Politics, religion, and culture where East meets West

Hedging against a new Iran

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Underlying the ramped-up rhetoric, military mobilization, and escalating espionage in Iran is a hidden economic war against Iran’s currency. The implication of this economic war is that the U.S. seeks to avoid military conflict with Iran. In fact, dollarizing Iran—which is what the U.S. is seeking to do with its economic sanctions—would be a hedge against an up-and-coming Iranian oil empire. Israel, unhappy with this prospect, seeks to start a conflict.

Iran’s nuclear program has received a lot of attention in the last few weeks. While this attention may accompany legitimate concerns—and this may be an appropriate time to voice such concerns—careful observers should be uneasy about the apparent convenience of focusing on the “Axis of Evil” at this time. With (1) an Iraq devoid of American police and (2) a stubborn Syrian regime that feels an increasing affinity toward Iran, Iran stands to gain a lot (see my previous post, “Why Syria?”). And if Iran stands to gain, then Saudi Arabia (and its oil hegemony), the United States (and its reliance on Saudi oil hegemony), and Israel (and its mere existence) have a lot to be afraid of.

The headlines of the past few weeks have, of course, demonstrated this fear. But there is one news item in particular that I’d like to point out, just as an example of the absurdity of the rhetoric. For some, it may be déjà vu, though it isn’t being reported that way:

Iran starts enriching uranium to 20 pct – IAEA

In summary: “The International Atomic Energy Agency officially confirmed that Iran has started enriching uranium to the 20-percent level…”

But this same headline can be traced back to at least February of 2010, almost two blissful years ago. Here’s one from May 17th, 2010:

Iran says will continue 20 percent enrichment

Notice the word “continue.” This is nothing new. Credibility is all but lost when old news becomes, when reprinted, a sign of “further escalation” (read: casus belli):

“This is a further escalation of their ongoing violations with regard to their nuclear obligations,” State Department spokeswoman Victoria Nuland told reporters.

Public subterfuge.

Cold War
As ZeroHedge artfully phrases it (here): “The geopolitical foreplay is getting ridiculous. At this point it is quite obvious that virtually everyone involved in the US-Israel-Iran hate triangle is just itching for someone else to pull the trigger.” And reading about the overt espionage, public subterfuge, and military muscle-flexing going on between the US and Iran, it may very well seem that itchy trigger fingers abound.

But while there are, quite clearly, warmongers in our midst, I don’t think it’s quite fair to characterize the standoff between Iran and the United States so simply. That’s because neither side really wants a war. If any explanation is really necessary to illustrate this, I will defer to George Friedman (here):

Invading Iran is out of the question. The mountainous geography of Iran, a nation of about 70 million people, makes direct occupation impossible given available American forces.

An air campaign against Iran’s conventional forces would play to American military strengths, but it has two problems. First, it would be an extended campaign, one lasting months. Iran’s capabilities are large and dispersed, and as seen in Desert Storm and Kosovo against weaker opponents, such operations take a long time and are not guaranteed to be effective. Second, the Iranians have counters. One, of course, is the Strait of Hormuz. The second is the use of its special operations forces and allies in and out of the region to conduct terrorist attacks. An extended air campaign coupled with terrorist attacks could increase distrust of American power rather than increase it among U.S. allies, to say nothing of the question of whether Washington could sustain political support in a coalition or within the United States itself.

Presence of mines in the Strait would drive maritime insurance rates through the roof.

Neither the U.S. nor Iran stands to gain from this scenario. Even the closing of the Strait of Hormuz presents a lose-lose situation, and this fact does not escape the calculations of either side.

Covert War

A 2,700 kg solution to most any problem.

Which is why a covert war, writ large, currently rages in Iran. Though blown out of proportion, the concern about a nuclear Iran is real, and becomes more so when war is not imminent. Instead of the simple methods of “Big Blu” (see image), more sophisticated methods will be necessary. Much like Iran’s nuclear program, the war will be protracted and moved underground. Fortunately for the U.S., Iran is—by most estimates—still lacking properly enriched fissile material. At this stage, a sprinkling of diplomacy and sabotage can still stall the emergence of a nuclear Iran.

Unforgiving sabotage—that is—which is how one would instinctively explain the recent assassination of Mostafa Ahmadi Roshan, “a 32-year-old chemistry expert from Tehran’s Sharif University who held the position of a deputy director for commercial affairs at Natanz nuclear plant in central Iran.” But, as many have maintained, this kind of sabotage-terrorism serves no real purpose in stalling Iran’s nuclear program—Iran’s human resources being much too extensive to thwart. Put simply, this guy wasn’t that important.

Enter Israel, which has an urgent interest in keeping Iran at arm’s length (i.e., not in Iraq, not in Syria, and not in Lebanon). Israel, in order to achieve this goal, is more than happy to employ the services of the United States (i.e., carpet-bombing Iran on their behalf). But, as we have already established, the U.S. is not too interested in complying. To push the U.S. into a confrontation with Iran is desirable, if not necessary, for the security of the Israeli state. The assassination if an Iranian scientist—any scientist—is the means to that end. That’s because Iran thinks the death of Roshan can be linked to information gathered by UN investigators (here):

Iran says as the UN Resolution 1747, adopted against Tehran in March 2007, cited Abbasi’s name as a “nuclear scientist,” the perpetrators were in a position to trace their victim.

As such, Iran will be compelled to disallow future UN investigation for its scientists’ safety. Allowing further monitoring, for all Iran knows, will result in a meticulous terror operation against its scientists—Israel will merely search for scientists’ names in UN reports and target them for assassination. But if Iran denies UN observers’ access, as Israel hopes, the U.S. will be forced to intervene on the grounds of nuclear non-proliferation. Problem solved.

But the assassination of Roshan was met by immediate condemnation from the U.S. and the cancellation of the scheduled “Austere Challenge 12” cooperative wargames with Israel (here).

The postponement of a massive joint United States-Israeli military exercise appears to be the culmination of a series of events that has impelled the Barack Obama administration to put more distance between the United States and aggressive Israeli policies toward Iran. 

Mossad is believed to have assassinated at most a handful of Iranian nuclear scientists – not enough to slow down the Iranian program. And the timing of those operations has strongly suggested that the main aim has been to increase tensions with the United States and sabotage any possibility for agreement between Iran and the West on Iran’s nuclear program, if not actually provoke retaliation by Iran that could spark a wider conflict.

But why would Israel feel that it has to “push” the U.S. into a conflict by assassinating these scientists? After all, there seems to be at least some level of cooperation between the two against Iranian ambition. To understand Israel’s recent unilateral action, we have to look back to where President Obama was on the night of the 31st of December and what he did with the stroke of a pen.

Currency War
He was in Hawaii, actually, but that’s not important. What’s important is that he was signing into law a defense bill that started the sanctions rolling against Iran. By January 10th, this sort of thing was happening in Iran (here):

An EA source reports that a relative in Tehran ordered a washing machine for 400,000 Toman (about $240) this week. When he went to the shop the next day, he was told that — amidst the currency crisis and rising import costs — the price was now 800,000 Toman (about $480).

This, amidst runs on banks and attempts by individuals to change their rials to dollars, was the immediate result—and the intended result—of the sanctions. The alternative explanation, which is that the U.S. was attempting to facilitate regime change (forwarded here) simply does not fit. The CFR puts it in perspective (here):

Lest Washington forgets, the Islamic Republic has endured more draconian economic pressures in the past. Despite its phenomenal petroleum resources, rarely in its 32-year history has the Islamic Republic been flush. During the height of its war with Iraq, Iran’s annual oil revenues fell under $6 billion — less than ten percent of its 2010 take. Skyrocketing income from oil sales over the last decade has been a welcome anomaly for Iran’s revolutionaries, but it is hardly certain that constricting that spigot will doom the regime… 

We are left to understand the sanctions for what they really are: An attempt to annihilate the rial. Iran’s only alternative to the rial—or so the U.S. hopes—will be the dollar (it certainly won’t be the Euro). Being that Iran has been notorious for its evasion of the dollar (the IOB, for example), the “dollarization” of Iran—an oil-producing country—would be a significant victory for the United States over Iran and its crude-thirsty customers (who have been drawing up oil deals in their own currencies instead, evading American seigniorage). Indeed, several reports suggest that rials and hard assets have been traded for dollars by concerned Iranians as the rial predictably hyperinflates. But all of this could only be considered a victory if Iran continues to export its own oil in the long run.

What it really means
To understand the implication of an attempt at dollarizing Iran, we could look at it through Israel’s eyes. Why would the U.S., if it is contemplating an Iranian invasion, attempt to force a dollar standard in Iran, and thereby benefit from (and control, to some degree) the current and future sale of Iranian oil? And why wouldn’t the U.S. be going ahead with “Austere Challenge 12?”

The answer is simple: The U.S. does not see a war on the horizon. Nor does it see a fallen Iranian regime. If anything, it sees an assertive, opportunist Iran edging out some of the GCC’s petroleum market share and gumming up the works in the Arabian peninsula. If nothing else, it sees this as a very real possibility. With Iranian influence potentially dominant in the new Iraq and the old Syria, the U.S. is in need of a hedge against a new Iran and a new oil empire.

While this all may be the “worst scenario” in President Obama’s mind, it’s still a scenario, and it has prompted a currency war for the U.S.’s economic security. This has, in turn, miffed the Israelis, who have caught on and responded by attempting to drag the U.S. and Iran into a military confrontation. All three parties know the consequences of a war, which would send Iran back to the stone age, the U.S.—and the world— into recession, and Israel into a state of… well… relative comfort. You can rest assured that these considerations have been carefully weighed by each country.

But don’t let that deceive you: The outcome doesn’t have to reflect any careful considerations—which is why the 5th AOR will be occupied by three U.S. carrier strike groups in the coming weeks.

Written by M. James

January 19, 2012 at 2:03 am

Posted in News, Politics

Tagged with , , , , , , , , , , , ,

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