President Obama yesterday rightly slammed opposition to the US-Iran deal that was reached over the weekend. The critics, unfortunately given far too much time by the media, are in a frenzy to stop the deal. They’re using extreme and overblown rhetoric and throwing everything that they can into the mix. It’s Munich! Iranian suitcase bombs will be blowing up in New York! We can’t negotiate with terrorists! What about human rights?! And so on.
But the accord is a done deal, and its effects are already being felt. The Iranian currency, the rial, is strengthening, and oil prices are falling. The Europeans are already talking about meeting in January to ease sanctions on Iran further. And for the rest of the world it’s sinking in: for the first time in thirty-four years, there’s a chance that the United States and Iran might do more than strike a limited deal to wind down Iran’s nuclear program. It’s possible that the two countries could reach a détente, and work together on problems from Syria and Afghanistan to terrorism, world energy problems, and—believe it not!—even Palestine.
Of course, it’s early—but there’s no going back now. The US-Iran accord has the potential to be a transformational event. Let’s count the ways.
First, it can vastly change the world oil market, and that’s a big part of the reason why Saudi Arabia is so worried. Iran’s oil output, at about 1 million barrels a day now, could almost instantly rise to 2.5 million b/d, and from there it could go up significantly, to as much as 4 million b/d or more. Already, world oil companies are quietly jockeying to take advantage of an opening in Iran, which needs hundreds of billions of dollars in investments to rebuild its production facilities, pipelines, export facilities and refineries. That’ll be good news for China, India, Japan and other consumers in East Asia, and along with rising output in recovering Iraq and Libya, it’ll add a lot to world production. Prices will fall, and among OPEC countries it’s Saudi Arabia that will have to absorb the shock. Saudi Arabia will be faced with the choice of getting far less for its exports, per barrel, or cutting back on its own production to keep prices stable. So, if you thought that Saudi opposition to the Iran deal was only about the Sunni-Shiite struggle for power in the Middle East, well, there’s more to it.
The accord is transformational in other ways, too. It changes the ground rules of the whole region. If Iran winds down its nuclear program, it will reap vast rewards in terms of expanded trade, investment and business with the rest of the world. That will help moderates in Iran—including the business class, led nominally by Ayatollah Ali Akbar Hashemi Rafsanjani, the billionaire mullah and former president—to gain momentum over the remaining ideological radicals who seek confrontation and who are still animated by the extreme-Shiite ideology that was put forward by the founder of the Islamic Republic, Ayatollah Ruhollah Khomeini. Every dollar, mark and yen that flows into Iran will bolster Iranian moderation and help Iran back away from its less-than-reasoned confrontational stance. So in conflicts in Syria, Iraq, Palestine, Bahrain, Afghanistan and elsewhere, where Iran has a role to play, Tehran could become a force for a peaceful, negotiated solution in partnership with the United States and the rest of the world. It’s already partially evident in Syria, where Iran could play an important role in the upcoming peace conference in January.