ukraine crisis.

Putin was re-elected for his fourth presidential term in March with a huge majority, but is under increasing pressure to meet voters’ expectations of better growth and assuage concerns about falling living standards.

SLOW-GROWTH ENVIRONMENT

After two years of contraction, Russian GDP returned to growth of 1.5 percent last year on the back of higher oil prices, still short of a government target of 2 percent.

Chris Weafer, a senior partner at economic and political consultancy Macro Advisory, said he still saw Russia’s economy growing by 1.8 percent this year, with oil prices above $60 a barrel.

“But the big question, of course, is ‘How long does Russia stay in this low-growth environment?’ That’s where the impact of sanctions happens,” he said.

“We all know that the economy needs to grow at a faster pace over the course of the next (presidential) term, it needs to get stronger – and sanctions and the impact on foreign direct investment, that’s where it comes in,” he said. “2018 is the year of Russia in the doldrums.”

The latest round of U.S. sanctions represents the biggest escalation in Western action against Russia since Washington and the European Union first targeted oligarchs close to Putin and their businesses over the Ukraine crisis in 2014.

Investors said the inclusion of people who are not traditionally seen as part of Putin’s inner circle showed that any Russian company or business leader could now be targeted.

Russia’s rouble suffered its biggest daily fall in over three years on Monday and stocks in major Russian companies also slid, as investors reacted to the new sanctions. State-owned Sberbank, often seen as a barometer of the wider economy, fell 17 percent in Moscow and aluminum giant Rusal <0486.HK> lost over half its value in Hong Kong after its main owner Oleg Deripaska was named on the sanctions list.

TIGHTER MONEY

The increased uncertainty and risk will make it harder for Russian companies to borrow abroad and reduce the amount of inward investment, said Tim Ash at BlueBay Asset Management.

“Unless there is a move to de-escalation, you have to assume that financing conditions around Russia will get even tighter,” he said. “Long-term, that’s going to be bad for growth and mean even more stagnation in the Russian economy.”

Natalia Orlova, head economist at Alfa Bank, said the central bank might now take more time over interest rate cuts that could boost growth: “Based on economic logic … it seems to me that it is dangerous to hurry with a rate cut in such uncertain conditions.”

Loko-Invest’s Kirill Tremasov said the biggest danger of the new sanctions might be in scaring foreign investors off Russian OFZ treasury bonds, popular in the West because of their high yields.

The yield on the benchmark 10-year OFZ rose as high as 7.32 percent on Monday as the price of the bond fell. It had stood at around 7.05 percent last week.

Foreigners’ holdings of OFZ bonds stood at nearly $40 billion, or 33.9 percent of all OFZ bonds as of Feb. 1, the last period for which data was available.

“For foreign investors, this is a very, very serious signal … and now there could be some OFZ outflows,” Tremasov said. “This will be reflected in the growth of interest rates in the economy.”

(Additional reporting by Andrey Ostroukh; Writing by Jack Stubbs; Editing by Kevin Liffey)

Iran tells Trump he would regret dropping nuclear deal

LONDON (Reuters) – Donald Trump will regret it if he pulls out of the nuclear deal with Iran, President Hassan Rouhani said on Monday, warning the U.S. President that Tehran’s response would be stronger than he thinks.

U.S. sanctions that were lifted under the Joint Comprehensive Plan of Action (JCPOA) of 2015 will resume unless Trump waives them again on May 12. Trump has effectively set that as a deadline for European powers to “fix the terrible flaws” of the deal.

“The new U.S. president – who has big claims and many ups and downs in his words and actions – has been trying for 15 months to break the JCPOA … but the structure of the JCPOA is so strong that it has not been shaken by such quakes,” Rouhani said in a speech broadcast live on state television.

“Iran will not violate the nuclear deal, but if the United States withdraws from the deal, they will surely regret it. Our response will be stronger than what they imagine and they would see that within a week.”

Iran has warned that it would ramp up its nuclear program if the JCPOA collapses, to achieve a more advanced level than before the deal.

Rouhani was speaking as Tehran marked National Nuclear Technology Day and unveiled what it said were its latest nuclear achievements including a nuclear battery and centrifuges for the oil industry.

Rouhani said Iran has been preparing for every possible scenario, including a JCPOA without the United States – which would still include European signatories, China and Russia – or no deal at all.

France, Britain and Germany are seeking to persuade their EU partners to back new sanctions on Iran, as a way to persuade Trump to stick with the nuclear deal curbed on Iran’s nuclear activities in return for sanctions relief.

Those sanctions would not involve measures that were lifted under the nuclear deal but would target individual Iranians that the EU believes are behind Iran’s ballistic weapons program and its support for Syrian President Bashar al-Assad.

Rouhani said on Monday that Iran’s missile capabilities were purely defensive.

“We will produce any weapons necessary to defend our country in such a volatile region. But we will not use our weapons against our neighbors,” Rouhani said.

Iran’s currency hit a new low on Monday on continued concerns over a return of crippling sanctions if Trump carries out his threat.

The U.S. dollar jumped in a day from 54,700 rials to 58,000 rials in the open market in Tehran, local media reported. A dollar was 36,000 rials in mid-September.

(Reporting by Bozorgmehr Sharafedin; Editing by Robin Pomeroy)

Before expulsions, a brick-by-brick hardening of U.S. stance toward Moscow

By Phil Stewart and Matt Spetalnick

WASHINGTON (Reuters) – America’s most sweeping expulsion of Russian diplomats since the Cold War may have seemed like a dramatic escalation in Washington’s response to Moscow, but the groundwork for a more confrontational U.S. posture had been taking shape for months — in plain sight.

While President Donald Trump’s conciliatory rhetoric toward Moscow has dominated headlines, officials at the U.S. State Department, Pentagon and White House made a series of lower-profile decisions over the past year to counter Russia around the world – from Afghanistan to North Korea to Syria.

The State Department earlier in March announced plans to provide anti-tank missiles to Ukraine to defend against Russia-backed separatists in eastern Ukraine. Trump’s predecessor as president, Barack Obama, had declined to do so over fears of provoking Moscow.

In Syria last month, the U.S. military killed or injured as many as 300 men working for a Kremlin-linked private military firm after they attacked U.S. and U.S.-backed forces. The White House, meanwhile, firmly tied Russia to deadly strikes on civilians in Syria’s eastern Ghouta region.

Both the White House and Pentagon’s top policy documents unveiled in January portrayed Russia as an adversary that had returned to the center of U.S. national security planning.

That was all before the United States said on Monday it would expel 60 Russian diplomats, joining governments across Europe in punishing the Kremlin for a nerve agent attack on a former Russian spy in Britain that they have blamed on Moscow.

Russia has denied any involvement.

With Monday’s announcement, however, it was unclear whether Trump is promoting – or just acquiescing to – the tougher U.S. stance developed by his advisers and generals.

Trump’s critics sought to portray him as a reluctant actor in any get-tough approach to Russia, even though one senior administration official described him as involved “from the beginning” in the expulsions of Russian diplomats.

“It is disturbing how grudgingly he came to this decision,” said U.S. Representative Adam Smith, the top Democrat on the House Armed Services Committee.

Still, the Trump administration’s actions run counter to widespread perception, fueled by the president’s own statements, that Trump has softened America’s stance toward Russian President Vladimir Putin amid a U.S. investigation into Moscow’s meddling in the 2016 presidential election.

Regardless of the tough actions, the inconsistent messaging may undermine Washington’s strategy to deter Moscow’s aggressive behavior, experts warn.

“U.S. signaling is all undercut by Trump’s lack of seriousness about Russia,” said Andrew Weiss, a Russia expert at the Carnegie Endowment for International Peace.

Just last Tuesday, Trump congratulated Putin on his re-election, drawing sharp criticism from fellow Republicans.

But in another sign of mixed messaging, Trump two days later named John Bolton, a strident Russia hawk, to become his national security adviser.

DOWNWARD SPIRAL

Although the nerve agent attack was the official trigger for the U.S. expulsions, Trump administration officials warned that the attack should not be viewed in isolation, citing a series of destabilizing and aggressive actions by Moscow.

In Afghanistan, Trump’s top commander on the ground accused Russia again last week of arming Taliban militants.

On North Korea, Trump himself told Reuters in January that Russia was helping Pyongyang evade United Nations sanctions.

And less than two weeks ago, the Trump administration imposed the first sanctions against Russia for election meddling and cyber attacks, though it held off on punishing business magnates close to Putin.

U.S. officials and experts widely expect ties to further deteriorate, at least in the near term, and caution that Russia’s next steps could extend far beyond retaliation against American diplomats.

“The risk of escalation doesn’t just come from tit-for-tat punishments,” said Matthew Rojansky, a Russia expert at the Wilson Center think tank in Washington, citing the potential for more aggressive moves from the Middle East to the cyber realm.

U.S. officials have said the Trump administration still seeks to avoid a complete rupture in bilateral relations. One official said Russian cooperation was still sought to address thorny diplomatic issues like North Korea and Iran.

(Additional reporting by John Walcott; editing by Mary Milliken and G Crosse)

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