Does Iran have Bush over a barrel?

Islam and the West

02 Jul 2008, NewAgeIslam.Com

Does Iran have Bush over a barrel?

By Jim Lobe July 2, 2008   WASHINGTON - If United States President George W Bush wants to boost Republican chances of holding on to the White House and keeping Democratic gains in Congress to a minimum in the November elections, he might consider taking an attack on Iran before the end of his administration "off the table". Of course, that's probably the last thing Bush - and his particularly belligerent vice president, Dick Cheney - will do. But there's little doubt that forswearing military action against Tehran should ease the upwards pressure on world oil prices - which hit a historic high on Monday of more than US$143 per barrel before, falling back to $140 - and thus offer at least some reprieve to the US consumer at a time when record gasoline prices appear to be driving widespread popular dismay with the state of the US economy. "[I]f this administration truly wanted to spare Americans further pain at the pump, there is one thing it could do that would have an immediate effect," wrote Michael Klare in this week's Nation magazine and author of a new book, Rising Power, Shrinking Planet: The New Geopolitics of Energy. "[D]eclare that military force is not an acceptable option in the struggle with Iran." While oil analysts say that prospects of a continuing decline in the dollar no doubt played an important role in Monday's price jump, they also pointed to this weekend's pointed reaction by the commander of the Iranian Revolutionary Guards Corps, General Ali Jaafari, to recent US and Israeli threats to attack Tehran's nuclear facilities, as well as his assessment that those threats should be taken seriously, as a major factor. In addition to retaliating against any regional powers, presumably including Israel, which take part in such an attack, Jaafari warned that Tehran would "definitely act to impose control on the Persian Gulf and Strait of Hormuz", after which, he added, "the oil price will rise very considerably, and this is among the factors deterring the enemies." Indeed, even without an attack, continuing tension involving Iran's nuclear program will almost certainly contribute to a continued rise in oil prices to as high as $170 a barrel in the coming weeks and months, the Organization of Petroleum Exporting Countries' president, Chakib Khelil, said during a conference in Madrid. World oil prices have risen by nearly 50% since the beginning of 2008 and nearly doubled over the past year. Analysts have argued over how much of that increase is due to structural factors in the world economy - such as growing demand in middle-income countries and the depreciating dollar that would tend to make the price increase permanent - and how much is related to worries about possible supply disruptions arising from the kind of conflict that has plagued the Niger Delta region in Nigeria, terrorist attacks by al-Qaeda in the Gulf, economic or other sanctions against key oil-producers, or war. The latter risk factors, according to some analysts in Washington, could account for as much as $50 of the total current price, although most believe that the figure is about half that. How much is due to the uncertainty about Iran is also a matter of considerable debate. Many point to the unprecedented $11 one-day spike in oil prices - from $128 to $139 a barrel - that took place on June 6 after Israel's Deputy Prime Minister Shaul Mofaz warned that an Israeli attack on Tehran's nuclear facilities was "unavoidable" if international pressure did not succeed in persuading it to freeze its uranium-enrichment program. While that incident offered the most spectacular suggestion of a relationship between threats against Iran and the price of oil, most analysts believe the effect is somewhat more modest, albeit still quite real. "I don't think it would be unreasonable to say it could be a few dollars [out of the current $140 a barrel]," Paul Saunders, an energy expert who directs the Nixon Center here, told Inter Press Service (IPS). And in congressional testimony last week, Daniel Yergin, a long-time analyst and historian of the oil industry, observed, "You see the Iranians make a ... bellicose statement, and you see the price of oil go up $5 or $7." That is not a new pattern, according to Klare, who said the possibility of a $100-a-barrel price first loomed nearly two years ago amid speculation during the July-August war between Israel and Hezbollah that the conflict could spread to Iran. At that time, the price hovered around $75 a barrel before falling back to just over $50 in early 2007, its lowest point in the past 18 months. Even though the price retreated after Mofaz's remarks, events of the past 10 days have helped drive up the price to historic levels. These include the publication of a front-page New York Times article about a massive Israeli air exercise that purportedly simulated an attack on Iran, and a New Yorker article by investigative journalist Seymour Hersh about a $400-million covert action program directed against Tehran; and public warnings by US hawks close to Cheney's office that either the Israelis or the US would attack Iran between the November elections and the inaugural of a new president in January 2009; as well as Jaafari's weekend remarks. Klare believes that the oil markets believe "there's at least a 50% chance that the US and/or Israel will attack Iran before Bush leaves office and that Iran will retaliate [in ways] ... that would push oil prices to $200 a barrel and above", which is why speculators are buying oil futures now at $140 and even $150 a barrel. "The run-up in the price today will only encourage more speculators to get into the act, unless the administration makes clear it has no intention of attacking Iran and will force Israel to make a similar declaration, neither of which is likely to occur," he told IPS. Meanwhile, the voting public is clearly worried about where oil prices are going. Seven out of 10 people told a Los Angeles Times/Bloomberg poll last week that their families had suffered "financial hardship" as a result of the price increases, and more than eight in 10 blamed the administration for "not [having] done enough" to ease the impact. According to a Pew Research Centre poll taken earlier in June, three of four voters believe gas prices will be "very important" in deciding who to vote for - a larger percentage than those who cite terrorism or the Iraq war. By margins of nearly 20%, those same voters said they had more confidence in Democrats and Senator Barack Obama than they did in Republicans and Senator John McCain to deal with the issue. That's one reason why most analysts rate the chances of an attack by either country before the election as quite low. Others accept Jaafari's logic that the likely impact on oil prices before or after the elections makes an attack improbable. "I think one of the things that makes [an attack] a lot less likely is what it will actually do to the oil price," said the Nixon Centre's Saunders. Jim Lobe's blog on US foreign policy, and particularly the neo-conservative influence in the Bush administration, can be read at http://www.ips.org/blog/jimlobe/. (Inter Press Service)