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LQD: Iran Sanctions - Dumb and Dumber

by ChrisCook Sat Apr 17th, 2010 at 08:15:17 AM EST

BBC News - US puts economic squeeze on Iran

As pressure grows on Iran over its nuclear programme, there is evidence that behind the scenes, the United States has stepped up its push to isolate Tehran economically.

In recent weeks a number of countries and companies have cut back on their imports of Iranian crude oil. They include some of Iran's most important trading partners: China, Japan and India.

At the same time more companies have stopped supplying Iran with refined petroleum. Because of a shortage of refining capacity, Iran relies on such imports to meet domestic demand.

The move was explained in unusually blunt terms this week by a senior US official.

William Burns, US Under-Secretary of State, told a Congressional committee: "What we've been doing is to try to use every lever that we already have at our disposal to encourage foreign companies, foreign entities to cut their ties with the Iranian economy."

I made a presentation at a very interesting Round Table at the Royal United Services Institute sponsored by Platts and covering Renewable Energy and Energy Security last Monday.

My panel covered the Middle East generally, and Iran specifically. My message re Iran was that sanctions are pretty dumb generally and have in fact been counter-productive in relation to finance, where they actually insulated Iran from the Credit Crunch, and re IT/Communications, where the more connected the Iranian population is the more beneficial it is for everyone.

Concerning the proposed energy sanctions, gasoline sanctions are actually what the Iranian leadership want, firstly because the IRGC/Bonyads - who made a hostile takeover bid last June - control the borders and would benefit hugely from sanctions.

Secondly, and more importantly, Iran desperately want to reduce profligate fuel use which is crippling them financially, through subsidies, and also environmentally. US sanctions give them the perfect excuse to do what they are already trying - and failing - to do, and to blame the Great Satan for it.

As for crude oil, all that sanctions achieve is a tax on Iranian crude sales payable to the more murky sell and buy side intermediaries who would sell and buy the crude oil, giving huge rakeoffs to the Bonyads again.

Oil for food anyone?

As I said, it is IMHO smart engagement that is necessary, not dumb sanctions. Most of those present agreed with the logic, I think, but I'm not sure what the former US Secretary of State sitting impassively next to me made of it......

I'm reading "Human Smoke". You should too.

It details, through incredibly intense research, the leadup to WWII, and the brutally venal and racist decisions made by dozens of leaders on both sides.

The sense I'm getting (the book is about two details per page, 500 pages, ordered by date) is that war is inevitable once a certain collaboration level is reached.

I think we've tipped over to war with Iran. We will squeeze, Iranians will become mad with anger, and will follow their leaders into the Iraqi hell. Israel will be safer, in their eyes alone. Syria will be next.

Good chess.

Align culture with our nature. Ot else!

by ormondotvos (ormond.otvosnospamgmialcon) on Sat Apr 17th, 2010 at 02:46:49 PM EST
Booman Tribune ~ Bombing Iran
Like Libya, Iran had been 'shocked and awed' by the Iraqi invasion, and in the aftermath they offered the US everything (and more) than they now require. The neocons turned it down in their arrogance because Real Men Go To Tehran and Iranian oil beckoned.

The nuclear issue was never an issue until things started going wrong for the neocon project in Iraq and a casus belli was needed against Iran, at which point is was trumped up.

But I reckon that the world changed in the first half of 2007 when China flexed its economic muscles and made clear to the US that energy security is (as it has been for the US for 100 years) a 'red-line' issue, and therefore that bombing Iran is definitively off-limits. I see that point as the 'Suez Moment' for the US when the economic plug was pulled on miltary adventurism by its main creditor, as the US did for the Brits in 1956.

From the Chinese veto onwards it's been posturing. Standing up to the Great Satan plays well for Ahmadinejad at home, while for Israel it's a great distraction from the realities they continue to create on the ground, and which are their number one priority.

Sanctions are a complete waste of time, and indeed counter-productive.

It was a source of great amusement to the elite I met in Tehran in October 2008 (including the heads of three state corporations; the OPEC rep; the head of the Majlis Energy Commission; top oil ministry people and even clerics) that the financial sanctions protected them from the global meltdown then going on.

Sanctions on IT and communications are IMHO totally dumb, and the US should be flooding Iran with free bandwidth and all the comms gear and IT kit they can sell: there's nothing more subversive than connectivity.

As for energy sanctions, that is exactly what the leadership want, because they can increase fuel rationing and hike prices - which drastically cuts subsidies and reduces the horrendous pollution caused by gaosline at 10 cents/litre - while blaming it all on the Great Satan.

Moreover, sanctions will make fortunes for the IRGC, ex-Savak guys and Bonyads who made a hostile takeover of Iran last June, removing the last vestiges of theocracy that remained, and replacing it with an oligarchy. The reason they acted precipitately then was the imminence of the wave of privatisations now going on of Iran's energy and other wealth.

The parallels between Iran now, and the Klepto era in Russia is quite close, complete with 'siloviki'. There's nothing remotely theological or ideological about Iran now. It's simply business.

In my view the West should give up dumb sanctions and go for smart engagement with the new owners.

I do not believe that there is the remotest chance the US or Israel will bomb Iran.

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

by ChrisCook (cojockathotmaildotcom) on Sat Apr 17th, 2010 at 05:03:17 PM EST
[ Parent ]
they actually insulated Iran from the Credit Crunch

What a punishment!  Forbidden the chance to be driven into bankruptcy as suckers in the great global housing-bubble & derivatives Ponzi banking scheme!  

The Fates are kind.

by Gaianne on Mon Apr 19th, 2010 at 05:36:47 PM EST

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