Since, historically, desperate countries do desperate deeds, the US and the world had best be prepared. It all has to do with the price of oil and the cost of ambition.
In a way the situation which is developing today is reminiscent of that which provoked the attack upon the US and the UK by Imperial Japan in December 1941. Then the reason was oil. The US was the single greatest source of oil for the factories and war machine of the Japanese Empire. When the Roosevelt campaign of escalating economic sanctions, which was intended (at least by Secretary of State Cordell Hull) to force the Japanese to end their aggression in China, reached its final stage, the Japanese were left without a supply of oil, particularly refined aviation gasoline.
This left the Japanese with two alternatives. The first was a humiliating capitulation to US policy demands. The second was the seizure of the oil fields and refineries of what was then the Dutch East Indies.
Taking the second option would assure war with both the US and the UK if for no other reason than the shipping routes from Indonesia to the Japanese home islands ran between the British outpost at Singapore and the US bases in the Philippines. Since both countries were dedicated to protecting the integrity of the Dutch East Indies, only removal of the threat to oil convoys would make the effort of taking the oil resources worth the effort.
The Japanese naval high command and its exceptionally able and honest strategist, Admiral Yamamoto bet that the UK and the US would be so preoccupied with the Germans that a single short series of shocks to both countries would allow the Japanese to achieve their strategic goal. Yamamoto was never sure that it would, fearing that the necessary surprise attacks upon the centers of US naval power at Pearl Harbor and in the Philippines would "awaken a sleeping giant who would pursue us without remorse."
Still, it was the least-worst of the options. The Japanese attacks were successful and for six months, just as Yamamoto predicted, the Empire rode high on the waves. The American eagle had its perch broken and its beak shoved in the dreck of defeat. It did, again as Yamamoto had predicted, take wing again and come after the Japanese with a complete dedication to the destruction of the Empire.
Desperate countries do desperate deeds.
Iran is now a desperate country. It is desperate because without oil prices above a minimum of ninety bucks a barrel, it cannot meet the needs of its population. Also, the mullahocracy cannot continue to invest vast resources in its effort to achieve both nuclear capacity and the status of regional hegemon.
When OPEC cut production 1.5 million barrels per day, that cut was no where near enough to boost the price of oil to the minimum required by Iran's budgetary requirements. The force behind the almost token cut was Saudi Arabia and it's fellows on the Arabian Peninsula. These oil states with the cushions of massive sovereign wealth funds need no more than fifty dollars a barrel to do handsomely.
(It might be noted that Iran's oil infrastructure is in such bad shape that it was not pumping all that it was allowed to before the cut and will not be able to move as many barrels per day as it is allowed under the new production regime.)
Iran (and Venezuela, but the Geek will ignore the New Workers' Paradise for now) was left in the cold of relative pauperdom. Due to the imprudence of President Ahmedinejad, the "rainy day" fund established during the glory days of triple digit prices under the control of the Iranian central bank no longer exists. As a result the Iranians do not have even a very short term reserve.
The central bank continues to crank out money, but the money is worthless. Inflation is currently running at the thirty percent level.
Eighty percent of Iran's foreign exchange comes from oil revenues, so the treasury is as empty as an Obama foreign policy statement. The last attempt by the mullahocracy's front man to up the government's internal take, a three percent value added tax, was withdrawn after the shopkeepers of the bazaar shut up shop and took to the streets. A new thrust in the VAT direction is not likely to go over any better.
It is definitely panic time in the mullah's corral. And, desperate countries do desperate deeds.
The desperation felt in the Iranian government is evident in the latest round of shrill rhetoric coming from both President Ahmedinejad and his rival for power, Speaker of the Majlis Larijani, regarding the near-collapse of the "world bully," the US. Ahmedinejad told his audience that the "American empire in the world was reaching the end of the road."
Yeah, right.
The empireless US is having a tough time. The tough time will continue and probably worsen in the months to come as the global recession deepens. But the US is not near the end of its road.
The situation for Iran is different. The economic distress currently being felt by the Iranian people can only get much, much worse. The combination of sheer ambition and fiscal mismanagement along with the cumulative impact of the sanction campaign assures that reality.
Desperate countries do desperate deeds.
Iran has a number of options available to it in an attempt to seek a higher price for its oil. The Iranian funded Mahdi Army in Iraq could be brought back on stream. Muqtada Al-Sadr could crank up his troops quickly and effectively should Tehran give the word. (This possibility should give the Sunnis in Iraq some pause for thought as the SOFA is under consideration. Do they really, really want the Shiites to start shooting again?)
The Iranian Revolutionary Guard Corps (naval section) could seize or fire on an oil tanker transiting the Straits of Hormuz under some transparent cover or another. Violation of sovereignty. Water pollution. Killing fish without a license. You get the drift.
The consequent impact upon insurance rates if nothing else would slow or end the transport of oil from Basra. (Another cause for thought on the part of (any) responsible Iraqi politicians considering the SOFA.)
Another option open to Iran is cranking up its creature Hezbollah. This could easily have the effect of producing another round of exsanguination as Israel seeks to squash once again the rocket firing lads in Lebanon or their Hezbollah aided, supported and trained colleagues in the Gaza. The inherent attractiveness of this option is enhanced by the upcoming Israeli elections, the relatively high degree of war-weariness in the Israeli population and the vulnerability of the population to casualties inflicted at acceptable risk (at least to Tehran.)
Even discounting the recent low-credibility reports holding that the recent seismic events in southwest Iran were caused not by nature but by Iranian nuclear weapons tests, the capacity of the Iranians to cause trouble on a large scale is impressive. It is certainly sufficient to cause the desired escalation in the price of oil.
Gosh, looks like there may be a challenge, a test, waiting for the next president as he steps into the Oval. The Iranians--at least Speaker Larijani--hope the man behind the big desk is named Obama. After all, as the Speaker observed, Obama is "more mature" than McCain.
Interesting question for all of us. Who is right? Sarkozy with his observation that Obama's views on Iran are "utterly immature" or the Speaker of the Majlis?
Subscribe to:
Post Comments (Atom)
2 comments:
Actually, for Iran there's a three headed counterpoint that's currently emerging that is strongly suggesting to Iran that they not get too crazy about tweaking the "Great Satan" in the sandbox, because Iran will also be pissing on three other pairs of footwear at the same time. Namely, Kuwait, Saudi Arabia, and Iraq.
It's one thing to do this when oil was $100 a Bbl. or so - everybody liked a good tweak to the West, and the money was flying high as far as one could see. But now it's a little different. There's more than a little bit of concern that oil demand hasn't just slumped, but has substantially decreased, and we haven't seen bottom yet - and worse, the decreases might be structural in nature.
Also, there's real concern in some OPEC quarters that efforts are being made (not by government yet, as much as by business) to cut back petroleum requirements by increased efficency, because those $140+ Bbl. prices left a mark, no matter how temporary.
Also, Right about now, OPEC does not need to be cast into the spotlight as being a contributor (right or wrong) to the entire financial crisis - time to lay low and let the stuff blow over.
Iran feels they win by bluster and confrontation - the other folks do not play that same way. Bluntly, they won't confront Iran - they'll probably (a) Come out in favor of a joint Iraqi-US security agreement, and (b) Just drive crude prices down to the $40 to $50 a Bbl. range for a year or so to send the carpet merchants across the way a second message.
Basically, the rules for the game will be simple. The US shuts up, says nothing, and once we get the cue from the "3 headed group" (probably only if Iran tries to muscle things), goes in militarily and breaks a whole bunch of stuff - and then we back off. If the Iranians get too outrageous, the "breaking things" part is to specifically cover a dramatic reduction in their gasoline refining capacity (couple dozen or so Tomahawks with bomblets per refinery ought to do just fine), and use of their ports (back to the mines).
As to:
"Interesting question for all of us. Who is right? Sarkozy with his observation that Obama's views on Iran are "utterly immature" or the Speaker of the Majlis?"
Well, betting we get to find out within the first six months in office. But there's a bigger issue - This type of situation also has the serious potential to completely split the Democratic party going into the mid-term elections in 2010.
Because if Iran thinks "the anointed one" can be rolled by such a manufactured international crisis, wait until you see the segments of his own party turn on him afterward. That's going to be brutal. He'll be back wishing he was spending all his time on the campaign trail.
Never want the job so badly - you just might get it.
You're bang on, it's a lot more fun to campaign than it is to sit in the Oval. In any event the Geek will be watching with interest and more than a little trepidation to see just how the One meets the first big "test" given his ideological orientation and, as you noted, the fissures within his party.
Post a Comment