Roger Stern and Bernard Haykel: Learning the Soviet Lesson on Iran
[Roger Stern is research fellow in oil and energy with the Middle East Project at Princeton University, where Bernard Haykel is professor of near eastern studies.]
Since Mahmoud Ahmadinejad rose to power in 2005, European and Saudi policy towards Iranian nuclear weapons development has been straightforward: fatalism. For countries who would be directly threatened if Iran gets its bomb, this is baffling.
Europe and Saudi Arabia have enormous leverage over Iran in the form of trade and energy investment sanctions. Their failure so far to use it has divided what should be a natural alliance to moderate the Iranian regime.
Instead, Europe prefers to talk. This would be fine if Iran were negotiating in good faith, but as we discovered at the weekend, this is not the case. As things stand so far, by indulging Europe’s love of talk, Iran has met its apparent objective, which is to buy time to develop nuclear weapons.
Alarmingly, despite the growing belligerence of Iran’s government, Europe seems more anxious than ever to make new energy investments in Iran. European energy firms such as Shell and Spain’s state-owned Repsol recently confirmed a $10 billion investment in Iran. Italy’s ENI and Norway’s Statoil, as well as many private companies, have also made large energy investments. In return, Mr Ahmadinejad blamed Europe for the civil unrest in Iran after the recent elections.
Europe must cut off its energy investments immediately if Iran continues to default on its obligations for transparency under the Nuclear non-Proliferation Treaty (NPT). Such an investment ban would spare Europe a spectacular humiliation. If it does not draw the line with Mr Ahmadinejad soon, it may find itself making energy deals with the Islamic Revolutionary Guard Corps itself.
That is the stick, but there must also be a carrot. Europe needs to sweeten the pot for Iranian compliance, since previous incentives have been miserly. Iran’s reward for better behaviour should be the promise of massive European investment in the biggest energy prize in Iran: modernising its obsolete gas-powered electricity generation infrastructure. There is no faster, cheaper way to free up more Iranian gas for power generation and export.
Such incentives will also allow Iran to save face, since all along it has insisted its nuclear programme is about electric power.
Saudi Arabia could play an even larger role. Though it has gone almost unnoticed, the Kingdom has become a powerful moderating force in the Middle East. By outspending Iran and Syria in the Lebanese elections this summer, the Saudis engineered victory for the moderate Saad al Hariri. This displaced Iran’s militant proxy, Hizbollah, from its total command of Lebanese politics.
Next, the kingdom should reprise its greatest peacemaking performance: the 1986 oil price collapse. Saudi Arabia has been given little credit for this effort, which secured western victory over the Soviet Union in the Cold War. Here’s the story: while some other Opec members cheated on their quotas by overproducing in the early 1980s, Saudi Arabia cut its production to defend the price of oil. In 1985, after years of sacrifice, the Saudis reversed course and opened the taps to regain market share. The consequent price collapse bankrupted the Soviet Union, which relied on oil for its only hard-currency earnings.
Iran’s situation now is like the Soviet Union’s then. If it does not comply immediately with international demands for transparency on weapons development, Saudi Arabia could force a drastic reduction of Iran’s revenue by producing some or all of its four million barrels a day of spare capacity. Iran’s Opec production quota violations have approached historic highs, so there is a strong precedent for such a Saudi production increase...
Read entire article at The National (UAE)
Since Mahmoud Ahmadinejad rose to power in 2005, European and Saudi policy towards Iranian nuclear weapons development has been straightforward: fatalism. For countries who would be directly threatened if Iran gets its bomb, this is baffling.
Europe and Saudi Arabia have enormous leverage over Iran in the form of trade and energy investment sanctions. Their failure so far to use it has divided what should be a natural alliance to moderate the Iranian regime.
Instead, Europe prefers to talk. This would be fine if Iran were negotiating in good faith, but as we discovered at the weekend, this is not the case. As things stand so far, by indulging Europe’s love of talk, Iran has met its apparent objective, which is to buy time to develop nuclear weapons.
Alarmingly, despite the growing belligerence of Iran’s government, Europe seems more anxious than ever to make new energy investments in Iran. European energy firms such as Shell and Spain’s state-owned Repsol recently confirmed a $10 billion investment in Iran. Italy’s ENI and Norway’s Statoil, as well as many private companies, have also made large energy investments. In return, Mr Ahmadinejad blamed Europe for the civil unrest in Iran after the recent elections.
Europe must cut off its energy investments immediately if Iran continues to default on its obligations for transparency under the Nuclear non-Proliferation Treaty (NPT). Such an investment ban would spare Europe a spectacular humiliation. If it does not draw the line with Mr Ahmadinejad soon, it may find itself making energy deals with the Islamic Revolutionary Guard Corps itself.
That is the stick, but there must also be a carrot. Europe needs to sweeten the pot for Iranian compliance, since previous incentives have been miserly. Iran’s reward for better behaviour should be the promise of massive European investment in the biggest energy prize in Iran: modernising its obsolete gas-powered electricity generation infrastructure. There is no faster, cheaper way to free up more Iranian gas for power generation and export.
Such incentives will also allow Iran to save face, since all along it has insisted its nuclear programme is about electric power.
Saudi Arabia could play an even larger role. Though it has gone almost unnoticed, the Kingdom has become a powerful moderating force in the Middle East. By outspending Iran and Syria in the Lebanese elections this summer, the Saudis engineered victory for the moderate Saad al Hariri. This displaced Iran’s militant proxy, Hizbollah, from its total command of Lebanese politics.
Next, the kingdom should reprise its greatest peacemaking performance: the 1986 oil price collapse. Saudi Arabia has been given little credit for this effort, which secured western victory over the Soviet Union in the Cold War. Here’s the story: while some other Opec members cheated on their quotas by overproducing in the early 1980s, Saudi Arabia cut its production to defend the price of oil. In 1985, after years of sacrifice, the Saudis reversed course and opened the taps to regain market share. The consequent price collapse bankrupted the Soviet Union, which relied on oil for its only hard-currency earnings.
Iran’s situation now is like the Soviet Union’s then. If it does not comply immediately with international demands for transparency on weapons development, Saudi Arabia could force a drastic reduction of Iran’s revenue by producing some or all of its four million barrels a day of spare capacity. Iran’s Opec production quota violations have approached historic highs, so there is a strong precedent for such a Saudi production increase...