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A Nuclear Armed Iran Will Increase Economic Insecurity In The Middle East

270px-Persian-Gulf-missileMany international investors are well aware that the deadline for a nuclear agreement between Iran and the West is November 24th. It has become a contest of wills between the United States government and the Iranian mullahs. The fear in the United States is that the Obama Administration desperate for a deal, will give away too much. The Iranians want to keep the option of becoming a nuclear power as part of their strategic planning. The United States and the geographic neighbors of the Iranians want to prevent this from becoming reality. Given this situation, it is highly unlikely that a deal will be struck by the deadline.

International Negotiations  Over Iranian Nuclear Program

International Negotiations Over Iranian Nuclear Program

What is most likely is an time extension, so the negotiations can continue. This allows the hope for a later agreement. It also permits the Iranians the luxury of time to move forward with their ambition to acquire a nuclear weapon. It is a repeat of the strategy the North Koreans used during the Clinton Administration in the 1990s. The American president continued with the negotiations as the Korean government ran out the clock. Once the government in Pyongyang was able to announce they had nuclear capability, there was no further need for dialogue.

It was a major failure of American foreign policy, that has not been widely publicized. The American president had been duped and since then, the North Korean government has become a greater threat to security in the region. It is only the economic weakness of the Koreans and the restraint exercised by China on them, that prevents even more trouble in the region.

The Supreme Leader Of Iran Ali Khamenei

The Supreme Leader Of Iran Ali Khamenei

This scenario is about to repeat itself in the Middle East. Sanctions on Iran have been somewhat successful in bringing the Iranians to the bargaining table, but have achieved little in getting them to abandon their nuclear ambitions. The hapless Obama Administration foolishly reduced some of the pain of the sanctions that had been in place, as a way to induce the Iranians to be more reasonable. It will be increasingly difficult to reimpose them, never mind making them more stringent if negotiations fail. Worse yet that a deal is reached, that has little or no meaning.

The difference between the situation in Korea and the Middle East is that other countries in the region were able to accommodate the change in the strategic balance of power in Northeast Asia. To the north China and Russia have no real fear of Korean aggression. To the south, Japan and South Korea fall under the American nuclear umbrella. If the North Koreans would attack militarily and actually use nuclear weapons, the United States could well decide to wipe North Korea off the map.

The Middle East

The Middle East

In the Middle East, the geopolitical situation is quite different. Whereas the immediate neighbors of Iran are not very tolerant of the idea of a nuclear Iran, Israel absolutely refuses to permit it. The Israelis are quite prepared to believe the propaganda emanating from Iran. That is that the Iranians continue to call for the defeat and absolute destruction of the state of Israel. Part of the policy of the Americans over the last few years, has been to restrain the Israelis from attacking Iran as they did Iraq in 1981. Now with Iran only months away from acquiring nuclear weapons, the Israelis know the window of opportunity is closing.

The 2006 the United Nations imposed sanctions went further than the American imposed restrictions that were enacted after 1979 and strengthened again in 1995. This is because it now involved a worldwide effort, to prevent the Iranians from acquiring the ability to produce nuclear weapons. The problem with the sanctions are that they have not prevented the Iranian progress with their nuclear program, which they insist is only for peaceful purposes. Why a nation with abundant oil and natural gas reserves would be so adamant to develop nuclear energy, stretches the limits of credulity.

Iranian Nuclear Program

Iranian Nuclear Program

The sanctions imposed by Western powers and the United Nations have made life difficult for the Iranian people. This has caused some in the West to question the legitimacy and morality of these very sanctions. An additional problem is that where the West wants to continue to slam the economy of Iran, to induce a change in government policy there, beginning in 2010 and now intensifying, China and Russia do not.

On the positive side for the Western powers falling oil prices have put more pressure on the Iranian government. Oil revenue had already been reduced by half because of the sanctions are now due to fall even further. As part of their foreign policy objectives, Saudi Arabia is complicit is helping international oil prices to reach levels not seen in four years. The Saudis are well aware that the Iranians need oil prices to be well above $100.00 USD (United States Dollar) to balance their national budget and $135.00 USD for the oil industry inside the county to be truly profitable. The price for Brent oil is now hovering around $80.00 USD.

Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, and other monarchies that circle the Persian Gulf are not happy with Iranian nuclear ambitions. If Iran is successful in becoming a nuclear armed power it will cause an arms race in the region. It will also encourage other countries in the area to aspire to nuclear ambitions as a self defensive mechanism. Although it has never acknowledged the fact, Israel is the only nation in the region that has the ability at present to detonate a nuclear weapon.

Iranian Nuclear Facilities At Arak

Iranian Nuclear Facilities At Arak

The Iranians have reported that the United States has agreed to allow Iran to operate about 4,000 centrifuges. Since Iran has 19,000 of these devices of which 10,000 are actually working, that would be a major compromise. If this was agreed upon it would lengthen the time the Iranians would need to produce the fuel for atomic bombs. However, what could very likely result is a questionable policy of cat and mouse in enforcement. It will be a repeat of what international inspectors experienced in Iraq, before the American invasion of that country in 2003. That is what many experts in the West, particularly those in the United States fear. That is an agreement, that has no real mechanism for compliance and supervision.

The Capture Of Saddam Hussein By American Soldiers

The Capture Of Saddam Hussein By American Soldiers

The experience of what happened with the Iraqis government, that half-heatedly complied to Western demands remains very much on the minds of the leaders of Iran. The circumstances of what occurred in Libya with the overthrown of Qaddafi, even after he surrendered his weapons of mass destruction program, compel the Iranians to be even more cautious. Although they might well count on the present American administration to not engineer an invasion or attack of their country, in 2017 there will be a new American President. It is quite evident that this new Commander in Chief, will be more assertive in projecting the power and foreign policy objectives of the United States.

A year ago the Iranian economy was near collapse, when the Obama Administration unwisely allowed some sanctions to be lifted. The interim agreement allowed the economy of Iran to recover to the point that they no longer have to consummate a deal next week. The Americans had given up a major bargaining chip and have very little to show for it a year later. The insistence of the Americans that the results of the sanctions relief can be reversed, miss the point. Without an agreement, a year from now the Iranians will have nuclear weapons in their possession.

American Made Tanks In Iraq

American Made Tanks In Iraq

Sanctions relief have allowed the present economy recovery in Iran to occur. Inflation has declined and exports are up. Iran is now open for business and is looking like a better investment opportunity, than previously. The economy has been brought back from a collapse, with no real concession on the part of the Iranians.

What does this diplomatic impasse lead to? Iran is going to become a nuclear power. The present American administration under Obama does not have the will nor the courage to stop it. Israel may wish to attack Iran and may actually do so, but it is not a war Israel can win. An attack on the nuclear facilities which is the most likely scenario, will not prevent Iran from acquiring nuclear weapons. Many of the atomic sites have been hardened and hidden, so the Israelis air force will be unable to take them all out.

The nations in the Persian Gulf will move to purchase both offensive and defensive weaponry, from the weapon stockpiles in Europe and the United States. The new American president will be left with the need to organize the wealthy but vulnerable nations around the Gulf, in a defensive alliance under American tutelage.

Iran will of course use the new leverage it has militarily, by threatening its neighbors. This can be done both covertly and overtly. As a result, many international corporations will reconsider investment plans in the region, as the area becomes more destabilized. There may well be a number of Western assets that will be sold, as the threat of war increases over time.

American Forces In The Persian Gulf

American Forces In The Persian Gulf

The United States and its allies will insist on keeping the Persian Gulf particularly the Strait of Hormuz, open to commerce and more importantly oil shipping. If the Iranians attempt to close this vital waterway, war could well result. It could easily escalate to a nuclear exchange, if a miscalculation or bad judgment call is made in a crisis.

As can be expected more oil wealth by the local privileged elite, will be relocated in Europe and North America. It is a way to safeguard investments in case a catastrophe occurs in the region. That would be the use of nuclear weapons or a major war.

What is certain to all analysts, will be an increased caution for future investment and development of the region by foreign interests. Insurance costs will need to be higher, to cover the higher risk in doing business in this area of the world. Major banks will be more guarded in lending money to business ventures in the region. This will lead to slower economic growth and more dissatisfaction among Arab youth, leading to even more political instability. The world could well witness the overthrow of one or more governments in the Persian Gulf. If nothing else, the Middle East and the world will be a far more dangerous place, with a nuclear armed Iran.

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