What to do about Iran?
Well, going to war with the Iranian people over the British hostage crisis is EXACTLY what the Ayatollahs desire. Any military action would only unite the Iranian people behind the regime. And this is diametrically opposed to the desired strategy of motivating/enabling the Iranian people to rejoin the international community of nations by deposing their corrupt and intolerant religious masters.
HOWEVER, there are many economic tools that can be used which would make it increasingly harder for the Iranian government to justify their holding of these British servicemen/woman...
However, it requires consideration of a risky policy decision by both US and European governments (or at least the implict threat of such an action); releasing SPR oil reserves. But it invokes the taboo of SPRs being used to "manage" oil prices, and the risk involved in having to later replace those reserves once the Iranian crisis was resolved (or government overthrown internally).
Iran pumps approximately 3 million bbls per day into the crude markets. This is a supply that can be readily compensated for using combined international SPRs reserves, in cooperation with Arab oil producers. The US SPR can release up to 4.4 million bbls/day alone for a period of up to 90 days. The US SPR site states that the average price of oil in the SPR is around $27/bbl, which would reap a tremendous short-term windfall to the US treasury if sold outright.
en.wikipedia.org
But if provided to oil companies as a replacement for lost Iranian oil production, with a pledge to replace that oil to the SPR at some point in the future at set market prices (when oil drops to the price it was originally borrowed at, the oil is replaced), it should not be overly detrimental to oil prices (which would amount to government intervention in pricing).
I have been heartened to see the UN unanimously denounce Iran for the capture of the British sailors/marines in Iraqi waters (which they clearly were in when apprehended). And this is a sign that the Iranian government may have taken an action that may further their international isolation.
One of the additional aspects to be remembered with regard to Iran is that they IMPORT up to 7 million bbls/day of gasoline, due to the lack of sufficient refining capacity. And since they HEAVILY subsidize gasoline prices, any reduction in imports is going to have dramatic consequences on their government's expenditures on these subsidies.
But what are the benefits of 7 million bbls/day of gasoline suddenly becoming available to the international markets? I wager they would certainly help to calm current gas prices to a certain degree.
washingtonpost.com
The key is to promote international cooperation in dealing with, once and for all, with the intransigent Iranian regime. And using the SPRs of the world is a worthy policy consideration. After all, current oil prices are being inordinately manipulated by the Iranian regime, in their attempt to ratchet up tensions in the region. And I opine that without such an intransigent regime holding such power in Iran, we would have FAR LESS NEED for large SPR holdings.
In sum.. SPRs need not be only a defensive mechanism. At their current size, they can be used quite effectively as offensive economic weapons to counter intransigent regimes such as the one in Iran.
Hawk |
