EU Oil Embargo & Iran
Thursday, January 05, 2012
EU Diplomat: 'EU Has Agreed In Principle To Embargo Iranian Oil'
Official Decision Expected To Be Adopted On January 30th At Foreign Ministers Session In Brussels
IsraCast Assessment: EU's Oil Embargo Could Impose Crippling Sanctions On Iran Which Has Threatened To Retaliate By Blocking Straits OF Hormuz
Has the European Union decided to call Iran's bluff? That is the implication of an EU diplomat's dramatic disclosure: 'The principle of an oil embargo is agreed, it is not being debated any more'. The EU's foreign ministers are slated to vote for the embargo at their next meeting in Brussels on January 30th. Analyst David Essing is of the view the EU leak is aimed at exerting further pressure on Iran to halt its nuclear weapons program before a possible military confrontation in the Straits of Hormuz.
The EU has decided to lower the oil boom on Iran, despite Tehran's threat to close the strategic Straits of Hormuz. According to an EU diplomat, the EU contacts have reached 'a decision in principle' to impose an embargo on Iranian oil. The U.S., Britain and Canada are already enforcing such a boycott after Tehran's refusal to halt its nuclear weapons project. The EU countries are following America's lead in calling Iran's bluff to prevent tankers from passing through the narrow straits at th entrance to the Gulf. During the Iranian Navy's recent exercise in the area, Naval Commander Habibollah Sayyari warned: 'Closing the Straits of Hormuz for Iran's armed forces is really easy - it will be easier than drinking a glass of water'. Moreover, Iran's Commander - in-Chief, Gen. Ayataollah Salehi, has warned the U.S. not to return its aircraft carrier John Stennis to 'the Persian Gulf region'. And he added the Republic of Iran would not repeat its warning.
It was undoubtedly the most blaring Iranian sabre-rattling to date and it was summarily rejected by the U.S. Fifth Fleet - the Stennis had sailed from the area on schedule and would return as planned. Nor would the U.S. tolerate any interference in the freedom of passage through the Straits of Hormuz, an international waterway. So the stage is being set for a showdown in what the Iranians stress is the Persian Gulf. Or is it?
If the EU does boycott Iranian oil it would be a major blow to Iran's economy; oil exports provide an estimated 80% of the country's foreign currency. Every day, the EU buys 450,000 barrels of Iranian crude and is its second largest customer. The EU's shortfall of 30% could be made up by Saudi Arabia, Iran's arch enemy in the Gulf although the price of oil is expected to soar in light of the mounting tension. It is highly unlikely that Iran's major customers in Asia - China, India and Japan would suddenly want to increase their purchases. Therefore Tehran has been trying to bluff its way out of the impending crisis.
At present, the Iranian economy is in a nose-dive with annual inflation running at over 30%, 20% unemployment and its rate of currency exchange is plummeting daily. So what's going on in Iran's corridors of power? Some experts believe that after the recent IAEA report that finally exposed Iran's nuclear weapons ambitions, Tehran is now trying to rally domestic support to the threat of an imminent foreign danger. But although the Iranian leadership may be split by a power struggle between President Ahmadinejad and Supreme spiritual leader Khamenei, they agree on one thing - the nuclear weapons program must continue. They believe that once Iran acquires the bomb it will be immune from foreign threats and there will be no stopping its grand design for regional hegemony and control of the Gulf's oil supplies. And although Iran's statecraft may appear erratic lately it has a kind of logic.
On one hand, the Iranians announce impressive achievements such as producing uranium fuel rods and launching medium range missiles. This creates the impression that it's futile for the U.S. and the international community to try and stop Iran. At the same time, Tehran again agrees to another round of nuclear talks to buy more time. Then to give everyone the jitters it raises the spectre of war in the Straits of Hormuz and a cutoff of Gulf oil. However the Iranians may be miscalculating when they come to the Obama administration. Even if it is an election year, they may err if they think President Obama will back down. An incumbent U.S. President can lose an election by not reacting with sufficient force, if America's vital interests are threatened in the Gulf. It is a well known axiom that a politician's top priority is to get reelected. This was behind Defense Secretary Leon Panetta's strong statement recently that implied the U.S. would launch military operations against Iran to stop its acquiring nuclear weapons. Gen Martin Dempsey, Chairman of the U.S. Joint Chiefs of Staff, followed through by warning that America has now developed military options to cope with Iran.
In this vein, Israel's Defense Minister Ehud Barak has said: 'The U.S. and Israel today have nearly an identical intelligence picture of Iran'. In a briefing to the Knesset Foreign Affairs & Defense Committee, Barak saw the Arab Spring impacting on the Iranian regime. Iran was concerned about the events in Syria and feared losing its strategic link with Damascus as well as the possible fallout on Iran's own domestic arena. The fall of the Assad regime could spark a revival of the protest movement in Tehran which might then spiral out of control. Nevertheless Iran's nuclear weapons program was advancing in spite of the difficulties such as sanctions, its domestic economic crisis and mounting external pressures, such as the recent IAEA report which concluded that Iran was working on nuclear weapons. But to use Churchill's term, to 'jaw-jaw' is a favorite tactic of Iran whenever the pressure builds up; they've been doing it for decades.
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