Iran ‘The prize’

With the 14 July 2015 agreement between Iran and the P5 + 1 group (the five permanent members of the UN Security Council plus Germany) on Iran’s nuclear energy programme, enormous investment opportunities for multinational corporations open up in Iran and significant strategic changes in the Middle East may be in the offing. The deal should lead to the removal of US and European Union sanctions on Iran in early 2016 and give Iran access to over $100bn frozen in overseas banks. Sanctions have cost Iran $160bn in oil sales in three years. The US has imposed sanctions on Iran since 1979; these may be removed. Israeli Prime Minister Netanyahu was furious at the deal, calling it a ‘stunning, historical mistake’ that will make the world a ‘more dangerous place’. Saudi Arabia threatened to develop its own nuclear industry. Saudi Arabia and Israel fear an economically strong Iran which the removal of sanctions could bring. They also fear that their strategic significance to imperialism will be downgraded and that the advantages that have come with it will be reduced.

Despite repeated US, Israeli and EU accusations, Iran has always denied that it intended to produce nuclear weapons. Iran’s Supreme Leaders, Grand Ayatollah Khomeini and then Khamenei, issued fatwas prohibiting Iran’s manufacture and use of nuclear weapons. US National Intelligence Estimates twice told the US government that Iran was not building a nuclear bomb. Israel possesses up to 200 nuclear weapons, but does not admit to them and, along with the US, maintains a nuclear monopoly in the Middle East. Netanyahu warned, ‘Israel is not bound by this deal with Iran, because Iran continues to seek our destruction. We will always defend ourselves.’ Israel will mobilise its Zionist lobby to try and vote the deal down in the US Congress.

Under the deal Iran has agreed to freeze its nuclear programme in exchange for the removal of sanctions. It will make its heavy water reactor in Arak inoperable and not build any new heavy water reactors for 15 years. Iran will send spent nuclear fuel abroad, dismantle two-thirds of its centrifuges and reduce its stockpiled uranium by 96%. These measures ensure that Iran cannot build a nuclear bomb within a year. Some 150 International Atomic Energy Agency (IAEA) inspectors will be stationed in Iran to monitor the agreement and they will have access to military sites. Should Iran comply with the terms of the deal, sanctions will be removed and an arms embargo will be lifted in five years. If Iran fails to comply sanctions will ‘snap-back’ in place. After 15 years, limitations on Iran’s nuclear programme are to be removed.

Given Iraq’s experience of IAEA inspections before 2003, Iran is opening itself up to the possibility of intrusion into its defence infrastructure. In Iraq, the inspectors’ failure to find anything resulted in accusations that the government was covering something up. The US can always claim that Iran has broken the terms of the deal.

Under sanctions, Iran’s oil exports have almost halved in three years. Iran is reckoned to be the world’s third largest holder of oil and gas reserves. BP estimates that Iran has the second-largest natural gas reserves after Russia, with 15.8% of the world’s total. Bloomberg, the business media group, announced ‘Iran is the big prize’. One analyst said Iran constitutes the ‘hottest emerging market in waiting, combining the consumer market and human capital potential of Turkey with the oil riches of Saudi Arabia, natural gas reserves of Russia, and mineral resources of Australia’ (The Diplomat 8 April 2015). Iran has 80 million people and the second-highest gross domestic product in the Middle East, after Saudi Arabia. Its per capita income is higher than those of Brazil and South Africa. In the days before the nuclear deal was signed, Iran was visited by oil executives from Royal Dutch Shell, France’s Total, Italy’s Eni, Russia’s Lukoil and China’s Sinopec. Automobiles account for 10% of Iran’s GDP and Iran has the biggest car market in the Middle East. Peugeot Citroen, Volkswagen and the British sports car producer Lotus have recently visited Tehran. Eight banks have been fined a combined $14.3bn by US courts for breaking sanctions on Iran; they include HSBC, Standard Chartered, Barclays and Royal Bank of Scotland. Once sanctions are lifted they will resurface in Tehran.

US strategy is to forge an alliance with a section of the Iranian ruling class. With huge multinational corporate investment in Iran, the Iranian ruling class will be less likely to oppose US plans for the region. In 2013 Russia supplied 43.2% of the EU’s gas imports, 31.4% of its oil imports and 26.7% of its coal imports. Iran can be developed as an alternative to Russia as a source of gas for Europe. The US ruling class is seeking to reduce European dependence on Russian supplies and to isolate and weaken Russia. Drawing Iran away from its ties to Russia and towards Europe and the US conforms to these objectives. However, Iran has observer status with the Russia and China-led Shanghai Cooperation Organisation and would like to become a full member of the Organisation which is a Eurasian economic, political and military alliance of six countries, soon to be joined by India and Pakistan. China buys a fifth of Iran’s oil exports and the strengthening partnership between China and Russia presents an alternative attraction to Iran’s rulers.

The US and Europe will look to Iran and Iraq’s Shia militias to shoulder more of the burden in fighting Islamic State, but the US ruling class is not about to forsake its alliances with Israel and the Gulf states for Iran. US President Obama said he was ‘prepared to go further than any other administration has gone before in terms of providing additional security assurances’. Saudi Arabia recently signed contracts for nuclear equipment with France and Russia. There will be no shortages of companies willing to profit from the Middle East arms race, whatever Iran’s trajectory.   

Trevor Rayne

FRFI 246 August/September2015


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