Economic effects of a military strike on Iran

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Economic effects of a military strike on Iran

First off, we cannot understate the effects of a military strike on Iran. Iran's southern coast borders the Persian Gulf, where over 40% of the worls oil passes via tankers. In the event that the US conducts a military campaign on Iran, it is a very high possibility that oil supply will be cut off for a undetermined amount of time. Thus, this topic fits squarely into the economic and energy topics of this website. So please, no moving to the controversial topics section as there will be no discussion as to whether a possible strike is "right or wrong:, rather, it is imperative to discuss the odds of a strike and what the effects on the world economy will be.

 

Right now, the drumbeats of war are beginning to pound ever so stronger. The news of a second nuclear site has the warhacks in a rage. The US is pushing for severe sanctions against Iran.

http://news.antiwar.com/2009/09/30/west-poised-to-make-demands-and-press-for-sanctions-in-iran-talks/

The opposition party in Iran is warning against stricter sanctions as they argue that sanctions will bolster support for the current government.

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/30/AR2009093004244.html

Moreover, the recent long range missle test by Iran has further stirred up more controversy as EU's Solana calls the missle launch "a concern".

http://www.reuters.com/article/worldNews/idUSTRE58R25720090928

It appears that sanctions are almost certain at this point. After that, time will tell which path our leaders decide to take us down. I put the odds at 40% that the US will bomb Irans nuclear site, perhaps with the assistance of Israel. If this were to occur, get ready for crude to jump to $100+ for a prolonged period of time, depending on how Iran responds. Will the Persians sit back and allow the West to bomb its nuclear sites? Or will they react by punishing the entire world economy by shutting down oil transportation in the gulf? Either way, the prospects for peace dont look so good.

 

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Re: Economic effects of a military strike on Iran

The Persians will be up in arms over the issue, for good reason.  The Arabs on the other hand will sit back and allow it to happen.  In fact, IMO they'll cheer it on, as the price of oil as you clearly stated, will climb into the $100+ per bbl.  This helps no one but the oil producing countries, and hurts the overall world economy.

Unfortunately, Iran has been demonized by the Western Media and Gov'ts.... who we all know from past experience, are not the most honest groups to inhabit the earth.   

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Re: Economic effects of a military strike on Iran

IMO, all the hype is simply hype.  

I don't think Obama & Co. are going to bomb, and I'm reasonable sure they're not going to give Israel the green light.  There's too much to be lost if Iran were to take its oil off the market.  I'm pretty sure that a small decrease in the supply has an outsized effect on the price of crude in the world market (so the price per bbl would be more like $200) and such a thing would run a very large stake through the heart of an exceedingly wobbly world economy.  Who (in a position to influence the decision) would view that as a win?

Iran's rattling their saber and everybody's expressing concern/outrage.  And then by the end of the year some kind of deal's going to get cut, methinks.

Viva -- Sager

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Re: Economic effects of a military strike on Iran
LogansRun wrote:

Unfortunately, Iran has been demonized by the Western Media and Gov'ts.... who we all know from past experience, are not the most honest groups to inhabit the earth.   

LR -

Point taken, but Ahmdedinejad has done an even better job of demonizing Iran.

From the October 26 speech by President Mahmoud Ahmadinejad to an Islamic Student Associations conference on "The World Without Zionism." The conference was held in Tehran, at the Interior Ministry.

Our dear Imam said that the occupying regime must be wiped off the map and this was a very wise statement. We cannot compromise over the issue of Palestine. Is it possible to create a new front in the heart of an old front. This would be a defeat and whoever accepts the legitimacy of this regime [Israel] has in fact, signed the defeat of the Islamic world. Our dear Imam targeted the heart of the world oppressor in his struggle, meaning the occupying regime. I have no doubt that the new wave that has started in Palestine, and we witness it in the Islamic world too, will eliminate this disgraceful stain from the Islamic world.  http://www.nytimes.com/2005/10/30/weekinreview/30iran.html?_r=1&ex=1161230400&en=26f07fc5b7543417&ei=5070

and

President Mahmoud Ahmadinejad called the Holocaust a lie Friday, raising the stakes against Israel just as world powers try to decide how to deal with the nuclear ambitions of an Iran in political turmoil.

"The pretext (Holocaust) for the creation of the Zionist regime (Israel) is false ... It is a lie based on an unprovable and mythical claim," he told worshippers at Tehran University at the end of an annual anti-Israel "Qods (Jerusalem) Day" rally.

"Confronting the Zionist regime is a national and religious duty."...............

Ahmadinejad won support from Sayyed Hassan Nasrallah, leader of Lebanon's Iran-backed Hezbollah which fought a 34-day war with Israel in 2006. "Our belief and creed ... remain that Israel is an illegal entity, a cancerous tumor, that must cease to exist," Nasrallah said in a televised address.  http://www.reuters.com/article/topNews/idUSTRE58H17S20090918

And to add my $.02 to the question - oil would go way up until Hormuz was open, and the world markets would crash.  Then recover to some level.

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Re: Economic effects of a military strike on Iran

Iran will never attack Israel - it would be suicidal. The same cannot be said for the Israelis who might do so.  Even if they acquire nukes it would not be in their interest to do so. They are decades away from matching the Israeli capability and they know it - and of course if they did the US would enter the war against them...

They want nukes as a defense against Israeli (and US) threats and to enhance their status as a regional power. This, I believe, is what Israel fears - that they would lose their overwhelming military advantage in the region if the Iranians could threaten nuclear retaliation if they were attacked.

The main danger I see from a proven Iranian nuclear capability is that other Arab states would  most certainly try to follow suit making the whole region more dangerous.

The Israelis want the Iranians neutered - just as they wanted Saddam Hussein neutered. One can of course see that this is unacceptable to Iran - if they can prevent it.

Israel is a small, but very powerful, land and resource-poor state that, because of its military strength (and allies in the US and Europe) believes it shouldn't have to compromise with weaker states  in the region on any issue and refuses to settle its disputes with the Palistinians on fair and reasonable terms.

Unless there is meaningful, fair compromise there will be no peace - almost certainly there will be again war, and not in the distant future.

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Re: Economic effects of a military strike on Iran

Great points CB.

Another concern, IMO even more so than leveling of the playing field in the Mideast, is the potential of "accidental" loss of an Iranian nuke (should/when they develop one) that gets into the hand of a non-state sponsored terrorist organization.

Given that nuclear weapons is a genie that can't be put back into the bottle, your comment about a destabilizing localized arms race is right on.  Would Israel or any of the more moderate Arab states sit idly by?  Would they have a choice?

Israel is going to have to make concessions, because it seems that soon enough, they won't be the only big dog in the hunt.

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Re: Economic effects of a military strike on Iran

Dogs,

I agree!  He's a sore on everyones rear end!  Unfortunately, I think the Persian people are being taken to the woodshed by all the leaders involved.  In my travels, I've never met a more friendly, educated and open minded citizenry than the Iranian people.  It's a sad state of affairs for them as well as the rest of the world if this escalates to a state of hostilities.  And just my opinion, but I think the leaders (real leaders) of the US and UK will push this issue to war as it's a win/win situation for them.:-(

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Re: Economic effects of a military strike on Iran

I've been following the situation pretty closely, and the best I can figure that the US has more to lose with a strike against Iran than it has to gain, and is more likely to wheel and deal for strict sanctions that cut off Iran's gas supply (as Iran doesn't have the refining capability to satisfy all its domestic needs) in the hopes of getting Iran's ruling powers to capitulate.  Israel, however, may feel backed against the wall, as their ability to conduct strikes with any effectiveness is believed to have a short timeline.  The longer they wait the more time the Iranians have to harden and/or widely distribute their nuclear facilities, as well as acquire additional anti-aircraft systems:

http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=2&article_id=106654

As it stands now it's uncertain that an air strike from Israel or the US could cripple Iran's nuclear program.  But if I were in Israel's shoes I might see only two choices in front of me: 1) carry out a strike now and hope they can cripple or at least substantially delay the Iranian nuclear program while it's still possible, or 2) stand down and hope that sanctions and/or diplomacy stops/delays their nuclear program, and in the meantime lose the chance of any effective potential military option.  Given the Israeli government's frustration with the UN and the relative ineffectiveness of such methods thus far in delaying their nuclear program, they may feel backed into a corner with a military action as their only option.  And as much as the US leadership would like to see Iran's nuclear capability immediately stopped or crippled, I think they see a bigger picture where oil supply disruptions and price volatility would hurt the US and the West in an immediate and severe way.  Like anyone else here I'm not privy to backroom conversations and dealing between Israel and the US, but my bet is that the US is using its influence in pressuring Israel to give them more time to put sanctions in place, and that the US' influence is limited in this issue.  So IMO we should be watching Israel more closely than the US as the one to carry out an initial military strike.  I think the US does however have contingency plans for military action against Iran in the event that an Israeli air strike led to a Gulf blockade by Iran.  If there is any media manipulation on the part of the government in emphasizing the Iranian nuclear threat (not saying there is or there isn't, just addressing the possibility), it would seem likely to be geared more towards preparing the public for that contingency of being drawn into a conflict, rather than starting it.

Now if it did happen I might expect two potential outcomes.  The first is that Israel conducts air strikes and Iran does its best to defend itself but stops short of launching most of its missiles at Israel or blockading the Strait of Hormuz, in the hope of garnering international support behind them ("we showed restraint against unprovoked aggression" or the like) against Israel specifically and the US in general.  I think this is most likely if Iran's nuclear production capabilities and/or stockpile of enriched uranium remains largely intact.... they could afford to be patient so as to buy more time to increase their production of enriched uranium further and complete bomb designs (if they are producing it for weapons) and/or to sway more neighboring states or even perhaps world powers (Russia or China maybe) to their side.  IMO this would likely result in high but temporary oil price volatility and push markets down, but disruptions in actual oil supply are likely to be low or nil (Iran would still needs to sell their oil).  The biggest threats I see in this outcome are that this limited conflict touches off a 2nd market panic with all the associated credit crises and bank failures ("from the Outside In" as CM might say), and it potentially sets the stage for a larger Iran-Israel conflict in 2-3 years where both sides have acquired more armaments and allies willing to fight with them.

The second outcome is that in response Iran does go all out, to include missile strikes against Israel, blockading the Strait against all foreign traffic, and convincing allied states to join the assault on Israel.  The potential consequences to this are so numerous and potentially high impact its impossible to think of just one or a few likely scenarios.  Internationally we might expect global trade to suffer major disruptions, a more or less global market meltdown, a conflict that spans much of the Middle East and maybe Pakistan, a possibility of the use of one or more nuclear weapons in the region (maybe more if Pakistan becomes involved), and as the conflict grinds on perhaps uninvolved nations see an opportunity to settle old scores or conquer a weaker neighbor (Russia-Georgia or Russia-Ukraine perhaps?)  Here in the US we could probably expect oil price volatility, some oil supply disruptions (some, though not most, of our oil comes from the Gulf), market crashes which touch off failures of banks and other financial institutions, panic buying of essentials and guns/ammo, and sporadic supply-chain disruptions.  And last but not least we could probably count on the US being involved in the conflict, and thus another large portion of our military men and women being sent overseas.  Of course there's much more but I've already written a novel here and will post more later.

- Nickbert 

 

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Re: Economic effects of a military strike on Iran
LogansRun wrote:

 And just my opinion, but I think the leaders (real leaders) of the US and UK will push this issue to war as it's a win/win situation for them.:-(

What are these "wins" you speak of?

 

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Re: Economic effects of a military strike on Iran

Dogs,

I don't think the Iranians are a particular threat in that area, other than the fact that the more the knowledge and technology is spread around the greater the likelyhood of that occurring. Pakistan, with its proven track record of proliferation is still more of a threat in my opinion.

I believe the drumbeat against Iran and threats of attack are driven by the Israli sense that the window of opportunity is closing - for many reasons, some having to do with the state of the US economy and political changes here as well as their own geopolical calculus. Zib Brezinski was making the rounds recently stating that patience and diplomacy were the answer to the "Iranian" problem and citing robert Gates as an ally. Someone may try to force the situation into open war before the tide changes completely.

I don't think this is a "win-win" for anyone LR. All I see are losers and a lot of dead people if the stiuation ended in conflict.

Israel is too small a nation to be forever at war/in conflict with its neighbors, but if they can't find the political will to compromise... well, I have bad visions looking down that road...

That said, it is clear to me that meaninful compromise is a very hard road - the region is so full of bitter blood.

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Re: Economic effects of a military strike on Iran

I don't want to relegate this thread to the CT area.  I think you can figure it out for yourselves by me not wanting it shipped to oblivion.  It's sad that reality is still considered "theory".  

 

SagerXX wrote:
LogansRun wrote:

 And just my opinion, but I think the leaders (real leaders) of the US and UK will push this issue to war as it's a win/win situation for them.:-(

What are these "wins" you speak of?

 

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Re: Economic effects of a military strike on Iran

Nickbert,

I don't believe the Israelis could attack with your "limited" option - just targeting the nuclear facilities. They could not risk the possibility of an Iranian counter-attack. I don't know if that then dictates American cooperation because of the number of targets and the time frame. At a minimum I believe they need American acquiesence for overflights in Iraqi airspace and some air support. How anyone could think that the situation could be controlled onece conflict started I don't know. The Egyptian government might actually favor an attack privately, but could they actually sit by and watch without their own country going up in flames?

I do believe that the US will not initiate an attack (not without some real or "real" provocation). Many here want to participate in the Iranian energy market and the rode through conflict to this goal is not clear.

Suerly the disruption to world economic markets would be severe.

Hoping for a miracle, but not expecting one - expecting the same old bad situation to continue... or worse.

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Re: Economic effects of a military strike on Iran

Great thread so far guys. Im glad not to see political arguments so that the thread doesnt get kicked off. Heres some important updates:

Saudi Arabia to allow Israel to flyover for possible attack:

http://sify.com/news/international/fullstory.php?a=jj1m4jgdicj&title=Saudis_will_allow_Israel_to_bomb_Iran's_nuclear_site

OPEC's spare capacity would lessen the impact on oil prices of any disruption to Iran's oil supply if the dispute over Tehran's nuclear programme escalates, a Kuwaiti OPEC delegate said in a newspaper column.

http://in.reuters.com/article/oilRpt/idINLU65387020090930

 

On a side note, the Arabs would love to see Iran get bombed for many reasons. One, the persians and arabs dont have the best relations and the arabs would love to see Iran lose nuclear capability. Two, oil prices would jump which translate to huge profits for them. Its a win/win situation for the arab states.

 

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Re: Economic effects of a military strike on Iran

John Mauldin's Outside The Box: Iranian Sanctions: Preparing for the Worst (Part 3) by STRATFOR

Sorry for the ginormus post, but I'm not able to link directly.

September 25, 2009

Summary

Iran has long been preparing itself for U.S.-led sanctions against gasoline imports and is confident in its ability to circumvent them. But even if the sanctions did get Iran's attention, they would not necessarily bring it to the negotiating table. Iran takes resistance very seriously, and while extolling the virtues of self-sacrifice it could close the Strait of Hormuz, which would wreak havoc on the global economy.

Editor's Note: This is part three of a three-part series on what sanctions against Iran could mean for Iran, U.S.-Russian relations, Israel and the global economy.

As the Iranian regime continued apace with its nuclear program, it understood that it was only a matter of time before the West would aim for its gasoline imports, a potential Achilles' heel for Iran. Although Iran may be one of the world's top-five crude-oil producers and exporters, its rogue reputation isn't exactly good for business. The Iranian energy industry has been sagging under the weight of sanctions for decades as the foreign energy majors with the technical skill Iran so badly needs wait for the geopolitical storm clouds to clear before tapping the country's vast energy reserves.

To contain domestic political dissent, the Iranian regime has heavily subsidized the population's energy needs. The drawback to such a policy is that ridiculously cheap gasoline prices (gasoline in Iran costs around 9 cents per liter) tend to fuel rapid consumption and rampant smuggling. As Iran's population continued to grow, so did its appetite for gasoline, and the regime has now reached a point where it simply cannot keep up with domestic demand without importing at least one-third of its fuel.

So, while Iran's Arab rivals, such as energy heavyweight Saudi Arabia, profited immensely from record-high crude prices in 2008, the Iranian regime was still struggling to balance its accounts. Then came the global economic collapse, which sliced the country's oil revenues in half. And given the sponsorship by the Islamic Revolutionary Guard Corps (IRGC) of militant and political proxies in Iraq and Lebanon, Iranian President Mahmoud Ahmadinejad's repeated raids on the country's rainy-day oil funds for his political campaigning, and funding for the Iranian nuclear program, Tehran does not have much cash to spare.

Unreliable Allies

Iran is not oblivious to its gasoline vulnerabilities, but it also isn't left without options should Washington become more aggressive with its sanctions campaign. As discussed in detail in part two of this series, Russia — for its own strategic reasons — has developed a contingency plan, most likely involving Russia's former Soviet surrogate, Turkmenistan, to cover the gasoline gap should Iran start experiencing shortfalls. The Russians are certainly not planning to do this out of the goodness of their hearts and sincere loyalty to their allies in Tehran. On the contrary, sabotaging Washington's sanctions regime against Tehran is yet another way Moscow can turn the screws on the United States if the Obama administration refuses to take seriously the Kremlin's demand that the West respect its influence in the former Soviet sphere. Since the Obama administration backed down recently from itsBallistic Missile Defense (BMD) plans in Central Europe, there could be more room for Russia and the United States to engage in serious negotiations. That said, there is no guarantee that Washington would be willing to pay the price of Russian hegemony in Eurasia in return for Russia's cooperation on Iran, and Moscow will drive a hard bargain before it even thinks about sacrificing its leverage with Iran.

Iran could certainly use Russia's help in maintaining its gasoline supply, but Tehran is also quite wary of becoming that much more dependent on Moscow's good graces for its energy security. Russia and Iran have quite a tumultuous history (the Soviets briefly occupied Iran during World War II), and the Iranian leadership is fearful of being abandoned by Russia should Moscow reach some sort of compromise with Washington.

Iran's other energy-producing ally hostile to the United States is Venezuela, which recently announced it would come to Iran's aid in the event of sanctions and supply its Persian friends with 20,000 barrels per day (bpd) of gasoline starting in October for an $800 million annual fee. Beneath the revolutionary rhetoric of oppressed regimes sticking it to their imperialist foes, this Venezuelan-Iranian energy deal is filled with holes. For starters, Venezuela — much like Iran — is facing serious refining problems due to mismanagement and a severe drop in foreign investment. Also like Iran, Venezuela's populist regime heavily subsidizes its constituents (gasoline in Venezuela is even cheaper than in Iran at 4 cents per liter), sending consumption soaring over the past four years. While Venezuela is currently refining around 420,000 bpd, it still needs to import gasoline to help meet domestic demand.

Caracas could always go through a third party to supply gasoline to Iran from a source closer to the Persian Gulf, but finding a willing supplier could prove difficult and costly when insurance premiums and political risks are taken into account. Moreover, should push come to shove, Washington has substantial leverage over the Venezuelan regime given the abundance of assets that Citgo, the refining unit of Venezuelan state oil company Petroleos de Venezuela, has spread throughout the United States. The United States also is the largest recipient of Venezuela's crude exports and one of the few markets in the world with the technological capabilities to process Venezuela's heavy crude, leaving Venezuela without much of a viable alternative market.

Iran has already turned to China to help backfill its gasoline supply. Latest estimates show that starting in September, China began to directly supply up to one-third of Iran's total gasoline imports. Until now, Chinese involvement in the gasoline trade had mostly been limited to shipping companies. In the run-up to the Oct. 1 talks, China now has the extra incentive to poke the United States and profit from these gasoline shipments to Iran. After having boosted its refining capacity this year, China has surplus gasoline to sell on the international market. In August alone China exported 140,000 barrels of gasoline per day. Like Malaysia's Petronas, which began supplying Iran with gasoline in August, China sees an opportunity to profit off of Iran's gasoline trade at a time when political tensions are rising and major energy firms, such as BP, Reliance and Total, have already stopped or are cutting back their shipments to Iran. But Iran may not be able to rely on Chinese aid over the long term.

China currently is in a heated trade spat with Washington over a recent U.S. tariff on Chinese tire imports and could push back against Washington even further by flouting the threatened sanctions regime. However, this is a decision with major strings attached. Washington still has a great deal of leverage over Beijing in the form of Section 421, a U.S. law that was incorporated into China's accession agreement with the World Trade Organization in 2001 and allows the United States to legally impose tariffs on nearly any Chinese export until 2013. Now that Obama has put Section 421 to use in restricting tire imports, the Chinese have to think twice before making any moves that could compel Washington to go even further in slapping trade restrictions on China. Additionally, China is a massive energy importer itself, so shipping any sort of energy product to the Middle East, where its supply lines are unprotected, is something that works directly against most of China's energy security strategies.

The United States has not yet formalized the gasoline sanctions against Iran in the form of legislation or a U.N. Security Council resolution, and this may be providing Beijing a limited opportunity to hit back at the United States during the trade spat and demonstrate the limits of Beijing's cooperation. However, Beijing will be far more cautious than Russia when it comes to blocking sanctions against Iran and will keep a close eye on Russia's intentions in deciding its next steps. China has long been noncommittal when it comes to sanctions against Iran and will align itself with Russia in forums like the U.N. Security Council to demonstrate its opposition to punitive U.S. economic measures. Of course, if Russia folds and reaches some sort of compromise with Washington, China will comply with the sanctions and avoid being left in the spotlight as the sole sanctions-buster allied with Iran.

In short, Iran has friends that it can turn to if necessary, but the reliability of those friends is by no means guaranteed.

Fending for Itself

In the spirit of self-sufficiency, Iran has long been preparing itself for a U.S.-led offensive against Iranian gasoline imports. Over the past two years, as talk of gasoline sanctions intensified, Iran sought out willing suppliers to help stockpile its gasoline reserves. Iranian gasoline consumption currently stands at around 300,000 to 400,000 bpd, but over the past several months, Iran has been importing well in excess of that amount from mostly Swiss suppliers and now newcomers like Malaysia's state-owned Petronas, which are looking to replace the energy majors that are dropping out of the Iranian gasoline trade while political tensions are high. Iranian and U.S. intelligence sources claim that Iran currently has at least three months worth of gasoline needs (estimates average around 30 million barrels) stockpiled. The director of the National Iranian Oil Refining and Distribution Company claims Iran's gasoline storage capacity is about 15.7 million barrels, which gives Iran about four months of in-storage capacity. Some of the surplus gasoline is sitting on tankers off Kharg Island, but the bulk of the supply is stored on land, where it is less vulnerable to airstrikes.

Iranian Gasoline Imports - 2009

The Iranian government continues to make bold claims about its ability to massively ramp up its refining capacity and become self-sufficient in gasoline production within four years, but this is mostly hot air. Iran simply doesn't have the capability to meet its gasoline production goals on its own without the necessary foreign investment. And even if Iran had willing partners in places like Central Asia, it would still need to overcome its extreme reluctance to actually foot the bill for such projects.

It may strike some as odd that Iran has acquired a capability to develop nuclear technology but still struggles to build and operate refineries on its own. There are a number of reasons for this, but the simple answer is that the technology for a nuclear program dates back to the 1930s and 1940s and has not changed much since, while refining technology is continually updated and Iran has been out of the global oil-and-gas mainstream for 30 years now. A nuclear weapons program requires a couple dozen or so highly trained scientists and engineers to operate it, and these personnel can be trained in any number of institutions around the world. On the other hand, a permanent staff for a refinery producing around 300,000 bpd would require some 1,200 highly trained technicians and petroleum engineers, and most of Iran's intelligentsia — particularly the group with strong technical skills — left the country following the Iranian Revolution. Iran's stated energy goals are full of delusion as well as ambition.

Confronting the Subsidy Problem

Iran thus has little choice but to figure out a way to reduce gasoline consumption at home. The Iranians started on this initiative in June 2007 when the regime implemented a rationing system. Though the move was extremely unpopular and instigated a spate of riots in Tehran, the backlash was swiftly contained and, according to energy industry sources, Iranian gasoline imports dropped from 40 percent of total domestic consumption to about 25 to 30 percent.

The next step is for the regime to start cutting untenable subsidy rates by raising the price of gasoline. This is a plan that has long been in the works but has been put off time and time again due to the regime's deep-rooted fear of sparking major social unrest. This especially became a concern following the June presidential election debacle, which gave scores of Iranian citizens the courage to pour into the streets to voice their dissent against Ahmadinejad. Though the protests have dramatically dwindled in size, they continue sporadically and are a persistent irritant to the regime. Iranian sources claim that the coming gasoline price hike will not be that dramatic in the beginning. The government would likely continue to subsidize domestically produced gasoline while allowing the cost of imported gasoline to rise so it can pass along a portion of the costs to the consumer and further dampen demand.

Besides the potential political fallout, there is another significant issue with this gasoline price-hike plan. Since gasoline prices are heavily subsidized in Iran and are, therefore, much cheaper than the gasoline sold in neighboring countries, Iran has a major problem with gasoline smuggling to these countries. Iranian sources claim that more than 750,000 barrels are smuggled every month from Iran to Turkey, Afghanistan and Iraq, and this puts a considerable drain on Iran's energy revenues. The smuggling rings are run by a variety of actors, from Iranian organized crime entities linked to the IRGC to Balochi tribesmen to Kurdish smugglers, and they are extremely difficult for the regime to dismantle. Moreover, Iranian officials tend to turn a blind eye to these smuggling practices in order to buy political patronage from non-Persian minorities (Kurds, Balochis and Azeris) in the borderlands who could otherwise cause serious trouble for the regime. With the political situation at home particularly dicey right now, the Iranian government will have to proceed cautiously with any future price hikes, which are sure to be applied unevenly across the country.

Natural Gas Relief?

Iran also has an alternative-fuel plan under way that capitalizes on the country's natural gas resources and reduces its reliance on refined crude, but the results have so far been limited. The plan involves encouraging the use of compressed natural gas (CNG) for Iranian motorists. Cars that can run on CNG, which are prevalent in South Asia and Latin America, can be more economical and environmentally friendly. In fact, the price of CNG retails at around 4 cents per cubic meter (roughly equivalent to one liter of gasoline). Moreover, the technology used to compress natural gas is far less complex than that needed to refine crude. Considering that Iran is the world's fourth-largest producer of natural gas, the switch to CNG makes sense, but there is one big drawback. Vehicles must be modified to run on CNG, and CNG stations would have to be built across the country. None of this would be quick or cheap for Iran.

Nevertheless, Iran has made notable progress since kicking off its CNG plan in 2007, when Iran Khodro Industrial Group — Iran's leading automaker — invested $50 million in low-consumption, flexible-fuel engine production lines. Former Iranian Oil Minister Gholam Hossein Nozari said in July that there are currently 880 CNG stations in Iran, with plans to build an additional 400 within the next several months. Since Iran Khodro started ramping up production of CNG-capable vehicles, Iran has become the world's fourth-largest CNG-vehicle producer following Argentina, Pakistan and Brazil, according to the International Association for Natural Gas Vehicles. As of May 2009, Iranian government officials claim the official count of CNG-capable vehicles on the road totaled 1.4 million. The total number of cars in Iran was estimated to be 11.7 million in 2008, according to the Global Market Information Database. All in all, estimated fuel replacement by CNG is currently around 7 percent of Iran's total automobile fuel consumption, up from zero five years ago. While Iran seems to be making steady progress in the CNG arena, it still has a way to go before the switch to CNG would make a significant dent in the country's gasoline imports.

Responding to Pressure

When STRATFOR speaks to Iranian sources, we get the sense that the regime is feeling fairly confident in its ability to slip the sanctions noose while continuing to work on its nuclear program, using the same rhetoric it has used for the past seven years to drag negotiations into a stalemate. This continued confidence may be due to the fact that the Iranians have yet to feel the pinch of Washington's quiet campaign against Iran's gasoline suppliers. Though the energy majors appear to be dropping out of the Iranian gasoline trade, the numbers we have seen indicate that Tehran is importing surplus amounts of gasoline in preparation for tougher days to come. However, should Iran fail to outmaneuver the P-5+1 come Oct. 1, those tougher days could arrive sooner than it thinks.

In the weeks and months ahead, Israel will likely determine whether Iran and the United States are headed for a collision course in the Persian Gulf. The Israelis were promised "crippling" sanctions against Iran by the Obama administration. If that promise goes unfulfilled, and the Iranians (as they are expected to do) refuse to freeze their enrichment activities, the Israelis are likely to turn to the military option and demand Washington's cooperation. Israel understands Russia's leverage over Iran — particularly its ability to arm the Iranians with critical defense systems and sabotage a gasoline sanctions regime — and would rather deal decisively with the Iranian nuclear issue while the program is still several steps away from a critical phase.

Israel, unlike the United States, never had much faith in the sanctions to begin with. The U.S. administration appears to be operating under the assumption that severe sanctions against Iran will create a dire economic situation in the country, galvanize the masses against the clerical elite and thus coerce the regime into making significant concessions on its nuclear program. More imaginative policymakers believe that such economic sanctions could build on the dissent that followed the election and produce a third front to challenge and topple the regime. But Tehran's actual actions are unlikely to mesh nicely with Washington's preferred perception of the regime's mindset. Iran — at least for now — has no intention of meeting the West's demands to curb its nuclear program and takes the idea of resistance very seriously.

A Doomsday Scenario

Israel is willing to see how the sanctions regime plays out, but it also knows that it has a limited menu of options. If the sanctions are blown apart with Russia's help, the Iranians will obviously feel little pressure to negotiate seriously and the Israelis will have to turn to alternative options. If the sanctions prove effective because of Russian cooperation, a U.S. willingness to risk trade spats to enforce the sanctions or a combination of the two, the Iranians will be left feeling extremely vulnerable. However, that vulnerability would not necessarily bring Iran to the negotiating table. On the contrary, the Iranians are more likely to turn increasingly insular and aggressive with their nuclear ambitions. While extolling the virtues of self-sacrifice for national solidarity, the Iranian regime would begin to seriously threaten to use its "real" nuclear option — closing the Strait of Hormuz with mines and its arsenal of anti-ship missiles.

This is an option of last resort for the Iranians, but if Tehran feels sufficiently threatened, either by sanctions or potential military strikes, it could wreak havoc on the global economy within a matter of hours.

Setting ablaze the Strait of Hormuz would undoubtedly inflict intense pain on the Iranian economy, but this may be a pain that the regime is willing to bear while it watches energy prices soar and the world's industrial powers plunge deeper into recession. At such a level of brinksmanship, the United States would have to seriously consider a military campaign to preempt an Iranian move to close the strait, providing Israel with an opportunity to strike at Iran's nuclear facilities. If the United States failed to act in time and Iran succeeded in mining this critical energy chokepoint, then the U.S. military would have to clear the strait. Either way, the Persian Gulf would become a war zone and the global ramifications would be immense.

This may be a doomsday scenario, but it is one of increasing credibility given that the main players — Iran, the United States, Russia and Israel — continue to raise the stakes in pursuing their respective national imperatives. A number of questions remain: Will the United States put its trade relations on the line and aggressively enforce sanctions? Will Russia go the extra mile for Tehran and bust the sanctions regime? Can the United States and Russia reach a strategic compromise that will leave Iran out in the cold? Has Israel's patience regarding Iranian diplomatic maneuvers run out? Will Iran resort to its real nuclear option and threaten the Strait of Hormuz?

STRATFOR does not know the answers, and neither do the main stakeholders in this saga. However, come Oct. 1 these stakeholders must begin making some critical decisions that could dramatically alter the geopolitical landscape.


John F. Mauldin
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Re: Economic effects of a military strike on Iran
CB wrote:

Nickbert,

I don't believe the Israelis could attack with your "limited" option - just targeting the nuclear facilities. They could not risk the possibility of an Iranian counter-attack. I don't know if that then dictates American cooperation because of the number of targets and the time frame. At a minimum I believe they need American acquiesence for overflights in Iraqi airspace and some air support. How anyone could think that the situation could be controlled onece conflict started I don't know. The Egyptian government might actually favor an attack privately, but could they actually sit by and watch without their own country going up in flames?

CB,

I think you're right in the sense that it wouldn't likely be a few simple in and out series of strikes, as Iran has been clever in how they distributed their nuclear facilities and I presume Israel would have to deal with some of their anti-aircraft systems first.  Combine that with the distances involved and fuel requirements, it might require a large number of sorties to strike most or all of the targets.  So given the limited payloads they can carry across that distance, targeting anything else that wasn't a threat to the mission may be counterproductive (I would assume time would be of the essence).  American cooperation would make the process much easier, but isn't necessary for Israel to carry this out.... all they need is for the US to not get in the way.  IMO it's unlikely the US would actively interfere with Israeli planes moving through Iraqi airspace (given a little tiny bit of advance notice), and Israel may adopt a policy of "it's easier to ask for forgiveness than permission".  I'm sure Israel like the US realizes the risks of such a conflict spiraling out of control, but they might consider it worth the risk if they see minimal possibility of effective sanctions being placed.  Now as far as Iran's ability to counter-attack, to my admittedly limited knowledge Israel has air superiority by a large degree and Iran probably wouldn't risk its air force in trying to punish Israel (especially by trying to fly over Iraq).  What they do have is missiles; some of which can easily reach Israel but many that cannot.  I don't know how many they have but they may feel reluctant to expend those for a retaliatory strike now, especially since the trajectories would take them over Iraq and that could very easily draw the US into the fight.  Not to say that it wouldn't happen, just that they are less likely to do it merely for revenge and more likely as the beginning of an all-out conflict.  So if Israel conducts air strikes in Iran that would be a 'Defcon 2'-type situation in my point of view, but if Iran strikes back with more than a token number of missiles I will be in a 'Defcon 1' mindset.

To steer away from the "how" for a second and address the "what if" (supposing that most of us at least acknowledge it as a possibility even if we differ on how probable we think it is), what actions would you all take and when would you take them once you see the start of said hostilities?  What actions would you take once the conflict spread to involve the US or your home country?  Now think of how many people will be thinking the exact same things at the same time... what actions are most people likely to instinctively take ("gotta top off the gas tank!"), and which actions are likely to be good ideas yet mostly overlooked by those who are simply 'reacting to the moment'? (finally make that woodstove purchase perhaps?)

- Nickbert

 

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Re: Economic effects of a military strike on Iran

To steer away from the "how" for a second and address the "what if" (supposing that most of us at least acknowledge it as a possibility even if we differ on how probable we think it is), what actions would you all take and when would you take them once you see the start of said hostilities?  What actions would you take once the conflict spread to involve the US or your home country?

This is my concern, exactly what will happen if a attack on Iran occurs. At this point we can only speculate as to which scenario will play out. Perhaps Iran retaliates, perhaps it takes the loss of the nuclear plants. Either way, this is a story that must be followed, unfortunately, with so many other events that we now watch worrying about the future..

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Re: Economic effects of a military strike on Iran

IMHO this plus the markets big rally makes this a good time to keep some shorts on if you are still playing the market. I am also long the USO (oil) for peak oil anyway but if this happens it will more than off set the price at the pump increase. PM should be defensive also.

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Re: Economic effects of a military strike on Iran

The neocons (PNAC - Dick Cheney, Paul Wolfowitz, Donald Rumsfeld, Jeb Bush, Richard Perle, Scooter Libby, et al.) brought the U.S. our new "preemptive attacking" policy that was first used against Iraq because we "thought" the had WMDs.  They didn't and over a million Iraqi's were killed.  Any sane and sovereign nation would have rebuked this policy and and reestablished that only congress has the constitutional power to wage war.  The policy still stands and our imperial president may attack Iran or facilitate and support Israel's aggression without our approval.

Considering Iran's long history of British and American colonialism and the fact that they have been told over and over that they may be next, it is no wonder that they may be seeking nuclear weapons.  Joining the nuclear club grants nations much more say in world events while providing protection from invaders.  Israel already has nuclear weapons and they should not be surprised when their adversaries seek them too (e.g. India and Pakistan).  Both Iran and Israel are theocracies with human rights violations (see the Goldstone Report) - we shouldn't be comfortable with either having nuclear capabilities.

Israel's nuclear reactor and facility at Dimona is never mentioned though it has existed for over 50 years.  The reactor was built secretly with the help of the french.  It wasn't until 1986 that whistle blower Mordechai Vanunu, a technician at the plant, exposed the fact with words and pictures in the London Times that the Israelis stocked between 200 and 400 nuclear warheads.

Has the the International Atomic Energy Agency (IAEA) ever visited Israel?  Has Israel ever signed nuclear agreements along with the rest of the global community?

If Iran is attacked, it could lead to WW3 as unlike Iraq, Iran has powerful friends and business partners.  Iran is OPECs second biggest oil producer and it has the second largest natural gas reserves in the world.  Iran is China's biggest foreign oil supplier.  China has an agreement with Iran to invest around $100 billion to help develop their natural gas fields.

China's appetite for energy and natural resources is growing along with thier economy.  Hitting Iran would hurt China and this is something a debtor nation like the U.S. should avoid.  The obvious hole in the U.S. and Israel's logic is that they think Iran must develop their own nuclear weapons - what is to stop another nation from selling Iran nuclear weapons to help secure it's position?

But it really doesn't matter what Americans think, our imperial president will do whatever the international bankers and Israel suggest.  AIPAC has more clout than the American people.

Larry

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Re: Economic effects of a military strike on Iran

Larry,

I understand where you're coming from and I do agree with some of what you said, but this is all largely irrelevant to the original focus of the thread which is to examine the effects of such a conflict rather than the morality of said decisions.  As you say, those in charge aren't likely to listen to the wishes or concerns of the people anyway, so probably the best use of our energy would be to anticipate the consequences of that outcome (as potentially horrendous as those may be) and prepare accordingly. 

- Nickbert

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Re: Economic effects of a military strike on Iran

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Re: Economic effects of a military strike on Iran
DrKrbyLuv wrote:

.....Considering Iran's long history of British and American colonialism and the fact that they have been told over and over that they may be next, it is no wonder that they may be seeking nuclear weapons.  Joining the nuclear club grants nations much more say in world events while providing protection from invaders.  Israel already has nuclear weapons and they should not be surprised when their adversaries seek them too (e.g. India and Pakistan).  Both Iran and Israel are theocracies with human rights violations (see the Goldstone Report) - we shouldn't be comfortable with either having nuclear capabilities.

Israel's nuclear reactor and facility at Dimona is never mentioned though it has existed for over 50 years.  The reactor was built secretly with the help of the french.  It wasn't until 1986 that whistle blower Mordechai Vanunu, a technician at the plant, exposed the fact with words and pictures in the London Times that the Israelis stocked between 200 and 400 nuclear warheads.....

If Iran is attacked, it could lead to WW3 as unlike Iraq, Iran has powerful friends and business partners.  Iran is OPECs second biggest oil producer and it has the second largest natural gas reserves in the world.  Iran is China's biggest foreign oil supplier.  China has an agreement with Iran to invest around $100 billion to help develop their natural gas fields.

China's appetite for energy and natural resources is growing along with thier economy.  Hitting Iran would hurt China and this is something a debtor nation like the U.S. should avoid.  The obvious hole in the U.S. and Israel's logic is that they think Iran must develop their own nuclear weapons - what is to stop another nation from selling Iran nuclear weapons to help secure it's position..........

Larry

Larry -

I think this is largely a tempest in a teapot.  Iran would need to accumulate far more warheads to be a true member of the Nuclear 5.  The big difference between the 5 (US, UK, Russia, PRC and France) is all of these countries have credible deterrent power with the structure of their strategic nuclear forces.  You need several things - the most important is a survivable leg.  The US has a Triad - composed of SSBNs, ICBMs and bombers with cruise missile and gravity weapon delivery capability.  At any given moment there are enough SSBNs at sea and invulnerable, with enough of a deliverable warhead count to hold at risk the sovereignty of just about every country in the world.  So does Russia, the UK and France.  China does to a degree but frankly, their SSBN fleet is miserable.  The Rand deterrence model is still valid today among these members - no matter what you hit me with, I will have enough to hit you back and hit you hard.  Hard enough that it isn't worth it.  Where the rand model falls apart is the non state nuclear actor or the regional nuclear powers.

The third tier members - Israel, Pakistan, India - have a sufficent stockpile to be a regional force and threat but not a global one.  Proliferation and back room terrorist dealing notwithstanding. 

So even if Iran does develop an arsenal - whether they buy it outright or develop their own, they only have one delivery system in the form of an IRBM.  They have no SSBN fleet and they don't have the ability to project with air delivered weapons.  Contrast the capability of a B-2 taking off from Whiteman AFB and being capable of striking targets anywhere in the world within 24 hours.  The old Sukhoi 25 and 29s Iran has might make it to the border before going away.

I think Iran's pursuit of nukes - if that is in fact what they are pursuing - is more of a National pride issue and fuel for rhetoric than a true capability.  No matter what Ahmadinejad says while the camera is rolling, he knows the USS PENNSYLVANIA or any one of our Minuteman III missile wings could eliminate every population center in Iran with over 100,000 people.  It would be WWIII - for Iran - in this case, they lost the toss and elected to receive.  It will never come to that though - and not just because Obama lacks the stones to issue the order.  Iran might develop a handful of weapons, and join the club - but they would be like a probie rookie fireman - yeah you're a fireman, but you're not a FIREMAN.

Israel is the wild card here - they have the weapons, they have the delivery systems and they have demonstrated the will for unilateral action.  They are as much of a stabilizing force as a destabilizing one - a nuclear jenga if you will.  Pull the right block and the stack stays up, pull the wrong block and boom.  I still believe that Israel is the canary in a coal mine here - they won't hesitate to unilaterally stike Iran the nanosecond they feel Iran is capable of threatening israeli sovereignty.  Their air strike in Syria last spring was a perfect execution and almost carbon copy of what a stike on Iran would look like - and clearly demonstrated the ability, logistics support and overwhelming force to conduct the strike.

I just don't see Russia, China and the US in an exchange over a strike on Iran - there will be a lot of hand wringing and finger pointing, but there are far too many MIMUTEMAN III, Trident SSBNs, B-2, SS-24s, TEL SS-27, SSN-19 and CSS-4s pointed at each other for either of the three to blink.  I hear what you're saying about Iran's friends, but having been inside the world of strategic nuclear war planning and execution for 12 years,  those bankers and businessmen that may be Iran's "friend" don't have nukes, and when they try to pull those strings, the strings are going to break.

So in the end, I'm okay with the "Old Faithful" deterrence model to model and dictate the behavior of the truly global nuclear powers.  Iran simply isn't there - regionally yes, globally no.  And while it might really suck to be in the one or two cities that sucks up a few Mach stems, one or two cities isn't a threat to a nation's sovereignty unless you are a Monaco, Vatican City or Andorra.

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Re: Economic effects of a military strike on Iran

those bankers and businessmen that may be Iran's "friend" don't have nukes, and when they try to pull those strings, the strings are going to break.

 

A war with Iran isnt it wall streets interest at the time. Reason being that higher oil prices will kill US economy even more. Banksters can afford any more defaults then they already have. With gas going to $4+ it will ruin bens plans.

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Re: Economic effects of a military strike on Iran

those bankers and businessmen that may be Iran's "friend" don't have nukes, and when they try to pull those strings, the strings are going to break.

 

A war with Iran isnt it wall streets interest at the time. Reason being that higher oil prices will kill US economy even more. Banksters can afford any more defaults then they already have. With gas going to $4+ it will ruin bens plans.

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Re: Economic effects of a military strike on Iran
bearmarkettrader wrote:

those bankers and businessmen that may be Iran's "friend" don't have nukes, and when they try to pull those strings, the strings are going to break.

 

A war with Iran isnt it wall streets interest at the time. Reason being that higher oil prices will kill US economy even more. Banksters can afford any more defaults then they already have. With gas going to $4+ it will ruin bens plans.

What about the PTB? Some have always made money from war and yes Wall St is part of it and prices rises would hurt, but if the assumption was that the events would be over quickly, isn't it something that could be considered??  Just think how this could open "Piplineistan" and challenge Russian and Chinese influence in the region.

Time to revisit this perhaps??

 

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Re: Economic effects of a military strike on Iran

What is the economic and political cost to the US of no military strike?

It might sound a bizzare question but I ask it anyway

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Re: Economic effects of a military strike on Iran
britinbe wrote:

What is the economic and political cost to the US of no military strike?

It might sound a bizzare question but I ask it anyway

Great question.

Immediate Economic cost - zero.  Might have some issues downstream by missing the opportunity to build the Pipelineistan referred to earlier and we end up competing with Russia and China for oil.  Oh wait, we already do.

Political cost - assuming Iran doesn't allow inspections and/or the US doesn't get the level of sanctions asked for, perceived loss of influence on the Security Council could be a huge political cost downstream.

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Re: Economic effects of a military strike on Iran
Dogs_In_A_Pile wrote:

Political cost - assuming Iran doesn't allow inspections and/or the US doesn't get the level of sanctions asked for, perceived loss of influence on the Security Council could be a huge political cost downstream.

I've always got my antennae up for DIAP's posts when nuclear is at issue.  Thanks for your thoughts, man.  Most illuminating.  

Now:  I concur with your assertion above:  we'll look bad/weak if it seems as if we don't get the sanctions (or other outcome) we're looking for -- and that could have as you say big costs downstream.  But it seems to me our global influence is waning anyway.  Since 9/11 especially we've squandered goodwill, blood and treasure in various enterprises -- the legitimacy and effectiveness of which has been debated elsewhere.  My point is that it seems like our ability to do as we please when we please is just about at an end.  

So IMO it'd be ultimately pointless to run off and attempt to smash whatever it is Iran is up to.  We'd spend additional blood, goodwill and treasure -- kick the Iran/nuke can down the road X years (what, you think they'd give up forever if we blew up the Qum facility?  Or do you want to just destroy Iran top-to-bottom so they can't start again?) [ed.:  I'm using the collective "you" here] -- and end up dealing with the issue at a later date (when we have less prestige and financial [and therefore military] muscle/influence).

Maybe I'm reading too much into it (and hey I'm happy South America's gonna get its first Olympics -- "Do-Do Brasil-Brasil!!") but the fact that not only did we not get the 2016 games, but that our "well-regarded" bid was eliminated in the first vote feels like a mild rebuke from the world at large.

Viva -- Sager

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Re: Economic effects of a military strike on Iran
Quote:

What is the economic and political cost to the US of no military strike?

I'll add a different perspective on this.

Economically:  given our current monetary/economic system, the cost is that the military-industrial complex and their bankers don't get the revenue, and the Treas/Fed machine doesn't get to push taxpayers even deeper into debt to keep the system running.  Of course both of those are a great thing for citizens.  It would perhaps be an opening for people to consider a new monetary/economic system...what other ways do we have to live together than perpetual growth, perpetual debt, increasing consumption, constant war?

Politically:  there are 2 lenses here--looking at the impersonal nation-state governance level which is how political experts analyze it, vs. looking at the individual human, the sad face, the dead little girl, the broken hearts.  A case can be made using the 1st lens that not killing people would have a political cost.  Of course that reveals the warped nature of that academic lens.  Using the 2nd lens, it's tough to find a cost, except for the cost to the forces of empire so the CFR, the bankers, the royal families wouldn't get to use the US as their muscle.  Like Gandhi, we would appeal to the masses of the world that perhaps we aren't the Death Star and we can appeal to the forces of good instead of the forces of dialectical violence.  The great Persian people would see our humanity, be drawn to it, and even become a force for change organically inside their own country.  

Quote:

A war with Iran isnt it wall streets interest at the time. Reason being that higher oil prices will kill US economy even more. Banksters can afford any more defaults then they already have.

Gotta separate the general herd of working Wall St professionals chasing a W2 and the controlling bankers who own Wall St and the Fed.  Yes it's not in the interest of working Wall Streeters because the capital markets will be severely disrupted.  But it's very much in the stated interest of the controlling/owning few to establish global hegemony and use the US as the enforcement arm.  The Persian people are one of the last remaining groups that aren't under the rule of anglo banking institutions.  They want to fix that.  

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Ron Paul on Iran

Heeeere's Ronnie: 

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Re: Economic effects of a military strike on Iran
Dogs_In_A_Pile wrote:
britinbe wrote:

What is the economic and political cost to the US of no military strike?

It might sound a bizzare question but I ask it anyway

Great question.

Immediate Economic cost - zero.  Might have some issues downstream by missing the opportunity to build the Pipelineistan referred to earlier and we end up competing with Russia and China for oil.  Oh wait, we already do.

Political cost - assuming Iran doesn't allow inspections and/or the US doesn't get the level of sanctions asked for, perceived loss of influence on the Security Council could be a huge political cost downstream.

Hi Dogs,

I'm maybe straying into the CT area and may also be a little off topic but bear with me.

We have all heard various politicians in the US talk about energy security and independance and somehave talked about reducing the reliance on imported oil, but what does that really mean?  The imported oil is fine, but energy security and independance?  I guess the logical assumption would be from within the US territory, the switch to biofuels, solar etc etc.  But does that assumption really hold?  Its a question mark that been further reinforced for me after listening to the Ron Paul video C1ouldfire posted.  Perhaps we should refine the issue of security and independance to that of being "within US control", we are also talking about protectionism here are as well if the markets are to be contained to an "acceptable price" for oil for the US industry and public.

If this s a nuclear question, we have to consider both N Korea and Iran and maybe throw Pakistan and India into the mix as well.  But whilst N Korea is also involved in sabre rattling, they lack the natural resources to be of interest and they really do sit in Russia's and China's backyard.  But Iran, they are a little bit further removed from Russia and China geographically, have the all important oil and could potentially be a spring board to open up the whole region.  As for the credability of the threat they present?  Their current nuclear and missile capability might be questionable, but it is undoubtedly a card that could be played in swaying the opinion of the general population of Europe, the kind "they can hit Isreal so they could target NATO bases in Turkey or perhaps Greece or Italy with future developments, you will have 4 minutes in the event of a launch"....powerful stuff.  Of course, the governments of Europe could be swayed in exchange for a share of the spoils, in short there is money to be made and the preservation of power and a way of life, for a little while at least.

So to turn my question on its head, can the US afford not to deal with Iran if we are discussing either the nuclear or the oil card? And as an additional ones, how much credability does the UN really have?  What would be the consequences within/coming from the Muslim world? How much work needs to be done to sell this to the public and the world before attacking another soveriegn state?

Of course this could be distractional rhetoric in a bid to fill a sizable portion of the news channels schedules and bury bad news; I certainly hope this is what going on!

It will be an interesting topic to see develop over over how ever long it takes.....

Time to read the kids a bed time story................Smile

 

“All political thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. Political language... is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.”..........George Orwell

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