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Iran: On the Brink of Economic Warfare - ASHARQ AL-AWSAT English Archive
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Is the psychological warfare waged by the U.S. against Iran finally bearing fruit? American officials say war is always an option. And for over two years now, Iran has concentrated its efforts on confronting this “Western challenge.” Meanwhile, the country’s economic rug is being pulled out from under the officials’ feet. David Petraeus, a United States Army general, says that Iraq’s security plan could take over 10 years to work. Members of congress and the American media do not seem to take this into consideration, when they demand a date to be set by which the United States will pull out of Iraq.

To President Mahmoud Ahmadinejad, this was a chance for him to say what he did earlier this month that Iran is ready to hold more talks with the United States on the security situation in Iraq. “We didn’t say no to the first round of talks demanded by the Iraqi and U.S governments,” he said. “We are prepared to offer any help we can to help preserve unity and establish peace and security in Iraq.” This uproar in Washington has created a window of opportunity for Ahmadinejad, as his situation as president is no better than that of George W. Bush.

Iran’s main concern is to shape the situation in Iraq so that it can hold a decisive sway there. Its main concern is its own geo-political and economic interests. These interests can only be maintained with an Iraqi government that will not allow American military bases on its soil, because this would limit Iran’s ability to achieve its regional goals. By enflaming the situation in Iraq, Iran’s interests would be better maintained, since it would push the thought of taking military action against Iran further behind. Secondly, it would compel them to set a date to pull out.

Washington acknowledges that it is in need of improving its relations with the major forces of the region, as well as with its allies there. It also acknowledges that it must maintain its military presence in the Arabian Gulf, until a strategy is found that bars Iran from achieving regional goals even beyond those in Iraq– or it may, they fear, have absolute authority over the Gulf.

The United States is hence studying whether or not to respond to the riots that took place in Iran as a result of the fuel crisis. The Bush administration appears to be divided over this. Some at the National Security Council see this as a chance to destabilize Ahmadinejad’s regime. Others, such as those in the Department of State and Department of Defence, believe that the U.S. should not take advantage of the situation in Iran, and urge the administration to be patient. They also warn them not to make the United States appear as the world’s troublemaker. They stress that Iran’s economy is deteriorating and it thus may not require military action, as it is in self-destruction mode, much like the Soviet Union in 1988. Only a token few realized this about the USSR in the past, when President Mikhail Gorbachev warned that Communism put the USSR on the cusp of a downfall. It was too weak to confront the steady economic growth of the U.S. and its allies. Russia did not have the resources to carry on the war of weapons with the U.S. and collapsed under the pressure of the United States’ military preparations.

For Iran, it is only a matter of time. Sparked by Ahmadinejad’s decision to impose fuel rationing, protests and riots have broken out in a number of cities in Iran. In some, protesters set petrol stations and government-owned banks on fire in an angry backlash against the decision. Iran hasn’t witnessed such violent protests since the 1999 student riots. These riots have compelled Ahmadinejad to declare states of emergency in 22 cities and to deploy thousands of police officers and security forces in the country’s major cities in order to suppress the violence. For the first time since he took office in 2005, protesters poured their anger out on Ahmadinejad, chanting such slogans as “Enrich oil, not uranium!” [In reference to Iran’s nuclear program that has cost the country 2.5 billion dollars to date], as well as “Death to Ahmadinejad!” This is because Iranians believe that cheap gas is every citizen’s inalienable right.

The Iranian government had allotted 22 gallons per month for every car. This barely covers the minimum needs of bigger cars that Iranian youth prefer to drive. News has been circulating about leaders of smuggling rings to Turkey being responsible [for the riots], as they send pick-up trucks loaded with subsidized fuel to make profit of no less than three thousand dollars, an Iranian’s estimated per-capita income, and will thereby suffer a great loss due to the government’s rationing system.

Ahmadinejad soon realized that these riots pose a threat to his regime. He thus called on his comrades of scholars and politicians to save him. Soon, Ayatollah Ahmad Jannati, a well-known advocate of Ahmadinejad’s regime, was quoted as saying, “The oil must be used in reconstruction.”

Many security departments in the U.S. have leaned toward the decision to take advantage of the riots in Iran to destabilize Ahmedinejad’s regime, and to pressure him into halting the nuclear program. American officials agree that the riots proved that Iran would be most vulnerable if subjected to oil sanctions, particularly because Iran has to import 40% of its gasoline.

Mark Kirk, a Republican member of the House of Representatives representing Illinois, proposed a bill for imposing international oil sanctions against Iran. Kirk, who is a member of the powerful House Committee, said: “As Iran continues to defy the U.N. Security Council and International Atomic Energy Agency, we need to explore new economic sanctions to augment our diplomacy.”

“Legislation targeting gasoline imports offers the best way for IAEA [International Atomic Energy Agency] safeguards to succeed,” he added. In light of this legislation, the American sanctions could extend to include any company or individual to oversee or aid Iranian transactions to import refined gasoline. This may lead oil and gas trading agencies to be boycotted as well, along with petrol truck and insurance companies. Iran will have to import its gasoline from neighbouring Gulf states and India. Vitol, a Dutch company, will act as a mediator in the trading process. And Lloyds, a British insurance company will provide gasoline trucks.

However, U.S. Department of State expressed uncertainty with regards to the likelihood of this proposed bill’s success. Officials believe the Bush Administration has failed to convince the U.S.’s fellow North Atlantic Treaty Organization [NATO] members, such as Britain, Germany and France to intercept their funds, or the companies that facilitate Iran’s nuclear program. Tom Casey, a spokesman for the Department of State, said: “We need to do everything that we can to continue to raise the stakes in Iran in terms of its nuclear program. We are in the process now of looking at what additional measures we can add.”

The Department of State’s stance does not mean that most U.S. officials do not agree that Ahmadinejad is in a state of obvious vulnerability. The department has, in fact, received numerous reports about burnt down busses and cars in the Iranian capital. Officials believe that these protests’ timing is perfect, and that Ahmadinejad’s vulnerability is consistently worsening as the forthcoming parliamentary elections approach by the end of this year. These protests could incite more opposition to him, particularly by “old guards” the likes of ex-presidents Hashemi Rafsanjani and Mohammed Khatami.

The Congress intends to impose sanctions on any given country or body that may export fuel to Iran. In light of this new legislation, the sanctions could entail barring whomever breaks it from working in or with American companies, be they on American soil or otherwise. This legislation to broaden sanctions against Iran will be put into effect by the beginning of the year 2008. It has been supported by both the republicans and the democrats in congress.

Robert Andrews, a member of the House of Representatives who was one of the lawmakers to introduce “Iran Sanctions Enhancement Act”, stated: “An international restriction on the supply of gasoline would serve as a critical diplomatic tool to deny Iran the ability to further its efforts to acquire nuclear weapons.”

The U.S.’s new way of thought allows it to believe that economic warfare will prove far more effective against Iran than military action. This way of thought stemmed from a simple equation: more freedom for the Iranian people, coupled with the country’s economic woes will result in a radical regime change, reminiscent of that which occurred in Russia in the 1980’s. Iran, as is widely known, imports about half of its petrol, as it lacks refining capacity. In a recent paper by Dr. Horace “Woody” Brock on oil prices, figures show that Iran will no longer be able to export petrol by the year 2014.

The situation appears to be worsening, as a report by Roger J. Stern of the Johns Hopkins University Department of Geography and Environmental Engineering predicts that “Iran earns about fifty billion U.S. dollars a year in oil exports. The decline is estimated at 10 to 12 per cent annually. In less than five years exports could be halved and then disappear by 2015.”

This was only confirmed by Iranian deputy petroleum minister for international affairs, Mohammad Hadi Nejad Hosseinian, who stated: “If the government does not control the consumption of oil products in Iran, and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export.”

A decline in oil production, economic sanctions preventing the country from importing gasoline, an unemployment rate of over 30%, an inflation rate of over 20%, and the government having to resort to redenomination. All of which give Iran’s clergymen two choices as the next course of action: either they content themselves with what the future holds, i.e. the same fallout as the USSR, or they can turn to adventurism. They are, of course, pursuing the latter by investing money and arms in Shiaa allies from Basra through Beirut, with some Sunni “customers” getting the same special treatment, such as Hamas and the Islamic Jihad Movement in Palestine.

Their goal?

Controlling Iraq’s oil fields first, and then the Gulf states’ oil fields afterwards!