Middle-east Arab News Opinion | Asharq Al-awsat

Opinion: Iran looks to regain its share in the oil market | ASHARQ AL-AWSAT English Archive 2005 -2017
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epa03826261 Former Iranian Oil Minister and Nominated Iranian Minister for Oil, Bijan Namdar Znganeh (C) during the parliament session to discuss president Rowhani`s proposed cabinet at the parliament in Tehran, Iran, 15 August 2013. Zanganeh was confirmed on 15 August 2013 by the parliament as new Iranian Oil Minister. EPA/ABEDIN TAHERKENAREH

Iran has decided to sell the bearskin before it killed the bear. Calls have already been made to international oil companies, making tempting offers based on the presumption that the West will soon lift sanctions.

A Western source told me, “There is an overwhelming feeling that US president Barack Obama is not concerned about America’s allies. He thinks if he shows leniency to the Iranian leadership, it would respond with more than just thanks. He does not know the nature of the Iranian bazaar. Iran may not be interested in acquiring a nuclear weapon; it is satisfied with keeping the world talking about the possibility of its possession of such weapons. What is important is to possess enriched uranium.”

He added: “Iran wants to be one of the great powers and wants to control the region, but this will not be realized. What it asks for or dreams about is beyond its capability, but the problem is that Obama, in the negotiations, sells all America’s friends, and Iranians feel that the US president is on their side, and they even feel he is within their grasp. This process will take some time, but Iran’s dream will not be realized. Obama will fight against imposing new sanctions on Iran because it would destroy his new relationship with the country.”

Iran has decided not to wait; it thinks it can open new avenues. It monitors the tensions among international investors about events in Libya, an oil state, and other parts of North Africa. Because of the political unrest in Egypt, American oil exploration companies sold their shares to a Chinese company, and two oil companies—one American and one Dutch—turned their backs on Libyan oil.

Since the start of the era of revolutions in some Arab states at the start of 2011, Iran has been watching and waiting on their eastern borders patiently. Then came President Hassan Rouhani, who started his charm offensive against the West, and he still believed he will win.

When Rouhani took office, he gave his instructions to the oil ministry to work on measures which reflected the damage caused by years of international sanctions. The National Iranian Oil Company said there would be new options available to Iran in the oil market if circumstances became favorable.

During the sermon of the first Friday of this month, Iranian cleric Kazim Sadeqi, who opposed former president Mahmoud Ahmadinejad, said the time had come for America and Iran to stand “shoulder to shoulder” in an attempt to end the sanctions.

In this atmosphere, Iran is promoting a huge incentive by granting foreign investors access to the huge oil and gas reserves it possesses.

Iranian oil minister Bijan Zanganeh sent encouraging messages that the spirit of openness shown by the Iranian leadership may extend to the Iranian energy market when he said, “Contracts are being rewritten to allow more foreign investments into this sector, including the option of developing the southern Pars Field.”

On October 1, the Iranian oil company’s news agency, Shana, quoted Zangeneh as saying: “We will do all we can to regain Iran’s share in the oil market. I contacted a number of foreign oil companies about this issue and they all expressed interest in returning to Iran.”

Iran is testing the waters by announcing the opening of its oil market, in addition to offering lucrative contracts which could force the West to ease the economic sanctions, even without giving concessions on its nuclear program.

Iran possesses the third-largest oil reserves in the world and the second-largest natural gas reserves. However, the economic sanctions imposed by the United States and the European Union, which targeted the oil and banking sectors, reduced Iran’s oil production and made it difficult to sell its oil in international markets. The sanctions also discouraged Western countries from investing in Iran and caused Iranian oil exports to drop to half the levels they were at before the sanctions, which cost Tehran billions of dollars.

It is certain that the decline in oil exports and the erosion of Iranian economy forced the Iranian leadership to review its policies.

Any immediate or significant easing of the sanctions is not currently expected. Western countries will only ease sanctions when Iran takes tangible steps to end uranium enrichment and put the spotlight on its nuclear program.

The spokeswoman of the US Department of State said that any steps taken in easing the sanctions will be in accordance with the steps taken by Iran in abandoning its nuclear program. The leniency shown by the Iranian leadership since Rouhani left New York is caused by a reduction in oil revenue. However, if the sanctions were the reason which prompted Iran to negotiate and wear the mask of leniency, what are the guarantees that Iran would continue on this path when its economy recovers? With regards to the Iranian leadership, and especially President Rouhani, will the return of oil exports to their former levels not allow the Iranian government to impose stricter security measures against the Iranian people?

So far, executions continue in a manner which is beyond description, and Iranians are not allowed to enjoy or benefit from the communication revolution.

If we look at modern Iranian history, we will notice that with every oil boom, there has been an Iranian shock.

When the Iranian Revolution erupted in 1979, Iran was at the pinnacle of oil wealth. Oil prices had trebled, so Shah Mohammad Reza Pahlavi embarked on a modernization program and the huge budget exceeded the expectations of the Middle class. The shah, however, began to impose himself regionally and internationally, and his vision was that Iran would soon turn into a major international economic power. However, he tightened security internally and threw the opposition in prisons. He also held royal parties ignoring the abject poverty in the country.

The rise in oil prices made the shah think he could not be wrong. What followed is what Iran is living today.

The rise in oil prices between 2008 and 2009 produced the same arrogance in the policies of former President Mahmoud Ahmadinejad and the regime as a whole. Thousands of political prisoners are still in prisons, and many have escaped Iran. Also, the fact oil prices reached USD 100 per barrel made Iran unconcerned for the sanctions and did not think the countries would dare extend them. Ahmadinejad continued (despite everyone’s admission that he was behind Iranian military and nuclear power) to ridicule Security Council resolutions and the General Assembly’s sessions.

When Mohamed Khatami was in office, from 1997 to 2005, and the price of oil was USD 20 a barrel, he proposed a dialogue between civilizations. Iran signed a number of bilateral investment and free trade agreements and strengthened civil society, and improved press freedom. His era was marked by an increase in social and economic freedom for Iranians.

The result of the June 2013 elections came from the difficult economic situation. This situation made the regime think about the people and its international relations, especially with the West. The victory of Hassan Rouhani, the moderate, would not have been possible or allowed by the supreme leader had it not been for the increasing economic pressure due to international sanctions. The Iranian public relations campaign to charm the West should be taken—according to the saying—with a pinch of salt; the regime knew how to use cunning when it came to diplomacy.

On the other hand, any move from the Rouhani government to free the oil market and invite foreign companies to return would face strong opposition from hard-line conservatives.

These are still in power and they accept foreign investment if they are guaranteed their rights and received benefits. They want to maintain their privileges, but will the major oil companies agree to pay bribes?