THE ROVING
EYE Iran
and Europe, 'till death do us part By Pepe Escobar
So the grand Barack
Obama administration foreign policy strategy of
trying to square the circle between an Iranian
nuclear deal and getting the eurozone economy back
on the road slouches towards ... what exactly?
(See War
and cheeseburgers Asia Times Online, May 22)
Not even Zeus knows. At least what was on
the table this week in both Baghdad and Brussels
has kept the ball rolling further on down the road
in Moscow and Paris/Berlin.
The story
in Baghdad The much-anticipated meeting of
the five permanent members of the UN Security
Council - the US, China, Russia, Britain and
France plus Germany (P5+1) with Iran in Baghdad at least
produced a result; a
third round of negotiations in Moscow next month.
It couldn't be any other way. A divided
P5+1 (the US and the Europeans on one side, BRICS
members China and Russia on the other) wanted Iran
to totally halt their uranium enrichment to 19.75%
- to which it has a right, as it subscribes to the
nuclear Non-Proliferation Treaty (NPT). In
exchange, the P5+1 offered a "sanctions-lite"
package, allowing the sale of US aircraft spare
parts and a vague "assistance" in developing
Iran's energy sector.
Tehran was unmoved; to
succeed, this P5+1 package had to be
"significantly revised and reformed", according to
the IRNA news agency. Tehran's ultimate objective
in these negotiations is to soften the Security
Council sanctions. For the leadership, a schism is
very clear between the UN as a whole and the wall
of mistrust involving any US government. Both
Russia and China support Iran's position.
Tehran even accepts, in principle, the
idea of a foreign supply of 19.75% enriched
uranium for the production of medical isotopes at
its medical reactor. And it might even agree with
the International Atomic Energy Agency (IAEA)
inspecting the military base in Parchin (although
that is not part of the IAEA mandate).
But
the key point is still that the P5+1 has turned
the NPT into dust. The mantra since 2006 has been
the same; Tehran must stop all sorts of uranium
enrichment. This is being enforced by a nasty
financial blockade whose ultimate aim is
essentially to paralyze the Iranian economy - by
preventing it from selling oil using the
international banking system.
Unfair
doesn't even begin to describe it.
Then
steps in the European Union (EU) - with its extra
sanctions cum oil blockade, to be in effect in
theory by July 1, in fact going beyond the
Security Council sanctions, and virtually illegal
to boot. This is compounded by a US law in effect
on June 28 forbidding any foreign bank to be
involved in payment for Iranian oil.
Yet
the Obama administration needs a deal - be it in
Moscow, or beyond. That will be essential for
Obama to milk as a foreign policy triumph - in
fact much more substantial than the milking of the
Osama bin Laden raid (see Osama
re-elects Obama Asia Times Online, May 25). If
there is no deal, the Obama administration will
have to exert much pressure for the EU to scrap,
at least until the end of 2012, the ban on
insurance of tankers carrying Iranian oil (EU
companies control most of the global maritime
insurance industry).
Who's suffering with
the sanctions? Not the suspected "regime change"
target - the Tehran leadership. The military
dictatorship of the mullahtariat stays comfortably
in place with oil above $54 a barrel (Brent crude
is at around $106, and West Texas Intermediate at
$90). Moreover, Tehran is selling energy in every
currency from yuan to Indian rupees, and is
engaged in wholesale barter with its customers -
especially Asian.
The bottom line though
is clear; the EU will have to scrap its absurd
Iranian oil blockade to avoid badly hurting itself
and also, by extension, the US economy.
The story in Brussels It was up
to German weekly Der Spiegel [1] to gleefully
register the birth of Merkollande.
New
French President Francois Hollande drew a monster
crowd during his first press conference after a EU
summit - starting way beyond 1 o'clock in the
morning and speaking for over an hour; for her
part German Chancellor Angela Merkel faced a half
empty room for five minutes.
The stage is
set for a Gotterdammerung-style clash.
Hollande will go no holds barred to prove to
Merkel that issuing euro bonds is the only way out
of the eurozone disaster.
Hollande insists
that would be a mighty help to hyper-troubled
Spain, for instance, in terms of saving on huge
interest payments and using the money on
productive investment. Hollande is supported by
Spain, Italy, Ireland and Austria.
Merkel's argument is the troika (European
Central Bank, European Commission, International
Monetary Fund) argument; euro bonds violate EU
law. She is supported by Sweden, Finland and the
Netherlands. Yet even Hollande admits EU treaties
would have to be modified to accommodate euro
bonds - and that would be a mess, as Britain and
the Czech Republic already rejected an amendment
to the treaties late last year.
The whole
situation is immensely complex. Hollande let it be
known that some EU members would accept euro bonds
only in a distant future; some may accept them for
a very specific purpose; and some reject it
outright.
European bankers, for their
part, take refuge in a fuzzy "debt sustainability"
concept; somebody's got to pay, and it's basically
the bulk of the salaried population. No wonder
Nobel laureate Joseph Stiglitz is fuming with the
"pontifications" of "those who, at the helm of
central banks, finance ministries and private
banks, steered the global financial system to the
brink of ruin - and created the mess".
No
one seems to be betting on multi-year subsidies of
core European countries to the periphery, most of
them part of the Club Med. At the same time,
everyone knows there's never been an "exit" sign
on the euzone. Now, though, the unthinkable is
already thinkable.
Anyway, what is being
described as a Orwellian "growth package" will
only be decided on at the next formal EU summit in
late June - after two crucial events on June 17;
the French parliamentary elections, and the
possible victory of the left-wing Syriza party in
Greece, whose key platform point is to renegotiate
the country's bailout imposed by Berlin/Brussels.
Incidentally, EU political leaders have
absolutely no clue what to do with Greece. While
they reassure the god of the market saying Greece
will never leave the euro, they threaten Greece
saying, "If you don't vote the right way, you will
be out of the euro." No wonder the Obama
administration is perplexed. Compared to this,
killing Osama was a piece of cake.
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