News : Economy
- Published: Sunday, 23 September 2018
By Edward Carney
On Friday, Oil Price ran an article whose headline characterized the Iranian regime as saying that it “won’t allow” the Organization of Petroleum Exporting Countries to increase oil production so as to compensate for the loss of Iranian oil to international markets after renewed US sanctions take effect. The article quoted Iranian Oil Minister Bijan Zanganeh as saying that any effort to do so would be a “one-hundred percent political statement, not economic.”
But the article goes on to say that an increase in output by at least some of Iran’s fellow OPEC member states is virtually the only viable reaction to potential shortfalls arising out of the sanctions situation. Member states such as Saudi Arabia and the United Arab Emirates would be joined in this endeavor by non-member states like Russia, which has joined the Saudis in recent years to spearhead an effort to stabilize a volatile petroleum market.
The involvement of non-member states may be a complicating factor for Iran, which wields considerable leverage over OPEC simply by virtue of its status as a member state. The Oil Price article explains that policy decisions by the oil cartel must be unanimous. This speaks to the means by which Iran might follow through on its apparent threat to “not allow” increases. It can prevent OPEC from formalizing such increases simply by blocking a formal plan in meetings of the organization. Yet Oil Price anticipates a de facto increase in output by at least some members anyway, since global markets stand to lose as much as 1.4 million barrels per day of Iranian oil by next year, and “those missing barrels have to be made up elsewhere.”
The prospective impasse on this issue raises the specter of broader conflict among member states, and it remains to be seen how this conflict might play out. But prior statements and actions by the Islamic Republic have pointed to at least two tactics that it might implemented. In the first place, the Washington Post reported this week upon the latest warnings from the cyber security firm FireEye regarding an uptick in Iranian hacking and phishing attacks in advance of the re-imposition of oil-related US sanctions in November.
The report indicates that these efforts have so far been focused on energy firms throughout the Middle East, and FireEye warns that the attempts to gain access to sensitive information and online systems could be a precursor to disruptive attacks in the event that the Iranian regime deems them necessary to its strategic goals. Furthermore, the regime might very well perceive such necessity if its initial warnings about oil output are not heeded. And of course FireEye also emphasizes the potential for cyberterrorism campaigns to look beyond the initial targets and affect Western interests throughout much of the world.
Tehran’s willingness to lash out directly at its “enemies” in the US and Europe is hardly in question. The country’s leading military and paramilitary figures have recently made a habit of boastful remarks regarding their readiness for open conflict and their confidence in the supposed consequences that foreign adversaries would face as a result of attacks on Iranian assets. In fact, Iranian.com published an article on Friday that began with the observation that the regime made “many interesting claims” about its military capabilities this month alone.
Among the most boastful of these claims is that of Brigadier General Hossein Salami, the second-in-command of the Iranian Revolutionary Guard Corps, who said that the US “will be on the losing side” if war ever breaks out between the two countries. Other claims highlighted by the Iranain.com article include the claims that Iran has inspired “resistance” to the US and its allies among other regional countries, that Iran’s domestic weapons industry has improved to the point of warning off Western adversaries and producing a “better” version of the S-300 missile defense system purchased from Russia, and that the United Nations Security Council failed in efforts to halt such development.
Also prominent among Iran’s boastful, militaristic commentary is the claim that has been repeated by a variety of military and political figures including President Hassan Rouhani, that the Islamic Republic would close off the Strait of Hormuz in response to any effort to seriously reducing Iran’s own oil exports. Well over half of the world’s oil supplies pass through the strait, and a successful blockade of it would be deeply disruptive. And although Iran’s claims on this and other points can hardly be taken at face value, the threat was underlined on Friday when the Iranian air force carried out military exercises in the immediate area.
The Associated Press noted that Iranian state media specifically described the war games as a warning to “enemies,” a phrase that is typically used to refer, first and foremost, to the US, the UK, and Israel. The media’s threat of a “stern response” to those enemies is easily connected to the broader Iranian threat against oil exports from fellow OPEC member states, and others. The AP notes that in July, for instance, President Rouhani said the entire region’s oil exports would be threatened if US sanctions were re-imposed on Iran’s oil industry.
The roughly simultaneous military and cyber threats issuing from Iran be motivating further assertive gestures by the White House, which has been pursuing an uncompromising strategy of pressure on the Iranian regime since President Donald Trump took office at the beginning of last year. Trump himself announced earlier in September that the US would be chairing a meeting of the UN Security Council that would focus on Iran’s malign behavior this coming week, when world leaders will also be in New York for the UN General Assembly. However, the agenda of the meeting was later changed to focus on non-proliferation throughout the globe, for reasons that were not specified.
Now, according to Bloomberg, the president has reversed the change, contradicting his aides by saying that the Security Council will still focus primarily on Iran. If the administration stands by this claim, it could set up a direct connection between Trump and Rouhani, or their surrogates at the UN, since the Security Council is required to provide a seat at the meeting to any government that is directly targeted on its agenda.
It is not clear whether the White House wishes to force such a confrontation or even give Iran an opportunity to defend itself against American criticism in the context of the council meeting, but President Trump has said on multiple occasions that he is prepared to meet with Rouhani directly, and without precondition, to discuss a better alternative to the Iran nuclear deal, from which the US withdrew in May. So far, Iranian officials have rejected the notion of a meeting or the sort of treaty sought by Trump and his foreign policy team.
Although the Security Council meeting may yet have a broader focus, Secretary of State Mike Pompeo is scheduled to deliver a speech at the General Assembly that will indeed be focused on Iran and its malign behavior. The speech may elaborate upon non-specific threats that Pompeo delivered in an interview with CNN on Friday. The Secretary of State raised the specter of Iranian attacks on Western assets, which might be carried out either directly or through militant proxies. In any event, “Iran will be held accountable for those incidents,” he said without going into detail.
In July it was revealed that four Iranian nationals including a high-ranking diplomat working out of Vienna had been arrested in connection with a plot to blow up a rally of Iranian expatriates outside Paris. In March, a terror plot was disrupted in Albania which would have targeted the local residence of more than 2,000 members of the People’s Mojahedin Organization of Iran. And in September, the US Department of Justice announced the indictment of two Iranian nationals who had been caught spying on behalf of the Islamic Republic, with the probable intention of facilitating attacks on Iranian Resistance figures in the US as well.
The arguably growing danger of Iranian attacks upon Western targets was further underscored in the context of a summit between Iran, Russia, and Turkey on September 7, which the Algemeiner characterized as showcasing the Islamic Republic’s ambitions to expand its influence both across the region and throughout the world. The Iranian president participated in that summit and far from focusing on political resolutions for the future of the Syrian government, the so-called moderate Rouhani used the opportunity for ideological grandstanding, decrying American influence while praising Iran’s own.