SPEAKING FREELY Iran's untapped resources
By Andrew Bishop
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their say.
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Iran is a golden goose locked in a steel cage built by the West. There may well
be good reasons for having locked up the goose, such as the risk that it might
try to peck its neighbors; but there certainly exists an even better case for
making the most of such a promising creature's resources.
According to the US Energy Information Administration (EIA), Iran "ranks
amongst the world's top three holders of proven oil and natural gas reserves"
with "roughly 10 percent of the world's total proven petroleum reserves" and is
"the fourth-largest exporter of
crude oil globally after Saudi Arabia, Russia, and Norway." [1]
Despite this, "the Iranian government heavily subsidizes the price of refined
oil products, which has contributed to increased domestic demand." The EIA
adds, "Iran has limited refinery capacity to produce light fuels, and imports
much of its gasoline supply."
Yes, Iran, one of the world's biggest oil holders and exporters, imports most
of the gasoline its people use on a daily basis.
On a comparative key, the EIA continues, "Iran produced 6 million billion
barrels per day [bbl/d] of crude oil in 1974, but has been unable to produce at
that level since the 1979 revolution due to a combination of war, limited
investment, sanctions, and a high rate of natural decline in Iran's mature oil
fields."
The problem more recently has been that "investment in Iran's energy sector has
been tempered due to the election of the conservative government of President
Mahmud Ahmadinejad in 2005, the international controversy surrounding the
Iranian uranium enrichment and nuclear program, and economic sanctions." Which
leads the EIA's analysts to predict that "Iran will not be able to increase its
net expansion capacity through 2012."
They may be right since "the most significant energy development project in
Iran" - its offshore South Pars field, which is estimated to represent "around
47% of Iran's total natural gas reserves" - has recently been shunned by
several leading energy companies, which fear Iran's domestic and regional
instability.
Early last May, Reuters reported that Royal Dutch Shell had expressed a desire
to withdraw from its previous engagements with Iran to exploit the field. It
finally did so on May 10, claiming that it would nevertheless re-enter the deal
at a later stage. [2] Repsol YPF, a leading Spanish energy company, has
expressed similar intentions and is expected to act upon them. [3] Only French
firm Total has maintained that it will meet its ongoing commitments. [4]
The point is, with traditional investors turning away from exploitation deals
and given the country's limited capacity to extract or refine its own
resources, Iran is in desperate need of technical and financial assistance.
Some would say that that is precisely the West's objective and that with
sanctions having worked and Iran's leadership desperate, Brussels and
Washington can now have their way with Tehran.
The problem with such logic is that it is not certain that Iran will remain
desperate for long (it has already begun looking towards Russia and China for
more reliable partners) or that any concrete political leverage was gained
through the Bush administration's power-play. At the same time, and what is
indubitable, is that Western companies and their consumers have lost both
economic gains and energy security guarantees in the process.
Fortunately, these developments have also brought with them the paradoxical
advantage of giving the West a chance to reverse course.
As Stratfor, an Internet-based forecasting firm, puts it, with oil prices
surging to around US$130 per barrel, Iranians are increasingly wondering why
they aren't seeing the benefits of being a resource-rich nation. This
disappointment, along with Ahmadinejad's longstanding history of economic
mismanagement, could soon bring an end to the president's rule over the
country, Stratfor analysts wrote recently. [5]
These claims appear particularly likely when one considers the fact that
Ahmadinejad has long-lost many of his supporters within both the Iranian
population and Tehran's political circles.
Rumors of tension between Iran's Supreme Leader Ayatollah Ali Khamenei and the
president have now become common. Further, the country's legislative elections
in March have given new stature to Ali Larijani, Ahmadinejad's former nuclear
negotiator who quit his job last October and was recently elected to the
influential position of speaker of the parliament.
A conjunction of these factors might well lead to Ahmadinejad's ultimate
marginalization and withdrawal from politics if he decides not to run or loses
in the country's 2009 presidential elections. This could provide the West with
a chance to cooperate with the Iranian leadership as it did at times before
Ahmadinejad was elected in 2005.
The issues of Iran's role in Iraq and of its nuclear enrichment program will
remain, but increased talks on both subjects are not impossible. Signs of
compromise have already surfaced, with US and Iranian officials having been at
a UN-sponsored conference in Sweden last month held to consider reconstruction
of Iraq.
Moreover, the fact that the White House has decided not to revise the National
Intelligence Council's (NIC) November 2007 assessments about Iran's nuclear
program, despite the International Atomic Energy Agency's (IAEA) recently
taking a tougher stance on Tehran, could be interpreted as a sign of restraint
on the part of the George W Bush administration.
All of this creates a context in which the United States and its Western allies
will likely have a chance to re-establish a more rational dialogue with Iran's
leadership within the next year.
In doing so, they will discover that, as the deputy director of policy planning
for the French Ministry of Foreign Affairs said in 2005, "on the will to move
towards a nuclear weapon, there aren't good guys and bad guys within the
Iranian regime, nor are there those who want it and those who don't. There are
[simply] those who want to do it if it doesn't cost too much." [6]
Indeed, apart from the regime's Iranian Revolutionary Guards Corps, most
Iranians, businessmen and workers alike, can be expected to prod their
government into accepting a deal on the nuclear issue if it is perceived as
fair and freely contracted.
In fact, Iran's leadership has already once pursued such an option - in 2003,
when it offered the Bush administration to negotiate on its nuclear program.
Despite having seen its proposal turned down at the time, Tehran could well
come around with new proposals if its enrichment agenda keeps failing both of
its main objectives: prestige and economic diversification.
Not only have sanctions discouraged the country's main foreign investors, but
Iran's influence in the region is increasingly looking like a bubble that could
burst if Syria and Israel strike a peace deal, or if Saudi Arabia turns its
recent economic gains into increased political clout along Iran's borders.
The key, therefore, will be to give the Iranians want they want: some
recognition for their ancestral Persian heritage as a great power.
Paradoxically, this could well be the most efficient way to prevent Tehran from
further seeking to acquire nuclear weapons which it may perceive as being its
best chance of being taken seriously by the West.
Surely, this would mean giving a little to a regime the United States abhors.
But such a policy could also hold great gains for Washington and, even more
evidently, Europe.
In addition to South Pars' potential economic gains for their companies, Iran
has at least one other feature Europeans are lurking over: it stands in the
middle of their attempts to draw alternative energy supply routes from Central
Asia to the European heartland without having to step over Russian territory.
Washington, on the other hand, needs to accept Iran as one among many players
in the region if it is to avoid prompting a "coalition of the unwilling", which
could stretch from Tehran to Beijing with Moscow between the two.
US Department of State spokesman Tom Casey, for example, must have realized he
wasn't being realistic when he asked Indian Prime Minister Manmohan Singh to
demand Ahmadinejad put an end to Iran's nuclear enrichment program during a
formal visit the Iranian president made to New Delhi this past May. [7]
At a time when Europeans and Americans seem to be going down the road to a new
Cold War with Moscow, Brussels and Washington will soon realize that Iran could
be more useful as a friend than as a foe, albeit in the context of a
cold-hearted relationship.
Naturally, with Ahmadinejad in power, such a shift would have been even more
difficult than when it was first rejected in 2003. It also might not have been
the right choice. The West, however, is lucky that Iran's president has been as
unproductive domestically over the past three years as he was in his relations
with the outside world.
If he goes in the next 18 months, the West will have everything to gain in
responding to such a landmark political shift in Tehran.
Notes:
1. EIA, Country Analysis Brief, Iran. October 2007.
2. Reuters / Tom Bergin, "Shell pulls out of Iran gas deal", May 10, 2008
3. Reuters, "Shell, Repsol aim to leave Iran gas project: paper", May 3, 2008.
4. Reuters, "Total says still interested in Iran's South Pars", May 12, 2008.
5. Stratfor, "Global Market Brief: Ahmadinejad's Oily Problem", May 22, 2008.
6. Philippe Errera, Translated from "Les risques lies a la proliferation
nucleaire", January 18, 2007.
7. BBC News, "India rejects US advice on Iran", April 23, 2008.
Andrew Bishop is a graduate student of European politics at Sciences-Po
in Paris and at the London School of Economics. He is also a
bloggerand commentator on international affairs.
(Copyright 2008 Andrew Bishop.)
Speaking Freely is an Asia Times Online feature that allows guest writers to have
their say.
Pleas e click hereif you are interested in contributing.
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