By Hooshang Amirahmadi and Shahir Shahidsaless, American Iranian Council
Pessimism is setting in about the planned talks in Moscow on June 18-19 between Iran and the five permanent members of the UN Security Council (the US, the UK, France, Russia, China) and Germany, otherwise known as P5+1. Yet, it is imperative that the negotiations do not collapse. Indeed, both sides have a huge stake in its success even if that means agreeing at the minimum to continue negotiations for another round. However, Iran will only return to the negotiation table if the planned EU and the US sanctions are not enforced by then. The talk will fail if the P5+1 were to insist in a disproportionate Iranian compromise to abide by the UN resolutions demanding suspension of all nuclear enrichment activities.
The failure of the talks will almost automatically lead to two planned detrimental sanctions to kick in. Effective June 28th, the US will enforce a new law that denies access to the American market for any foreign company that conducts business with Iran’s Central Bank. According to Senator Robert Menendez, the new legislation simply says to the world that, “you can either do business with Iran or the United States, but not both.” Immediately thereafter, on July 1st, the EU will boycott Iranian oil, a significant 20 percent of the nation’s oil exports. If Iran’s main Asian buyers, namely China, India, Japan and S. Korea, were also to cut purchases under the growing US pressure on them to do so, then Iran’s export could drop by almost a million barrels a day.
In its April report, the International Energy Agency (IEA) stated that, “recently enacted E.U. and U.S. sanctions on Iran’s oil and banking sectors are affecting shipping and trade flows as well as undermining Iran’s crude production outlook.” The report added that, “[the] long list of countries planning to implement import cuts in coming months suggests Iranian output could plummet to 2.6 to 2.8 million barrels a day by mid-summer, unless alternative buyers can be found.” This level of production would be considerably less than the 3.55 million barrels Iran produced at the end of 2011. Western powers are trying to impede Iran from oil sales, a policy that would result in oil prices skyrocketing, plunging the already fragile Western economies into abyss.
There are even more crippling sanctions in the making. According to Debkafile, an Israeli-based security think tank, quoting official sources in Washington on June 4:
In the fall, the US administration will bring out its most potent economic weapon: an embargo on aircraft and sea vessels visiting Iranian ports. Any national airline or international aircraft touching down in Iran will be barred from US and West European airports. The same rule will apply to private and government-owned vessels, including oil tankers. Calling in at an Iranian port will automatically preclude them from entry to a US or European harbor. This sanction would launch an air and naval siege on the Islamic Republic without a shot being fired.
The Debkafile report is in line with statements on June 4 by the US Treasury Undersecretary for Terrorism and Financial Intelligence, Richard Cohen. While praising the creativity of Israelis in offering ideas with respect to the sanction regimes, he assured the world that, “if we don't get a breakthrough in Moscow there is no question we will continue to ratchet up the pressure." Wendy Sherman, the US negotiator, in return from Iraq, paid a visit to Israel to reassure Israelis that the US’s positions on negotiations with Iran remains unchanged, meaning, the US will not allow Iran to develop nuclear bombs. The State Department said in a communique that Ms. Sherman was in Israel to “reaffirm our unshakeable commitment to Israel’s security”.
Even before these planned sanctions are put in place, the Iranian economy is in a state of moribund. According to Mahmoud Bahmani, Governor of the Central Bank, “the country's economic situation has become unusual due to the sanctions”. Boycott of the Central Bank has led to the depreciation of the Iranian Rial by over 50 percent relative to US dollar, and suspension of relations with the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has almost halted Iran's ability to use the international electronic money transfer system. As a result, prices have sharply increased across the board, particularly for Iran’s sizable imports. With unemployment rate already in the high teens, rapid rise in poverty level, and the promised subsidies withdrawn, the mismanaged economy can hardly survive another round of crippling sanctions.
A failed Moscow talk for Iran will most likely translate into a risk for the survival of the Islamic system, an outcome that Western powers seem to be hoping for. The question is what Tehran will do if its survival is threatened. The US and its European allies seem to believe that under such a condition, the Islamic Republic will surrender. That would have been one possible outcome if Tehran believed it had no other option. Yet, more likely than not, this assumption can prove inaccurate, and all indications point toward a different mood of thinking in Tehran - one of resistance to pressure at any cost.
Here are the reasons why:
First, even if Iran’s oil exports were to drop to around 1.2 million barrels a day from the current 2.2 million, with oil prices so high, and will be even higher if Iran’s exports dropped, Tehran can still earn significant revenue from its oil. Iran also has over $100 billion in foreign currency reserves. These funds can help Iran to module through for at least two years before it hits the red line of economic collapse. Meanwhile, an Iran under threat of survival will speed up uranium enrichment toward developing military capability if it indeed is bent to do so as the US and its allies have claimed.
Second, as many public opinion polls, such as Rand Corporation, have shown the Iranian nuclear program enjoys overwhelming popular support. The nuclear program is often equated with the nationalization of Iranian oil industry under the Prime Minister Mohammad Mossadegh, who was overthrown by the US and the UK. That episode has left a scar in the Iranian psyche that continues to trouble Iran-Western relations. Added to this nationalistic sentiment is the country’s culture of resistance particularly to outside pressure. Therefore, any unreasonable demand on the part of the Western powers concerning Iran’s nuclear program could lead to public resentment and rallying around the flag.
And third, the Supreme Leader Ayatollah Khamanei has in many occasions said that the nation’s nuclear program is inseparable from its national right and dignity and that submission under pressure is more dangerous to the Islamic regime than resisting and risking confrontation with the US. Khamenei believes that the US is after regime change and holds that “the end of US pressure and intimidation will only come when Iranian ofﬁcials announce they are ready to compromise Islam and their popular Islamic Republic.” The Ayatollah has also put himself in a perilous position by appointing Mr. Saeed Jalili, Iran’s nuclear negotiator, as his personal envoy as well, thus rendering himself directly accountable for any menacing outcome.
Thus, in case of a failure in Moscow, the Ayatollah will be left with only extreme options in confronting the West. These options could include disruption (not necessarily closure) of traffic flowing through the vital Strait of Hormuz oil route is one such highly risky option. According to the same Debkafile report:
Word of the US plan [about introducing new sanctions] prompted a deliberately provocative visit by the Iranian Revolutionary Guards commander Gen. Mohammad Ali Jafari Thursday, May 31, to his forces stationed on the three disputed islands commanding the Strait of Hormuz, Abu Musa, Little Tunb and Big Tunb. ... In Washington, Jafari’s visit was perceived as Tehran’s reminder of its repeated threat to close the Hormuz Straits in the event of a blockade to the transit of a large part of the world’s oil.
Another possible action by the Ayatollah would be threatening to exit the NPT, an option that is open to all signatories of NPT by giving the International Atomic Energy Agency (IAEA) a three-month advance notice before pulling out. The Ayatollah can condition remaining in the Treaty by the West lifting certain crippling sanctions. Disruption of the Hormuz traffic along with a retreat from the NPT could quite possibly trigger a tit-for-tat chain of retaliatory events, ultimately leading to a military confrontation that in Defense Secretary Panetta’s words “we would regret.”
A war over the Iranian nuclear dispute is surely a road to hell for all involved at a time when the Middle East is in political-economic turmoil to say the least. The Arab Spring has led to a re-emergence of political Islam as a powerful force particularly in Egypt, the civil war in Syria continues unabated, and Iraq is maintaining a delicate balance among the feuding Sunni, Kurdish and Shia factions. It is almost certain that any attack on Iran will be extended by the Islamic government beyond its borders. We must not forget the fact that Iran is an Islamic theocracy and that it is still a revolutionary country. Thus, the impact of a war with Iran will certainly extend beyond destruction and instability; it could indeed produce what it was to prevent- a nuclearized Middle East.
The Obama administration should not want the conflict between Iran and the US intensified in an election year as escalation of the conflict can lead to soaring oil and gas prices. A survey conducted in March by the Washington Post-ABC News indicated that Obama’s approval rating plummeted mainly because of rising gasoline prices. Unless the US’s plan is to use failed diplomacy and sanctions as legitimizing means towards a war and thus create a convincing casus belli to attack Iran, it should ease tensions by finding a mutually acceptable step-by-step formula. The US is the only party that can actually make the peace or war decision on this dispute.
Given the tense environment that has developed since the failed Baghdad talks and the extreme consequences that can result from the collapse of talks in Moscow, it is imperative that both sides make constructive concession. At a minimum, an agreement should be forged that commits Iran to move its 20 percent-pure uranium stockpile out of the country. Iran would also agree to halt uranium enrichment above 5 percent and accept intrusive inspections by the IAEA on all of its nuclear facilities. In return, the P5+1 would guarantee the provision of fuel plates for Tehran’s Research Reactor (TRR), and suspend all new sanctions. The parties must also agree to continued talks at a short interval, during which other confidence-building measures, such as Iran responding to the IAEA’s transparency demands in return for the West addressing Iran’s security concerns, can be put in motion.
... Payvand News - 06/13/12 ... --