United Nations and United States financial and economic sanctions on Iran have probably gone about as far as they can in damaging Iran’s economy. They have had a significant effect, but are hardly in danger of shaking the regime or convincing it to cease its civilian nuclear enrichment program.
Iran is preemptively responding to threats of escalating sanctions by conducting a big naval exercise, Vilayat-90, in the Straits of Hormuz at the mouth of the Persian Gulf. Iran is making the point that if it wants to, it can close the straits, through which about 17% of the world’s petroleum exports flow. Any interruption in that flow would cause a global energy crisis. An Iranian admiral has said that closing the straits would be as easy as “drinking a glass of water.”
These exercises are not a threat to close the Straits, which Iran needs as well, any time soon. They are a demonstration that if the US tries to impose a global oil embargo on Iran, it has the means to reply to that act of war. It is a response to the threats of the US Senate.
The US- and Israel- led economic war on Iran is not a notable success so far. Iran’s central bank says, at least, that the Iranian economy grew some 5.5% in 2010-2011, which is pretty good given the state of the world economy and rather better than the US.
Iran’s annual oil income based on its performance in the past seven months is nearly $100 billion a year, and oil prices were up nearly 10% in 2011. (The Iranian state receives the oil income, since that industry is nationalized. Iran’s nominal gdp is on the order of $400 billion a year, in the range of South Africa, Taiwan, Argentina and Norway). That is, even with all the US and UN sanctions, Iran’s government is wealthy. Middle class Iranians may not be able to vacation in Europe very easily because of banking issues, and Iran isn’t attracting the kind of foreign investment that would allow it to grow 8% a year, as it would like (and which would be possible if the regime weren’t at loggerheads with the US and its allies). But the regime’s economic strength has probably grown in recent years, not weakened.
Another problem with trying to sanction Iran primarily through financial sanctions is that the world financial system is leaky. Venezuela, Turkey, and Russia, not to mention China, all offer Iran financial back doors for accessing the world banking system. Iran’s temporary problems in selling petroleum to India once it was kicked off the South Asian bank exchange under American pressure have been resolved, probably via Turkish banks. Iran can be put under pressure, and pain inflicted, but nothing debilitating.
A further step in the escalating conflict, advocated by the Israelis and their allies in the US Congress, is to impose an embargo on Iran’s gasoline imports or on its petroleum exports.
The time for the former idea has probably passed; Iran had a temporary shortage of refinery capacity to turn crude petroleum into gasoline. But the regime has addressed that problem by building more refineries and by phasing out gasoline subsidies, thus discouraging Iranians from driving so much.
The problem with imposing an embargo on Iran’s petroleum exports, which the US Senate wants to do by sanctioning Iran’s central bank, is that it is like cutting off your nose to spite your face. It would be South Korea, Japan, India and Italy that would suffer, i.e. US allies (along with China, which wouldn’t be happy and is not without resources to fight back).
Moreover it would put up world oil prices in an election year, harming Barack Obama’s reelection chances.
Israel, the US and some European states maintain that Iran has a secret nuclear weapons program, but there is no really good evidence for any such thing if by that you mean a rush to construct an actual warhead. The real problem for Israel and its allies is that Iran’s civilian enrichment program is potentially dual-use. If Iran can enrich uranium to 3.5 percent for nuclear reactor fuel, it could in theory use its centrifuges to enrich to 95 percent for a bomb. Israel and the US don’t want Iran even to have the possibility of making a bomb if Tehran someday chooses to, since that would knock Israel down a peg on the Middle East pecking order.
(It isn’t actually that easy for Iran to make a warhead, and the “in theory” should be underlined. For one thing, in order actually to develop a bomb, Iran would have to be able to evade US satellite and other surveillance, hide enormous use of water and electricity and trucking activity, and kick out United Nations International Atomic Energy Agency inspectors altogether. The inspections, while not perfect, are ongoing, and don’t find things like plutonium signatures that would point to a weapons program).
So, Iran is insisting on its nuclear enrichment prerogative, guaranteed by the Nuclear Non-Proliferation Treaty. And it is saying to the US Senate and the US Israel lobbies that if they go too far, it is perfectly willing to play the spoiler with the world economy.
The USG Open Source Center paraphrases an interview on the exercise with Rear Admiral Habibollah Sayyari:
“Iran: Navy Commander Comments On Ongoing Velayat 90 Drill
Islamic Republic of Iran News Network Television (IRINN)
Wednesday, December 28, 2011
Document Type: OSC Summary…Tehran Islamic Republic of Iran News Network Television (IRINN) in Persian at 0447 GMT on 28 December interrupted its regular coverage to report on the naval drill codenamed Velayat-90, which is currently being held in the Strait of Hormuz. The ten-day drill entered its fifth day today.
The channel established a video-link with Navy Commander Rear Admiral Habibollah Sayyari, who was present at the drill site. Sayyari described the drill detailing how the forces had spread out across the naval exercise area. Commenting on the data-gathering scope of the drill, he said that the drill covers the area up to the free waters of Indian Ocean and added that the navy had information bases across the Gulf of Aden. He then expressed content over the spreading out of the forces and said it took place less than the estimated time.
Sayyari said that the results of the drill will allow evaluation of strength and flexibility of their forces, which will lead to changes in tactics. He added that the today (28 December) was the second day of the “tactical phase.” He further said that the forces, which were divided into two groups (orange group as the enemy force and the blue group as the home force), were involved in developing tactical measures.
On adhering to the policies of the Navy as well as the guidelines of Iran’s Supreme Leader, who is the Commander-in-chief of Armed Forces, Sayyari said that as per the commands of the leader, Iranian Navy should showcase its authority across free waters, which he said, has been fulfilled to some extent over the last three years. Commenting on the Leader’s remarks, Sayyari said that Iran needs to make use of the resources and potential trade sources in the south of the country (Persian Gulf and the Sea of Oman).
However, he added that this can be realized only by establishing security across the free waters and cited recent incidents of piracy.
The conversation ended at 0559 GMT.
(Description of Source: Tehran Islamic Republic of Iran News Network Television (IRINN) in Persian — 24-hour news channel of state-run television, officially controlled by the office of the supreme leader)”
Juan, it’s Velayat-90 (referring to the Iranian calendar year), not 80.
U.S and U.N. .as wel us the israel are pathetic c0nquerors. .
U.S and U.N. .as wel us the israel are pathetic c0nquerors. .they are trying to put down the enriched and p0werful islam country over the w0rld. .
The real problem for Israel and its allies is that Iran’s civilian enrichment program is potentially dual-use. If Iran can enrich uranium to 3.5 percent for nuclear reactor fuel, it could in theory use its centrifuges to enrich to 95 percent for a bomb. Israel and the US don’t want Iran even to have the possibility of making a bomb if Tehran someday chooses to, since that would knock Israel down a peg on the Middle East pecking order.
As always, this is well put. It is really not well enough understood that the dispute over Iran’s nuclear issue centers on the question of whether or not Iran will be able to develop legal nuclear weapons capabilities such as those Japan, Brazil, Canada, Germany and maybe dozens of other countries have to varying degrees.
The wall the US is crashing into is, I’m starting to think, less Israel’s insistence that the US stop Iran from attaining legal nuclear weapons capabilities, or the power of the pro-Israel lobbies on the US political process but instead the problem seems to be the US idea that the US can “do something”.
Maybe the US just doesn’t have any options that would work or even that would not be counter-productive and make Iran more likely to reach for legal nuclear weapons capabilities or even deploy actual weapons.
It has become difficult for Americans to think of the United States as not being able to achieve some objective it holds. The US has abundantly demonstrated that it is willing to sacrifice any number non-Jewish people in the Middle East to achieve a goal that Israel considers useful.
But what if the US would have to sacrifice US interests and still would fail to reach its goal?
link to mideastreality.blogspot.com
Of course closing the strait of Hormuz would be as easy “as drinking a glass of water”, but it wouldn’t be much harder to sink the Iranian vessels. Ships that don’t move are one of the easiest targets. (As everyone knows since Pearl Harbor.)
I think it’s not only “Israel, the US and some European states” but also the IAEA and most of Iran’s Arab neighbours which don’t believe Iran’s assertion’s of a merely peaceful nuclear programme.
Here’s Juan Cole’s original statement:
Israel, the US and some European states maintain that Iran has a secret nuclear weapons program, but there is no really good evidence for any such thing if by that you mean a rush to construct an actual warhead.
If you are saying either the IAEA or any Arab country maintains that Iran has a secret nuclear weapons program, then you are are flat-out factually wrong.
Actually, the US has not, that I’m aware of, said that Iran has a secret nuclear weapons program, but instead hold the position that it is important that Iran be prevented from developing a nuclear weapon, while being vague about what it means by “nuclear weapon.”
Effectively, the US position is that Japan, Germany, Brazil and many other countries have that type of “nuclear weapon” because Israel and the US define, for Iran’s case, nuclear weapon as either a deployed weapon or the technological capability to develop a weapon.
This redefinition of “nuclear weapon” for Israel’s region has not been supported by the IAEA or any Arab country.
So what? If India, Pakistan, Israel, North Korea, not to mention the belligerent and provocative USA have nuclear weapons, they need some deterrent (which, like the others, should never be used). Iran is just the latest “enemy” of paranoid Israel which has to rule the roost.
The IAEA is a puppet organization and is about as trustworthy about Iran as Israel or the US. This is well established by numerous leaks of American cables regarding Yukio Amano’s appointment to the head position at the IAEA due to his pro-American bias. You want honesty, look to El Baradei’s comments and the reports published during his tenure. In a nutshell, there is absolutely no reason to suspect there is any weaponization program in Iran.
Juan:
From what I have read over the years, the Iranian regime is reported to be unstable and have serious economic problems. So do you disagree with this view, which I thought was more or less a consensus, that the Iranian Republic was brittle, a la the Libyan or Tunisian regimes, if not more so…?
Frank
Woah, where have you read that? I’m not aware of it being a consensus, and in fact I have not come across this idea in writing until now.
I can’t recall the source. I think in an NYTimes article and blog commentary (talkingpointsmemo, andrewsullivan…). I think the Green Revolution was often described as being in part a response to bad economic performance. Thomas Friedman stated that the economy of Iran was a mess. To possible preempt you: He can be wrong on a lot of things and right on some things.
Perhaps one ought to acquire a more indeendent report of what the state of the Iranian economy is. Alot of what is reported about Iran in western media is aimed at demonising it and presenting it as an isolated pariah state. Independent investigation would reveal a somewhat different picture.
the Iraq war brought new life in to the iranian regime plus the rise of china.
If Iran can enrich uranium to 3.5 percent for nuclear reactor fuel, it could in theory use its centrifuges to enrich to 95 percent for a bomb.
This is something that shrill voices tend to emphasize, without any perspective of the huge difference in scale.
Climbing a hill in your neighborhood means you could potentially climb Mt. Everest, but the first doesn’t imply that the second prospect is near or practical.
The Manhattan Project used centrifuges to provide slightly enriched uranium that was fed to “calutrons”, essentially mass spectrometers applied to enrichment for successive levels of separation. Whichever modern approach Iran’s engineers might use, they would still have to “turn the whole country into a factory” (Niels Bohr’s phrase) in an energy-intensive process that would be highly visible, as Dr. Cole mentions.
It would be ludicrous to seek to prevent Iran from climbing the backyard hill of low levels of uranium enrichment, any more than we could prevent people from making flashlights or guns.
Even if Iran had a stockpile of 20% enriched uranium (which it wants for legitimate medical uses), physicists can tell you that this initial effort is still only the tip of the iceberg. A highly visible massive ramp up would still be needed to get to the 90% and higher enrichments needed for a uranium bomb.There is no simply no urgency until unmistakable signs of an all out effort to make a bomb are visible.
On the other hand, there are always corporate sponsored hawks looking to promote a war that will unleash spending. Wars have always been as much about profits as about conquests. This issue appears more about projecting power and profits than protecting people from aggression.
My understanding is that the latest Iran sanctions bill — which passed the House by a hugely lopsided majority (I don’t know about the Senate) — also prohibits the United States from negotiating with Iran. Sounds too absurd to be true, right? No negotiating. Except that in Washington the too absurd is true all the time.
Worse than that, it stops other countries who do work with Iran from trading with the USA. Madness. The sanctions on Cuba for 60 years are in this category on a smaller scale. Why not treat Iran as the sovereign oilrich, cultured country it is? 25 years under the Shah and SAVAK are enough cruelty to Iran.
Hey, as our former Cheney-and-Chimp act proves once again, it’s a lot easier to maintain a kleptocracy if there’s a handy, credible “external enemy” around which the rulers can conjure up “patriotic fervor” and that old “blind obedience” to the rule about “not switching horses in midstream.” I’m not even going to cite all the examples where that’s worked in real life — but in the filmic world, there’s always jokers like “Wag The Dog.”
Sure helps to “prop up unstable regimes,” and paper over “serious economic problems,” including of course those engineered by our Game of Risk!-playing CIA and related Jackals and Jackasses…
[…] Iranian Navy Menaces Oil Exports from Hormuz | Informed Comment. […]
If you are really interested in what’s going on in Iran:
link to foreignpolicyblogs.com
link to businessweek.com
link to iranian.com
Article in Persian:
Obeying Vali Faghih is obeying god and the prophet
link to iranian.com
Iran: Workers in Shiraz enter fifth day of protests
link to payvand.com
iran labor report
link to iranlaborreport.com
Hojatoleslam Mirdamadi: “Minor operation” on disobedient women
Explains necessity of hitting women as a last resort
link to iranian.com
About this latest manufactured “crisis:” What was it that wise old Forrest Gump said? “Stupid is as stupid does”?
But if “we” are gonna do stupid yet again, all you Serious Brow Furrowers and Pronunciamentators out there get ready to justify and/or deplore, as your tastes run…
Follow the money. Wisest advice ever for anyone trying to understand what’s really going on…