Iran and the Recurring Bad Dream

Maybe U.S. energy independence isn’t such a great thing after all. Some years ago, when the American political class was whooping it up for war with China, what stopped the push were the American commercial interests who essentially said, “What, are you crazy? This is bad for business. We need China, and China needs us. You can’t do business during a shooting war.”

In contrast, an isolated Iran is a dispensable Iran. And an energy-independent U.S. is a warlike U.S., presuming to tell nations such as Japan, Turkey and Spain where they can buy their own from, at what quantities, and under what terms. How does the U.S. get away with this? Take a look at the U.S. military bases around the world and see. The U.S. may be an empire in decline but until that decline turns to fall, we are going to continue to see this repeat performance of sanctions followed by war.

Between Israel’s daily threats against Iran and Obama’s absurd claims that wind and sun can easily replace internal combustion, we have to rely on the Turkish Prime Minister Recep Tayyip Erdogan to make any sense in this world. He said that an Israeli attack on Iran would be disastrous for the entire region. It is certain to embroil the U.S. in a war that would be equally disastrous for the U.S. as a whole (but probably beneficial in some way for the U.S. government).

If there was ever a clear exhibit that government learns nothing from its past — nothing from its long record of fiascos, waste, destruction, and pointless killing — the pressure against Iran now mounting day by day is it. This repeat performance is going to turn out as bad or worse than the Iraqi mess.

Americans who have paid no attention to the saber rattling against Iran shouldn’t feel so bad. It’s like watching old reruns on television. It was interesting the first time, perhaps, but you can watch a second time only if there is nothing else on. Or perhaps America’s leaders are cynically counting on short memories: Who cares about the past?

The plotline seems the same as Iraq (and only one letter difference). The truth is that most Americans can’t tell Iran from Iraq in any case. All the elements are there. Iran is headed by a guy the U.S. doesn’t like. It is said, without evidence, that Iran “may” be “researching” nuclear technology, which Iran denies has anything to do with “weapons of mass destruction,” but the U.S. knows better than to believe this line.

Step one is the path of sanctions. Step two is to observe that the sanctions didn’t work to turn foreign leaders into compliant lambs. Step three is to make daily crazy claims that can be neither confirmed nor credibly refuted. Finally, another war.

The U.S. doesn’t buy any Iranian oil, but the U.S. is leading a global campaign to stop anyone else from doing so. Iran has the fourth-largest oil reserves in the world. They export to China, which takes 22% of Iran’s crude oil exports. Japan (14%) and India (13%) are next. Then the European Union imports 18% of Iran’s total exports, and that’s mainly Italy and Spain. South Korea (10%) and Turkey (7%) are also sizeable importers.

Of all these countries, only China has not yet bowed to U.S. pressure to cut and curb imports of Iranian oil. Meanwhile, Iran’s oil business has been growing like crazy in the last 10 years, increasing by nine times the dollar value from 2000 to today. It is now the fourth-largest exporter behind Saudi Arabia, Russia and the U.S. And there’s vast untapped reserves in Iran; the country is well positioned to move up the rankings in the years ahead.

Meanwhile, despite all of Obama’s latest talk about the U.S. moving away from U.S. oil consumption and production, it is very obvious, at this point, that the U.S. in an a better position to achieve the great dream of “energy independence” than at any point since the 1970s. As Robert Samuelson writes, “in 2011, oil imports fell to 45% of consumption, the sixth year of decline.” Moreover, if you consider total domestic resources, the “proved reserves” are only a drop in the bucket.

What does it all mean? It means that there are perceived low risks for the U.S. in badgering Iran, and even going down the path to war. It could be knocking out a big competitor to the U.S.’ regime friends in the region, such as Kuwait and Saudi Arabia, and have no serious consequence for the U.S. (beyond risking property and lives, but since when has the government cared about that?).

The White House has said as much: “There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their import of Iranian oil,” said a White House press release. “In fact, many purchasers of Iranian crude oil have already reduced their purchases or announced they are in productive discussions with alternative suppliers.”

For this reason, the U.S. keeps tightening the noose more and more. It’s like the 1990s with Iraq. Same damn thing. Incredible. And all based on a public rationale that is completely unproven, namely that Iran is secretly developing a nuclear program toward developing WMDs, even though there is absolutely no evidence at all that this is the case.

Just as with Iraq, the official rationale for the belligerence has nothing to do with the actual driving dynamics, which all come down to the matter of oil production, supply, trade and competition. We are supposed to believe that the U.S. is only making the world a safer place by batting down crazy world leaders who want nuclear weapons; the reality is that the U.S is fomenting war solely to advance what it sees as the economic interests of the government, its favored producers and its regime friends around the world.

Thomas Jefferson summed up the best case against all this frenzied pressure against Iran: “The state of peace is that which most improves the manners and morals, the prosperity and happiness of mankind.” Sanctions and war do exactly the opposite.


Jeffrey Tucker

The Daily Reckoning