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Why Washington’s Iran Policy Could Lead to Global Disaster

Posted on Apr 14, 2012
indigoprime (CC-BY)

A bas-relief in the ruins of Persepolis, Iran.

By Juan Cole, TomDispatch

(Page 2)

Faced with the economic damage a sudden interruption of oil imports from Iran would inflict on East Asian economies, the Obama administration has instead attempted to extract pledges of future 10%-20% reductions in return for those U.S. exemptions.  Since it’s easier to make promises than institute a boycott, allies are lining up with pledges. (Even Turkey has gone this route.)

Such vows are almost certain to prove relatively empty.  After all, there are few options for such countries other than continuing to buy Iranian oil unless they can find new sources—unlikely at present, despite Saudi promises to ramp up production—or drastically cut back on energy use, ensuring economic contraction and domestic wrath.

What this means in reality is that the U.S. and Israeli quest to cut off Iran’s exports will probably be a quixotic one.  For the plan to work, oil demand would have to remain steady and other exporters would have to replace Iran’s roughly 2.5 million barrels a day on the global market.  For instance, Saudi Arabia has increased the amount of petroleum it pumps, and is promising a further rise in output this summer in an attempt to flood the market and allow countries to replace Iranian purchases with Saudi ones.

But experts doubt the Saudi ability to do this long term and—most important of all—global demand is not steady.  It’s crucially on the rise in both China and India.  For Washington’s energy blockade to work, Saudi Arabia and other suppliers would have to reliably replace Iran’s oil production and cover increased demand, as well as expected smaller shortfalls caused by crises in places like Syria and South Sudan and by declining production in older fields elsewhere. 


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Otherwise a successful boycott of Iranian petroleum will only put drastic upward pressure on oil prices, as Japan has politely but firmly pointed out to the Obama administration.  The most likely outcome: America’s closest allies and those eager to do more business with the U.S. will indeed reduce imports from Iran, leaving countries like China, India, and others in Asia, Africa, and Latin America to dip into the pool of Iranian crude (possibly at lower prices than the Iranians would normally charge).

Iran’s transaction costs are certainly increasing, its people are beginning to suffer economically, and it may have to reduce its exports somewhat, but the tensions in the Gulf have also caused the price of petroleum futures to rise in a way that has probably offset the new costs the regime has borne.  (Experts also estimate that the Iran crisis has already added 25 cents to every gallon of gas an American consumer buys at the pump.)

Like China, India has declined to bow to pressure from Washington.  The government of Prime Minister Manmohan Singh, which depends on India’s substantial Muslim vote, is not eager to be seen as acquiescent to U.S. strong-arm tactics.  Moreover, lacking substantial hydrocarbon resources, and given Singh’s ambitious plans for an annual growth rate of 9%—focused on expanding India’s underdeveloped transportation sector (70% of all petroleum used in the world is dedicated to fuelling vehicles)—Iran is crucial to the country’s future. 

To sidestep Washington, India has worked out an agreement to pay for half of its allotment of Iranian oil in rupees, a soft currency.  Iran would then have to use those rupees on food and goods from India, a windfall for its exporters.  Defying the American president yet again, the Indians are even offering a tax break to Indian firms that trade with Iran.  That country is, in turn, offering to pay for some Indian goods with gold.  Since India runs a trade deficit with the U.S., Washington would only hurt itself if it aggressively sanctioned India.

A History Lesson Ignored

As yet, Iran has shown no signs of yielding to the pressure.  For its leaders, future nuclear power stations promise independence and signify national glory, just as they do for France, which gets nearly 80% of its electricity from nuclear reactors.  The fear in Tehran is that, without nuclear power, a developing Iran could consume all its petroleum domestically, as has happened in Indonesia, leaving the government with no surplus income with which to maintain its freedom from international pressures.


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By heterochromatic, April 15, 2012 at 8:38 am Link to this comment

vec, here’s how to tell that I’m faking…..

oh oh oh vec, yes yes yes that’s perfect yes oh yes vec yes.

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By Inherit The Wind, April 15, 2012 at 6:57 am Link to this comment

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IMax's avatar

By IMax, April 15, 2012 at 6:53 am Link to this comment


Are you here displaying your “neutrality”? LOL

China has made its position toward Iran processioning uranium out of sight of the IAEA fairly clear.  My question to you is, what is the position of the Chinese government? 


P.S. Before you answer, allow me to simply remind you that I haven’t just asked you what you think.  I asked if you are aware of the Chinese position.

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By balkas, April 15, 2012 at 6:13 am Link to this comment

if US cld not defeat to a necessary degree vietnam via a long war, i suppose, it [and the west] is not going to bring
iranians to their knees by any sanctions.
the main problem appears to be that most americans; and especially the 20% of its pop, cannot assuage their anger and
hatred towards peoples, like korean, vietnam, apache, sioux, iraqi, nicaraguan, cuban, palestinian, afghan, pakistani,
somalian, libyan, syrian, lebanese, et al, when they disobey US and or US/europe.
most americans see their ideology as infallible; their country blessed by god; being the greatest, fairest, most
helpful/peaceful ever; thus, when others do not see it that way and go own ways, americans go ballistic.
so once again we come to the root of all of it: THE THOUGHT, roughly described as: me-better-than-you-etc.
germans and japanese also entertained exact same THOUGHT. and i think they still do, but even they r now bossed or
trumped by US and much of europe.
so, even if america wld become 10 or 20 weaker econo-miltarily, it may not result in planetary change for better as
germany and japan may try to dominate some countries in ways US had.
in short, as long as the THOUGHT remains, we can expect no changes for better.  bozhidar b. planet moon [well, i’d like
to be there]

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By vector56, April 15, 2012 at 5:18 am Link to this comment

IMax. how can one so obviously be useful as a “tool”?

At least your counterpart heterochromatic fakes neutrality every now and then, but you; lets just say you insult our intelligence pretending to have an opinion other than the ones they feed you.

Again, you remind me of the Cuban exiles in Florida; supporting every unprovoked attack by the US, while claiming to care about the people of the country America brutalizes.

The 50 year sanctions (embargo)against Cuba are still in place; Iraq suffered 12 sanctions that ended the lives of countless sick people, women and children; now we turn our attention to Iran.

I see you still push that same manufactured argument that Iran’s neighbors (our puppet states) have an opinion other then the ones we give them.

Comparing Iran’s track record to ours this statement make no sense;

“These would be the same reasons the global community doesn’t trust that Iran is not pursuing a nuclear weapons program. “

We have killed “millions” just in my life time alone! The only country in human history that has delivered Atomic death to humanity should not even have a seat at the table that decides who should develop nuclear energy, let alone “run the show”! After Hiroshima and Nagasaki our credibility on this issue should be Zero. 

Iran should be allowed to create their own nuclear fuel for their reactors; that is really this is all about.

Lastly, this “global community you speak of is as phony as your attempts to fake neutrality. They are a gang of Corporate thugs and the mob bosses these global CEO’s (with the help of America’s military) put in charge of these countries. Europe, they are like Jackals following America (the lion) hoping to regain a few “scrapes” of their old colonies.

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By IMax, April 15, 2012 at 4:29 am Link to this comment

There are several solid reasons why Iran is not trusted by the global community.  These would be the same reasons the global community doesn’t trust that Iran is not pursuing a nuclear weapons program.  And why Iran’s closest neighbors are among those shouting the loudest to prevent Iran from obtaining such weapons.  All issues worth discussing.

While this is a global issue, I think it’s imperative to discuss Iran in a global context.  Talking only about the United States does nothing to aid in understanding why Russian troops are massing at Iran’s border.  Or that Russian troops are even massing at Iran’s border.  Talking only about the United States does nothing to address Iran’s incursions into East Saudi Arabia.  Or addressing Iran’s meddling in Lebanon and Central & Eastern Caucasus.  Talking only about the United States does little to promote peace, growth, or combating hunger or illness.  In fact, talking only about the United States seems wholly useless to understanding or solving even a single real global issue.

I’m sorry to be so terse.  It just seems to me that, at some point, someone on these boards needs to talk about something other than the United States.

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By prisnersdilema, April 14, 2012 at 11:12 pm Link to this comment

You mean Obama’s policy….our nobel peace prize winning president, his policy….

The elite who he represents don’t really care about suffering people, ours theirs or
anyone else’s..That’s why they crashed the economy so people can cover Goldman
Sachs Derivates.

They know they will be well protected, what do they care if a few hundred million
peasants die horribly, they will remain, in charge and wealthy.

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By rtb61, April 14, 2012 at 9:31 pm Link to this comment

As the amount of Iranian Oil reaching US allied markets drop and the price rises as a result, Iran wont have to sell oil at reduced prices it simply wont raise the price.
Watch US corporations use US dollars secreted in offshore tax havens buy Iranian oil for cash and pretend it’s from else where and then import it.
Money laundering combined with oil washing to inflate profits all with fraudulent tax claimed losses.
The whole scam run lobbyists and controlled by those paying those lobbyists.

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By heterochromatic, April 14, 2012 at 8:55 pm Link to this comment

gerard—- you would have loved Woodrow Wilson. He was able to prove that a
truly moral policy would convince world opinion to adopt Christian morality as the
basis for all world diplomacy.
THe way he persuaded the victorious powers to arrange the world order following
the great War and his plan for “peace without victory” was superb and led to the
end of the resort to military force for the remainder of the 20th century.

some people told Wilson that the world was not going to instantly re-arrange itself
to suit his vision, but he knew better.

you would have loved Woodrow Wilson.

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By gerard, April 14, 2012 at 8:48 pm Link to this comment

P.S.This is precisely what the release of the State Department cables might have accomplished, given some honest intentions from power centers in the U.S. and a government that did not always have to be top dog at any price.  We have missed a golden opportunity so far, and are trying to squeeze some petty satisfaction out of holding Bradley Manning and Julian Assange hostage for having opened up a can of ugly facts and let the media in on some denigrating diplomatic games. If diplomacy could, by concerted effort, be lifted above the level of “dirty pool”, everybody in the world would be better off.
  The U.S. is completely capable of under-taking this venture, and has a good chance of succeeding.  If our leadership passes up the chance, it may not come to them again.
  Free Bradley Manning.  Free Julian Assange.  And go back to square one and change the whole picture to one of honesty,fairness and determination leadng toward a gradually expanding warless world and human preservation.
  At this point in human history it’s the only civil and civilizing thing to do. The age calls upon courageous, generous and intelligent heroes and heroines.  Probably nothing less will suffice.

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By heterochromatic, April 14, 2012 at 4:46 pm Link to this comment

perhaps that was merely a poor word selection and I shouldn’t be sitting here
wondering how you could be so silly.

don’t confuse these sanctions with the Iraqi sanctions and don’t expect anything
even remotely similar to happen.

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By heterochromatic, April 14, 2012 at 4:41 pm Link to this comment

vec——what “brutalizing” of iranians have I endorsed, you silly thang?

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By vector56, April 14, 2012 at 4:06 pm Link to this comment

Well said gerard; I like the way you compare our empire to a kind of “Global Mafia” where those who refuse to “pay protection” get “Bombed and starved”.

heterochromatic; I am not surprised by your response; as a “thug” , naturally you would see nothing wrong with brutalizing Iran as we have done to Iraq because they can’t prove to us that they don’t have WMD’s our CIA has already told us they don’t have. Personally, I think you are not as dumb as you pretend to be and you understand that this is more about “crippling” Iran (not allowing them to produce their own nuclear fuel) to bring their oil back under the control of our US-Euro empire like Iraq and Libya.

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By gerard, April 14, 2012 at 3:11 pm Link to this comment

“For some reason the Iranians do not trust the West and want to avoid being put in a position of being held hostage by their American or European suppliers of fuel rods. Any one who knows anything about US-Euro-Iranian history would understand why Iran feels this way”,  Vector56 points out.
  The “reason” is not obscure, since half the world or more harbors the same ‘reason”, which is mainly fear, mixed with various amounts of “obligation”. They manage to deal with us by giving over to us some independence and living under the “protection” of American or European supplies of this or that commodity or privilege which they hold valuable, s “protection” by “the nuclear umbrella” or military supplies or some such. North Korea has the affrontery to try to escape from this subservience! And quite possibly Iran the same. 
  And what does this mean to us?  Starve them!  Bomb them!  Threaten them into submission.  This, too, is a part of “empire building.”
  Sadlly, it is too often what “being friends” with the U.S means,  to put it bluntly. It definitely does not mean real “friendship”—just a sort of buying time by placating the boss. So sad! So utterly futile! So denigrating for all sides! Yet under present methods of international operation there is little hope for change where international relations comes to mean something more and less childish than what they can get out of us, or we can get out of them, or who gored whose ox fifty years ago.

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By heterochromatic, April 14, 2012 at 2:26 pm Link to this comment

Lousy analysis that manages to overlook the obvious,
which is that the sanctions and economic isolation of
Iran has been a long time coming and will end when
Iranian regime behavior changes.

If Iran was sincere about not building weapons, and
wishes to engage in peaceful trade with the Western
world and its allies, the regime need do no more than
give evidence of sincerity and amity.

The sanctions would be lifted

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By vector56, April 14, 2012 at 11:04 am Link to this comment

“dissuading the regime from pursuing its nuclear enrichment program. “

It would seem that Juan Cole, like most have stepped right over the 54 billion dollar question without ever asking the obvious; “Other then creating nuclear weapons, why would Iran want to enrich uranium?”

The corporate media dare not ask this question for fear of changing the narrative.

Iran’s enrichment program has more to do with creating their own nuclear fuel for their reactors than making WMD’s. For some reason the Iranians do not trust the West and want to avoid being put in a position of being held hostage by their American or European suppliers of fuel rods. Any one who knows anything about US-Euro-Iraian history would understand why Iran feels this way.

The 12 year sanctions in Iraq brought about the death of about a million people; many were the sick, women and children. To do this again to appease two “Religious” states (Saudi Arabia and Israel) when the blood is not yet dry on the ground in Iraq would be “evil” incarnate.

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By jr., April 14, 2012 at 10:53 am Link to this comment

Though this article be very long winded, there is one fact that seems is being neglected here:  that with just the hostile takeovers of libya and iraq, america and it’s european union now have an oil glut. 

And, one way to drive their own prices up, is by demonizing, and perhaps, increasing hostilities with other suppiers.

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By PatrickHenry, April 14, 2012 at 10:51 am Link to this comment

America’s Iran policy has successfully raised gas prices and given the militarists an excuse for more weapons.

It hasn’t raised American prestige in the world one bit.

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