Page 2 of 2 SPEAKING
FREELY Iran being hit in the
pocket By Amandeep Sandhu
for Iranian banks at its New York branch.
Within the past four months, major European banks
have rolled back their exposure to dealings with
Iran. The impact is already being felt: a US$5
billion Japanese investment in Iran's oil-and-gas
sector is in limbo because Japanese banks are
nervous about doing business with the Iranians.
Last month, Iranian Oil Minister Kazem
Vaziri-Hamaneh acknowledged having difficulties in
financing oil
projects. [9] Inflation in
Iran has risen to 17%, the highest figure since
the 1970s. [10]
The political
repercussions of the financial squeeze are already
visible: it is unnerving politicians, with rising
criticism of President Mahmud Ahmadinejad from
different factions within the government as well
as the opposition. As Ahmadinejad presents the
annual budget, he will be forced to cut back in an
environment where government subsidies are very
much central to the role of the state. This is
potentially dangerous because he was elected with
the support of the poor, to whom he had promised
subsidized loans for housing. With inflation
shooting up, real-estate prices rising and the
Iranian rial fast losing value, Ahmadinejad's
government will not be able to fulfill its
promises, leading to increased anger and
frustration among the populace.
Iran can
expect to suffer terribly in the next few years,
because the prize of the game is the Persian Gulf.
The first chapter of this struggle in the new
century began with the attack on Iraq in March
2003. The next stop will be Iran. As global oil
reserves fall, the Gulf - with more oil and gas
than anywhere else - becomes more central to the
global economy and the global political order. As
oil runs out slowly and competition for resources
shifts to natural gas, Iran and Qatar, with the No
2 and 3 biggest reserves in the world, will become
central. Any possible move toward increased
nuclear-energy use will still leave
transportation, where most oil is used in the US,
dependent on oil.
The power that controls
the Gulf will control global energy supplies,
including supplies to the Chinese, Japanese, South
Korean and Indian economies. At this point, those
who disagree with this analysis will make this
criticism: geopolitical analysis is not important
because there is a global market in oil, so it
does not matter from where the oil comes to the
market as long as it does.
Yes, there is a
global market in oil, and one barrel of oil
available, regardless from where it comes, is just
a barrel of oil. But geopolitical thinking in
statecraft does not work on the way things are in
the present. It works by both looking back and
looking forward in the long term. Fear is central
to the construction of political and economy
strategy.
It is not only about what is
rational; it is also about emotions - of what one
fears - and the worst-case scenarios are always
central. Thus if the globalized system in which we
now live fails, we are back to geography - then a
barrel of oil is not just a barrel of oil; it
becomes a barrel of oil from a specific place.
That is why the Persian Gulf as a specific
place is important and is becoming more important.
An obstruction in energy supplies in the Gulf area
would be enough to send Asian economies into a
tailspin. At present, India gets 70% of its energy
from imports; Japan 57%; China 40%; and South
Korea 97%. [11] These imports are predominantly
from Gulf countries. It is estimated that there
will be a 53% increase in global energy demand by
2030, of which 70% will come from India and China.
[12] As other places on the planet run out of oil,
the Gulf will become more central.
This is
not lost on the big Asian economies, and the past
decade has seen their increasing engagement in the
Middle East. Former Chinese president Jiang Zemin
visited Saudi Arabia in 1999; current President Hu
Jintao visited Saudi Arabia in 2006; India and
Pakistan are in talks with Iran to lay an oil
pipeline into South Asia; and Chinese and Indian
national oil companies are increasingly active in
the region. Iran as a state that shows
independence in its policy stands in the way of
outside control of the Persian Gulf via brute
force, and therefore the "empire" will destroy it.
Iran is the next, bloody stop in the fight for and
against the Asian century.
Notes 1. Ahmed
al-Jarallah, "US military strike on Iran seen by
April '07: Sea-launched attack to hit oil,
N-sites", Arab Times, January 14. 2. Gary
Drosch, "What's behind the crash in crude oil?",
Turkish Weekly, January 13. 3. Barbara Bibbo,
"Al Qaradawi blames Iran for sectarian strife",
Gulf News, January 21. 4. "Israel should give
diplomacy more time to work", The Independent,
January 8. 5. Uzi Mahniami and Sarah Baxter,
"Revealed: Israel plans nuclear strike on Iran",
The Sunday Times, January 7. 6. Mark Mazzetti,
"Leading senator assails Bush over Iran stance",
New York Times, January 20. 7. Laurent
Zecchini, "L'Embargo qui fait peur? Tehran", Le
Monde, January 20. 8. Michael Hirsch,
"Emptying Iran's pockets", Newsweek, January 11.
9. Daniel Dombey and Gareth Smyth, "Europe, US
squeeze Iran on nuclear plans", The Financial
Times, January 8. 10. Amir Taheri, "Iran: The
looming economic crisis", Arab News, January 20.
11. "World Energy Outlook 2006", Paris:
Organization of Economic Cooperation and
Development/International Energy Agency, 2006.
12. Ibid.
Amandeep Sandhu
writes on South Asian and Middle Eastern affairs
and is a chancellor fellow at the University of
California, Santa Barbara. He can be reached
at sandhu@umail.ucsb.edu.
(Copyright
2007 Amandeep Sandhu.)
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