Why Iran Can Afford to Be Insane
By Brad Macdonald
March 2006
Is the Iranian president crazy, or canny? Before you answer, consider the
ace up his sleeve.
Iran has guts, there’s no doubt about it—what with its pressing forward
with nuclear development while threatening to wipe Israel off the map. But these
moves aren’t as careless as some people assume, considering the ace Tehran
has up its sleeve.
Oil, that is.
The equation is simple. The advanced economies of America and Europe rely
heavily on a stable supply of oil, much of it from opec member nations. Iran
is the second-largest opec producer and a major contributor to the global oil
supply.
In the same manner that nutrient-rich sap is the lifeblood of a tree,
furnishing the energy needed to grow, oil provides energy (in many cases,
literally) to the largest and most affluent economies on the globe. Oil is absolutely
central to our modern lifestyles.
Although Iran can’t stop the flow of oil, it can reduce the volume of oil
flowing onto the global market if it chooses. And any such restriction in oil
flow would yield dire results for the economies of America, Europe and Asia—
directly affecting transportation, manufacturing, industry, agriculture and the
military, with indirect ramifications for every other economic sector. Even
a couple of million fewer barrels of oil per day on the market would likely
create economic chaos, which would precipitate political crisis.
But here is where the analogy breaks down. While a tree wouldn’t respond to
a mere threat to reduce its sap flow, with oil it is different. Even the
threat of there not being enough oil to meet global demands has an impact.
We experienced this phenomenon in late January. As Europe and America
scrambled to drum up support for UN sanctions against Tehran for resuming its
nuclear activities, the Iranian oil minister warned that one of the consequences
of sanctions will be “the unleashing of a crisis in the oil sector and
particularly a price hike” (Agence France Presse, January 19). The news of a
potential disruption in the flow of oil from Iran caused oil prices to jump to near
four-month highs.
This is quite startling. Iran didn’t actually reduce the amount of oil it
contributes to global supply, it just threatened to reduce it—and look what
happened.
The amount of influence Iran wields in this scenario is ridiculous. The
Iranian oil minister makes a statement to the Middle Eastern press, and you have
to pay more at the gas pump. This man is taking more money from your wallet,
and there is little you can do to stop him.
Why? Because America, as well as Europe and Asia, absolutely must have a
stable flow of oil. Oil has become the Achilles heel of the world’s greatest,
most advanced nations. Even though the United States doesn’t receive oil
directly from Iran, in the event of Tehran squeezing supply, those nations
that do import Iranian oil would have to hunt elsewhere for it. In the end, it
affects everyone.
Few Alternatives
As Iranian President Mahmoud Ahmadinejad swaggers, endorsing dangerous
ideologies, flippantly throwing around offensive remarks that he remains
arrogantly unapologetic for, many wonder if this politician isn’t slightly loco—if
there aren’t some screws loose in his mind. What else would give him the gall
to push around some of the most powerful nations and groups of nations in the
world?
But is he crazy, or canny?
It is hard to deny the truth in a threat Ahmadinejad made this past January
14. The Guardian in Britain reported his statement: “Iran had a ‘cheap means
’ of achieving its nuclear ‘rights,’ Mr. Ahmadinejad said, adding: ‘You
[the West] need us more than we need you. All of you today need the Iranian
nation’” (January 16; emphasis mine).
Iranian oil fuels and energizes some of the world’s leading nations. Fully
aware of the resultant massive influence it wields on the world scene, Iran
believes it can run the risk of pushing around global giants.
Iran is playing for the highest stakes in the global energy game, given
that, based on latest figures, that country contains some of the largest proven
reserves of hydrocarbons in the world.
That explains the West’s embarrassing timidity in invoking any real
penalties on Iran for flouting conventions in its pursuit of nuclear capability.
With Iran, regardless of the stridency of the rhetoric from the rest of the
world, appeasement is the foreign policy of the day. The major energy-consuming
nations dare not risk any move by Iran to further disrupt an already
high-priced energy market.
The most ironic aspect of the situation is this: These nations’ response to
Tehran’s prestige has gone well beyond mere inattention. In the scramble for
energy resources, Germany, having the leading industrial economy in Europe,
realized early that the nuclear option would be a prime negotiating tool in
gaining favorable access to Iranian energy resources. Even 30 years ago, it
ensured an early place in the development of Iran’s nuclear technology by
signing its first contract to assist in this project. Since then, it has been
joined by Russia and China in aiding and abetting Iran’s development of
nuclear power, using various tricks of delay in contractual fulfillment as
diplomatic carrots or sticks, depending on the mood reflected by their major Islamic
client.
But there is now a stark new threat. The ayatollahs may have been extreme,
but Ahmadinejad is truly a volatile, unpredictable customer whose violent
vocalizing against Israel, the U.S. and EU members is forcing these nations to
reassess their foreign policies toward this rising king of the south. Now
Ahmadinejad has ripped the UN seals off Iran’s stalled nuclear program and
declared his intention to proceed full-steam ahead with the development of a
nuclear capability, despite any global opinion to the contrary.
Sure, UN sanctions would hurt the Iranian economy, and its national income
would decrease substantially if it chose to withhold oil from the market. But
Tehran knows such measures would hurt America and Europe even more. It could
potentially devastate their economies! These facts infuse Iran’s leaders
with tremendous confidence.
The Danger of Overconfidence
The Iranians are failing to consider all the ramifications of their flippant
behavior, however. They are blinded by arrogance and overconfidence. They
operate under the assumption that they can push Europe and America around
without serious implications. Time will prove them wrong.
Europe is heavily dependent on outside sources for its energy. The lives and
well-being of most Europeans depend heavily on Russian natural gas and opec
oil. Threatening Europe’s supply of energy is the same as threatening the
lives of Europeans! President Ahmadinejad is foolish for thinking Europe will
roll over and acquiesce to Tehran’s wishes. To push at Europe by threatening
its energy supply is naive and highly dangerous.
Facing Russian instability to the east and Iranian arrogance to the south,
Europe has to secure the flow of oil and natural gas into its borders. And
this will not be good news for Iran.
For more than a decade, our editor in chief has foretold of bullying tactics
by Iran that would “push” Europe over the edge—inviting a blitzkrieg attack
from the Europeans.
Europe’s energy issues will play a significant part ..... Continuing
resistance by Ahmadinejad to German-led EU initiatives on the nuclear front,
stymieing EU efforts to tap further into Iran’s massive oil and gas reserves, will
ultimately awaken the beast in the German breast. With the engines of this
formidable global power needing fuel, and present sources proving so
unpredictable, we can expect that, quite soon, Europe will rise up and impose its will
on this energy-rich nation by force.
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