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By Fester:
The United States and the West have very little leverage in Iran. Global trade is falling fast, global credit is far less available now than it was three years ago, and oil prices are going up again in dollar terms past Iran's break even point. The US military is tied down in two wars, the rest of NATO either can not or will not deploy additional forces to Afghanistan to act as fungible units to free up US forces. There are not too many obvious and effective leverage points avaialble to nation states that want to lend support to the protesters or to harm the current regime.
The only plausible leverage point is economic. A complete embargo on the oil as a means of pressuring the ruling elite is being proposed. We know that sanctions have worked wonders on quickly overthrowing the Castro regime in Cuba.... instead of allowing the elites to blame outside actors for their own failings.
Raymond Lears at the Huffington Post proposes this idea without thinking through the consequences.
Though the United States does not currently import Iranian crude, the fungiblity of oil is such that our government espousing such a boycott would carry a meaningful impact. The cutoff of Iranian oil shipments through a buyer's boycott is entirely feasible in the structure of today's oil market. Inventories throughout the world are filled to overflowing, supertankers are loaded with 100's of millions barrels oil, lying at anchor at sea waiting for customers or storage on shore....Without the income from oil, Iran's dictatorship will be increasingly vulnerable.
There are several significant practical road blocks to this.
First is the political-economic one of domestic political support in Europe or Japan --- all of those economies are under as much or more pressure than the US economy with consumers retrenching, concerns about jobs and concerns about debt levels --- where is the political support for individuals to pay another ten to fifteen percent per gallon/liter if the boycott was 100% effective? That to me seems like the quickest way for a government to lose its mandate as they would be effectively be placing a regressive tax that would mainly be a transfer from oil consumers to non-Iranian oil producers.
The countervailing effect is that the boycott would not be effective as Iran would still be able to export several million barrels of oil per day to a different customer set.
We know that China has two primary current foreign policy concerns. The first is to maintain its supply lines for crucial raw materials. This is fueling the expansion of Chinese trade with Brazil and Australia as well as backing the Chinese influence push into Africa. Iran already has decent to good ties with China and as a customer of last resort, those ties would strengthen. The second major foreign policy concern for China is a concerted effort to push for a precedent of international non-interference in the internal affairs of nation states. China and its oil buyers will not be a part of a buyers' embargo.
The end result is public diplomacy masturbation as the embargo would be toothless while giving the current hardliners a validation of their story that they and the rest of the Iranian people are being pressured by foreign, colonialist influences. That is not a good solution
Obviously -although it�s the last thing Team Obama wants to hear- Ronald Reagan�s support of Poland�s Solidarity in the dark days of the Soviet-ordered crackdown is the model here- not the preposterous straw-man argument of �what are you going to do, invade?� disingenuously presented by the do-nothing, Obamapologist left.
ReplyDeleteAnd isn�t this what George W Bush told you was going to happen in the Middle East in the wake of Iraq�s liberation?
Maybe that�s why Barack Obama has so little apparent interest in finishing the job in Iran� no matter how much it benefits the US and free world.
That, and the fact that he�s already piled all his chips on legitimizing this vile regime- a democratic revolution at this point would be downright embarrassing for him.
Any Oil emargo may come from the Iranians themselves. Work slowdowns and maybe some sabotage. Those who are revolting are the very ones needed to keep the Iranian economy functioning.
ReplyDeleteOIl is also not as fungible as Lears suggests. Many oil producing countries have bilateral contracts for oil. And those contracts can, and do, specify supply rate, total volume, and even currency of exchange. China and Japan (Iran's #1 and #3 buyer) both are buying Iranian oil in euro and yen, respectively.
ReplyDeleteIt is not outside the realm of imagination that the US has been pressuring Japan on this, but what is Japan supposed to do? Iran is one of the more secure sources of oil in the world, not having been invaded by the US or bombed to the stone age. China, of course, does what it wants, and the US isn't going to say or do anything about the Sino-Iranian oil arrangement. The fact that Iran is decidedly not under the US umbrella is a plus as far as the Chinese are concerned.
OIl is also not as fungible as Lears suggests. Many oil producing countries have bilateral contracts for oil. And those contracts can, and do, specify supply rate, total volume, and even currency of exchange. China and Japan (Iran's #1 and #3 buyer) both are buying Iranian oil in euro and yen, respectively.
ReplyDeleteIt is not outside the realm of imagination that the US has been pressuring Japan on this, but what is Japan supposed to do? Iran is one of the more secure sources of oil in the world, not having been invaded by the US or bombed to the stone age. China, of course, does what it wants, and the US isn't going to say or do anything about the Sino-Iranian oil arrangement. The fact that Iran is decidedly not under the US umbrella is a plus as far as the Chinese are concerned.