Moon of Alabama Brecht quote
July 18, 2008

Iran and Israel Have the U.S. Over a Barrel

Laura Rozen and her colleague suspect that the real reason why an attack on Iran was, for now, called off are the unstable U.S. economy and oil prices.

High oil prices threaten to push the U.S. from a credit crunch induced recession into a depression. The only way to avoid this is for the White House to take the war premium out of the oil price, hence negotiations with Iran.

Was this the result of economic 'sanctions' Iran put onto the U.S.? Yes.

On May 1st oil was at $110/bl. In April and May Iran rented some 10 huge crude carriers to store oil on them. The official argument was a lack of refining capacity for heavy Iranian oil. But the move not only took oil off the market, it also led to a scarcity of tanker capacity in world markets and thereby to a hefty increase in prices:

Rates for tankers have more than tripled since April 8, based on data from the Baltic Exchange and ship-fuel prices.

Some suspected back then (I did not) that this was a deliberate strategy by Iran and done with help from Venezuela.

On Friday July 3 oil had reached $145/bl. Then over the weekend the New Yorker published Hersh's piece about clandestine operations against Iran. It included strong voices including Sec. Def. Gates' against an open attack on Iran. Monday and Tuesday oil fell to $135/bl.

On Wednesday and Thursday Iran launched a bunch of missiles. It claimed that some of these were Shahab 3 missiles with a range of 2000 km. Experts disputed this. Iran also release a photoshopped still picture of the missile launch but at the same time also released not manipulated video. That made sure that an extended discussion led to a multiplication of the reporting about the issue. Filmmaker Errol Morris noted:

Take several steps back. Are we being tricked into thinking that Iran is a bigger threat than it is?

Oddly enough, the effect of all this publicity — including this essay — is to draw further attention to the missiles. If the casual reader passed over them quickly when they first appeared on the front pages of American newspapers, the missiles are now more than ever firmly embedded in the popular imagination.

On Thursday oil jumped up to $140/bl. On Friday June 11 it was back to $145/bl.

Since the 15th July announcement that Undersecretary of State William J. Burns will take part in negotiations with Iran crude oil prices fell from $145/bl to $130/bl.

Iran can deliberately increase the price of oil even when the U.S. tries to talk down the possibility of war. The U.S. economy is already in big trouble. With a little incident in the Strait of Hormuz Iran could take oil immediately back up to $150/bl. That would make a depression in the U.S. quite possible.

Iran indeed has the U.S. over a barrel.

Laura's colleague wonders "Everyone seems to have missed the obvious." That is certainly not the case. But as noted here before the U.S. press is suppressing the relation between the war on Iran Israel demands the U.S. to wage and oil price increases.

With this Israel also has the U.S. over the barrel. On June 7 oil prices jumped $11 because an Israeli minister talked about "unavoidable war." Today the NYT publishes on op-ed by the Israeli historian Benny Morris. He essentially argues that the risk of Iran having a nuclear bomb (which it neither has nor wants) justifies Israel to nuke Iran. He believes that it will happen "in the next four to seven months."

Such talk and Israeli provocations against Iran can shut down the U.S. economy for good.

Do the Israelis recognize this ability? If they do what goodie do/will they request from the U.S. to not use their deadly weapon against the U.S. economy?

Posted by b on July 18, 2008 at 12:01 PM | Permalink

Comments

"shut down the U.S. economy for good."

One can only hope, eh b?

Of course, Europe will be unaffected by any Israeli "provocation."

Posted by: slothrop | Jul 18, 2008 12:09:49 PM | 1

@sloth - did i write about Europe? No. Europe has no significant say in this game.

Posted by: b | Jul 18, 2008 12:30:35 PM | 2

In another bygone age the use of nuclear weapons to destroy a nuclear weapons development program would be an example of "irony."

Posted by: slothrop | Jul 18, 2008 12:36:38 PM | 3

slothrop: do you seriously think shutting down the US economy will have no effect on Europe? Europe might not have any significant say in this insane game, but they, like the rest of the world, would certainly experience some of the aftershocks of a US economic meltdown, no?

Posted by: Lizard | Jul 18, 2008 12:44:07 PM | 4

"Europe has no significant say in this game."

Tacit approval from Europe, sounds like.

I don't see how the "west" can extricate itself from war with Iran.

Also, the continuing belief that Iran doesn't want a bomb seems ludicrous. Of course they want the bomb.

Posted by: slothrop | Jul 18, 2008 12:50:02 PM | 5

Lizard

We're all crapping in this teetering shithouse together, aren't we?

Posted by: slothrop | Jul 18, 2008 12:59:18 PM | 6

Part of the great game ...

Russia's energy drive leaves US reeling

Gazprom chief executive Alexei Miller suddenly arrived in Tehran on Monday and discussed with Iranian President Mahmud Ahmadinejad the setting up of an organization of gas-producing countries. No doubt, with the Russian foothold in Libya (which has estimated natural gas reserves of 1.47 trillion cubic meters), in coordination with Algeria (which currently supplies over 10% of Europe's gas supplies), Qatar (with proven natural gas reserves of 25.8 trillion cubic meters) and Iran (which has the world's second-largest reserves after Russia), the time for a "Gas OPEC" is approaching.

The Iranian leader also suggested to Miller a market-sharing arrangement so that Russia and Iran could "collectively meet the demands of Europe, India and China in the gas sector". During the visit, an agreement was signed on the development of Iran's oil and gas fields by Russian companies; on Russian participation in the transfer of Iran's Caspian Sea crude oil to the Oman Sea; cooperation in the development of Iran's fabulous North Azadegan oil field; and, possible participation of Gazprom in the planned Iran-Pakistan-India gas pipeline project. Evidently, Moscow took a deliberate decision to press ahead with Iran in energy cooperation in the full glare of world publicity in complete disregard of US displeasure. Tehran loved it.

Posted by: b | Jul 18, 2008 1:20:05 PM | 7

wow. great addendum to a great post, b.

i guess maybe the US isn't as interconnected (and will be even less so in the near future) as i thought; a direct effect of our hostile, arrogant, unilateralist approach i suspect.

Posted by: Lizard | Jul 18, 2008 1:33:40 PM | 8

Good point about Israel, natch', because the supply is dwindling, any scare provokes the anticipation of higher prices, thus fulfilling its own prophecy.

FLASHBACK: Ten Years Ago, Bin Laden Demanded Barrel Of Oil Should Cost $144. from Think Progress:

http://thinkprogress.org/2008/07/05/bin-laden-144-oil/>link

h, that ws jst fr fn.

Posted by: Tangerine | Jul 18, 2008 1:44:06 PM | 9

the continuing belief that Iran doesn't want a bomb seems ludicrous. Of course they want the bomb.

Nonsense. What Iran might want is "outbrake capacity". That is civilian low level enrichment in industrial size that could, in a crisis, be used to produce a bomb within three to six month or so.

Iran certainly does not want a bomb now. Having such would immediately lead to a nuclear arms race in the Gulf with the Saudis getting Pakistani nukes (they financed their development) and Dubai and others getting them elsewhere or making them. Egypt would follow if only for prestige. All of that would certainly NOT be in Iranian interest.

It does not make sense for Iran to have a bomb.

Israel? Israel is on the verge of killing itself. That is what Ahmadinejad says but also what many Israeli strategic thinkers say. The settlements will lead to an apartheid state. The intellectual westernized young will leave and the lunatic ultraorthodox settlers will bread in competition with the Palestinians but have a the majority in the parliament. How long can such a state survive?

A bomb against the U.S.? Why should Iran pay the very significant price for that when it has the superior weapon - oil.

An Iranian bomb is nonsense.

Posted by: b | Jul 18, 2008 2:07:37 PM | 10

Great post b, looking back at the run up to the Iraq war, there was a similar period of market uncertainty with the DJIA hitting its 7600 low in late 2002. After the invasion started, and the unknowns about it began to evaporate the market began a long recovery, up until these threats against Iran have intensified, and now we have an apparent repeat scenario with the market flagging under speculation on uncertainty. And you can bet that there are no shortage of fools in Washington and Tel-Aviv anxious to make the claim that bombing Iran would actually fix the economy by removing the uncertainty, instead of crashing it. Which of course this time, unlike the first time, it would most certainly, do.

Posted by: anna missed | Jul 18, 2008 3:00:56 PM | 11

Europe has no significant say in this game

Europe’s cowardice and hanger-on status is totally disgusting. But what can you expect? People elected, for ex. Blair and Sarkozy. And the likes of Zapatero haven’t a clue about the economy. Then there is the whole neo-colonialism bit. Dominique Strauss Khan, head of the World Bank - nominally a French socialist. Gimme a break.

The 14 july French military parade featured UN military vehicles (white) chugging along with all the French forces. On the VIP podium, the head honcho of Quatar, and his no. 1 wife, in ray bans and poisonous green. Kouchner, thrilled to bits. Ban Ki Moon looked upset. Assad was jumpy and ill at ease, very nervous (the military were appalled he was there and almost refused to parade) with his lovely wife - a banker, hiding behind shades and feminine delicacy which is due deference. Many other of the usual culprits grinned at the cams.

And so the TV stations blare the success - the parachutists came down grand, a feat of French precision, the best in the world. The photo op, very brief, with the handicapped (none were ever pictured in full as they are terribly ugly) projected the message that Carla ‘cared’ - such a sweet lady; no side; a word for the underdog; yet her disgust at the gift (planned beforehand) from a little twisted boy was plain to see.


Posted by: Tangerine | Jul 18, 2008 3:14:33 PM | 12

Oddly enough, a nuclear capable Iran might actually be the most stable thing for oil markets since no one would attack or even hint that they might.

Irony

Posted by: Lysander | Jul 18, 2008 3:18:22 PM | 13

I think the phrase is "breakout capacity." I agree with you. However, the problem is verification as always. And for paranoiacs, capacity=possession in the absence of adequate verification.

As for the isolation of the "US economy," --is at best naive. Everyone is hurt by rising energy costs. Everyone, regardless whether crafty germans become signatories to creation of this or that energy security grid.

I'm down with strangling America's subsidies for domestic energy consumption. But that has nothing to do with killing the "US economy."

Your fantasy about bringing America to its knees "economically" requires an Unhappy Consciousness which is unaware that the demise of the "US economy" is your demise as well.

I don't share your enthusiasm to see others suffer to prove a personal opinion.

Posted by: slothrop | Jul 18, 2008 3:25:03 PM | 14

The entire world depends on increasing rate of US consumption of finished goods.

Sure. Kill the "US economy," b.

Your ideas about "the economy" persistently omit any understanding of globalization, as far as I can tell.

Posted by: slothrop | Jul 18, 2008 3:32:21 PM | 15

I don't share your enthusiasm to see others suffer to prove a personal opinion.

Where please have I ever shown such?

The entire world depends on increasing rate of US consumption of finished goods.

Nonsense.

Your ideas about "the economy" persistently omit any understanding of globalization, as far as I can tell.

Hold hand before eyes, count fingers, five? Okay, you could tell that far. Now put hand in Mumbai, how many fingers can you see?


Posted by: b | Jul 18, 2008 3:48:40 PM | 16

There is a direct correlation between saber rattling/U.S. and Israeli tensions with Iran's nuclear program and the spikes in crude oil prices. Unfortunately, saber rattling is a counterproductive measure as it is benefiting the Iran regime as their wallets swell from high oil prices.

According to RAND, a DC think tank, who recently released a report, even if Iran's nuclear facilities were bombed, it could easily rebuild without much harm to its economy due to lucrative oil revenue.

Even John Bolton understands that an attack on Iran's nuclear facilities won't solve problems with the Islamic republic which further evidences why Israel and the US must refrain from counterproductive talk.

The RAND report also stated that an attack on Iran will not cause the Iranian people to revolt against the regime. Instead they would unit behind the unpopular regime and oppose the aggressor or the "Great Satan."

America must pursue greater diplomacy than "pre-negotiation" talks and begin dialogue with all levels of the government and all levels of civil society.

Posted by: Christopher Feld | Jul 18, 2008 4:06:54 PM | 17

China's export-led development depends on financing American consumption. The trade-imbalance epitomizes the Chinese "miracle." It will be many years before domestic consumption in china can replace the need for this imbalance.

To name one fact about globalization you are blithely unaware.

And Euros have been all too happy to inflate the global housing bubble--a crisis always solved by socializing finance capital's losses. Burying "the American economy" of course makes zero sense in the context of international finance.

But that won't stop you from trying.

Posted by: slothrop | Jul 18, 2008 4:11:22 PM | 18

no, it won't

Posted by: remembereringgiap | Jul 18, 2008 4:30:39 PM | 19

& i'm trying to work out whether sloth comes from some rump barrite libertarian action committee somewhere deep in the snows or that perhaps he is a member of the politburo of the bulgarian communist party/dimitroff import-export co. filing through old papers that have unfortunately been whitened by the western winds

Posted by: remembereringgiap | Jul 18, 2008 4:39:29 PM | 20

So many essayists this week declaring the threat of war upon Iran is moot!

All because Iran and other interested parties have used their elbows a bit, and hit back.

Oooh!

Back in 1891, Jim Corbett went 61 rounds in San Francisco against Peter Jackson, neither man conceding, and called it a draw when the sun went down on them.

There were discerning sportsmen who went home after Round 19, saying Corbett couldn't stick. There were respectable reporters who rushed to the typesetter after Round 39 to put the story of Jackson's demise into Times Roman before anyone else could.

By Round 54, it seemed the only creatures left in the crowd were the gamblers, cynics, and pickpockets.

When the two pugilists finally shook hands after 61 rounds, the fight was over. Not a moment before.

America's fight with Iran is by no means over.

America will attack Iran because it has to, to avoid declining aster and further than our elites have in mind. The economic collapse such an attack may well cause is no worse than what is coming anyway. The choice is between letting Russia, China and India move in and take over the most valuable energy treasure on the planet, and taking it ourselves.

Jesus, failing to make the attempt, to grab for the brass ring, is beyond the capacities of our ruling elites. They want the American Century.

They want a century of telling Russia, China, and India the price of energy, in dollars if you please. They see that prize right there for the taking. Nor do they see economic or military failure as losing America. They'll buy up America for pennies on the dollar in any case. America is just one of the nations they do business in. There are a couple hundred others.

From their position, from their perspective, they'd be nuts to not use the biggest, baddest military machine in human history to their advantage.

Gotta go . . . the next round has already started.

Posted by: Antifa | Jul 18, 2008 4:40:10 PM | 21

Insult or carbon-copy screed. That's all you got.

Posted by: slothrop | Jul 18, 2008 4:54:14 PM | 22

It's uncalled for, your ad hominem bullshit.

I don't defend global capitalism. Fuck you. I at least make an attempt to understand what global capitalism does.

Posted by: slothrop | Jul 18, 2008 5:01:08 PM | 23

slothrop

you are quite wrong on this point. your analysis is not always as 'open' or 'objective' - it is quite openly casuistry. & we never move from the point where you will defend the u s empire againsts its very partical & singular crimes but hiding behind what is in your aruments a very paranthetic 'globalisation'. head office is always in the united states tho its hiding holes can be anywhere from lichtenstein, geneva or the cayman islands. you have shown for a good moment a singular lack of understanding of the very schismatic movements of european capital & the inter elite rivalries

you seem completely unaware of the differing positions held here about iran or about another ' war on terror'.

it is not you who is being maligned but your arguments which are not served well by their repitition. they are in short - capital global, innocent americans, implacable imperial power, inevitable weakness of the 'other', godlike capacity of american capital to reinvent itself & what i find a little perplexing is that you seem not to understand what is happening in either china or india let alone the economies of the arab world

david havey's lectures on marx capital vol 1 were poster here the other day by either uncle $cam or cloned poster & i find them very valuable - perhaps they might be useful to you

Posted by: remembereringgiap | Jul 18, 2008 5:56:39 PM | 24

I'm not going to read your response.

Posted by: slothrop | Jul 18, 2008 6:23:32 PM | 25

b

Excellent points. But, don’t overlook the true believer aspects. The free market is divine. Government intervention is evil. The Bush Administration kept filing the Strategic Oil Reserve until recently forced to stop by Congress. Surprise, Surprise! Once filling the Reserve stops, the price of oil declines. I doubt the Bush Administration is competent enough to purposely start negotiating with Iran in order to lower gasoline prices. That would also mean that they recognize that decline in the dollar and Iraq Invasion are also directly responsible for the skyrocketing oil prices. No way can Bush admit to this.

Posted by: VietnamVet | Jul 18, 2008 6:48:11 PM | 26

it was only a matter of time before the USA encounters the limitations of its moral superiorities. Moral superiorities cannot keep the Strait of Hormuz open, cannot compel a draft, cannot keep the dollar almighty, cannot protect its stooges and cannot impose upon the world. And it cannot turn the clock back fifty years.

Posted by: jony_b_cool | Jul 18, 2008 7:02:47 PM | 27

b,

Another great post, well done.

I think that America is in deep trouble; we are bankrupt and the wars are only making our money woes ever worse. The question to ask yourself is if we will take the world down with us when we go. After all, we have 20,000 to 30,000 nukes and can make some heavy threats toward any country in the would.

Would Bush do that just before the elections? Perhaps. And even saying "perhaps" to such a nightmare scenario is frightening, eh?

Posted by: Buckaroo | Jul 18, 2008 7:16:56 PM | 28

slothrop: ahhh, now i see the top of the thread was extreme sarcasm.

i don't think b is explicitly championing bringing the us economy to its knees, he's just pointing out how easily it can be done. it would be nice if amerika's foreign policy reflected this up front, instead of veiling the necessary diplomacy with our "enemies", allowing the US to maintain the illusion of strength only backed by mutually assured destruction.

Antifa once again is making a scary kind of sense i'm reluctant to say sounds like "their" brand of thinking. and if the economy crashes, yes, they'll buy up shit for pennies on the dollar, because that is the historically proven common practice of these international movers and shakers.

slothrop, i know it's hard to come to terms with why so many outside the states want to see us crash and burn. amerika is a global lightening rod, and it's not just because of our puppet presidents and imperial flexing. within the populous there exists this persistent, willful ignorance that will only be broken by cataclysm.

i don't pretend to understand the movement of global capital, but i do know the world is very fucked up place right now, and it just so happens that as a national actor on the global stage, the US is the most identifiable villain there is. b may sometimes be pretentious and arrogant, but when you toss out those expletives and refuse to read responses to your tirades it's just more fuel for the anti-amerikan bonfire.

Posted by: Lizard | Jul 18, 2008 7:49:29 PM | 29

There's no empirical proof of the belief that "the US economy" is in independent decline, or even that any configuration of interests within global capital will actively seek destruction of "the American economy." The CCP itself recognizes this and is moving toward eventual revaluation of the yuan in response to excessive growth. This will only help the US by decreasing the trade imbalance by increasing US exports.

As for monopolizing energy production as a means of "destroying US economy," exactly how is this supposed to work? Given the escalating needs of scarce energy commodities to fuel development--development which depends on the US to consume the mountains of shit made by impoverished Chinese laborers--"destroying the US economy" would be collective suicide.

Posted by: slothrop | Jul 18, 2008 8:31:20 PM | 30

"i don't pretend to understand the movement of global capital"

I'm just trying to learn what little I can, lizard.

Posted by: slothrop | Jul 18, 2008 8:33:30 PM | 31

...and you are raising some good questions. i am interested to see how others respond. and b's sometimes curt "nonsense" responses don't always further dialogue. i don't think anyone here has a totally firm grasp on what is happening. i know the anti-amerikan sentiment is strong, but look at the other players gnashing their teeth ready to take our spot. the US, as professional consumers, and China, as a major center for manufacturing, seems to make our fates closely intertwined. i really don't know, and it's exhausting trying to keep up. i think it's important to keep reminding ourselves the geo-political game is for the high rollers who don't exist in the same reality as the rest of us. they are prepared for cataclysm or nuclear fall out. the really nasty consequences are for us, the peons. it's an old game, and we'll always be the losers as long as we allow them to sit on their thrones.

Posted by: Lizard | Jul 18, 2008 9:09:25 PM | 32

and b's sometimes curt "nonsense" responses

i like b's soh

the US, as professional consumers, and China, as a major center for manufacturing, seems to make our fates closely intertwined.

of course. ouch.

Posted by: annie | Jul 18, 2008 9:29:50 PM | 33

Widespread economic distress now does not prove mutual dependence in the long run. Remember what happened to Japan post '89? Decoupling happens after the recession.

Summer's balance of financial terror is hyperbole. Remember the outcome of Britain's Suez gambit? Efficacious threats need not be carried out to rein in a weakened country.

Posted by: Jacob Richter | Jul 18, 2008 10:30:40 PM | 34

Is there any evidence of decoupling now? How is that possible given international specialization, global property rights regime, and the facts/contradictions of capital expansion: struggle to maintain rate of profit, labor shortages, overaccumulation, etc.?

The traditional "core" of the capitalist world economy is now deindustrializing thanks to the IT "new economy." And in the old "periphery" the inequalities are growing between transient "enclaves" of development (east vs. west china, for ex.). And so we have a world gated community so to speak of haves and have-nots ("knowledge-workers" vs. surplus labor) in which the old notion of nation-state hegemony has a diminished saliency.

And global capital knows this. But we do not.

Posted by: slothrop | Jul 18, 2008 10:45:21 PM | 35

Helena Cobban on the Benny Morris op-ed: Benny Morris's nuclear blackmail scenario

For the Israeli government, using its very robust nuclear-weapons capability for purposes of blackmailing other parties-- including, certainly, the US-- is nothing new. (See my 1988 World Policy Journal article-- PDF-- on that topic.) However, that blackmail is usually carried out in a subtle and behind-closed-doors fashion.

But now, here comes Israeli citizen Benny Morris openly expressing (and expressing support for) the most blatant form of nuclear blackmail imaginable.
...

Posted by: b | Jul 19, 2008 4:07:35 AM | 36

Actually I think you could add Iraq to the list of countries that have the US over a barrel. The three I's. Refusal to sign the SOFA, refusal to pass the oil law. Those two refusals hold the success or failure of the American enterprise in Iraq in their hand. The US cannot force the signatures, but without them, the deaths of a million Iraqis, 4000 US military, and expenditure of $1 trillion are for nothing (in the Neo-Con view, I hasten to add). Neither oil law nor SOFA will be signed. If nothing else, Sistani said no. But the opposition is widespread and strong, to signing away Iraqi sovereignty and oil. It is astounding that the US has got itself into such an impossible position given that it is militarily occupying Iraq, but there you are. There's nothing that can force the Iraqis to sign.

Posted by: alex | Jul 19, 2008 5:24:44 AM | 37

Swoop: The US and Iran: The Role of Economics

However, it is impossible to overstate the influence of energy concerns over US policy, especially in terms of high domestic energy prices. This means that, when the Administration views its core national security and that of its allies to be at stake, a crisis can rapidly develop. This is the case with Iran. While US officials continue to emphasis diplomatic means to resolving the standoff over Iran's nuclear program, it is also deploying additional sanctions. The White House is in no hurry to confront Tehran militarily. Nonetheless, this should not be confused with a lack of resolve on Bush’s part should Tehran refuse to respond to Washington’s initiatives.

Posted by: b | Jul 19, 2008 6:43:07 AM | 38

All of which goes to prove irrefutably the lie of the commodity traders, that, as Warren Buffett casually demurred, it's merely someone selling futures to someone else, "and purely a supply and demand issue". But the politicians won't grow the balls to
re-regulate futures trades, and they won't grow the balls to re-regulate the banks,
so we'll see Crown Fire food-energy pricing and New Ice Age in the credit markets.

Diesel is still $4.99, regardless of the candle chart on crude, home values are plunging along with sales, and Fed/Treasury is about to bail out mortgage lender debt, and roll it up into a public tax-paid welfare fund, ex audit, a NeoZi.con Department of Grift Security, pushing US far into stratospheric of external debt.

So break out the crack pipes, mates, because Helicopter Ben's on a tear!

Current National Account Balances:

Germany - $186.8 Billion
Russia - $94.5 Billion
Iran — $19.0 Billion
Brazil - $8.5 Billion
Israel - $5.9 Billion
Australia - $ (-) 51.0 Billion
Britain - $ (-) 111.0 Billion
USA - $ (-) 811.5 Billion

Posted by: Neo Logism | Jul 19, 2008 11:37:42 AM | 39

annie@33: i usually do to, but being on the receiving end, as i have been from time to time, isn't fun, so i was merely pointing out that being told something you are trying to articulate is nonsense can be frustrating and leads to dialogue on both sides breaking down.

Posted by: Lizard | Jul 19, 2008 11:41:47 AM | 40

lizard being told something you are trying to articulate is nonsense and leads to dialogue on both sides breaking down.

or a good flushing out. gawd, you are a relatively new regular lizard (valuable and appreciated!), consider it as a ritual of passage.

to say sloth has a history here is an understatement. in context #16 is going to make more sense to us ol timers. w/relativity not harsh in the least.

Posted by: annie | Jul 19, 2008 12:36:15 PM | 41

The amazing part of all of this is how the Iranians are in their actions and intentions
Yet all of these countries are dependent on the west - have accomplished nothing on their own , and yet hate the west to death
Its a terrible situation that has been allowed to progress to this point by failed leaders . Did we not know from 1973 on that Opec hated the west , and the crunch would come ?
It makes the 1930's and Neville Chamberlain look like child's play
Guess europe learnt nothing of the price it paid
While the other side staggered on - we were worried about the Monica Lewinski scandal

Posted by: s | Jul 19, 2008 2:13:35 PM | 42

the iranians, poster s have created a civilisation & a culture - quite beyond the crude caricatural caca of the u s empire

what has the u s empire created other than destruction, destruction of all things - amost in biblical terms

for us, its contradictions are the most useful - that inside the belly of the beast - arrives a humanity beyond the barriers of its barbarism

& this humanity produces visionaries who can writer siter carrie, who can direct the night of the hunter, who can sing visions of johanna who can paint blue poles

Posted by: remembereringgiap | Jul 19, 2008 2:40:42 PM | 43

Iran has the right to nuclear enrichment according to every single ‘International’ rule.

Rules that the US has supported, and continues to support. Long ago, Kissinger was for nuke power stations in Iran - the Atoms for Peace program. Most developed countries have nuke power plants (say) why shouldn’t Iran?

They have been very patient, very low key. Because they know they hold some strategic cards, are confident, actually hope that the ‘world’ will come to its senses - or all agreements are off, and then everybody better look out.

The US cannot, dare not, take up the glove thrown down. As it has recently shown.

Fighting a diplomatic battle you are bound to lose is an ultimate sign of weakness. Better, always, to capitulate and re-coup; show some willingness, if grudging, negotiate, etc.

Yet, the attempt here to frame and make sense of US actions is silly -- as if there was a ‘real’ issue, some ‘essential’ bone of contention, some ‘present danger’ to be avoided; some long term goal that might be achieved, some vital economic interests.

None of those apply vs. Iran.

In fact the US, and the EU in second place, have suffered from the patchy sanctions and arm-twisting imposed, giving advantages to Asia, China and Russia and Iran itself of course. Maybe that just dawned?

Posted by: Tangerine | Jul 19, 2008 2:43:07 PM | 44

Why bother destroying the US economy? It is enough to cripple its capacity for aggression or cohesion. Terms-of-trade trends broke up the USSR with no need for grandstanding proxy wars or arms races. Now the US exports mostly debt securities. The relative value of US debt is deteriorating much faster than did the Soviet Union's vital export, oil. A minor misstep - or a filip - will have disproportionate effects on stability. Creditors have much to gain in the inevitable restructuring.

Posted by: Jacob Richter | Jul 19, 2008 3:45:31 PM | 45

from bhadrukumar's article on russia's gazprom linked in #7 above

By now it must be obvious to the Bush administration that the youthful-looking, post-communist lawyer-president who took over from Putin has lost no time drilling a hole through the entire US strategy to weaken Gazprom's grip over the supply of gas to Europe. The sense of fury is imaginable. But then Washington has only itself to blame. Medvedev's career as an energy czar is an open book like Cheney's - or Rice's. From 2000, he headed Gazprom. Now he controls Gazprom from the Kremlin. ... In sum, the past week's flow of events in places as far apart as Prague, Hokkaido, Tbilisi, Harare, Tehran and the Arctic underscored that after a brief respite, the rivalries over energy security have revived with a ferocity that can rock the equilibrium of overall US-Russia relations. The situation will likely be exacerbated in the coming period. ... It is a tremendous loss of face for the Bush-Cheney-Rice combine that Moscow is outwitting the US on the energy front.

well, jeez, it's par for the course isn't it? like since when has the US govt has shown any collective unpoliticized wit or brain power when it comes to sizing up russia throughout recent history?

i question how much bhadrakumar fully grasps the picture here too - putin essentially controlled gazprom then, as he does now. i claim no expertise on the subject, but from my readings i gathered that most observers were of the opinion that putin selected medvedev to follow him exactly b/c it allowed him become the pm & continue to direct russia's return to being a global superpower. and, as bhadrakumar even points out in the piece at asia times online,

..when Medvedev signed last Saturday a new foreign policy strategy for Russia, it came to light that for the first time the prime minister has been put in the driving seat to implement foreign policy measures -- hitherto a presidential perogative -- which also shows that the Kremlin will pursue the line set by Putin in his eight-year presidency.

that's hardly a surprise & i doubt this was 'the first time' such a move 'came to light.'

michael klare, for one, has been writing on putin's strategy for some time now. from his rising powers, shrinking planet: the new geopolitics of energy, chpt 4 - 'an energy juggernaut'

In Russia's rise to energy superdom, the decisive role of Vladimir Putin cannot be overestimated. At every pivotal moment, he intervened directly (if often behind the scenes) to ensure the triumph of the state over powerful private interests... He also shaped the overarching strategy governing the Kremlin's struggle to centralize its energy authority.
...
While serving as a functionary in the St. Petersburg municipal administration in the mid-1990s, Putin managed to complete a doctorate at the St. Petersburg Mining Institute, a historic school with ties to Russia's governing elites. (It should be noted that geologists commonly view oil, coal, and natural gas as "mineral" resources.) Here, evidently, he developed or refined his belief in the crucial role of the state in the management of the country's natural resource endowment and first expressed his thoughts on how energy production could contribute to the reemergence of Russia as a Great Power.
...
From portraying the development of the nation's raw materials as a "strategic factor" to calling for state oversight of this process proved but a short leap once Putin had power in his hands...
...
Putin next set his sights on ... Gazprom, the world's largest natural gas producer. It alone claims ownership of 16 percent of the world's natural gas reserves -- more than that possessed by all the countries in North America, South America, and Asia combined. It also controls the world's largest pipeline network, extending from gas-producing fields in Siberia and Central Asia to markets to throughout Western and Southern Europe.
...
The company came into existence in the final days of the USSR when Mikhail Gorbachev, then president, combined the gas ministry's far-flung operations into one unified enterprise. This giant entity, dubbed Gazprom (for gas industry), was partially privatized in 1993, though the Russian state retained 39.4 percent of its shares and appointed a majority of its board members. During the Yeltsin era, charges of corruption were regulary brought against its directors, and the company failed to provide the sort of stimulus to economic growth envisioned by Putin in his 1999 essay. So, when assuming office in 2000, Putin chose two close allies, Alexi Miller and Dmitry Medvedev, to serve as Gazprom's CEO and chairman of the board and took other steps to improve the company's performance. His key goal, however, was to restore full state control over the company.
...
Since 2005, by all accounts, Putin has assumed personal responsibility for Gazprom's continued growth. "Putin effectively controls the company and makes all key decisions about its strategy and displays a surprising acquaintance -- for a politicial of his rank -- with the minute details of the operations," Vladimir Milov, director of the Institute for Energy Policy, a Moscow think tank, observed in 2006. From the beginning, his intentions were clear: to turn Gazprom into an energy powerhouse that would help propel Russia into the front ranks of the major world powers.

russia & iran have been discussing a natural gas opec for some time now. in january of this year, there was a rpt that a 'Gas OPEC' could be established in June

Members of the Gas Exporting Countries Forum, which control 73% of the world's gas reserves and 42% of production, held a session in Egypt on Wednesday and plan to discuss a charter of the new international organization based on the principles guiding OPEC at its next session in June, the daily [Kommersant] said.

The draft charter was proposed last year by Iran, which has the world's second largest gas reserves and is in need of new export markets, the paper said.
...
Russia's Industry and Energy Ministry made changes to the draft charter and submitted it for coordination with other ministries in November after a GECF session in Doha, Qatar, in late October. The Foreign Ministry and Economic Development and Trade Ministry have criticized Iran's draft over negative political consequences it could trigger, the paper said, citing government sources.

Gas producers plan to finally coordinate their positions on the charter in Moscow, which experts quoted by Kommersant warn could trigger fresh tensions in relations between Russia and the United States.

Washington has labeled the brainchild of some of the world's least democratic countries as a security threat and said it was designed for "extortion". The founding fathers of the 'gas OPEC' would be Russia, Iran, Qatar, Venezuela and Algeria.

An analyst with the Troika Dialog investment said an organization of gas exporting states would be created in the next few years, but it would have no major influence on the market due to fierce opposition from the U.S. and Europe.

"The exporters will have to take an evolutionary, rather than a revolutionary, way to the gradual consolidation of efforts," Valery Nesterov told the newspaper.

i'm not so sure it will necessarily be a gradual thing - according to some, peak natural gas is right on the heels of peak oil.

Posted by: b real | Jul 19, 2008 4:11:26 PM | 46

Even in merry olde europe, the cradle of human perfection, recession looms. Everywhere, commodity inflation is eating away at standards of living. This is a global crisis unsolved by "reducing US aggression" via "restructuring." The crisis magnifies the likelihood of more conflict so that, in part, "restructuring" is achieved by redirecting global investment into armaments and war. Even Deutsche Bank has a little action in Halliburton. And as we know, little GWOT-loving French pensioners have some francs invested in Raytheon.

Posted by: slothrop | Jul 19, 2008 5:28:47 PM | 47

"Creditors have much to gain in the inevitable restructuring."


I suppose the difference in the amount of debt reduced by an improving trade imbalance will simply be the amount the US refuses to pay. If Argentina can default, why not the US?

Posted by: slothrop | Jul 19, 2008 5:34:39 PM | 48

as far as the empire is concerned, it is collapsing faster than its 'experts' could ever imagine & soon there won't be much left & that won't be worth stealing so will become an army weapons range

Posted by: remembereringgiap | Jul 19, 2008 6:53:43 PM | 49

some american history for slothrop on the bodyguards of capital

Posted by: remembereringgiap | Jul 19, 2008 7:04:23 PM | 50

thank you annie for the nudge@41. relatively new regulars really should take advantage of the archives before swimming in the deep end with the big fish.

Posted by: Lizard | Jul 19, 2008 7:16:06 PM | 51

China's dependence on exports to the west has been greatly reduced during the course of this century.
China's economy has passed the critical mass required to be self sustaining which means that although amerika's recession will effect the Chinese economy a little because demand for the consumerist crap which amerika/europe/whitey was gobbling has been seriously reduced, this drop off won't mortally wound the chinese economy in the same way that Japan and Korea were cut off at the knees during the 90's. That was when amerikan and european demand for their goods decreased post the old "dot com boom" compounded by the effects of the shift of manufacturing from the s.e. asian 'tigers' into China and then India.

Why not?

well China is already in the process of moving it's manufacturing bases off shore into cheaper areas.

Wage increases combined with the usual worries of a bourgeoisie, eg the increased concern for environmental issues which China's population has been emoting have deemed this shift necessary. The difference between China and Japan and/or Korea is about a billion. That is China's billion plus population has now been cranked up to the point where consumerist growth has become self-sustaining.
A drop in demand from outside is insufficient to counter the impact from the ever increasing demand from China's domestic population.

Chinese peeps are coming from so far back and there are so many of them that developing the domestic population to the point where the citizenry have been fully exploited for their consumerist potential will take decades. China has created the 'perpetual motion machine' of economic progress, the same illusion which distracted the west for the second half of the 20th century.
The upside is that China probably won't be required to commit acts of imperialism to stimulate growth in my lifetime. the downside is that eventually it will have to throw Chou en Lai's opposition to colonialism out the window. Probably during my children's lifetime, but since amerika and europe will have already been at the same thing for a long time by then I suppose they will have become adjusted to living in a world full of injustice and free of hope.
The real kicker of course is that by the time China does lose it's domestic growth the planet will be an arid desert free of diversity or life giving potential.

USuk, G-8, WTO and all the other monoliths of trans-national corporate consumerism will have really kicked in the pricks by then.*


N.B. Cliches are included free of charge so that the post can be read without necessitating any engagement of the intellect, thereby creating distress where concern could 'spoil the buzz'.

Posted by: Debs is dead | Jul 19, 2008 8:11:28 PM | 52

yup

Posted by: slothrop | Jul 19, 2008 9:44:20 PM | 53

thanks Debs

Posted by: Lizard | Jul 20, 2008 1:49:14 AM | 54

debs. what's NB stand for?

speaking of engaging. this morning i was blown away by your post here along w/some of the other commentary on that thread however sometimes it's embarrassing to admit my absorption is not producing commentary...that's just me. not everyone is graced w/your intellect.

The real kicker of course is that by the time China does lose it's domestic growth the planet will be an arid desert free of diversity or life giving potential.

i praying scientist will save us, somehow. whatever faith i have ........

Posted by: annie | Jul 20, 2008 2:01:50 AM | 55

jbc @ 27

it was only a matter of time before the USA encounters the limitations of its moral superiorities.

GWB & co. took the low road... at break neck speed, eviscerating moral considerations for anything. None of this had to happen. 7+ yrs destroying agreements, undermining principle (and lieing about it)... the breadth & swath of Junior's foibles are mindboggling.

b:

Excellent post... Thanks.

Posted by: jdmckay | Jul 20, 2008 7:57:05 AM | 56

slothrop @ 30

There's no empirical proof of the belief that "the US economy" is in independent decline
,

Well, there may be no empirical evidence of looming tornado's "hurricane alley", but they show up nearly every year.

The health of US economy... it's underpinnings, integrity, and fuel for future growth... all have been undermined by this president. Right down to statistic manufacturing. And the thing is, in Junior's short few years at the helm, a very significant # of "third world nations" have caught up and eclipsed us in all the economic fundamentals that matter.

So./Central America has abandoned US econ dictates entirely. They don't even invite Bush to their major economic conferences anymore.

or even that any configuration of interests within global capital will actively seek destruction of "the American economy."

They don't have to "actively seek" destruction, it's happening from within.

And it's happening at the hand of "free market" rules US repub K-Streeters have "championed", while they lied about their crony implementation of the same.

I've been watching pretty closely now for a while. I've got tons of very, very convincing evidence we are not just in decline, but in (or close) to imminently slipping into 3rd world economic status ourselves. Growing and healthy foreign economies, put simply, increasingly cannot rely on US markets. The emerging technologies & production capabilities that the world needs are not coming from the US.

With all due respect, IMO one has to have their head deep in the sand to remain optimistic about future US economic health. Particularly when neither major prez candidate, not to mention most of US press, has even addressed the fundamental US economic conditions/mechanics etc. which, if not corrected the right way, leave no hope (other than conquest and stealing) for global leadership.

Posted by: jdmckay | Jul 20, 2008 8:19:08 AM | 57

China seems to have two economies. First is its massive internal rural economy that utilizes rudimentary but highly innovative, well-adapted & effective technologies in its rural areas & farm-lands. And also its export economy. Neither economy is hindered from the profit motive, but the driving industrial policies are managed by Beijing. Every now & then, companies from the internal economy are brought together by the state & aggregated into new export entities. And its mostly those participating in the export chain that get to participate in Western-style consumerism, as contrasted with the traditional aversion to wastage & admirable thriftism of the greater rural China population.

Hence China has good management over consumerist growth and resource usage. But energy is becoming a challenge. And both economies will respond, though energy innovations from China's internal economy will probably not be easy to export. But we can be sure that in many farms & rural areas of China, there are people tinkering with & rigging up rudimentary systems for solar/wind/hydro/bio-mass energy-generation.

Posted by: jony_b_cool | Jul 20, 2008 12:10:15 PM | 58

It's not a matter of "optimism," but of analytical precision. The US and Japan dominate patents. The OECD owns 90+ % of copyrights, for ex.

To be sure, the US/OECD is deindustrializing while "enclaves" of development sprout throughout the old 3rd world. What we have here is a creeping end to nation-state development (though nation-states defend interests, but it's different now), and a rise in a "territorial logic" which fractures the world into transient zones of development/deindustrialization.

Posted by: slothrop | Jul 20, 2008 12:13:00 PM | 59

Confirmation? Oil rises over $1 on Iran talksOil rises over $1 on Iran talks

PERTH (Reuters) - Oil rose over $1 to top $130 a barrel on Monday after inconclusive talks between Iran and world powers over the weekend over Tehran's disputed nuclear programme.

Posted by: b | Jul 21, 2008 2:42:20 AM | 60

a creeping end to nation-state development (though nation-states defend interests, but it's different now), and a rise in a "territorial logic" which fractures the world into transient zones of development/deindustrialization.

yep

Posted by: annie | Jul 21, 2008 1:50:46 PM | 61

Dilip Hiro in the Guardian is a bit late, but the idea finally gets some traction:


Bush blinks first as oil price dazzles

What explains Washington's sudden softening attitude on Iran? Could it possibly be the economy?

Those who accept the White House's explanation that, in the dying days of his administration, Bush is keen to leave behind a positive legacy regarding Iran are being gullible. They ought to be reminded: "It's the economy, stupid".

Military strikes against Iran will disrupt not only oil supplies from Iran – the second largest producer in Opec – but also the rest of the Persian Gulf region, which produces 40% of the global total. The subsequent price hike would make $200 a barrel appear "reasonable".


Posted by: b | Jul 22, 2008 2:33:04 AM | 62

as an economist or economic analyst, i think it might be better if you kept your day job

at least i'd ask you to read the marxists economst that come from your country - especiallly the althusserian economist who have been doing steady & rigorous work

i don't see any work in your 'analysis'

Posted by: remembereringgiap | Jul 22, 2008 6:55:05 AM | 63

this, for example

Posted by: remembereringgiap | Jul 22, 2008 8:44:20 AM | 64

Let us send several more billion to Israel to promote the use of the largest most deadly bomb the world has ever invented and accident happened. (rest is toast)
so as to harmlessly go off to notify the world that the Jewish population, ever so small will have something to say and talk about with each other. Thats their claim to fame in the first place.

Posted by: | Sep 28, 2008 10:42:23 AM | 65

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