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Iran faces its most critical moment since the 1979 Revolution

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Iran’s President Hassan Rouhani addresses parliament in the capital Tehran on September 3, 2019.

ATTA KENARE | AFP | Getty Images

DUBAI – Iran faces a time of reckoning, and the stakes couldn’t be higher: potential war with the United States, the reversal of its gains across the Middle East and the future of its revolutionary state.

It would surprise most Americans how little the Arab public and media here – nine time zones from Washington, D.C. – were occupied this week with the congressional hearings on impeaching President Donald Trump. They instead were focused on the crisis in Iran, just 600 miles away from the UAE as the drone flies.

This defining moment for Tehran – perhaps the most critical since the Iranian Revolution of 1979 — has been prompted by the Trump administration’s “maximum pressure” campaign of sanctions, Iran’s dangerously declining economy, and the cumulative effect of Tehran’s domestic malfeasance and regional overstretch.

Growing protests in Iran, Iraq and Lebanon have charged the atmosphere with urgency.

What’s clear is that the growing scale of the challenge makes it difficult for Iran to pursue its earlier approach toward mounting U.S. pressure: hunkering down and waiting out the Trump administration through the November 2020 election in the hope of Democratic victory.

What’s less clear is whether Tehran over the short term will respond to this historic test with more military escalation, diplomatic compromise – or a combination of both.

Diplomats in the Middle East argue that the United States has put itself in a good position to shape that choice. They argue Washington could take advantage of Iran’s increased difficulties by working more closely with European and Mideast allies to frame an offer that would ease sanctions but put in place a process that would block Iran’s path to a nuclear weapon and end its foreign policy of regional meddling.

However, that sounds like wishful thinking in the world of Washington’s distractions, transatlantic distrust and Iranian outrage. Trump administration officials are sanguine, arguing that at the very least the sanctions have cut deeply into the resources Iran can invest in its proxies. Protests at home and abroad are usefully soaking up regime energies.

The danger is that may risk further military escalation to gain attention and leverage, following its June 20 shooting down of the American drone and its Sept. 14 strike on Saudi oil processing facilities. Or it could take further steps away from its nuclear agreement of 2015, having this month resumed low grade uranium enrichment at its underground Fordow nuclear plant to 60% of fissile purity, not far from the 90% level required for nuclear bomb fuel.

It’s hard to imagine Iran entering the expanded talks the U.S. would want without first getting the sanctions relief Trump has thus far refused. Yet it’s just as difficult for Iran to imagine that the status quo is sustainable, amid a collapsing economy and rising protests.

It’s hard to imagine Iran entering the expanded talks the U.S. would want without first getting the sanctions relief Trump has thus far refused. Yet it’s just as difficult for Iran to imagine that the status quo is sustainable.

The challenges to the Iranian regime have been sharpened by ongoing demonstrations at home since Nov. 15 that have resulted in at least 106 and as many as 200 deaths in 21 cities, according to Amnesty International. Those numbers have been increasingly difficult to verify or update due to the regime’s shutdown of the internet this week. (The U.S. Treasury on Friday added the Iranian Communications Ministry and its minister to the sanctions list for that action.)

At the same time, widespread protests in Iraq and Lebanon are also taking aim at Iran’s influence and proxies. What’s at risk for Iran are decades of investments that have transformed the country into the Mideast military and political power it is today. U.S. officials reckon Iran has spent some $16 billion on Iraq, Lebanon and Yemen since 2013 – and $10 billion on Syria. It is estimated to spend $700 million a year on Hezbollah. That support is increasingly difficult to sustain both financially and politically among Iranians – and there are new reports that Hezbollah, Iran’s proxy in Lebanon, increasingly has been engaged in fund-raising drives.

What’s also changed is that Iranian leaders are conceding that the economic pressures on them are growing – after a long period of insisting they could easily sustain the sanctions. They are taking unprecedented and perhaps counterproductive measures to address the problem. What triggered the current protests was Iran’s midnight announcement on Nov. 15 that it would cut fuel subsidies and increase the price of gasoline by 50%.

“We all know too well that we are not in normal and easy circumstances,” Iranian President Hassan Rouhani said recently, calling it the worst economic situation in four decades. “The conditions are very complicated. … Since the beginning of the revolution until today, we have never faced so many difficulties in moving an oil tanker from our ports and harbors to the world.”

Though Iran’s economic numbers can be unreliable, what’s clear is that under the sanctions regime it’s oil exports have dropped from 2.5 million barrels a day after the lifting of sanctions in 2016 to 400,000 barrels per day and perhaps as little as 200,000.

Rouhani has said that some $25 billion of the state’s annual budget of $39 billion has been covered by oil exports. Beyond that, the export decline has prompted the International Monetary Fund to project that Iran’s economy would shrink by 9.5% while inflation would surpass 35%. Iran’s own inflation projection of 42% is even more pessimistic.

Economic sanctions have a mixed history when it comes to bringing about political change.

That said, it is difficult to imagine a moment when the West’s leverage could be higher. Thus, Germany, Britain and France should get ready to consider moves to reinstate international sanctions on Iran over breaches of its 2015 nuclear deal, as suggested by German Foreign Minister Heiko Mass, and such deeper sanctions should be at the same time accompanied by more intense diplomacy.

The problem from the Western side, say leading diplomats, is that it’s hard to know what Iran wants nationally and regionally. It’s been even more difficult to know with whom in Iran one can negotiate most effectively. Supreme Leader Ali Khamenei – with whom no one has negotiated – holds the cards.

Until those answers are known, the best approach is to continue and expand the maximum pressure and prepare for a range of increasingly unpredictable Iranian responses – focusing as deeply on deterrence as diplomacy.

Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.



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Trump suspends travel from Brazil as coronavirus pandemic worsens in South America

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US President Donald Trump arrives to take part in a joint press conference with Brazil’s President Jair Bolsonaro in the Rose Garden at the White House on March 19, 2019 in Washington, DC.

Jim Watson | AFP | Getty Images

President Donald Trump is suspending travel from Brazil to the U.S. as the coronavirus pandemic worsens in Latin America’s largest nation and economy. 

The president’s order, published Sunday, denies entry to “all aliens” who were in Brazil two weeks prior to their attempted entry into the United States. The order takes effect May 28 at 11:59 pm ET. 

Brazil has rapidly become one of the hardest hit countries in the world as the World Health Organization warns that the epicenter of the pandemic has shifted from Europe and the U.S. to South America. 

“We’ve seen many South American countries with increasing numbers of cases and clearly there’s a concern across many of those countries, but certainly the most affected is Brazil at this point,” Mike Ryan, executive director of the WHO’s emergencies program, said Friday during a news briefing at the organization’s Geneva headquarters. 

Brazil has more than 347,000 confirmed cases of the virus and at least 22,013 people have died, according to data from Johns Hopkins University. At this point only the United States is harder hit in terms of total positive cases. 

Brazil President Jair Bolsonaro has repeatedly downplayed the virus, dismissing it as a “little flu” and attacking stay-at-home orders imposed by governors as a “crime.” He is a close ideological ally of Trump. 

Bolsonaro’s own press secretary tested positive for the virus in March after attending a gathering with the Brazilian president and Trump at Mar-a-Lago. The incident raised concern about the health of Bolsonaro and Trump at the time, though both leaders have tested negative for the virus.  

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U.S. likely impose sanctions against China over Hong Kong law

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Hong Kong Chief Executive Carrie Lam attends the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing on May 22, 2020.

Leo Ramirez | AFP | Getty Images

The U.S. government will likely impose sanctions on China if Beijing implements national security laws that would give it greater control over autonomous Hong Kong, White House National Security Advisor Robert O’Brien said Sunday. 

The draft legislation represents a takeover of Hong Kong, O’Brien said, and as a consequence U.S. Secretary of State Mike Pompeo would likely be unable to certify that the city maintains a “high degree” of autonomy. This would result in the imposition of sanctions against China under the Hong Kong Human Rights and Democracy Act of 2019, O’Brien said.  

Pompeo has already called the proposal a “death knell” for Hong Kong’s autonomy. O’Brien warned that Hong Kong could lose its status as a major hub for global finance. 

“It’s hard to see how Hong Kong could remain the Asian financial center that it’s become if China takes over,” O’Brien told NBC’s Chuck Todd on “Meet the Press.” He said financial services initially came to Hong Kong because of the rule of law that protected free enterprise and a capitalist system.

“If all those things go away, I’m not sure how the financial community can stay there. …They’re not going to stay in Hong Kong to be dominated by the People’s Republic of China, the communist party.” 

The legislation was announced during the annual session of China’s parliament, the National People’s Congress. The session had been delayed for months during the coronavirus pandemic. Hong Kong faced months of at times violent anti-government protests before the pandemic effectively shut China down.  

Hong Kong has been governed under the “one country, two systems” principle since the former British colony was returned to Chinese rule in 1997. The system gives Hong Kong a high degree of autonomy and a greater degree of freedom for the special administrative region than the rest of China. 

A draft decision on “establishing and improving the legal system and enforcement mechanisms” for Hong Kong was submitted to China’s parliament Friday, according to state news agency Xinhua. A document explaining the decision said the one-country two systems principle “has achieved unprecedented success in Hong Kong,” but the “increasingly notable national security risks” in the city “have become a prominent problem,” according to Xinhua.  

The document says activities “have seriously challenged the bottom line of the ‘one country, two systems’ principle, harmed the rule of law, and threatened national sovereignty, security and development interests,” according to Xinhua.

The move from China has incited strong opposition from pro-democracy activists and politicians. Thousands of protesters demonstrated for the first time since the introduction of the national security laws on Sunday. Hong Kong police fired tear gas and pepper spray to disperse the crowd.

Nearly 200 political figures from the U.K., Europe, Australia, North America and Asia condemned the laws in a joint statement. 

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Airlines change summer air travel procedures

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Ahead of the Memorial Day holiday weekend, all states in the U.S. began to lift some restrictions implemented to halt the spread of the coronavirus. Government officials are still urging people to practice social distancing and to wear masks in public. 

Changing opinions from scientists and health officials have contributed to some people refusing to wear masks because public health authorities initially advised against wearing masks, saying there was little evidence that it would help prevent people from getting sick.

China’s top diplomat criticized U.S. efforts to hold China accountable for its alleged role in the spread of the coronavirus, calling any aims to force Beijing to pay compensation for the coronavirus a “daydream.”

The number of coronavirus fatalities in New York state fell below 100, Gov. Andrew Cuomo said on Saturday, marking the lowest daily death toll since March 24.

This is CNBC’s live blog covering all the latest news on the coronavirus outbreak. This blog will be updated throughout the day as the news breaks. 

  • Global cases: More than 5.33 million
  • Global deaths: At least 341,513
  • U.S. cases: More than 1.62 million
  • U.S. deaths: At least 96,046

The data above was compiled by Johns Hopkins University.

Air travel is going to look different this summer because of the coronavirus

9:03 a.m. ET — Memorial Day weekend is the traditional kickoff to the peak travel season and while demand is showing some signs of life, it is still down about 90% from a year ago. The virus and concerns about it spreading have prompted new procedures at airlines and federal agencies.

The Department of Homeland Security, which includes TSA and customs, is exploring temperature checks at airports. The Transportation Security Administration is also changing some polices to limit physical contact, such as asking travelers to scan their own boarding passes and that they remove food and other items from their bags so officers don’t have to touch bins.

Starting this month, U.S. airlines require that travelers wear masks on board. They are tweaking boarding to fill seats from back to front to limit contact with other travelers. Some airlines are limiting the number of travelers on board, or letting travelers know when their flights are full. Experts warn its nearly impossible to socially distance on an aircraft, however. —Leslie Josephs

AngloGold Ashanti closes mine in South Africa after 53 employees tested positive

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