August 18, 2005

FACESPITE, ANYONE? (via Robert Duquette):

Iran Holds Big Bargaining Chips in Dispute: Tehran May Use High Oil Prices, Iraqi Turmoil As Leverage in Nuclear Talks With the West (NEIL KING JR. in Washington and FARNAZ FASSIHI in Beirut, Lebanon, 8/18/05, THE WALL STREET JOURNAL)

President Bush says the world is "coalescing around the notion" that Iran must be barred from getting nuclear weapons. But two factors -- soaring oil prices and chaos in Iraq -- are giving Tehran new muscle in its diplomatic standoff with Europe and the U.S. [...]

Iran, which shares a long border with Iraq, has huge sway over much of Iraq's now-dominant Shiite population, and it could disrupt the constitutional process if it so chose. Western diplomats in Tehran say Iranian officials have been blunt in recent weeks on that point, threatening to cause problems in Iraq if the Bush administration tries to punish Iran with international sanctions.

The most influential man in Iraq, Grand Ayatollah Ali Sistani, a Shiite leader whose approval has been central to every political twist and turn, is Iranian. When Iran's foreign minister, Kamal Kharazi, visited Iraq recently he visited Mr. Sistani -- an audience so far denied to top U.S. officials. "It didn't exactly please us to see the Iranians getting face time with Sistani," said a senior American diplomat in Iraq.

At the same time, oil prices have become a domestic thorn for President Bush, and any move that might push them higher could cost him support. Oil hit a nominal record of more than $66 a barrel last week before slipping slightly to $63.25 a barrel yesterday in New York trading.

Iran pumps around 3.5 million barrels a day, or about 4% of global oil production. It is the second-largest producer of oil in the Organization of Petroleum Exporting Countries and has the world's second-largest natural-gas fields. Analysts are divided over whether Tehran would openly use its energy leverage in a diplomatic standoff, if only because the Iranian government is so dependent on oil revenue.

Officials in Tehran, however, have suggested that they might move to crimp tanker flows through the crucial Strait of Hormuz, which would have far-more-serious consequences. Around 15 million barrels of oil a day, and a large percentage of the world's gas supplies, flow through Hormuz. The Energy Department calls the strait "by far the world's most important oil chokepoint."

"We have told the Europeans very clearly that if any country wants to deal with Iran in an illogical and arrogant way...we will block the Strait of Hormuz," said Mohammad Saeedi, a spokesman for Iran's Center for Nuclear Energy, which runs the country's nuclear facilities and uranium-enrichment program.


This is a deeply silly story. Iran's interest in Iraq is identical to ours--the defeat of the Sunni extremists who despise Shi'ites and the establishment of a stable Shi'a dominated regime. Meanwhile, not only is Iran dependent on oil revenue but its new government has been elected precisely to get the economy growing, which would obviously be impossible under this scenario. Most importantly though, Iran can't afford to give us the pretext we're looking for to take out their nuclear facilities, which these actions would. Scare mongering like this always depends on the idea that when our foes behave as if we're at war we'll react not just benignly but as if we were helpless, a notion unsupported by the historical record (excluding the godawful 1970s).

Posted by Orrin Judd at August 18, 2005 2:39 PM
Comments
Around 15 million barrels of oil a day, and a large percentage of the world's gas supplies, flow through [the Strait of Hormuz]. The Energy Department calls the strait "by far the world's most important oil chokepoint."

Iran can't afford to give us the pretext we're looking for to take out their nuclear facilities, which these actions would.

If the U.S. were to react in these circumstances, we'd have a lot of global support.

All of the first-world nations are oil-dependent, and so is China.

Further, although we might differ on how to prevent it, most first world nations, as well as most Persian Gulf nations, do not want to see a nuclear-armed Iran.

Posted by: Michael Herdegen at August 18, 2005 3:18 PM

Michael:

who cares?

The point is that the American people would gladly nuke Iran anyway, but especially if it'd save a nickel a gallon on gas.

Posted by: oj at August 18, 2005 3:26 PM

They should go ahead 'n make our day.

There is a limit to everything, as the mullahs'll find out sooner or later.

Posted by: Barry Meislin at August 18, 2005 3:39 PM

I should have said that all first-world nations are dependent on imported oil, except for Canada, Norway, and the UK. Russia, which is almost a first-world nation, is also oil independent.

oj:

I do, as well as tens of millions of other Americans, and the Bush administration.

Witness the the UN charade prior to the invasion of Iraq.

Lack of international support should never bind our hands, but even the Lone Ranger had friends and allies to help him out.

Posted by: Michael Herdegen at August 18, 2005 3:51 PM

Michael:

That was for Blair and Powell and the UN said, no. Is Saddam in power?

Posted by: oj at August 18, 2005 3:54 PM

Why haven't we nuked North Korea yet?

You are all under the mistaken impression that Iranian theocrats apply rational cost/benefit analyses to their policy decisions. Theocrats are not rational by definition. If God is with them, as they believe Him to be, then how can they be worse off for following His will?

They may be bluffing, or maybe not, but either course we take will drive oil prices through the roof (which was the point I was making to OJ when I told him of the article). The nuclear option is not free, it carries with it huge political and economic costs.

Posted by: Robert Duquette at August 18, 2005 4:02 PM

Robert:

The North Koreans don't have oil, so they're truly marginal.

The mullahs have behaved eminently rationally.

Posted by: oj at August 18, 2005 4:08 PM

As far as North Korea, we don't have a dog in that fight. We have no brder with them, we don't buy or trade anything with them, and they can't harm us. We should just pick up and leave the whole Korean pennisula.

We should tell China and Japan and South Korea and....well, whoever the other players are....that NK is their problem, not ours, and wish them well. And then leave.

Posted by: ray at August 18, 2005 4:20 PM

oj:

That was for Blair and Powell...

Right. As well as for the American public.

As I assumed that you would gather from my shorthand comment, the Bush administration cares about rallying public support, which requires them to be seen to be appealing to the international community for support.

Is Saddam in power?

Perhaps you failed to notice this: "Lack of international support should never bind our hands... Posted by: Michael Herdegen"

Robert Duquette:

Any oil price spikes will be temporary, if temporary is defined as two years or less.

Attacking Iran does carry a cost, but it may be an investment, and one well worth making.

We aren't going to nuke Iran.

Posted by: Michael Herdegen at August 18, 2005 4:22 PM

Michael:

No, it was literally just for Blair and Powell. The president changed his mind at Blair's urging.

Posted by: oj at August 18, 2005 4:25 PM

Michael,

A two year price spike above today's levels can do significant damage to the world economy. Check out this article, which is what I sent to OJ to begin the discussion.

Posted by: Robert Duquette at August 18, 2005 5:20 PM

Robert Duquette:

Damage to the world economy, yes.

However, even if oil prices rose by 50% from what they are today, the woes listed by Mr. Buckley, based on Raymond Learsy's book, would NOT be visited upon the U.S., at least not in full.

Oil would have to rise to, perhaps, $ 150/bbl for that scenario to come to pass, in full.

If oil rises to above $ 80/bbl, and stays there, there are at least three replacement sources for geologically-extracted petroleum that would become economical, four sources of geologically-extracted petroleum that could be expanded, and two that could be developed.
Further, the U.S. could cut petroleum usage by 5% almost overnight, with little pain, and by 10% with modest pain. After all, the oil glut of the 80s was caused by the oil crunches of the 70s.

Mr. Buckley also calls $ 60/bbl oil an "OPEC success", but that's not quite correct. The current prices are demand-driven, and although OPEC benefits, they didn't have much to do with creating the current situation.

Posted by: Michael Herdegen at August 18, 2005 9:11 PM

20 JDAMS in one pass from a Spirit does wonders for any Iranian nuke site.

Posted by: BillMill at August 19, 2005 7:15 AM
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