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EVEN a cursory look at a map of the region should clarify the geopolitical centrality of Iran in West Asian politics and in the epochal struggles for control of oil and gas resources, the most important strategic raw materials of our time.
On its eastern flank, Iran shares extensive borders with Pakistan, Afghanistan and Turkmenistan; and, on its western flank, with Azerbaijan, Turkey and Iraq. The small expanse of land in Azerbaijan separates Iran from Russia. In the north, it has an extensive coastline on the Caspian Sea. Treaties of 1921 and 1940 with the former Soviet Union, which Russia has inherited, treated the Caspian Sea essentially as a landlocked "lake", gave the two countries exclusive jurisdiction over 10 miles of its water from their respective shores and joint jurisdiction over all the rest. Iran, therefore, has incipient claims on half of the underwater resources, including offshore oil, of the Caspian Basin. The five states of the Caspian littoral that emerged out of the collapse of the Soviet Union obviously dispute this and have their own respective, and mutually conflicting, claims.
Meanwhile, thanks to hostilities between the United States and Iran and the U.S. occupation of Afghanistan, everyone talks only of Afghanistan as the country through which pipelines could be laid for transporting oil from states of the Caspian littoral toward the subcontinent and the Red Sea. A look at the map would show that pipelines running through Iran, and intersecting with the already existing ones there, would carry that oil to the Persian Gulf much more easily and, by the same token, a set of gas and oil pipelines running through Pakistan could deliver not only Irani but also Iraqi, Russian and Caspian Sea oil and gas to India. Pipelines through Afghanistan could supplement this, or not.
In the southwest, Iran similarly has an extensive coastline on what has been historically known as the Persian Gulf but, owing to Arab sensitivities, is now coyly referred to, simply, as the Gulf. But for the narrow waters of the Gulf, Iran would have an extensive border with Saudi Arabia itself, as well as Kuwait at one end and the Emirates at the other. Virtually all of West Asia's oil passes through the Gulf and Iran's strategic position overlooking the Strait of Hormuz, which connects the Gulf with the Indian Ocean, gives it the capacity to choke off tanker traffic for the whole region, if it is attacked. The U.S. has fought two Gulf wars, both against Iraq, at a time when Iran had a deep interest in the overthrow of Saddam Hussein and therefore remained passive. The third Gulf war, if and when it comes, shall be against Iran, and consequently oil supplies from the whole region may be jeopardised. The U.S. of course has enormous military resources to frustrate Iran's best military efforts but it needs to be kept in mind that at its narrowest point the Strait of Hormuz is barely six miles wide, through which 15 billion barrels of oil pass every day.
Iran is thus the only country that straddles both the regions where the bulk of the known and estimated oil and gas deposits of the world are located. Among countries that could theoretically choke off supplies from the Gulf, Iran is the only one that is not a U.S. client. Actual estimates of oil and gas resources in any country are the most closely guarded secret in the industry, so that publicly available estimates vary widely and tend to be unreliable in varying degrees. One of the more reliable recent estimates comes from Oil and Gas Journal, which says that Iran has 125.8 billion barrels, far behind Saudi Arabia's 280 billion barrels, but ahead of Iraq and all other countries of the region. According to the same source, Iran also has 940 trillion cubic feet of gas, surpassed in the entire world only by Russia's 1,680 trillion cubic feet, so that the combined energy resources of Iran are roughly equal to those of Saudi Arabia. Furthermore, and unlike Saudi Arabia, Iran is currently producing far below its capacity and its production, if left unhampered, could exceed that of any other country over the next few years. Its role in the world energy markets is thus already very prominent and is likely to keep growing. The U.S. corporations want desperately to get hold of this market but cannot because U.S. law forbids them to do business with Iran, so that Iran has greatly diversified its relations with other countries, including the main competitors of the U.S. like China and Russia. "Regime change", either through internal subversion or by military force, is thus really the only choice for U.S. corporate capital.
Iran has clearly defined and internationally recognised borders. However, these borders, like many others in Asia and Africa, cut across linguistic, cultural and religious communities which live across them. In the north, Iran has notable Azeri and Kurd minorities, and the U.S. is known to have cultivated groups there for possible internal subversion. On the eastern flank, a vast territory inhabited by the Baluch people is divided between Iran and Pakistan. As among the Kurds in Iraq or Turkey, there have been separatist movements and even guerrilla insurgencies among the Baluch in Pakistan. While the Pakistan Army is embroiled in fighting off an Islamicist insurgency of Taliban-style inspiration in the Pakistani part of Baluchistan, albeit in the Pashto-speaking part of the region, the U.S. is said to have bases and extensive covert military operations. It is yet unclear, though, how these elements may get played out in the U.S. designs for destabilisation of Iran.
Even so, this U.S. military presence on Iran's border with Pakistan should not be discounted when we think of the much more extensive U.S. military encirclement of Iran from Saudi Arabia and other clients in the Gulf on the one hand, and, on the other, the newly acquired military bases in Afghanistan, Iraq and some of the Caspian littoral states. All this is supplemented by the military power and anti-Iran designs of Israel.
This military pressure is then supplemented by threats of internal subversion not only by Azeri or Kurdish groups but also the seasoned fighters of the Mujahideen-e-Khalq (MeK), a dissident Islamicist faction of Iranis whom Saddam Hussein had sheltered in his own struggle with Iran and who are now under U.S. protection and command; reports suggest that some MeK elements have infiltrated Iran already. In addition, there are large and powerful groups of affluent Iranians, including members of the royal family and of the class that Ervand Abrahamian dubbed as the "monarcho-bourgeoisie" during the Shah period, whom the U.S. has cultivated on its own soil, who provide much of the disinformation in the purported capacity of "experts" and "scholars" and "Iran hands", and who are linked to secret subversive networks inside Iran. As early as 2001, a number of luminaries of the U.S. rightwing such as Michael Ledeen of the American Enterprise Institute, Morris Amitay, a former head of the notorious American-Israeli Public Affairs Committee (AIPAC), and former Central Intelligence Agency (CIA) director James Woolsley had floated The Coalition for Democracy in Iran to bring such groupings together, with the blessing of Reza Pahalvi, the son of the deceased Shah who dreams of returning to Teheran to claim his crown.
These networks of outright subversion are then supplemented by the collaborationist factions of what one might call the "new ruling class" that has arisen from inside the Islamic regime and which seeks accommodation and `normalisation' of relations with the U.S. The famous `dialogue of civilisations' that was proposed by Mohammed Khatami, the former President of Iran and the `moderate' face of the ruling clergy, was an ideological move in that direction, supplemented with many diplomatic overtures on the international level and a variety of neo-liberal reforms at home, not to speak of the many concessions that Iran offered on the nuclear issue itself. (There is in fact a body of opinion in Iran, influential in the current Iranian administration, which believes that Iran offered too many concessions and got itself trapped in the European Union-led negotiations that turned out to be nothing but a U.S.-sponsored ploy.) Indeed, Iran has gone so far as to help the U.S. in its objectives in both Iraq and Afghanistan, in search of far-reaching accommodation, but also because some of the U.S. interests coincide with Iran's own regional calculations. Hashemi Rafsanjani, a thoroughly corrupt politician who was expected to win the recent presidential election in Iran, was the favoured candidate of this collaborationist faction. The U.S. media was outraged when, in a surprising electoral result, Rafsanjani lost the presidential bid to Mahmoud Ahmedenijad, the young Mayor of Teheran who is a radical populist of a different stripe.
Throughout this period, it was the U.S. which spurned the overtures, declared Iran a part of the "Axis of Evil" while the `moderate' Khatami was in power, and kept pressing for more and more concessions. The settled bipartisan view in Washington is that U.S. policy should be geared not to obtaining this or that concession from Iran, by this or that dispensation in Teheran, but to the elimination of Iran as an influential force in regional politics as well as in the geopolitics of oil and the petrodollar/weapondollar complex. As we said in our previous article: with Saudi Arabia in the U.S. pocket, with Egypt neutralised and Iraq conquered, Iran is the only country in the region which can, potentially, stand up to the U.S.-Israeli axis. This potential capacity is what needs to be destroyed and, within this equation then, there really is nothing that Iran can offer to win the peace, short of full collaboration on the model of Saudi Arabia.
IRAN is thus not nearly as invulnerable as it might seem. That is, however, only one side of the story and there are other elements in the regional map which give Iran considerable leverage. During the anti-Soviet jehad in Afghanistan, Iran hosted two million Afghan refugees, many of whom are Shia by sectarian identification and speak variants of Farsi. It is well-known that the Karzai government's writ does not run much beyond Kabul and Iran has substantial influence in large, volatile and well-armed regions of southeastern Afghanistan. Bahrain has a U.S.-allied Sunni ruler but a mostly Shia population which looks to Teheran and Qom as its political guide and spiritual centre; the U.S. has repeatedly charged Iran with promotion of subversion and "terrorism" there, which Iran does not but can do in a situation of all-out conflict. In Saudi Arabia, the eastern zone, where much of the oil resources are located, is populated by a Shia majority deeply opposed to the Wahabi variant of the Sunni orthodoxy, which is the official doctrine of the Saudi regime. Farther afield, Iran has considerable influence and long-standing relations with the Hezbollah in Lebanon, the formation which drove the Israelis out of Southern Lebanon with the force of arms (the only instance when Israel was forced to give up an Arab territory) and which has emerged as a major political party in the country. Even in Kuwait, Shias have the majority in the areas where oilwells are concentrated. Hardly any of these areas would remain quiescent if Iran were to be frontally attacked.
The most complex case, however, is that of Iraq where Iran has established a pragmatic and amoral relationship of competitive collaboration with the U.S. Since Saddam Hussein invaded Iran in 1980, precipitating a war between the two countries which lasted eight years and cost them a million lives, the toppling of Saddam became Iran's primary objective in the region. A number of Shia theocrats from southern Iraq flooded into Iran at that time and, in 1982, Ayatollah Khomeini himself supervised the creation of their umbrella organisation under the name of the Supreme Council for Islamic Revolution in Iraq (SCIRI). The father of Moqtada al-Sadr, who has now emerged as a major leader of the Shia dissidents in Iraq, was one of its founders, and Dawaa, the oldest anti-Ba'athist Shia theocratic group in Iraq, too joined the organisation but left it in 1984. The military wing of the SCIRI, the Badr Brigade, was founded, armed and trained by the Irani Revolutionary Guards. When the U.S. unleashed the first Gulf war against Saddam under the pretext of `liberating' Kuwait in 1991 and then proceeded to get the United Nations sanctions imposed on Iraq, with a view to weakening the Saddam regime, the Irani clerical regime found that it had an identity of interests with the U.S. and authorised the SCIRI and Dawaa to begin collaborationist relations with the U.S. Moqtada cooperated with and received assistance from the Irani regime in his struggle against Saddam but refused to cooperate with the U.S. and built his own independent base. Meanwhile, the Iranian regime also patronised Jalal Talabani, leader of the larger Kurdish party in Iraq, so as to win the cooperation of the Irani Kurds with Talabani's mediation as well as to further undermine Saddam's hold over the Kurdish part of Iraq. In this too, Iran and the U.S. were on the same side.
When the U.S. claimed (and probably genuinely believed) before the invasion of Iraq that its forces would be greeted with flowers by the Iraqi masses, it certainly was banking (too much) on the groups of exiled Iraqi bourgeoisie and technocracy, and on the Kurdish clients, but, above all, on the SCIRI and Dawaa, which were perceived as true leaders of the Iraqi Shia and which had been collaborating with the U.S. for over a decade. Well, these outfits quite failed to produce the jubilant masses to greet the conquering army but, thanks to the religious authority their leaders have in the highly hierarchical life of the Shia faithful, they rendered immense service to the Americans by forbidding their followers from joining the insurgency that soon began and in then neutralising Moqtada himself, the only formidable Shia leader who wanted to fight the occupiers; in the hierarchy he was too junior and, being pious himself, he too obeyed the orders of the higher echelon. The fact that relatively few Shias have joined the armed insurgency is owing to this collaborationist clergy.
The Iranian clerical regime has concentrated on two tasks with a remarkable degree of clarity and cynicism: the liquidation of Saddam and subsequent "de-Ba'athification" of the Iraqi state; and the creation of a Shia-dominated state to replace the Ba'athist one, not yet theocratic in the Irani way but sectarian at its core. Once the U.S. had taken charge in Baghdad and leaders of the SCIRI and Dawaa had been brought in, it concentrated on getting the personnel of their outfits such as the Badr Brigade to occupy all the positions in the state machinery that "de-Ba'athification" had opened up; maximum number of Sunnis were thrown out to obtain that outcome, the Kurdish collaborators were given a free hand in their own areas and some personnel from their militias, the Peshmargas, were integrated into the new army being trained and used by the U.S. in predominantly Sunni areas. Ideologically and politically, the Islamicist rightwing and the imperialist reactionaries were agreed that modern state entities in Asia and Africa were really not secular nations, as anti-imperialist nationalism had claimed, but conglomerations of religious and ethnic communities who deserved to be given proportionate representation in the state machineries. The Shia clergy of Iraq, backed by Iran, would be perfectly happy to dominate a multi-denominational, multi-ethnic Iraqi state. If that entity begins to fall apart, they would merrily settle for a new ethno-religious state in the Shia-majority part of Iraq, letting go of the rest; the making of a true theocracy, Iran-style, may then begin. The collapsing of politics into ethnicity, of ethnicity into culture, of culture into religion, of religion into civilisation! The U.S. imperium, the Iranian clergy, postmodern culturalism, and Samuel P. Huntington can all agree on THAT.
Thus it came to pass that Ayatollah Sistani, the seniormost Iraqi cleric, insisted on early elections - before the occupiers were required to withdraw; before any constitutional settlement - so as to install the SCIRI and Dawaa, along with the Kurdish clients, in dominant positions within the evolving dispensation under occupation. Faced with an insurgency its 140,000 troops were unable to control, and relying more and more on the Iraqi and Iranian clergies to keep the peace, the U.S. obliged. Its clients, who were independent of Iran, had just collapsed, and Chalabi, its star client and great hope at one point, simply defected to the Iranians and re-emerged as a prominent figure in the new dispensation as well.
WE are dealing with a paradox of historic proportions. The U.S. had come into Iraq believing that it was a mere way-station, and that it would soon be marching on Syria, Iran, perhaps even Saudi Arabia, imposing "regime change" everywhere. Instead, it is caught in a situation where it cannot even control Iraq without relying heavily on Iran, the country it had set out to subjugate as the main prize in this "war on terror" in West Asia. Iranians, on the other hand, have made a pact with the devil ("Satan" in the peculiar semantics of the Iranian theocracy), in pursuit of their own interests but also in the knowledge that Iran is safe from U.S.-Israeli aggression only as long as the Americans are mortally unsafe in Iraq, unable to pacify the country but equally unable to withdraw their forces, and in the interim heavily dependent on Iran itself. The U.S. has been trumped.
Within the U.S., meanwhile, the Bush administration is faced with something of a crisis of its own. According to the latest poll, 59 per cent of Americans now want the troops to be brought back, whatever the situation in Iraq; few Americans are likely to have the stomach for an invasion of Iran, a country three times the demographic and territorial size of Iraq, and one where human resource and physical infrastructure are intact. Service in the armed forces in the U.S. is voluntary, and recruitment not only for the armed forces but also for the National Guards have dried up. Senior commanders are saying that they cannot really do their job in Iraq without a much larger force, perhaps three times as large. No one listened to them when they said so at the beginning of the invasion; now, with the results in hand, their argument cannot be dismissed so easily. So, cynical politicians like Hillary Clinton are demanding that many more troops be sent, but there are no more troops; even the present level of deployment is being sustained with National Guards and army reserves, backed by some 40,000 civilian personnel contracted to do what normally armies do. Another theatre of war while Iraq bleeds would be impossible without instituting the draft (the American term for compulsory military service), which would immediately lead to a first-rate middle class rebellion against the ongoing war itself; a voluntary army is an army of the poor and no one cares if only the poor are dying, but compulsory military service means that sons of all classes have to take the risk of dying, and no affluent American wants to die in such a war, which they may support as long as there is no risk to life for themselves. The U.S. dollar is at a record low; the U.S. deficit at a record high, as is the U.S. military budget; how much bigger a military budget, how much bigger a deficit, how many more cuts in essential services would be required if the U.S. were to go marching into another war, against a people of deeply patriotic convictions, the Iranians, who hold, moreover, all the aces in Iraq itself? The popularity ratings of Bush Junior are lower now than those of Lyndon Johnson at that point in the Vietnam War when he abdicated his presidency. The contempt he and his cabal showed for the lives and dignity of American citizens in New Orleans and elsewhere, during and after Hurricane Katrina, has eroded what little moral authority he commanded as crusader against `threat to America'. Any number of Americans are comparing New Orleans to Falluja, the Iraqi city that American armed forces destroyed with such savagery, and any number are saying that the country that needs "regime change" the most is the U.S. itself.
IS Iran safe, then? Well, not quite. It is safe, provisionally, more or less, so long as the U.S. is on a tight leash in Iraq, unable to stay victoriously, unable to leave for political and strategic reasons. Iran is thus living through a bit of a reprieve. Meanwhile, Bush is in the midst of his second term, cannot run for a third term, and his administration can therefore afford to be reckless. Moreover, whatever the actual limits of American military power, the strategic imperatives of the U.S., not to speak of imperialist capital in general, require that Iran be subjugated and brought in line, with its independence of action curtailed as much as possible. So, precisely among those people at the apex of power in Washington who understand the nature of Iran's own growing power perfectly, there is a debate raging, with respect to the timing of the strike on Iran. One side of the argument in that debate is that Iran does indeed have the power to strike back not only within its own territory but also in the neighbouring countries, and the U.S. should, therefore, first stabilise its positions in Iraq and Afghanistan, to the point where Iran is able to do only limited damage to U.S. interests, before striking at Iran. The other side of the argument, greatly advocated by Israel and its formidable supporters in the U.S., is that the strike should come as soon as possible, before Iran strengthens its positions further. One side asks: what if Iran chokes the Strait of Hormuz and the oil prices go sky high? The other side asks: how long can Iran keep the Strait choked against our full might, and do we not have the power to clear up the mess in a matter of days or, at most, a couple of weeks? So the debate goes on. The interim solution - a provisional compromise in this debate - is to try and subject Iran to the cold war of multilateral sanctions as soon as possible, in preparation for a hot war of actual invasion, or at least a series of strategic strikes, to shock and awe, at a later date, while trying all the time for a "regime change" through internal subversion.
It is in this perspective that the meetings of the Board of the International Atomic Energy Agency (IAEA), the actions of its Director-General Mohamed ElBaradei, the position of the European Union-3 on that Board (France, Britain and Germany), and the voting pattern with regard to the Board's recent, disastrous resolution become so important. The resolution, for which India unfortunately voted in favour, opens up the possibility of referring Iran to the Security Council for collective sanctions. Inter alia, though, such resolutions provide the ground for the core imperialist countries that they will proceed to impose the sanctions anyway, whether or not the Security Council authorisation can be obtained. Since the publication of our previous article, the Swedish Academy has seen it fit to award the Nobel Peace Prize to, equally, the IAEA and its Director-General. Some people on the Left see in this a slap in the face of the U.S.. Well, perhaps.
Questions remain, however, about the agency as well as its head. Brazil and South Africa, members of the Board who had the sense at least to abstain even though they did not join Venezuela in voting against the resolution, are launched upon precisely the kind of enrichment programme that Iran is undertaking, but they have refused to sign the Additional Protocol that Iran did sign, in good faith, even though, by the terms of the Nuclear Non-Proliferation Treaty (NPT), it was not obliged to do so; ElBaradei does not require them to sign that Protocol and does not require that they submit themselves to similar inspections. Why not? He requires that Iran's "transparency measures extend beyond the formal requirements of the Safeguard Agreement and additional Protocol and include" submission to all sorts of demands which have no basis in any law or treaty or protocol, and which violate Iran's sovereign rights. Why? This question is particularly important because the key demands made in Sections 4 and 6 of that outrageous resolution simply repeat the demand that ElBaradei made in his capacity as Director-General. Had he not provided that language, the resolution would not have gained any strength or semblance of legitimacy. As a matter of fact, the NPT not only allows, in its Section 4, that non-weaponising states have every right to develop all aspects of nuclear technology necessary for reactors to function for peaceful purposes; it goes further, in Section 6, to enjoin upon countries that have such technologies to actively provide such technologies to the non-weaponising states who have signed the treaty. Why does the IAEA, led by its Director-General, not demand that such technology be provided to Iran in lieu of the recognition that the Agency has not found any evidence that Iran is pursuing the acquisition of nuclear technology for military purposes? The answer to all these questions is that the principal reason for inspections in Iran is to satisfy the demands put forth by the U.S.
The nuclear issue with respect to Iran is as spurious as it was in the case of Iraq and ElBaradei is perhaps serving his agency as best as he can, under unbearable U.S. pressure. Iran is being subjected to this spurious criminalisation for reasons stated above: its geopolitical location and the size of its natural resources, the clout it has in its regional environment and the power it can wield based on those natural resources, its status as the only country in the region which is neither a client (like Saudi Arabia) nor a colony (like Iraq or Afghanistan) of the U.S., and the relatively independent foreign policy it has formulated in pursuit of its national interests and regional relationships. In Iraq, it has certainly followed what I have called its amoral and pragmatic policy of competitive collaboration with the U.S. I have already commented on the collaborative aspects of that policy. Let me comment briefly on the competitive aspect as well.
WHAT Iran has done, under the shield of collaboration, is that it has increasingly assimilated the imperatives of the Iraqi economy into its own. Oil production in Iraq can perhaps be restored more swiftly than construction, reconstruction and sustained functioning of refineries; Iran has offered to refine Iraqi oil for the world market and offered finance to build more refineries. Iraq has no extensive port facilities at present; Iranian ports are getting used for deliveries of goods (including whisky, one is told) destined for consumption in Iraq; Iran is thus taking over the transit trade that used to go through Syria and Jordan. It is offering finance and investment in a whole range of infrastructural construction in southern Iraq, from hotels to roads to airports to electricity grids. Iran is training Iraqi personnel in various branches of government, including police and army and judiciary, as well as technical personnel for the private sector. In short, Iran is fast occupying many of the places where the U.S. corporations had hoped to be, and Iran may yet be able to persuade the Iraqi government, jointly sponsored by the U.S. and itself, that there is enough expertise and even finance for reconstruction of Iraqi oil industry and Iraq, therefore, need not allow privatisation of its oil assets and invite U.S. multinational corporations for reconstruction of that industry. There would appear to be enough of a technocratic elite in Iraq itself that would welcome this prospect of a reconstructed state sector that it can direct and dominate.
The U.S. is unlikely to welcome this enhanced and independent role of Iran in a country which the U.S. conquered with such enthusiasm, at such high monetary cost, with the dream of monopolising the profits. It simply has to live with Iranian gains not only in the political but even the economic sphere in Iraq, simply because it needs Iran's help in keeping the U.S. occupation afloat. This is an odd case of a great imperial power having to rely on an enemy-designate, which is manifestly so much less powerful. This local matter is bad enough, but there are also two crucial areas of geopolitics in which Iran's conduct greatly conflicts with U.S. designs. One is the set of independent relationships Iran is developing with a variety of countries, outside the Euro-American zones, which enhance Iran's status and contribute to its own security. It already provides some 14 per cent of China's energy requirements and the huge deals it has been signing and proposing for the future would make Iran a strategic ally of China, indisputably the rising power against the U.S. over the coming decades. As Iran gains in importance for China in its pursuit of independent access to energy resources of the world, China is also bound to reciprocate and sympathetically consider Iran's need for various types of equipment for its own military security. In a similarly evolving relationship, Russia is already reported as having provided Iran highly sophisticated weaponry, including very advanced missiles, for its defence against attacks in the Gulf region; the Strait of Hormuz may, after all, remain closed longer than the U.S., eternal believer in its own might, may think.
These moves overlap, then, with the associated desire to use its petro-power for intervening in the very structure and directions of oil trade. In our previous article, we referred briefly to the central place Iran has come to occupy in the aspiration to create an Asian Energy Security Grid which may make our continent relatively independent of the Western control over energy flows in the world. That goes to the very heart of the future of any genuine industrialisation in Asia but is still at very early stages of conception, intra-governmental negotiations, feasability reports and so on, and, if it comes about, will take years and decades before it can be put in place. But the important thing is that the thinking has begun, finances for something as ambitious as all that are conceivably available within Asian economies (one loosely counts many elements of the Russian economy as `Asian' for these purposes), and proposed projects such as the pipeline from Baku to Bushehr, from Iran to India via Pakistan, and from Turkmenistan to western China would be merely a few of the building blocs for such a grid. Even without such a grid, Iran seems interested in reorienting the directions of at least a good part of its oil and gas trade from Euro-American West to the Asian East, which is a good thing in itself. In this regard, Iran may well follow in the path of Venezuela in attempting to disrupt, to whatever degree possible, U.S. power in the energy field.
That is bad enough, from the U.S. standpoint. Worse is Iran's ambitious plan - almost a dream - to construct in Teheran an oil bourse which would use a Euro-denominated international oil-trading mechanism to begin competing with the two main bourses, the New York Mercantile Exchange (NYMEX) and London's International Petroleum Exchange (IPE), both dominated by U.S. multinationals and both involved in dollar-denominated oil trade, thus making the dollar virtually the world currency for oil trade. One would recall here that one of the last, and crowning, crimes of Saddam was that he had finally started asking for payments for Iraqi oil in euros instead of dollars. Some other oil-producing countries, notably Venezuela, have started diversifying their reserve holding in either Euros or a basket of currencies including euros and dollars. With the dollar fast losing its value, many countries have taken this path. China, for example, recently announced that its reserves shall be held in a "basket of currencies" including the dollar, pound sterling and euro and also the currencies of its other main trading partners. Since the spring of 2003, Iran has required payments in euros for its European and Asian exports, although the initial price is calculated in dollars.
The step Iran is now contemplating, and for which brisk preparations are afoot, goes much further because it proposes a euro-denominated trade which would bypass the whole mechanism of first denominating the trade in dollar terms and then converting that price in terms of other currencies, relative to the dollar standard. The technical problem here of course is that a euro-dominated oil pricing (or oil `markers') standard does not yet exist, and the current such standards - Texan International Crude, Norway Bent Crude, and the UAE Dubai Crude - are all dollar-denominated. The challenge here is to actually invent a new pricing standard for which the euro is the take-off. If that problem is solved, and the Iranian bourse does take off, there would arise a situation in which a barrel of oil would be available at one price (in dollars) in London or New York and at another price (in euros) in Teheran. If enough producers (Venezuela? Russia?) and consumers (the E.U. countries?) can be persuaded to join the Teheran bourse, the dollar monopoly of oil trade can begin to get eroded, the dollar-euro currency war heat up, and Teheran emerge as a major oil trading centre. Any major break in the dollar supremacy in oil trade would not only further erode the value of the dollar, since fewer dollars would then be in demand internationally, but would also, by the same token, restrict the ability of the U.S. economy on the basis of infinite borrowing and deficit financing.
None of it may work, but the idea itself is audacious and those who think up such things must be punished. Would it not be better to just attack Iran and get rid of all such ideas? But who will then run Iraq for those very Americans who want to attack Iran?
Since an outright attack is likely to create more problems than it solves, it may be better to just make do with sanctions: better to bleed the enemy than try to kill the unkillable!
The more this "war on terror" unfolds, the clearer become not only the cynicism of American power but also its limits.
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