US Election Winner May Face a Dangerous Iran.
By AIC News – Posted on October 18th, 2012 – The American Iranian Council,
By Shahir Shahidsaless
Until recently, observers reasoned that the likelihood of Iran closing the strait would be slim because Hormuz is the only route for Iran’s oil exports, and the main route for its food imports. This calculus, however, appears tottery and uncertain today, as Iran’s oil export plummets, clearing its oil money becomes extremely hard, and its economy steeply declines.
Iran is likely to adopt a new and aggressive stance on the nuclear matter because Iranian leaders surmise that they can change the game. This position, however, may lead to an all-out war.
Following the European Union ministers meeting in Luxembourg on October 15, more sanctions were announced against Iran. According to the new set of sanctions all transactions between European and Iranian banks will be prohibited, except those with advance official permission or for humanitarian purposes, sources report. Analysts say that as a result of new sanctions Iran will lose the ability to clear its oil money in Euros. While Iran is already locked out of US transactions, these new EU sanctions can paralyze the country’s trade.
David Cameron, the British Prime Minister, in a speech to the United Jewish Israel Appeal in London, said: “I have said to Prime Minister Netanyahu that now is not the time for Israel to resort to military action.” He added, “The regime faces unprecedented pressure and the people are on the streets…We need the courage to give these sanctions time to work.”
Part of Mr. Cameron’s assertion is true. The economic situation in Iran is becoming perilous. As the national currency crisis unfolds, inflation is spiraling out of control. Sanctions have reduced Iran’s oil production to a 22-year low, while sanctions have also made it extremely difficult to access and transfer oil money. Mohsen Rezaii, Secretary of Iran’s Expediency Council, remarked, “They have made trade difficult for us. They don’t let us sell oil and when we sell oil, don’t let us get our money from the Chinese bank[s].” Iran’s Supreme Leader Ayatollah Khamenei, who in the past dismissed the effects of sanctions, for the first time during an angry speech, said, “These sanctions are barbaric. This is a war against a nation.”
However, Mr. Cameron and policy-makers in the US completely ignore the fact that the status quo is precariously unstable. It would be a grave mistake to assume that the Iranian government will stand idly by while gripped by paralyzing sanctions, and with its very survival threatened.
The potential for retaliation by Iran against sanctions has been a concern for the West in recent years. Iran repeatedly states that it has the capability of closing the Strait of Hormuz. Last month’s massive minesweeping exercise in the Persian Gulf, led by the US, reflected this West’s concern.
Earlier this year, Saudi Arabia and United Arab Emirates opened new pipelines that when they become fully operational will be able to bypass the strait and handle 6.5 million barrels of oil per day. The figure represents 40 percent of the oil exported from the region. However, still the majority of oil must be traded by using supertankers that should pass through the Strait of Hormuz. Besides Iran, Kuwait, Qatar, and Bahrain do not have any alternative route to ship their oil.
With sanctions tightening, dangerously reduced oil revenue may lead Iran’s leadership to the conclusion that a radical move in the Strait of Hormuz is a calculated risk that could ultimately change the game in favor of Iran.
Contrary to the US officials’ perception, keeping the Hormuz Strait open is not the issue. The crux of the strait issue resides in keeping it safe and secure, thus guaranteeing uninterrupted flow of oil. As Zbigniew Brzezinski, current international relations professor at John Hopkins University maintains, once the strait becomes a dangerous place the price of oil will skyrocket even it is not closed.
Iran can disrupt energy supplies – including oil and 20 percent of globally-traded liquefied natural gas – without closing the strait. In July 2012, Fars News, the news agency which reflects viewpoints of the Iranian Revolutionary Guards Corps (IRGC), published a long, meticulously researched, and noteworthy paper titled, “A study about the role of the Strait of Hormuz in the balance of power between Iran and the West.” The paper read:
“…complete closing of the strait by the Islamic Republic of Iran for extended duration may lead to the formation of an international coalition against Iran…therefore it doesn’t seem a logical option. But another option for the Islamic Republic of Iran is to imperil those traveling through the Strait of Hormuz…The outcome of this action would be the formation of a crisis in the global economy and a divergence between oil consuming countries and America. Meanwhile, as the economies of Europe and America toil, any disruption in oil supply will intensify the crisis. In fact, closing the Strait of Hormuz would mean, ‘making naval transit unsafe and the region look like a war zone,’ so that no government feels immune to an attack by [our] conventional armed forces, unidentified boats, or naval mines.”
Iran may use proxies to carry out attacks without directly becoming involved or simply stop supertankers from passage through its territorial waters in the narrowest parts of Hormuz, under the pretext of inspection. As oil prices soar, the conflict between Iran and the US could spiral, and ultimately transform into a disastrous military conflict.
The root cause of the deadlock over Iran’s nuclear program is the demand by the US (and of course Israel) for “zero-enrichment.” This exaction will most likely meet with insouciance, regardless of how much pressure is imposed on Iran. Iran’s leadership, even if it wanted to, could not agree with any resolution resulting in the complete suspension of their uranium enrichment program, due to the reasons and perceived costs that this author have discussed before.
The current pattern exponentially heightens the potential for a military conflict, unless demands for the complete suspension of uranium enrichment are replaced by strict and intrusive monitoring by inspectors of the International Atomic Energy Agency (IAEA) to limit Iran’s enrichment of uranium.
For the moment, US presidential elections have stifled new developments. Once the elections conclude, whether for the current US administration or a new president and his cabinet, Iran, most likely appearing dangerous, will take the center stage.
This article is part of Insider & Insight, a new AIC program aimed at providing different perspectives and analyses on key developments in US-Iran relations.
The commentary and opinions expressed herein are solely those of the author and do not reflect the official position of American Iranian Council.
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The Political Economy of Iran Under the Qajars.
By AIC News – Posted on October 18th, 2012
by Hooshang Amirahmadi, Professor at Rutgers University.
“The Political Economy of Iran under the Qajars,” is the latest book by Professor Hooshang Amirahmadi. The political economy of Iran underwent the fundamental transition from feudalism to modernity from the early 19th to the 20th century: a period which was a vital watershed in Iran’s historical development.
This book provides a critical analysis of Iran’s economic, social and political development and shows how the path to modernity, far from smooth, was hindered by both internal and international factors. These included a powerful monarchy with little interest in administrative and economic reform; a large, corrupt aristocracy frequently holding vital provincial governorships and frustrating effective central government; and a failure to create a modern civil service, military, banking, finance or communications – the essential infrastructure for economic development. Reformers were marginalised, and business suffered. And the all-powerful ulema were a further brake on modernisation.
On the international front, the rivalry of Britain and Russia compounded the problems: both acting to control Iran and to further their own interests.
Hooshang Amirahmadi explores the roots of present-day challenges to modernisation and progress and, using a wealth of primary sources and original research, has produced a work which is invaluable for students of modern Iranian history, politics and Iran’s political economy.
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‘This comprehensive book on the convoluted and truncated transition to modernity is a must read for anyone wishing to develop a deeper understanding of the challenges facing Iran today and, indeed, many of the developing nations.’ – Shireen Hunter, Georgetown University
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‘This is a lucid and succinct application of underdevelopment and dependency theories to Qajar Iran. It should become essential reading for anyone interested in the complex debates over the nature of the political economy of pre-modern Iran.’ – Ervand Abrahamian, Fellow of the American Academy of Arts and Sciences.
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Hooshang Amirahmadi is Professor and former Director of the Center for Middle Eastern Studies at Rutgers University. He holds a PhD from Cornell University and is the founder and president of the American Iranian Council. His publications include Revolution and Economic Transition: The Iranian Experience, three books in Farsi and numerous edited books and journal articles.
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Iranians Remember
* The Use of WMD’s during the Iran-Iraq War – 1980-1988
The Point: The Iran-Iraq War was fought for eight years and had devastating effects on both countries. Throughout the war Iraq used chemical weapons on the Iranian military as well as on Iranian civilian populations. There are several instances during the war that Iraq used harmful chemical weapons, which had been banned from use since the Geneva Protocol of 1925. Initially, Iraq denied using any chemical weapons, but as the war raged, chemical experts were sent into Iran to examine the possible use of chemical weapons. Irrefutable evidence was discovered that mustard gas and nerve gas were pervasively used along the border region in Iran.
* * “War of Cities” during the Iran-Iraq WarThe Point: The Iran-Iraq war had been fought for several years and the casualties for both countries were mounting. The war had cost both countries billions of dollars and several hundred thousand dead. By 1985, the war had degenerated into a war of attrition as both sides did not have enough equipment to mount effective offensives. Both Iran and Iraq had massive infantry armies that ground to a halt and ensued in a stalemate as military leaders scrambled to find new methods of inflicting damage on the opponent. One of these methods, developed by Iraq, resulted in bombing Iranian cities. The idea was to attack the civilian population in hopes of draining their morale and in effect losing the will to carry on the fight. This was a barbaric and deplorable tactic used by Iraq.
Algiers Accords: 1979-1981
* * * The Point: The Algiers Accords was an agreement between the United States and Iran in 1981 that dealt with the aftermath of the Islamic Revolution in Iran. At the core of the agreement was the contentious issue of American embassy personnel that were being held hostage by the Iranians. The Algiers Accords largely benefited the United States and did little to appease both parties. Indeed, as the years passed by it became more and more evident that the Algiers Accords were exclusively beneficial to the United States, especially after the US neglected to uphold its parts of the agreement. The Algiers Accords was drafted by the United States, Iran, and Algeria was the intermediary between the two conflicting actors. In print the accord essentially ended all formal diplomatic relations between the United States and Iran. This was an unfortunate result which set the confrontational precedent between the two countries for the next several decades.
The United States is considering trying to establish a direct military hotline with Iran in order to defuse potential confrontations between the two countries’ military forces.The proposal would create a link between the Iranian Navy and the U.S. Navy’s Fifth Fleet, which is based in the Gulf island nation of Bahrain.
There is a particular concern about a fleet of speedboats likely controlled by Iran’s elite Revolutionary Guard, which they say has been involved in several near-altercations.
A WSJ report says it is unclear if the hotline idea has been raised with Iran, and said the White House, Pentagon and an Iranian diplomat all declined to comment on the matter. The United States has not had diplomatic relations with Iran since 1980.
The Journal quoted Pentagon press secretary George Little saying the U.S. remains concerned about “Iran’s destabilizing activities and ambitions.”
* * * * * India and Iran, relations through oil
Iran and Indian relations are defined by the export and import of crude oil. But with the U.S. sanctions as they stand today along with the world financial instability the Indian government finds itself in debt with Iran. India currently owes the Islamic Republic 5 billion dollars, and the debt is mounting.
The difficulty lies in the U.S. sanctions, which prohibit transactions with the use of the dollar with Iran. Thus banks are afraid of handling such transactions out of fear and the country finds itself out of options.
Indian refineries, which import crude oil from Iran, are now stuck between a rock and a hard place as they nervously await the month of august, a month where it is still unclear whether they will be importing fuel from Iran.
With the third week of July over, Iran has yet to signal a continuance of trade with India. Such a signal indicates that India needs to find a solution to the payment problem, or else face the consequences.
India imports 400,000 barrels of crude from Iran a day and with such a supply cut off, the country could face disastrous results.
There are four reasons why the crisis is especially difficult for India to find a solution.
India exports very little to Iran meanwhile importing a lot. This means that the country cannot hope to barter with Iran and hope to recoup the debt and the cost of importing crude oil with a form of goods exchange.
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