SPEAKING
FREELY What the Iran 'nuclear issue'
is really about By Chris Cook
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
It is said that
there is the reason they give; and then there is
the real reason. Nowhere is this more true,
perhaps, than in Iran.
My experience with
Iran began four and a half years ago in June 2001
when, through my Iranian business partner, I wrote
to the then governor of the Iranian central bank,
Dr Mohsen Nourbakhsh. This letter was written
on the basis of my experience as a former
director of the International
Petroleum Exchange and in the aftermath of
allegations I made in relation to market
manipulation on the IPE the previous year, which
were dismissed by a commissioner appointed by the
exchange. I still regret that I used the
description "systematic" rather than "systemic" of
this alleged manipulation, but that is another
story.
In this letter I pointed out that
the structure of global oil markets massively
favors intermediary traders and particularly
investment banks, and that both consumers and
producers such as Iran are adversely affected by
this. I recommended that Iran consider as a matter
of urgency the creation of a Middle Eastern energy
exchange, and particularly a new Persian Gulf
benchmark oil price.
It is therefore with
wry amusement that I have seen a myth being widely
propagated on the Internet that the genesis of
this "Iran bourse" project is a wish to subvert
the US dollar by denominating oil pricing in
euros.
As anyone familiar with the
Organization of Petroleum Exporting Countries will
know, the denomination of oil sales in currencies
other than the dollar is not a new subject, and as
anyone familiar with economics will tell you, the
denomination of oil sales is merely a
transactional issue: what matters is in what
assets (or, in the case of the United States,
liabilities ) these proceeds are then invested.
After a couple of years of apparent
inaction, my colleague and I were invited to put
together a consortium to tender for a project to
create such an exchange and, after a presentation
at the central bank in Tehran in May 2004, we were
successful, as reported in The Guardian at the
time. We subsequently learned that the delay had
been due to initial opposition from the Saudis and
this opposition was withdrawn after the attacks of
September 11, 2001, and the subsequent US-led
invasion of Iraq.
A major feasibility
study was carried out in the summer of 2004 - for
which we still have not been paid by the Iranian
Oil Ministry - and after this, the process became
bogged down in turf battles between the Oil
Ministry and the Ministry for the Economy.
We met president Mohammad Khatami in
December 2004 to resolve this problem and then
spent considerable time with his close advisers,
from whom we received powerful backing. Progress
was made, to the extent that an exchange entity
was incorporated and premises purchased on Kish
Island in the Persian Gulf.
In the second
quarter of 2005 the real opposition from within
the Oil Ministry - from factions opposed to
shedding any light on the sales regime - was
becoming apparent. However, as the battle was
about to be joined, Khatami's period in office
came to an end and the presidential election in
August intervened.
Neither we, nor anyone
we knew, expected the result of the election,
still less the events after it. Three times over a
period of three months an oil minister was
nominated by the new president, Mahmud
Ahmadinejad, from among his trusted colleagues and
three times they were turned down by the majlis
(Iranian parliament), until finally an experienced
insider was appointed in early December. Only now
are further levels of appointments being made by
the new minister.
Ahmadinejad is on record
as saying that he favors transparency in the
Iranian oil market. As anyone familiar with the
City of London and Wall Street will know,
transparency is the enemy of private profit, and
it is this factor that was behind the delays in
developing the bourse project.
However, we
remain hopeful that the strategy we recommended,
which is based upon (a) gradual and organic
introduction of pricing built upon the neutral
function of transaction registration and (b) a
simple (and Islamically sound) partnership-based
"clearing union" synthesis of bilateral trading
and a multilateral guarantee, will in due course
be taken forward.
One of the most
interesting aspects of the process was that during
our brief spell of contacts with decision-makers,
some insight into current Iranian policy was
possible - in particular, the nuclear question. In
our conversations we were left in no doubt that it
suits both the US and Iran for the issue to be
seen to be that of the Iranian "threat" from
nuclear weapons.
In fact the issue is a
proxy for Iraq: try looking in the media prior to
the events in Fallujah, Iraq, for anything more
than desultory mention of this "issue". But once
factions in Iran funded Muqtada al-Sadr to the
tune of $50 million and the US body count started
to rise, then the issue began to attain its
current level of importance.
Now that
pro-Iranian Shi'ite elements are taking a primary
role in the emerging government in Iraq, we see
the nuclear temperature rising further.
The realpolitik is of course that those in
power in the US and Iran have the reason they give
- and the real reason - for what they do: and for
the US, the real reason is and has been for many
years energy security above any other
consideration.
Chris Cook is a
former director of the International Petroleum
Exchange. He is now a strategic market consultant,
entrepreneur and commentator. Reprinted with
permission from www.energybulletin.net.
(Copyright 2006 Chris Cook.)
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
