Iran's oil gambit - and potential affront to the US
The Iranian government's plans to create an oil exchange fit into a strategy of weakening US economic hegemony.
Is the biggest threat Iran poses to the United States really its nuclear ambitions - or is it petropolitics?Skip to next paragraph
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Last month the Iranian government quietly reaffirmed plans to create by next year a euro-denominated exchange in oil, natural gas, and other petroleum products. If successful, such an exchange could start to lap at the walls of the two existing oil exchanges - London's International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX) - both owned by American companies.
If the billions of dollars in oil sales ever got going in euros, experts say, that could dry up the demand for dollars that the heavily indebted US economy depends on, and it could mean big trouble for the US economy. It's enough to make the Great Satan-loathing visionaries behind the Iranian regime salivate. The chances of success, however, seem quite remote - at least in the short term.
"At this point, it's really to poke their finger in the eye of the US," says Jean-François Seznec of Columbia University's Middle East Institute in New York. "Certainly part of their idea is to weaken American economic hegemony." But whether it's the right tactic to achieve that strategy, he suggests, is questionable.
Still, as much as a pipe dream as the plan may be, it suggests the lengths to which Iranian leaders could go to weaken Western (and largely American) controls on the international economy, analysts say. It also hints at the integrated thinking that backs up the Iranian government's vision.
"It's part of a very intelligent, creative Iranian strategy - to go on the offense in every way possible and mobilize other actors against the US," says George Perkovich, an Iran expert at the Carnegie Endowment for International Peace in Washington.
Indeed, the exchange proposal is not the only evidence of Tehran's geopolitical plottings. Experts note that Iran has approved huge energy deals with both India and China - deals that not only cement Iran as an energy power, but also could create powerful friends for Tehran's ambitions. Iran signed an agreement this year to provide India with liquefied natural gas over a 25-year period and signed a similar agreement last year to supply China with natural gas over a 30-year period. Both countries are in a deal to invest in and develop Iran's Yadaravan oil field - the kind of investment that US oil companies are prohibited from making because of US sanctions - while Iran presses to build a major pipeline through Pakistan to India. "Iran is definitely looking East, rather than West," says Mr. Seznec, "and that will matter."
Iran continues its geopolitical play even as pressure against it mounts over its nuclear program. With international meetings planned next month to address the nuclear issue, new accusations are being made that claim to shed new light on a connection between Iran's nuclear program and its military.
At a Washington press conference last week, Iranian regime critic Alireza Jafarzadeh presented information claiming that Iran has used "reverse engineering" to deconstruct a Ukrainian missile it acquired in 2001 to build its own long-range missile. The new missile could be fitted with a nuclear warhead, Mr. Jafarzadeh claimed, although he said he does not have evidence that Iran is anywhere near possession of a nuclear warhead. Jafarzadeh also presented information purporting to substantiate links between the nuclear network of Pakistani nuclear engineer A.Q. Khan and the Iranian military, specifically the Revolutionary Guards.