Dropping oil prices and Iran’s Nuclear Pursuits
By: Michael D. Evans
Members of OPEC, which supplies more than 40 percent of the world’s crude oil, will meet on September 9th in Vienna, Austria. I believe that if OPEC refuses to decrease production, oil may continue to drop like the proverbial rock. It makes absolutely no sense for OPEC to cut its own economic throat unless the predominately Sunni-controlled cartel has decided to use oil as an economic stealth bomb to collapse the economy of Iran, a non-Arab, Shi’ite state hell-bent on going nuclear.
Quite simply: The oil-rich Persian Gulf Sunni states, i.e. Saudi Arabia, are concerned that Iran, under the leadership of Shi’ite fundamentalist President Mahmoud Ahmadinejad, will turn its sights on its Sunni neighbors once it possesses nuclear weapons. Ahmadinejad has been obsessed with a vision of a world Shi’ite caliphate in which he can become the Nebakanezer of the Gulf. A Persian nuclear umbrella would guarantee a Shi’ite fundamentalist explosion.
Atomic Iran would usher in a nuclear arms race in which the Sunni states would seek to arm themselves against Shi’ite aggression and could foment an apocalypse of global proportions.
The only thing that would prevent such nuclear proliferation in the Middle East would be a bankrupt Iran with no means to pursue its nuclear objectives. This would mirror the Reagan administration’s assault on the Soviet economy during his presidency. The Saudis were as concerned then about the Soviets as they are now about Iran. Reagan was able to induce them, and therefore OPEC, to cooperate with the U.S. in areas of oil production and price controls. In the end, the price of oil dropped, the Soviet economy collapsed, and the break-up of the U.S.S.R. began.
Would that same strategy work against Iran? It seems certain that bombing Iran would only unite and infuriate the Iranian people behind the present regime. It could create a global economic tsunami. Almost certainly, it would guarantee that John McCain’s bid for the presidency would fail. Although crude has dropped in value by more than 25 percent since peaking at $147 per barrel, Iran is now lobbying OPEC to cut production output by 1.5 million barrels per day.
The only thing that might work would be a concerted effort to drain Iran’s coffers of funds designated for nuclear pursuits. Iran simply cannot survive without significant oil profits. Such a move could force regime change. Ahmadinejad is up for reelection in 2009; an economic collapse could end his tenure, halt his nuclear ambitions and forestall a nuclear crisis in the Middle East.
Such a move would hit oil-rich Russia, Persia’s atomic subcontractor, hard in the pocketbook. That would be a delightful thought for John McCain, especially after the incursion in Georgia.
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AI
