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Iran and the Nuclear Bottom Line

by ChrisCook Sat Mar 31st, 2012 at 05:51:14 PM EST

Former Iran negotiator says nuclear deal possible

An end to a nearly decade-long nuclear standoff between Iran and major world powers will be possible if the United States and its European allies recognize Tehran's right to enrich uranium, a former Iranian negotiator said in an editorial.

"Talks between Iran and the five permanent members of the U.N. Security Council plus Germany (P5+1), scheduled for next month, provide the best opportunity to break the nine-year deadlock over Iran's nuclear program," Hossein Mousavian, Iran's former chief nuclear negotiator, wrote in an editorial in the Boston Globe.....

........Mousavian writes that if a deal that is acceptable to both parties is to be reached, the two sides' "bottom lines" should be identified.

"For Iran, this is the recognition of its legitimate right to create a nuclear program - including enrichment - and a backing off by the P5+1 from its zero-enrichment position."

"For the P5+1, it is an absolute prohibition on Iran from creating a nuclear bomb, and having Iran clear up ambiguities in its nuclear program to the satisfaction of the International Atomic Energy Agency," Mousavian writes.

The West also needs to abandon calls for regime change and accept that "crippling sanctions, covert actions, and military strikes might slow down Iran's nuclear program but will not stop it"

This is exactly in line with my reading of events.

I know for a fact that Marc Rich was in Tehran a few weeks ago and not to take the air or go clubbing. Don't forget that this is the guy who was selling Iranian crude to Israel for six years under the Shah and another 14 years under Khomenei, with whom he apparently got on famously.

Shortly after this trusted third party's visit we heard Khamenei re-stating his proscription re nukes, and Obama beginning to state categorically that Iran would never have nukes on his watch, which went down well with AIPAC.

My take is that Marc Rich carried back the message that the deal offered by Iran in 2003 - at least that part re nukes which was outlined by Mousavian above who was in a position to know - is still Iran's bottom line.

The enabling factor for a deal has been the recent Iranian election where the Khamenei faction finally saw off the eight year long bid for the Iranian oil and gas spoils by the Ahmadinejad faction. It was no coincidence that Iran's letter to the 5 plus 1 followed within days of this election.

I think we'll now see, beginning in a couple of weeks, Iran backing off with as much grace as possible over the next few months. So Obama might well achieve before the election what Carter never did, and that is to solve the Iran problem. Unless of course the Republicans do a Reagan/Iran Contra, but I see no signs that they have anyone with the brains or the balls to try.........

The US aim will also be for the Saudis and J P Morgan Chase - who have been manipulating the oil market on a cosmic scale through the use of Enron prepay deals - to manage the decline of the oil price back to the $70/bbl to $90/bbl peg they achieved between early 2009 and the Libya shock when they were acting as a Central Oil Bank.

This will have the beneficial pre-election political effect of returning gasoline below the $2.50 gallon level which was promised by the Republicans, on the basis of completely incredible, indeed totally barmy, premises.

But I very much doubt that JPM and the Saudis can catch the falling knife of the oil price as they did last year. This is because passive 'inflation hedging' fund money has pulled out, while proprietary trading capital and bank financing for inventory - both of which may provide a cushion against a price fall - are both sparse.

If the Chinese and others decide that they would prefer to fill their reserves at under $60/bbl rather than paying $120/bbl then the market could go into meltdown.

But we may be sure the Saudis -like the Qataris last November - will have hedged themselves against a temporary fall below $60/bbl by selling WTI futures to the muppet speculators who have piled in to buy them.

The irony is that an inadvertent collapse in oil prices below $60/bbl - which is more likely than not, I think - would do more to engender regime change in US antagonists like Iran, Russia and Venezuela than anything the US could possibly do deliberately.

Because it would all be the fault of the Great God of the Market........as opposed to the Great Satan.

Interesting times.

Unless of course the Republicans do a Reagan/Iran Contra, but I see no signs that they have anyone with the brains or the balls to try.........

But that leaves out the possibility of someone suitably deranged, such as Ollie North, but, fortunately, they would not likely have the necessary nurturing environment in which to operate -- we hope.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Mar 31st, 2012 at 09:01:19 PM EST
In a recent intervie, Brzezinski warned that the current Western policies would leave Iran without the face or options, that patient deterrence would work well just as with North Korea or the Soviets it did.

Interesting times indeed.

by das monde on Sat Mar 31st, 2012 at 11:31:10 PM EST
Indeed that is the danger as I see it as well.

If the US and EU members of the 5 + 1 limit discussions to the nuclear issue, then Iran will back off over a period of negotiations and all will be well.

If on the other hand, as is likely, they attempt to impose concessions in other areas then things may get difficult.

I think that Russian and China would at that point break ranks, and with others (eg the BRICS grouping) commence organised sanctions busting.  

ie put two fingers up to unilateral US attempts to impose sanctions on their institutions.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Apr 1st, 2012 at 04:26:45 AM EST
[ Parent ]
I don't see it though. You say yourself that Iran won't give up its nuclear program.
There already is no nuclear weapons program. Furthermore there is no way to run a complete nuclear cycle without also acquiring the ability to manufacture nuclear weapons in very short order. Those ambiguous points are mostly of propaganda value they are hardly the source of US hostility.

So how can the US declare victory? A big signing ceremony?

by generic on Sun Apr 1st, 2012 at 08:36:27 PM EST
Good question. Moreover, we have Ms Clinton saying Iran has to prove a negative.

If the US called the shots unilaterally we'd have a problem, but I think they no longer do.

I believe China has had since 2007 an economic veto over US 'dollar diplomacy' foreign policy. In my view Iran will do whatever is necessary to satisfy China and Russia. The EU and US are now secondary players.

I think mechanisms acceptable to China and Russia can be found if Iran are in earnest (and they are IMHO). I cannot see the US taking any action against Iran that breaches China's 'red line', which in my view, is the same as that of the US ie energy security above all else.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Apr 2nd, 2012 at 11:25:38 AM EST
[ Parent ]
Which sounds like an argument for continuation of the status quo.
The West stays hostile, China buys the oil, Iran builds its fuel circle and Israel grumbles.
by generic on Mon Apr 2nd, 2012 at 12:48:26 PM EST
[ Parent ]
And Russia gets to sell the Iranians more reactors. At the margin, this would tend to drive down the price of natural gas, but Russias primary customers are all hooked up to pipelines, so shipments of LNG from Iran is not a smooth substitution, so perhaps they dont care about this?
by Thomas on Mon Apr 2nd, 2012 at 01:15:37 PM EST
[ Parent ]
I don't see Iran going for any more nuclear reactors.

They appear to be up for the 'Transition through Gas' strategy I outlined in Tehran a few months ago, and the recent political conclusion of the Ahmadinejad faction's play for power appears to have removed political/rent-seeking blocks the strategy faced.

Watch this space.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Apr 3rd, 2012 at 07:10:43 AM EST
[ Parent ]
Eh.. "lots of civilian nukes" would constitute a facesaving exit for the iranian regime, yes? Certainly just exiting nuclear technology would be hideously embarrasing to them after picking this big a fight over it.
And since it would directly substitute for the insanely wasteful way they currently burn natural gas for power, the economics look reasonable too, so a deal where several members of the security council sells the iranians a couple of reactors each, and get to have their experts crawl all over the iranian nuclear complex as a part of the deal seems likely to happen.
by Thomas on Tue Apr 3rd, 2012 at 08:44:12 AM EST
[ Parent ]
I'm not saying they'll exit the existing reactor at Bushehr now it's working. For reasons of face, as you say.

But I see zero chance of them acquiring any more.

The 'transition through gas' strategy which they appear to have bought into will solve the problem of wasteful use of carbon fuels generally and gas in particular.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Apr 3rd, 2012 at 03:55:09 PM EST
[ Parent ]
The status quo is not an option, because the global dollar-based system is terminally fucked.

At the moment the producers have the whip hand.

When the oil bubble - and probably other commodity and equity bubbles - collapses, then both producers and consumers will be motivated to agree a new settlement.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Apr 3rd, 2012 at 07:06:14 AM EST
[ Parent ]
What would motivate consumers to seek a settlement? Going by historic precedent I'd rather imagine the West opting for triumphalism if they have the upper hand.
In general large scale financial collapse leads to wars not to settlements.
by generic on Tue Apr 3rd, 2012 at 07:38:28 AM EST
[ Parent ]
As in 2008/9 the upper hand is only temporary, because the Saudis and others will - once the price collapses - cut oil production as they did in 2008, and the price will be ramped up again as it was before in 2009.

Rinse and repeat.

The oil market is terminally dysfunctional because it is run by and in the interests of intermediaries operating with an aim to maximise profit.

Consumers have an interest in stable low prices: producers have an interest in stable high prices, and it would not be impossible for them to agree either:

(a) a formula for stable fair prices (rising as supplies become scarcer) or - more to the point, and as I advocate;

(b) a stable high price at the level necessary to choke off demand, with both a fair sharing of the surplus, and a investment fund available to invest in renewables and energy savings.

The problem is that for the intermediaries who own and control the existing market platform, price stability is Death.

That is why our proposed architecture for the global gas market is to connect producers and consumers directly, with existing intermediaries transformed to 'capital lite' service providers.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Apr 3rd, 2012 at 03:37:33 PM EST
[ Parent ]

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