Tanzania Facing Blowback From US-Iran Sanctions Spat

The East African nation of Tanzania has wound up in the middle of the sanctions fight between the United States and Iran.

The reason is Tanzania's decision to allow at least ten Iranian-owned oil tankers to re-register themselves in Tanzania; the ships, according to Bloomberg, are owned by Iran's NITC corporation but will fly Tanzania's flag and will, for all legal purposes be Tanzanian.  The move would allow the tankers to effectively skirt the sanctions regime imposed by the US and European Union on Iran over that country's nuclear research program.  While most of the focus on the sanctions has been on their embargo against Iran's oil exports, another piece of the sanctions also bans the issuing of insurance for Iranian ships carrying cargoes of Iranian oil.  Since a tanker's cargo can be worth millions, or tens of millions, of dollars and the liability involved in an accident that leads to an oil spill can exceed even those figures, companies aren't willing to run the risk of sending out uninsured oil cargoes.  Flagging these tankers as Tanzanian though could help Iran to skirt the insurance ban.

As expected, the US isn't happy about this move, and officials are already saying that the re-registering could harm US-Tanzanian relations.  Howard Berman, the top Democrat on the House Committee on Foreign Affairs issued this warning: “If Tanzania were to allow Iranian vessels to remain under Tanzanian registry, we in the Congress would have no choice but to consider whether to continue the range of bilateral U.S. programs with Tanzania.”  That would likely include $571 million worth of US financial aid and investment earmarked for Tanzania in 2013.

For their part, the Tanzanian government is saying very little.  Most requests for comment from Bloomberg went unanswered, though one official did say that the stories were inaccurate since the tankers in question were previously registered in Cyprus and Malta, which while apparently true does not mean that they were not also owned by NITC.

So the US seems to be involved in another diplomatic game of chicken over the Iranian sanctions.  If the US government can't successfully pressure Tanzania into dropping their registration of the Iranian  tankers then the decision has to be made over whether or not to levy sanctions against Tanzania, including cutting off more than a half-billion dollars worth of foreign aid.  But if the US decides to go that route, it will hard to see the decision as anything but hypocritical.  Recently the US granted an “exemption” to the sanctions to China – Iran's biggest oil customer.  China had been openly defying the US over the sanctions, arguing that they didn't need to abide by them since the sanctions were not authorized by the United Nations, the only body, China argued, that had the ability to levy such wide-ranging sanctions in the first place.  But rather than engage in a diplomatic fight and possible trade war with China, the US quietly exempted them from the sanctions.

Should the US punish Tanzania for their actions, the clear message sent will be that the United States is more than willing to play the role of the world's policeman, so long as you're too weak to do anything about it.