The Myth of an 'Isolated' Iran
Silk Road Redux
Most important of all, “isolated” Iran happens to be a supreme matter of national security for China, which has already rejected the latest Washington sanctions without a blink. Westerners seem to forget that the Middle Kingdom and Persia have been doing business for almost two millennia. (Does “Silk Road” ring a bell?)
The Chinese have already clinched a juicy deal for the development of Iran’s largest oil field, Yadavaran. There’s also the matter of the delivery of Caspian Sea oil from Iran through a pipeline stretching from Kazakhstan to Western China. In fact, Iran already supplies no less than 15 percent of China’s oil and natural gas. It is now more crucial to China, energy-wise, than the House of Saud is to the United States, which imports 11 percent of its oil from Saudi Arabia.
In fact, China may be the true winner from Washington’s new sanctions, because it is likely to get its oil and gas at a lower price as the Iranians grow ever more dependent on the China market. At this moment, in fact, the two countries are in the middle of a complex negotiation on the pricing of Iranian oil, and the Chinese have actually been ratcheting up the pressure by slightly cutting back on energy purchases. But all this should be concluded by March, at least two months before the latest round of US sanctions go into effect, according to experts in Beijing. In the end, the Chinese will certainly buy much more Iranian gas than oil, but Iran will still remain its third-biggest oil supplier, right after Saudi Arabia and Angola.
As for other effects of the new sanctions on China, don’t count on them. Chinese businesses in Iran are building cars and fiber optics networks and expanding the Tehran subway. Two-way trade is at $30 billion now and expected to hit $50 billion in 2015. Chinese businesses will find a way around the banking problems the new sanctions impose.
Russia is, of course, another key supporter of “isolated” Iran. It has opposed stronger sanctions either via the UN or through the Washington-approved package that targets Iran’s Central Bank. In fact, it favors a rollback of the existing UN sanctions and has also been at work on an alternative plan that could, at least theoretically, lead to a face-saving nuclear deal for everyone.
On the nuclear front, Tehran has expressed a willingness to compromise with Washington along the lines of the plan Brazil and Turkey suggested and Washington deep-sixed in 2010. Since it is now so much clearer that, for Washington—certainly for Congress—the nuclear issue is secondary to regime change, any new negotiations are bound to prove excruciatingly painful.
This is especially true now that the leaders of the European Union have managed to remove themselves from a future negotiating table by shooting themselves in their Ferragamo-clad feet. In typical fashion, they have meekly followed Washington’s lead in implementing an Iranian oil embargo. As a senior EU official told National Iranian American Council President Trita Parsi, and as EU diplomats have assured me in no uncertain terms, they fear this might prove to be the last step short of outright war.
Meanwhile, a team of International Atomic Energy Agency inspectors has just visited Iran. The IAEA is supervising all things nuclear in Iran, including its new uranium-enrichment plant at Fordow, near the holy city of Qom, with full production starting in June. The IAEA is positive: no bomb-making is involved. Nonetheless, Washington (and the Israelis) continue to act as though it’s only a matter of time—and not much of it at that.
Follow the Money
That Iranian isolation theme only gets weaker when one learns that the country is dumping the dollar in its trade with Russia for rials and rubles—a similar move to ones already made in its trade with China and Japan. As for India, an economic powerhouse in the neighborhood, its leaders also refuse to stop buying Iranian oil, a trade that, in the long run, is similarly unlikely to be conducted in dollars. India is already using the yuan with China, as Russia and China have been trading in rubles and yuan for more than a year, as Japan and China are promoting direct trading in yen and yuan. As for Iran and China, all new trade and joint investments will be settled in yuan and rial.
Translation, if any was needed: in the near future, with the Europeans out of the mix, virtually none of Iran’s oil will be traded in dollars.
Moreover, three BRICS members (Russia, India and China) allied with Iran are major holders (and producers) of gold. Their complex trade ties won’t be affected by the whims of a US Congress. In fact, when the developing world looks at the profound crisis in the Atlanticist West, what they see is massive US debt, the Fed printing money as if there’s no tomorrow, lots of “quantitative easing,” and of course the Eurozone shaking to its very foundations.
Follow the money. Leave aside, for the moment, the new sanctions on Iran’s Central Bank that will go into effect months from now, ignore Iranian threats to close the Strait of Hormuz (especially unlikely given that it’s the main way Iran gets its own oil to market), and perhaps one key reason the crisis in the Persian Gulf is mounting involves this move to torpedo the petrodollar as the all-purpose currency of exchange.
It’s been spearheaded by Iran and it’s bound to translate into an anxious Washington, facing down not only a regional power but its major strategic competitors China and Russia. No wonder all those carriers are heading for the Persian Gulf right now, though it’s the strangest of showdowns—a case of military power being deployed against economic power.
In this context, it’s worth remembering that in September 2000 Saddam Hussein abandoned the petrodollar as the currency of payment for Iraq’s oil, and moved to the euro. In March 2003, Iraq was invaded and the inevitable regime change occurred. Libya’s Muammar Qaddafi proposed a gold dinar both as Africa’s common currency and as the currency of payment for his country’s energy resources. Another intervention and another regime change followed.
Washington/NATO/Tel Aviv, however, offers a different narrative. Iran’s “threats” are at the heart of the present crisis, even if these are, in fact, that country’s reaction to non-stop US/Israeli covert war and now, of course, economic war as well. It’s those “threats,” so the story goes, that are leading to rising oil prices and so fueling the current recession, rather than Wall Street’s casino capitalism or massive US and European debts. The cream of the 1 percent has nothing against high oil prices, not as long as Iran’s around to be the fall guy for popular anger.
As energy expert Michael Klare pointed out recently, we are now in a new geo-energy era certain to be extremely turbulent in the Persian Gulf and elsewhere. But consider 2012 the start-up year as well for a possibly massive defection from the dollar as the global currency of choice. As perception is indeed reality, imagine the real world—mostly the global South—doing the necessary math and, little by little, beginning to do business in their own currencies and investing ever less of any surplus in US Treasury bonds.
Of course, the United States can always count on the Gulf Cooperation Council (GCC)—Saudi Arabia, Qatar, Oman, Bahrain, Kuwait and the United Arab Emirates—which I prefer to call the Gulf Counterrevolution Club (just look at their performances during the Arab Spring). For all practical geopolitical purposes, the Gulf monarchies are a US satrapy. Their decades-old promise to use only the petrodollar translates into them being an appendage of Pentagon power projection across the Middle East. Centcom, after all, is based in Qatar; the US Fifth Fleet is stationed in Bahrain. In fact, in the immensely energy-wealthy lands that we could label Greater Pipelineistan—and that the Pentagon used to call "the arc of instability"—extending through Iran all the way to Central Asia, the GCC remains key to a dwindling sense of US hegemony.
If this were an economic rewrite of Edgar Allen Poe’s story “The Pit and the Pendulum,” Iran would be but one cog in an infernal machine slowly shredding the dollar as the world’s reserve currency. Still, it’s the cog that Washington is now focused on. They have regime change on the brain. All that’s needed is a spark to start the fire (in—one hastens to add—all sorts of directions that are bound to catch Washington off guard).
Remember Operation Northwoods, that 1962 plan drafted by the Joint Chiefs of Staff to stage terror operations in the US and blame them on Fidel Castro’s Cuba. (President Kennedy shot the idea down.) Or recall the Gulf of Tonkin incident in 1964, used by President Lyndon Johnson as a justification for widening the Vietnam War. The United States accused North Vietnamese torpedo boats of unprovoked attacks on US ships. Later, it became clear that one of the attacks had never even happened and the president had lied about it.
It’s not at all far-fetched to imagine hardcore Full-Spectrum-Dominance practitioners inside the Pentagon riding a false-flag incident in the Persian Gulf to an attack on Iran (or simply using it to pressure Tehran into a fatal miscalculation). Consider as well the new US military strategy just unveiled by President Obama in which the focus of Washington’s attention is to move from two failed ground wars in the Greater Middle East to the Pacific (and so to China). Iran happens to be right in the middle, in Southwest Asia, with all that oil heading toward an energy-hungry modern Middle Kingdom over waters guarded by the US Navy.
So yes, this larger-than-life psychodrama we call “Iran” may turn out to be as much about China and the US dollar as it is about the politics of the Persian Gulf or Iran’s nonexistent bomb. The question is: What rough beast, its hour come round at last, slouches towards Beijing to be born?