How To Deal With Iran - What Milton Ezrati Saw (And Missed)
by Russell Mitchell of Boxing Alcibiades
In this Christian Science Monitor op-ed, money management executive Milton Ezrati comments on the Iranian oil bourse idea, a new, euro-based oil exchange, on Kish Island in the Persian Gulf which ultimately aims to dethrone the greenback from its position as the world's reigning reserve currency. He dismisses it as a complete fantasy for several good reasons, most of which can be summed up as "who wants to depend on Iranian law?"
The most interesting thing about Ezrati's article isn’t the futility of Iran's oil bourse idea, however; rather, it's the utterly missed implications of his own analysis re: Iran's oil weapon. An analysis that may suggest the way to bring the Iranian dictatorship1 to its knees.
Ezrati notes that Iran is hardly in a position to make threats regarding oil:
"And Iran, whatever its political agenda, simply does not have the economic and financial wherewithal to hold back its oil altogether. Petroleum amounts to 80 percent of all Iranian exports, 45 percent of the country's GDP, and 60 percent of the government's revenues. With the economy there already rickety, any shortfall in oil sales would tempt financial, economic, and consequently political suicide for Iran's current regime."
An interesting point. Yet he brushes past the obvious implications as if they're hardly there.
While Mr. Ezrati may feel the need to tiptoe past the obvious, there's no need for us in blogistan to do so... if the US wants to retaliate seriously against the Iranian regime, while drying up the international money that goes to Hezbollah, Hamas, and al Quaeda, and doesn't feel secure about its ability to take down Iranian air defenses... wiping out oilfield infrastructure would be a breeze.
Since Iran is completely dependent on imports for its gasoline -- imports that cost money -- its military will be effectively hamstrung even as its economy tanks.
And what's more, such a strategy would not be out of place: if we document Iranian security elements engaged in direct or proxy actions against US troops, we have our casus belli for limited countermeasures, and neither Russia nor China will able to do anything else but make predictable but polite noises in protest. China, because it will follow Russia's lead, and Russia because cannot it afford to lose one of its most effective propaganda levers for the justification of both legitimate defense and military adventurism in the Caucasus.
In this respect, US geopolitical and military strategy becomes quite clear:
- Allow Iran to gain the lead in the leadership and financing of terrorism abroad. Actually, it has held this position for some time now.
- Encourage other entities to cut funding, such that terrorists become dependent on Iranian oil money.
- Open up the press conferences documenting Iranian proxy war, and declare war on Iran with said Iraqi casus belli, completely bypassing the UN (it's not required, and although NATO troops wouldn't be needed for such operations, the US can, if need be, put NATO in a diplomatic hammerlock on this issue).—although not actually necessary on a legal level, it will provide the media “air cover” which has figured so dramatically in recent operations.
- Chop the oil money off at the kneecaps by dismantling Iran's oil infrastructure as soon as Iran takes one step over whatever is determined to be the red line.
Ahmadinejad may be trying desperately to obtain a nuclear trump card... but otherwise, he is holding an extremely weak hand. It is incumbent upon us to force him to play those cards, and sooner, rather than later.
Footnotes
1 That's what it is -- Iran's rulers use religious extremists who are actually in the employ of the intelligence community to crush their people, no differently than Milosevic used the Chetniks.
Joe,
I tried to send you this in an e-mail but it bounced. My new address is msimon 6808 at yahoo dot com. Send me something.
Any way here goes:
It appears that no other blogs except mine have seen the American/Euro policy of attacking Iran through Hamas. We are going after their ability to wage war - money.
You will note the Arab brothers are standing firm with Hamas. Their funding is steady. Neither increasing nor decreasing. Their version of solidarity.
Iran, however, has just withdrawn 700 tons of gold
from its accounts - now who do you have to pay in
gold? In addition they have withdrawn $30 bn as well in paper. All this reported in official Iranian sources.
I'd say they are preparing for war. Probably guerilla war plus a terror war with Hamas and Hizbollah as proxies. For all their bluster I'd say tthey expect to be defeated quickly.
Follow the Gold
also this:
Follow the Money.
If I were a betting man I'd say that the Israelis will do Damascus when we do Teheran.
Simon
===================================
As Joe points out this is just the initial squeeze. The oil squeeze could come next. The first attack has already started and it can't be counter attacked with super high speed torpedoes.
So far the Iranians have stocked up on gold and bank notes. In response
All I can say joe is that great minds think alike.
I think I have your points #1 and #2 well documented.
#3 and #4 were not clear at all to me though there was movement in the perephiral area.
Great work!
As usual our National Command staff has learned the lessons of the last war. Accountants can be as important as infantry. Total Information Warfare. The Iranians have not a clue.
Simon
Oh, yeah. Thanks for figuring out the blogspot thing.
I just wonder how Sharon manuvered the Palis to get Hamas elected - note that Hamas was surprised by their mandate.
I wonder.
The enemy has a vote.
They got nukes.
If they can't export or import, neither can anyone else. EMP device over the Gulf.
Or they can close the Straits of Hormuz.
Any military action against Iran will result in retaliation and escalation to full-bore conquest.
The best way to maximize casualties and economic injury for everyone is to dick around with incremental force.
Tom,
These are just the opening probing moves. Trying to get the other side to make a false step.
Think of two opposing armies marching on the double a few hundred yards from each other as often happened in Napoleonic campaigns.
Or skirmishers feeling out the enemy dispositions in the American Civil War.
When it goes off I expect a thunderclap. Causus belli will likely be a strike on Straight of Hormuz shipping.
One of the reasons why we can't wait years for non-military methods to work:
http://www.upi.com/NewsTrack/view.php?StoryID=20060409-074231-9704r
Russia is an oil exporter, and has a lot to gain if oil prices go up because we've decided that $3.50 a gallon is a small price to pay contain Iran. So I'm not sure that Russia really cares if we knock out Iran's oil infrastructure. It does, however, give enormous leverage to every other dirtbag in the world that controls some oil production at the margin. You've just made the House of Saud and Hugo Chavez that much more influential. It still might be worth it, but it is not a clear cut decision.
The goal of the US in this confrontation is to prevent Iran from developing nuclear weapons.
Economic means alone will not be sufficient to prevent Iran from developing nuclear weapons. This is demonstrated by North Korea, an economic failure believed to have develop nulcear weapons capability.
A nuclear weapon is more valueable to Iran than any other military asset or proxy. Therefore only regime change or an destructive attack on their nuclear weapons infrastructure will prevent Iran from obtaining nuclear weapons.
Iran is not a democracy. Economic disruptions are unlikely to bring about regime change.
Nuclear weapons have actually become a source of revenue in and of themselves for third world powers. Strange as this may seem, considering how costly they are to build and operate, but its true. "Rogue nations" can use them to threaten, coerce and bribe other nations to give them money in exchange for not "losing" a couple of nukes. This has worked for North Korea, and I expect it to work for Iran as well.
Also, we don't have to destroy their oil infrastructure to have the desired effect: all we need to do is disrupt it as the (no doubt Iranian-supported) terrorists have been doing in Iraq. Hundreds or thousands of miles of oil pipelines are a tremendously vulnerable asset.
As I argued in my post yesterday, blockade (enforced sanctions) would be a step which would signal resolve, possibly without inspiring a rally-'round effect as may happen with bombing or invasion.
How certain are you that Russia and China are in lock-step? It seems to me that their objectives are very different. Honestly, it's not completely clear to me what they're up to: unless they're absolutely, positively convinced that the U. S. (with or without coalition partners) will not attack Iran their position opposing sanctions of any kind makes no sense since it makes war more likely rather than the other way around (as I also argued yesterday).
Gents, I originally asked Joe for feedback, and we discussed putting it here so everybody could slice and dice it... but blame for any shoddiness here goes to me, not to him.
Simple:
Support those Iranians who want to get rid of the mullahcratic regime and you'll have a very safe world to live in afterwards
Before you get too far down this path, one reality check: Proportion of Iranian exports to Japan: 22.4%; to China: 10.4%. That's of total exports, but with POL being 80% of it, the fractions there won't differ materially. (Source: Economist 2006 Pocket World in Figures.)
That's two major American trading partners, one of them a long time ally that has essentially no domestic hydrocarbon sources. Something to consider when discussing blowing away the Iranian oil infrastructure, or even achieving a military chokehold on it.
I sure hope Winston is right. If he's not, I'd put my bet on the decapitation strike.