So far, high petroleum prices are helping Iran beat the new, ‘crippling’ US and EU sanctions. And, ironically, it is the Obama reelection campaign that is suffering most from the sanctions, not Iran
While Iran is producing about 500,000 barrels a day less today than was typical for it in recent years, the price has risen over 20% in recent months.
As the Bernama article points out, if Iran made $250 million a day on petroleum exports of 2.5 million barrels a day at $100 a barrel (the Brent crude price of last fall), and if the exports have fallen to 2 million barrels a day but the Brent crude price has risen to $125, then the income isn’t that much reduced.
Moreover, it is likely that some of the reduced sales to China were temporary, as a result of a tough price renegotiation. As Iran’s Asian importers realize that Iranian petroleum is a buyer’s market because of the European boycott, they will seek a price reduction.
Some of Iran’s problems will come from tanker companies being unable to secure insurance if they carry Iranian petroleum. This obstacle, however, is likely to be overcome by trucking gasoline through Asia and by building overland pipelines to Pakistan, India and China. Pakistan is already openly defying the US on this score. Petroleum is fungible, and once it leaves Iran, it is hard to see how it can be sanctioned. In essence, it can be laundered. During the sanctions on Iraq in the 1990s, the Baath regime was able to smuggle petroleum through Jordan and Turkey and to squirrel away billions with which to cushion its officials. The Iraqi middle classes were destroyed, but that development benefited the regime, since they no longer had the wherewithal to oppose it.
That production by countries like Iraq could increase fast enough to offset strong Asian demand and bring down the price substantially seems to me unlikely in the short run.
But it is clear that if what Iran really wants is energy independence, it should rapidly expand its solar, wind and geothermal sectors, which would allow it to carry out another moratorium on its nuclear enrichment and jump start negotiations with Europe.
Any country with plenty of sun and (whatever is the opposite of arable) land should invest in molten salt solar thermal electric generation. It does not require the use of rare earth elements. (So-called because they are rare – and found mostly in China, in mines in Australia that China owns, and n a few closed down mines in the western states.)
It is possible to store sunlight.
The technology is scalable, i.e. Iran could build small scale plants for starters.
A new book by Trita Parsi, “A Single Roll of the Dice: Obama’s Diplomacy with Iran,” lays out diplomatic opportunities squandered first by Bush-Cheney right after the fall of Saddam, and then twice by Pres. Obama. In each instance, the Iranian government agreed to all of the negotiating conditions laid down by the US and in each instance, Washington turned its back.
According to the intensely reported book, Washington was filled with hubris in 2003, convinced that it would quickly mop up in Iraq and then march straight on to Tehran for a second regime change. Iran’s letter, delivered through the Swiss, offered to stop funding Hamas and other terrorist groups as well as scale back its nuclear medicine and power program. We know how well that worked out for the Bushies.
Twice during the Obama administration, Iran offered again to a complex arrangement in which it would stop enriching uranium and have Russia produce the nuclear “packs” Iran needed to make medical isotopes. The most recent came when the president of Brazil went to Tehran – at Washington’s request – and was able to deliver a signed letter to The White House agreeing to esentially all of America’s demands. But the letter arrived just as the administration had gotten Russia and China to go along with “crippling sanctions” at the UN. The State Dept. didn’t trust Iran and so the offer was ignored.
Suddenly, the US had two major nations angry with it: Brazil, which went out on a limb to do our bidding, and Tehran which felt humiliated.
Now Pres. Obama is left trying to put the toothpaste back in the tube: Getting Iran to talk seriously and keeping Israel’s warmongers from striking out on its own.
This reminds me of Europe in 1914 which bumbled and stumbled its way into a war that no one actually wanted and no one could stop.
The visit of Luis Inacio Lula da Silva, Brazil’s former President, to Tehran to broker a nuclear deal with the Iranians was most definitely NOT at Washington’s request. This was a naive attempt by President da Silva to insert Brazil onto the world stage and a not-too-subtle dig at the United States. The irony is that the attempt backfired on da Silva, even in Brazil. It is generally acknowledged that Iran was using the da Silva mission to both forestall implementation of the draft sanctions that had just been agreed to by the UN Perm Five (including Russian and China) and to stall for more time to develop their nuclear capacity.
Under the agreement brokered by Brazil (as well as Turkey), Iran agreed to send uranium enriched at a low level abroad, reviving parts of a fuel swap plan originally proposed the previous October. Despite the agreement, however, and to the consternation of the Brazilians (who were caught flat-footed), Iranian officials announced that they planned to continue enriching uranium. This announcement revealed how hollow the agreement really was.
President da Silva returned to Brazil and faced much criticism from his own countrymen. Amoury da Souza, a political analyst in Rio de Janeiro captured much of the criticism by noting, “The most charitable interpretation is that we were naive, but in a game like this, being labeled naive just shows you have third-rate diplomacy.”
“in a game like this…” Yeah, for a few people it’s just a game. With the unstated assumption that nobody will do anything stupid enough to, like, y’know, result in the die-off of most or even a lot of our species.
da Silva’s effort, of course, was back in 2010, and there are various takes (what a surprise) on what it all meant. Here’s one contemporary one, with familiar text, and echoes in the present:
link to consortiumnews.com
Not much is ever what it seems, in the Great Game. Or is it?
The leaked letter (dated April 20, 2010) that President Obama sent to President da Silva, in no way requested President da Silva to go to Tehran and cut a deal, as suggested in Mr. James’s post above. In fact, the penultimate paragraph of Obama’s letter demonstrated how skeptical the Administration was of any offer the Iranians might make to the Brazilians.
The paragraph, in part, is quoted below:
“Throughout this process, instead of building confidence Iran has undermined confidence in the way it has approached this opportunity. That is why I question whether Iran is prepared to engage Brazil in good faith, and why I cautioned you during our meeting. To begin a constructive diplomatic process, Iran has to convey to the IAEA a constructive commitment to engagement through official channels — something it has failed to do. Meanwhile, we will pursue sanctions on the timeline that I have outlined. I have also made clear that I will leave the door open to engagement with Iran. As you know, Iran has thus far failed to accept my offer of comprehensive and unconditional dialogue.”
As a final note, I would add that Iran’s announcement after the agreement with Brazil, that Iran would continue uranium enrichment, demonstrated just how prescient President Obama was in questioning whether or not Iran was prepared to engage Brazil in good faith.
Mr. Bill: Speaking of good faith, since when has the US machinery been dealing “in good faith” with the rulers of Iran or any other “trouble spot” one might name on the planet? I guess any efforts, covert and overt, to “accomplish the mission of regime change/destabilization” (without reference to establishing anything stable and secure in the aftermath, see “Afghanistan” and “Iraq”) are just fair play in the Game, right?
As to the Brazilian president’s initiative, there’s obviously several ways to spin the pota(h)to. For any who care to parse it themselves, here’s the whole letter, with some interesting commentary: link to politicaexterna.com And April Glaspie didn’t tell Saddam it was OK with the US Administration if his armies invaded Kuwait, either. My view of history, shows more than enough BS and bad faith on the part of “my government” and its operational activities to choke a very large horse.
Since when do you, or “the administration,” get to pronounce that the Players in the government of Iran, a short missile flight from various launch sites in Israel and from the huge US arsenal afloat and otherwise, are “doing wrong” by engaging in enrichment of uranium, by all accounts in accordance with the NPT and its branches?
And you appear to be asserting, sub silentio, that “Iran” is “violating international law, or at least the dictates of our Righteous Rulers,” and the burden of persuasion, in debate-ese, is on you to prove the positive, that the Iranian administration is doing something they are not allowed, like other nations, to do. “We don’t know what we don’t know” does not, or should not, work any more.
Beware the lean and hungry men…
Please don’t say that the War to End All Wars was an enterprise that no one wanted. Certain sets of people made a whole hell of a lot of money off the business, and certain Players in the Great Game got some nice entries on their currucula vitae and pushes in the direction of “more power” for themselves. Lots of folks don’t much care for Niall Ferguson, but there are a lot of clues and bits of light in his “War Of The World.” link to topdocumentaryfilms.com
He also used that big word, “ineluctable,” in laying out the intersections and positive-feedback amplifications of many, if not all, of the various interests and forces and powers that conspire to get us where we’re at today.
Of course, “Hope Springs Eternal…”
I’m wondering how the oil sanctions will affect Iranian pilgrims’ ability to travel to Najaf and Karbala because of the devalued rial. Will this affect the Iraqi government from exporting refined petroleum products to Iran in exchange for Iranian crude? Or has PM Maliki been prevented from doing this. Seems to me the biggest threat to Iran’s economy is the reduction of refined petroleum products being imported into the country (Iran).
Professor Cole, what about what’s going on with the currency in Iran? I have an Iranian acquaintance who told me that the currency has dropped 50-55% since the sanctions began. 2LBs of meat in Iran currently costs around $38. And he says that the high price of food is likely to spark a riot against the government (though I’m not sure about that). But that might be what the Obama administration is aiming for with these sanctions.
But given that oil prices are up, what currency does Iran receive for it’s oil? Is it dollars? If so, then the Iranian government is getting way richer than it otherwise would given it’s own currency has basically halved.
Do you have any info on this?
thanks – Brett
>if what Iran really wants is energy independence, it should rapidly expand its solar, wind and geothermal sectors…
It is evidence of a log in the eye to suggest for Iran what is also true for any country, especially the US. Obama Wednesday said ‘oil is the fuel of the past’. Well duuuuhhh. That’s old news, and it’s more than a lot disingenuous to be saying it now in an election runup when he has had years of access to the presidential pulpit. Ocassional mentions to placate a voter sector won’t do. Obama’s paraphrase of Apollo’s iconic “We’ve got a problem” transmission has had a tough time getting in line behind a lot of other supposedly immediate and often invented dilemmas. If the US military is taking tax dollars to build alternative power generation at its bases, and build Afghan projects it will soon abandon, and Israel is doing the same helped along by a few bales of US dollars, why are domestic efforts stuck in research and studies?
Benjamin Netanyahu is out of US Control.
“has warned he will not countenance a long delay in launching an attack on Iran’s nuclear sites. He told Israel’s Channel 2 station he did not have a stopwatch, but added: “This is not a matter of days or weeks. It is also not a matter of years.”
link to bbc.co.uk 9 March 2012 Last updated at 15:39 GMT
Israel launches deadly air strikes on Gaza
link to bbc.co.uk 10 March 2012 Last updated at 00:40 GMT
The Palestinian population registry is controlled by Israel, which has occupied the West Bank, Gaza and East Jerusalem since 1967.
I does not make sense for the parties to pressure Iran so, unless what?
A policy to control the ME?
Palestinian land grab?
Defense business?
Oil business?
Political financial support?
All of the above?
Has anyone done an economic analysis of the benefits to the/any vested interests?
What specifically is so vital to Israel’s and US Republican interests to go to such extremes of pressure, with President Obama going along for most, thankfully not all, of the ride.
Iran/India trade: link to ndtv.com