[Marxism] In Iran Nuclear Standoff, Scant Leverage for West (WSJ)

Walter Lippmann walterlx at earthlink.net
Mon Aug 21 06:13:44 MDT 2006


(While the editorial columns of the Wall Street Journal remain as
bellicose as posslble, the news columns provide quite a sobering
assessment of how much the United States and its Western allies
can really hope to accomplish against Iran today. Irael's current
Lebanon debacle, and the threat, however remote, of oil prices up
at the $200.00 a barrel level, should give even the most extreme
of U.S. policy hawks reason to think and think again before they
get down and practical about a military strike against Iran today.
The addition to oil and the evident inability to practics serious
conservation are playing a major limiting role on the West today.

(You really have to scratch your head and wonder why someone at
a moment like this would choose to make a big issue of campaining
against "Islamo-fascism," "political Islam" and so on and on...)
===================================================================

The Wall Street Journal 		
August 21, 2006

In Iran Nuclear Standoff,
Scant Leverage for West
Differing National Interests,
Threat of Global Recession
Leave Few Workable Options
By BHUSHAN BAHREE and MARC CHAMPION
August 21, 2006; Page A3

For all of the tough talk likely in coming days about using global
sanctions to shut down Iran's nuclear-fuel program, the West has few
real options for forcing Tehran to back down.

Diplomats in the U.S. and Europe are considering how to pressure the
regime should it plow ahead with its nuclear program, as Tehran has
signaled it may announce as soon as tomorrow, ahead of an Aug. 31
deadline set by the United Nations. The sanctions being discussed,
such as curbs on imports of nuclear-related technology, wouldn't
affect Iran's overall economy. But the bluntest weapon available
short of war -- targeting Iran's vast energy sector -- is extremely
unlikely to be deployed anytime soon.

The West is in this bind because, despite a shared desire to stop
Iran from developing nuclear weapons, a number of forces -- the
conflicts in Iraq and Lebanon, high oil prices and minimal spare
global oil-pumping capacity -- have made the world a different place
from the 1980s and 1990s, when the U.S. imposed sanctions forbidding
its own companies from doing business with Iran.

Several countries that wield vetoes in the U.N. Security Council, the
body that would impose any sanctions, have energy companies invested
in Iran. China gets substantial amounts of its oil there. That means
sanctions such as prohibiting the purchase of Iranian oil or limiting
Western investment in that country's petroleum industry likely would
face resistance. In addition, today's tight oil markets and high
prices multiply the risks to the global economy of tripping up the
energy sector of a major oil producer like Iran. The country pumps
about four million barrels a day, nearly 5% of global output, and
exports 2.5 million barrels a day -- exceeding Iraq's entire output.

The picture is further complicated by deep-rooted divisions among the
world's great powers over how to fix the Middle East and by Iran's
ability to strike back at the U.S. and its allies through Shiite
militias in Iraq and Lebanon, including Hezbollah.

"Broad economic sanctions, comparable to the isolation of Iraq in the
1990s, are no longer feasible," Jeffrey J. Schott, a senior fellow at
the Institute for International Economics in Washington, told a
congressional committee last month. "Many Americans would question
harsh measures that might push oil above $100 a barrel and trigger a
world recession."

As a result, diplomats involved in the Iranian nuclear dispute say
discussion of sanctions will focus first on starving Iran's nuclear
industry of components and on targeted sanctions against individuals
in the regime, such as travel bans.

No mention of oil is made in a menu of potential sanctions that was
drawn up as the stick to accompany the June package of U.S.-European
incentives for Iran to negotiate closure of its nuclear-fuel program,
according to people who have read the text. Western governments
believe the program is intended to produce fuel for nuclear weapons,
despite Iranian denials.

But the language of the sanctions menu does allow for other
"political and economic" measures, an embargo on the "import of
specific products" and the prohibition of investment into "certain"
Iranian industries -- vague enough to leave the door open for
sanctions on Iran's energy sector down the line, these people said.

Set against the risks of targeting Iran's energy industry is the fear
in the West of a nuclear-armed Iranian state whose geopolitical
ambitions could endanger the security of the broader oil supply from
the Middle East, the world's major crude-exporting region. U.S.
Energy Secretary Samuel Bodman has said curbing Iran's nuclear
ambitions is more important than the price of oil.

Iran has signaled it intends to proceed with its program to enrich
uranium, a process that could be used to build nuclear weapons,
although Iran says it wants the technology purely for civilian
purposes. Iranian officials have indicated they are ready to talk
about suspending the program but say they won't abandon enrichment
and won't suspend it before any negotiations, as the West demands.

Tehran has said it will respond by tomorrow to the package of
incentives that the five permanent Security Council members -- the
U.S., Russia, China, Britain and France -- plus Germany offered to
negotiate if Iran suspends enrichment first. A U.N. deadline for Iran
to cease enrichment expires at the end of this month. Unless Iran
complies, the West will very soon have to consider hitting Iran with
sanctions.

The debate over wider economic sanctions will be all about Washington
persuading others to join it in punishing Iran, because the U.S. long
ago banned its oil and other companies from doing business with Iran.
That is likely to be a steep climb.

Russia, France and the U.K. have oil companies with interests in
Iran. After Japan, China is Iran's second-biggest oil export market,
and Beijing is negotiating a $70 billion deal to develop a
natural-gas field, in exchange for imports of Iranian liquefied
natural gas.

Iran's oil-output capacity has stagnated for the past decade.
Investments, including ones by France's Total SA, Italy's ENI SpA and
Anglo-Dutch energy giant Royal Dutch Shell PLC, have merely offset
natural declines in Iranian fields.

Export or investment curbs on Iran's large natural-gas industry are
just as unattractive. The European Union is backing plans for
construction of a €4.6 billion ($5.9 billion) pipeline across Turkey,
in part to tap additional gas supplies from Iran, at a time when
European use of gas is outstripping growth in output from its main
supplier, Russia.

Iran is vulnerable in one surprising respect: The country imports
more than a third of the gasoline it uses, because it lacks enough
refineries to turn its own crude into fuel. Thus pinching Iran's
gasoline supplies is theoretically possible.

But energy-industry officials are urging that sanctions steer clear
of oil and seek, instead, to deny Iran nuclear components and cause
some pain to the Iranian ruling elite through travel bans and asset
freezes. Even then, there is a risk. With oil scarce, Iran could
strike back at oil consumers by reducing its exports, causing the
world economic pain even as it reaped more revenues from higher
prices.

In an interview earlier this year, Iranian Oil Minister Kazem Vaziri
Hamaneh said that Iran wouldn't use its exports as a weapon. But
since then, other Iranian officials have threatened to play the oil
card.

An Iranian foreign-affairs official recently warned that sanctions
against Iran could send oil prices to $200 a barrel. Industry
officials consider that scenario unlikely, because the U.S. and other
major governments have vast stores of oil in strategic inventories
that are large enough to offset Iranian exports for about a year and
a half. But if Iran held out as the West's stocks ran down, the
situation could change.






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