Risky business in the Persian Gulf

The Obama administration is drifting toward war with Iran.  Besides the obvious risk of a repeat of the U.S. invasion of Iraq, there are risks of another oil price shock and of confrontation with China.

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Iran is the world’s third-largest oil exporter, behind Saudi Arabia and Russia.  The United States government is trying to organize a world oil embargo against Iran.  Saudi Arabia’s rulers promise to increase their own oil production to make up for Iranian oil being taken off the world market.  Iran’s rulers threaten that if that happens, Iranian forces will close the Strait of Hormuz, through which 20 percent of the world’s oil exports go.

The United States gets most of its oil from domestic production and other Western Hemisphere sources, but the nations of Asia depend on Middle East oil.  The Chinese expect to more than double their consumption of oil within the next 10 years.  The Chinese government has tried to befriend Iran while getting along with the United States.  But if China’s oil supply is jeopardized, there could be a serious confrontation.  Since the United States and China are the world’s two largest oil importers, there could be a confrontation anyway, as oil becomes harder to find and more expensive to produce.

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Nima Khorrami Assi, a security analyst at the Transnational Crisis Project in London, wrote recently that, until now, China and also India have sought to acquire oil supplies through a policy of neutrality, nonintervention and cooperation with all governments.  But he said that the two countries are adopting different policies over the U.S.-Iran confrontation.

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India aligns with the United States, Japan and the Arab kingdoms in the Gulf Cooperation Council, which so many Indians work overseas and which are potential customers for India’s information technology products.  But China, in his view, is joining Russia as a protector of Iran, splitting the world’s major powers into two competing blocs.  I can’t say whether is true, or whether there is any truth in reports that China is supplying Iran with advanced military technology.  But these are things that could be true, or could be true in the future if they aren’t happening now.

A writer for Forbes asserted that if the Strait of Hormuz is closed, even temporarily, world oil prices could triple.  That’s the last thing the United States or the European Union nations need, as they struggle to pull out of the deepest recession since the 1930s.

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But it might not come to that.  Pepe Escobar, roving correspondent for Asia Times, noted that Pakistan has given the go-ahead to a new pipeline which will bring Iranian natural gas to the Indian subcontinent, bypassing any naval blockage..  He noted that Iran has excellent relations not only with China and Russia, but also Iraq, Afghanistan, Pakistan, not to mention Venezuela, Ecuador, Bolivia and other nations of the non-aligned movement.

The great danger, as he sees it, is escalation of the low-intensity war that the United States is waging against Iran into a major military conflict.  The United States is losing economic power, but it still has military power.  The temptation will be to try to leverage military power into economic power.

Click on China and India: Rival Middle East Strategies for Nima Khorrami Assi’s article for Al Jazeera English.

Click on The myth of an isolated Iran for Pepe Escobar’s article for the Asia Times of Hong Kong, reprinted by Salon.

Click on Iran’s Real Weapon of Mass Destruction Is Oil Prices for Daniel Fisher’s article in Forbes.

Click on Pakistan speeds pursuit of Iranian pipeline, defying U.S. for a report in McClatchy Newspapers.

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