Iran cornered?25.01.2012 | 20:37
The European Union is importing 1/5 of Iran's oil. That is why the European embargo on importing "black gold" from the Islamic Republic expected to take effect on July 1 has already caused a serious blow to the rial exchange rate. Looks like Europeans have decided to support the United States in their intention to overthrow the regime in Iran. This time it is also Japan planning to drive in the last nail in the coffin of Iranian economy. The country of the rising sun wants to reduce oil imports from the Islamic Republic.
The decision taken by Old World yesterday to forego Iranian hydrocarbons is an undoubted achievement of US diplomacy. It is still unclear what it cost to break down the resistance of the countries most dependent on Iran's oil - Spain, Italy, and particularly Greece that received "black gold" from the Islamic Republic at reduced prices. However, considering the economic crisis in Homer's motherland, its needs in energy resources are unlikely to grow higher. Basically, Brussels could promise to support hopes of Greece that its debts to private creditors will be restructured. Athens suggests exchanging short-term bonds due to be paid out soon for more long-term ones with a yield of 3.5% per annum.
Private holders of Greek bonds agree at no less than 4.5%. There is no chance to reach accord right now. Time is running out - because the Greek treasury is empty. Brussels has enough levers of influence on Athens and apparently it has made Greeks so easily obey. Saudi Arabia that wants to dismantle the regime of Iranian mullahs seeking domination, already offers to make up for possible oil deficit for Europeans. Riyadh is ready to grow hydrocarbon exports by 2 mln barrels a day.
Stiffening of the sanctions against Iran directly hits its main ally in the Middle East - Syria. The European Union has already wound up imports of Syrian oil against the background of the civil war though it had little effect on the regime of Bashar al Assad since Syrian oil was sold to Europe by the Islamic Republic (like its own). Presently, this gap in the European embargo is closed for Damask.
Though EU sanctions come into force in half a year, Iran's national currency - rial is already suffering the consequences. And the threat to purchasing power of money is a direct path to escalation of social tension inside the Islamic Republic where the society is already fermenting, particularly youth. Young people are tired of medieval social norms introduced in the country by religious leaders. Yet, Iran's ayatollahs won't step down so easily, as suppression of the rallies after Mahmud Ahmadinedzhad was reelected for the second presidential term showed. That means, possibility of an armed conflict, particularly after US, British and French ships enter the Persian Gulf, has increased drastically with Japan, one of the largest consumers of energy resources, deciding to stop importing "black gold" from Iranian mullahs.
Teheran's primary task to secure political stability inside the country is necessity to find new markets for 30 percent of its oil exports. Naturally, China, number one consumer of Iranian energy resources, can use part of them with recession rates in China being lower than it was expected. Even China's almost limitless appetite for raw materials won't make up for the loss of Europe for Iran. A unique route for sales will inevitably take the prices down (now that Chinese economy is cooling off slowly). The same is true for India. China at least will not leave its ally and for Delhi, whose foreign policy is outside blocs, it make no difference where to import oil from. Yet, this is not true for Korea, another big consumer of Iranian hydrocarbons. Presently American and European diplomats are trying to coerce Seoul into joining to the Western embargo. If it happens, international pressure on Iran's economy will be excessive.
Then the armed conflict is likely to strike not only in the basin of the Arabian sea, but also in Lebanon where Teheran-sponsored Hezbollah is strong. The confrontation in Syria will
rise on a new level. As for the notorious nuclear program of the Islamic Republic, even now, without the arsenal, Iran is dangerous for being able to create a so-called "dirty" bomb (instead of a nuclear one) stuffing warheads of Shahab-3 missiles with radioactive materials. Explosion of such a bomb in the atmosphere might lead to radioactive pollution of large territories. And temptation is strong: Shahab 3 will definitely reach the Saudi kingdom.