{"id":17009,"date":"2012-01-23T12:00:38","date_gmt":"2012-01-23T12:00:38","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=17009"},"modified":"2012-01-18T00:57:00","modified_gmt":"2012-01-18T00:57:00","slug":"the-myth-of-isolated-iran-following-the-money-in-the-iran-crisis","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2012\/01\/the-myth-of-isolated-iran-following-the-money-in-the-iran-crisis\/","title":{"rendered":"The Myth of \u201cIsolated\u201d Iran: Following the Money in the Iran Crisis"},"content":{"rendered":"

Let’s start with red lines. Here it is, Washington\u2019s ultimate red line, straight from<\/a> the lion\u2019s mouth.\u00a0 Only last week Secretary of Defense Leon Panetta said of the Iranians, \u201cAre they trying to develop a nuclear weapon? No. But we know that they’re trying to develop a nuclear capability. And that’s what concerns us. And our red line to Iran is do not develop a nuclear weapon. That’s a red line for us.\u201d<\/p>\n

How strange, the way those red lines continue to retreat.\u00a0 Once upon a time, the red line for Washington was \u201cenrichment\u201d of uranium. Now, it\u2019s evidently an actual nuclear weapon that can be brandished. Keep in mind that, since 2005, Iranian Supreme Leader Ayatollah Khamenei has stressed<\/a> that his country is not seeking to build a nuclear weapon. The most recent National Intelligence Estimate<\/a> on Iran from the U.S. Intelligence Community has similarly stressed that Iran is not, in fact, developing a nuclear weapon (as opposed to the breakout capacity to build one someday).<\/p>\n

What if, however, there is no \u201cred line,\u201d but something completely different? Call it the petrodollar line.<\/p>\n

Banking on Sanctions?<\/strong><\/p>\n

Let\u2019s start here: In December 2011, impervious to dire consequences for the global economy, the U.S. Congress — under all the usual pressures from the Israel lobby (not that it needs them) — foisted a mandatory sanctions package on the Obama administration (100 to 0 in the Senate and with only 12<\/a> \u201cno\u201d votes in the House). Starting in June, the U.S. will have to sanction any third-country banks and companies dealing with Iran\u2019s Central Bank, which is meant to cripple that country\u2019s oil sales.\u00a0 (Congress did allow for some \u201cexemptions.\u201d)<\/p>\n

The ultimate target? Regime change — what else? — in Tehran. The proverbial anonymous U.S. official admitted as much in the Washington Post<\/em>, and that paper printed the comment.\u00a0 (\u201cThe goal of the U.S. and other sanctions against Iran is regime collapse, a senior U.S. intelligence official said, offering the clearest indication yet that the Obama administration is at least as intent on unseating Iran\u2019s government as it is on engaging with it.\u201d) <\/strong>But oops! The newspaper then had to revise the passage<\/a> to eliminate that embarrassingly on-target quote. Undoubtedly, this \u201cred line\u201d came too close to the truth for comfort.<\/p>\n

Former chairman of the Joint Chiefs of Staff Admiral Mike Mullen believed that only a monster shock-and-awe-style event, totally humiliating the leadership in Tehran, would lead to genuine regime change — and he was hardly alone. Advocates of actions ranging from air strikes to invasion (whether by the U.S., Israel, or some combination of the two) have been legion in neocon Washington.\u00a0 (See, for instance, the Brookings Institution\u2019s 2009 report Which Path to Persia<\/em><\/a>.)<\/p>\n

Yet anyone remotely familiar with Iran knows that such an attack would rally the population behind Khamenei and the Revolutionary Guards.\u00a0 In those circumstances, the deep aversion of many Iranians to the military dictatorship of the mullahtariat would matter little.<\/p>\n

Besides, even the Iranian opposition supports a peaceful nuclear program.\u00a0 It\u2019s a matter of national pride.<\/p>\n

Iranian intellectuals, far more familiar with Persian smoke and mirrors than ideologues in Washington, totally debunk<\/a> any war scenarios.\u00a0 They stress that the Tehran regime, adept in the arts of Persian shadow play, has no intention of provoking an attack that could lead to its obliteration. On their part, whether correctly or not, Tehran strategists assume that Washington will prove unable to launch yet one more war in the Greater Middle East, especially one that could lead to staggering collateral damage for the world economy.<\/p>\n

In the meantime, Washington\u2019s expectations that a harsh sanctions regime might make the Iranians give ground, if not go down, may prove to be a chimera. \u00a0Washington spin has been focused on the supposedly disastrous mega-devaluation<\/a> of the Iranian currency, the rial, in the face of the new sanctions. Unfortunately for the fans of Iranian economic collapse, Professor Djavad Salehi-Isfahani has laid out<\/a> in elaborate detail the long-term nature of this process, which Iranian economists have more than welcomed.\u00a0 After all, it will boost Iran\u2019s non-oil exports and help local industry in competition with cheap Chinese imports. In sum: a devalued rial stands a reasonable chance of actually reducing unemployment<\/a> in Iran.<\/p>\n

More Connected Than Google<\/strong><\/p>\n

Though few in the U.S. have noticed, Iran is not exactly \u201cisolated,\u201d though Washington might wish it.\u00a0 Pakistani Prime Minister Yusuf Gilani has become a frequent flyer<\/a> to Tehran. And he\u2019s a Johnny-come-lately compared to Russia\u2019s national security chief Nikolai Patrushev, who only recently warned the Israelis not to push<\/a> the U.S. to attack Iran. Add in as well U.S. ally and Afghan President Hamid Karzai.\u00a0 At a Loya Jirga (grand council) in late 2011, in front of 2,000 tribal leaders, he stressed that Kabul was planning to get even closer to Tehran.<\/p>\n

On that crucial Eurasian chessboard, Pipelineistan<\/a>, the Iran-Pakistan (IP) natural gas pipeline — much to Washington\u2019s distress — is now a go<\/a>. Pakistan badly needs energy and its leadership has clearly decided that it\u2019s unwilling to wait forever and a day for Washington\u2019s eternal pet project<\/a> — the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline — to traverse Talibanistan.<\/p>\n

Even Turkish Foreign Minister Ahmet Davutoglu recently visited Tehran, though his country\u2019s relationship with Iran has grown ever edgier.\u00a0 After all, energy overrules threats in the region. NATO member Turkey is already involved in covert ops in Syria, allied with hardcore fundamentalist Sunnis in Iraq, and — in a remarkable volte-face in the wake of the Arab Spring(s) — has traded in an Ankara-Tehran-Damascus axis for an Ankara-Riyadh-Doha one.\u00a0 It is even planning on hosting components of Washington\u2019s long-planned missile defense system, targeted at Iran.<\/p>\n

All this from a country with a Davutoglu-coined foreign policy of \u201czero problems with our neighbors.\u201d\u00a0 Still, the needs of Pipelineistan do set the heart racing.\u00a0 Turkey is desperate for access to Iran\u2019s energy resources, and if Iranian natural gas ever reaches Western Europe — something the Europeans are desperately eager for — Turkey will be the privileged transit country. \u00a0Turkey\u2019s leaders have already signaled<\/a> their rejection of further U.S. sanctions against Iranian oil.<\/p>\n

And speaking of connections, last week there was that spectacular diplomatic coup de th\u00e9\u00e2tre<\/em>, Iranian President Mahmoud Ahmadinejad\u2019s Latin American tour. U.S. right-wingers may harp on a Tehran-Caracas axis of evil — supposedly promoting \u201cterror\u201d across Latin America as a springboard for future attacks on the northern superpower — but back in real life, another kind of truth lurks.\u00a0 All these years later, Washington is still unable to digest the idea that it has lost control over, or even influence in, those two regional powers over which it once exercised unmitigated imperial hegemony.<\/p>\n

Add to this the wall of mistrust that has only solidified since the 1979 Islamic revolution in Iran.\u00a0 Mix in a new, mostly sovereign Latin America pushing for integration not only via leftwing governments in Venezuela, Bolivia, and Ecuador but through regional powers Brazil and Argentina. Stir and you get photo ops like Ahmadinejad and Venezuelan President Hugo Chavez saluting Nicaraguan President Daniel Ortega.<\/p>\n

Washington continues to push a vision of a world from which Iran has been radically disconnected.\u00a0 State Department spokesperson Victoria Nuland is typical in saying recently, \u201cIran can remain in international isolation.\u201d\u00a0 As it happens, though, she needs to get her facts straight.<\/p>\n

\u201cIsolated\u201d Iran has $4 billion in joint projects with Venezuela including, crucially, a bank (as with Ecuador, it has dozens of planned projects from building power plants to, once again, banking). That has led the Israel-first crowd in Washington to vociferously demand that sanctions be slapped on Venezuela.\u00a0 Only problem: how would the U.S. pay for its crucial Venezuelan oil imports then?<\/p>\n

Much was made in the U.S. press of the fact that Ahmadinejad did not visit Brazil on this jaunt through Latin America, but diplomatically Tehran and Brasilia remain in sync. When it comes to the nuclear dossier in particular, Brazil\u2019s history leaves its leaders sympathetic.\u00a0 After all, that country developed — and then dropped — a nuclear weapons program. In May 2010, Brazil and Turkey brokered a uranium-swap agreement for Iran that might have cleared the decks on the U.S.-Iranian nuclear imbroglio.\u00a0 It was, however, immediately sabotaged<\/a> by Washington. A key member of the BRICS, the club of top emerging economies, Brasilia is completely opposed to the U.S. sanctions\/embargo strategy.<\/p>\n

So Iran may be \u201cisolated\u201d from the United States and Western Europe, but from the BRICS to NAM (the 120 member countries of the Non-Aligned Movement), it has the majority of the global South on its side.\u00a0 And then, of course, there are those staunch Washington allies, Japan and South Korea, now pleading for exemptions from the coming boycott\/embargo of Iran\u2019s Central Bank.<\/p>\n

No wonder, because these unilateral U.S. sanctions are also aimed at Asia.\u00a0 After all, China, India, Japan, and South Korea, together, buy no less than 62% of Iran\u2019s oil exports.<\/p>\n

With trademark Asian politesse, Japan\u2019s Finance Minister Jun Azumi let Treasury Secretary Timothy Geithner know just what a problem Washington is creating for Tokyo, which relies on<\/a> Iran for 10% of its oil needs.\u00a0 It is pledging<\/a> to at least modestly \u201creduce\u201d that share \u201cas soon as possible\u201d in order to get a Washington exemption from those sanctions, but don\u2019t hold your breath. South Korea has already announced that it will buy 10% of its oil needs from Iran in 2012.<\/p>\n

Silk Road Redux<\/strong><\/p>\n

Most important of all, \u201cisolated\u201d Iran happens to be a supreme matter of national security for China, which has already rejected<\/a> the latest Washington sanctions without a blink<\/a>. Westerners seem to forget that the Middle Kingdom and Persia have been doing business for almost two millennia. (Does \u201cSilk Road\u201d ring a bell?)<\/p>\n

The Chinese have already clinched a juicy deal<\/a> for the development of Iran\u2019s largest oil field, Yadavaran. There\u2019s 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% of China\u2019s oil and natural gas. It is now more crucial<\/a> to China, energy-wise, than the House of Saud is to the U.S., which imports 11% of its oil from Saudi Arabia.<\/p>\n

In fact, China may be the true winner<\/a> from Washington\u2019s 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.\u00a0 At this moment, in fact, the two countries are in the middle of a complex negotiation<\/a> on the pricing of Iranian oil, and the Chinese have actually been ratcheting up the pressure by slightly cutting back on energy purchases.\u00a0 But all this should be concluded by March, at least two months before the latest round of U.S. 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<\/a>, right after Saudi Arabia and Angola.<\/p>\n

As for other effects of the new sanctions on China, don\u2019t count on them. \u00a0Chinese businesses in Iran are building cars, fiber optics networks, and expanding the Tehran subway. Two-way trade is at $30 billion now and expected to hit $50 billion in 2015.\u00a0 Chinese businesses will find a way around the banking problems the new sanctions impose.<\/p>\n

Russia is, of course, another key supporter of \u201cisolated\u201d Iran.\u00a0 It has opposed stronger sanctions either via the U.N. or through the Washington-approved package<\/a> that targets Iran\u2019s Central Bank. In fact, it favors a rollback of the existing U.N. sanctions and has also been at work on an alternative plan<\/a> that could, at least theoretically, lead to a face-saving nuclear deal for everyone.<\/p>\n

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.<\/p>\n

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.\u00a0 In typical fashion, they have meekly followed Washington\u2019s lead in implementing an Iranian oil embargo. As a senior EU official told<\/a> 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.<\/p>\n

Meanwhile, a team of International Atomic Energy Agency inspectors has just visited<\/a> Iran. \u00a0The IAEA is supervising all things nuclear in Iran, including its new uranium-enrichment plant<\/a> at Fordow, near the holy city of Qom, with full production starting in June. The IAEA is positive: no bomb-making is involved. \u00a0Nonetheless, Washington (and the Israelis) continue to act as though it\u2019s only a matter of time — and not much of it at that.<\/p>\n

Follow the Money<\/strong><\/p>\n

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> — a similar move to ones already made in its trade with China and Japan.\u00a0 As for India, an economic powerhouse in the neighborhood, its leaders also refuse<\/a> 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.\u00a0 As for Iran and China, all new trade and joint investments will be settled in yuan and rial.<\/p>\n

Translation, if any was needed: in the near future, with the Europeans out of the mix, virtually none of Iran\u2019s oil will be traded in dollars.<\/p>\n

Moreover, three BRICS members (Russia, India, and China) allied with Iran are major holders (and producers) of gold. Their complex trade ties won\u2019t be affected by the whims of a U.S. Congress. \u00a0In fact, when the developing world looks at the profound crisis<\/a> in the Atlanticist West, what they see is massive U.S. debt, the Fed printing money as if there\u2019s no tomorrow, lots of \u201cquantitative easing,\u201d and of course the Eurozone shaking to its very foundations.<\/p>\n

Follow the money. Leave aside, for the moment, the new sanctions on Iran\u2019s Central Bank that will go into effect months from now, ignore Iranian threats to close the Strait of Hormuz (especially unlikely given that it\u2019s 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.<\/p>\n

It\u2019s been spearheaded by Iran and it\u2019s bound to translate into an anxious Washington, facing down not only a regional power, but its major strategic competitors China and Russia.\u00a0 No wonder all those carriers are heading<\/a> for the Persian Gulf right now, though it\u2019s the strangest of showdowns — a case of military power being deployed against economic power.<\/p>\n

In this context, it\u2019s worth remembering that in September 2000 Saddam Hussein abandoned the petrodollar<\/a> as the currency of payment for Iraq\u2019s oil, and moved to the euro. In March 2003, Iraq was invaded and the inevitable regime change occurred. Libya\u2019s Muammar Gaddafi proposed a gold dinar both as Africa\u2019s common currency and as the currency of payment for his country\u2019s energy resources. Another intervention and another regime change followed.<\/p>\n

Washington\/NATO\/Tel Aviv, however, offers a different narrative.\u00a0 Iran\u2019s \u201cthreats\u201d are at the heart of the present crisis, even if these are, in fact, that country\u2019s reaction to non-stop US\/Israeli covert war<\/a> and now, of course, economic war as well.\u00a0 It\u2019s those \u201cthreats,\u201d so the story goes, that are leading to rising oil prices and so fueling the current recession, rather than Wall Street\u2019s casino capitalism or massive U.S. and European debts. The cream of the 1% has nothing against high oil prices, not as long as Iran\u2019s around to be the fall guy for popular anger.<\/p>\n

As energy expert Michael Klare pointed out<\/a> recently, we are now in a new geo-energy era certain to be extremely turbulent in the Persian Gulf and elsewhere.\u00a0 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 U.S. Treasury bonds.<\/p>\n

Of course, the U.S. 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 U.S. satrapy. Their decades-old promise to use only the petrodollar translates into them being an appendage of Pentagon power projection across the Middle East.\u00a0 Centcom, after all, is based in Qatar; the U.S. 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 U.S. hegemony.<\/p>\n

If this were an economic rewrite of Edgar Allen Poe\u2019s story, \u201cThe Pit and the Pendulum,\u201d Iran would be but one cog in an infernal machine slowly shredding the dollar as the world\u2019s reserve currency. Still, it\u2019s the cog that Washington is now focused on.\u00a0 They have regime change on the brain.\u00a0 All that\u2019s 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).<\/p>\n

Remember Operation Northwoods<\/a>, that 1962 plan drafted by the Joint Chiefs of Staff to stage terror operations in the U.S. and blame them on Fidel Castro\u2019s Cuba.\u00a0 (President Kennedy shot the idea down.)\u00a0 Or recall the Gulf of Tonkin incident in 1964, used by President Lyndon Johnson as a justification for widening the Vietnam War.\u00a0 The U.S. accused North Vietnamese torpedo boats of unprovoked attacks on U.S. ships.\u00a0 Later, it became clear that one of the attacks had never even happened and the president had lied about it.<\/p>\n

It\u2019s 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). \u00a0Consider as well the new U.S. military strategy just unveiled by President Obama in which the focus of Washington\u2019s 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<\/a> the U.S. Navy.<\/p>\n

So yes, this larger-than-life psychodrama we call \u201cIran\u201d may turn out to be as much about China and the U.S. dollar as it is about the politics of the Persian Gulf or Iran\u2019s nonexistent bomb.\u00a0 The question is: What rough beast, its hour come round at last, slouches towards Beijing to be born?<\/p>\n

______________________<\/p>\n

Pepe Escobar is the roving correspondent for <\/em>Asia Times<\/a>, a <\/em>TomDispatch regular<\/em><\/a>, and a political analyst for al-Jazeera and RT. His latest book is <\/em>Obama Does Globalistan<\/a> (Nimble Books, 2009). <\/em><\/p>\n

Copyright 2012 Pepe Escobar<\/em><\/p>\n

Go to Original \u2013 tomdispatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

So Iran may be \u201cisolated\u201d from the United States and Western Europe, but from the BRICS to NAM (the 120 member countries of the Non-Aligned Movement), it has the majority of the global South on its side. And then, of course, there are those staunch Washington allies, Japan and South Korea, now pleading for exemptions from the coming boycott\/embargo of Iran\u2019s Central Bank. No wonder, because these unilateral U.S. sanctions are also aimed at Asia. After all, China, India, Japan, and South Korea, together, buy no less than 62% of Iran\u2019s oil exports.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48],"tags":[],"class_list":["post-17009","post","type-post","status-publish","format-standard","hentry","category-in-focus"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/17009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=17009"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/17009\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=17009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=17009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=17009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}