Commodity Economies Part 3-Iran-Overextended and Vulnerable

Commodity Economies Part 3-Iran-Overextended and Vulnerable

The 82 million Iranians are not Arabs, but rather derive from the Iranic peoples of a diverse Indo-European origin. They count their lineage back to the proud Persian Empire. Unlike the majority of the Middle East, they are Shiite rather than Sunni, which is best thought of as similar to the energy of the Lutheran Protestant zeal of the 1650's within the Christian church. Thus it was that Iran was the first nation to throw off the American yoke in the 1979 Iranian Revolution when the population was approximately 39 Million. Over forty years, the population of Iran has doubled. This staggering population expansion (mirrored in Turkey too) explains Iran’s drive to expand post its civil war (Revolution). It was soon at war with it Sunni Neighbour Iraq in 1980, a bloody war that killed an estimated 1 to 2 million over eight years. Not only was Iran impeccably set against it Sunni neighbours, as it ultimately sought to re-establish a new Persian Empire, but it was determinedly set against American influence in the region. Thus the Iranian leaders had to live through what they perceived as a period of great vulnerability during the first and second gulf wars with massed American forces close to its borders and America military dominance apparently unchallengeable. However, all that changed when America got  bogged down in an occupational guerilla war in Iraq that started to bleed the finances and political will of America dry. That was the point at which Iran ramped up its asymmetric proxy Guerilla forces, seeking to exert control in Sunni regions.

With the America withdrawal from Iraq, Iran cemented its control over the Shia dominated southern section of the country and moved to a position of prime influence in the middle third, leaving only the Kurdish part of Iraq independent from Shia control. Both Obama and Trump have expounded a policy of withdrawal from the region mistakenly thinking that America was an independent oil producer. This created a paradigm similar to the end of the Vietnam War, which ultimately resulted in America's enemies taking control of the region they had been fighting for so long. In this case Iran and Russia.

In summary, Iran since 1979 has been an expansive and aggressive power seeking to control the middle east, but its enemies in the form of its Arab Neighbours and America are more numerous and more militarily capable. Thus it was forced to enact a policy of asymmetric proxy warfare to ware down it enemies. Parallel to this was the lesson learnt from Israel that was similarly positioned as a less populous nation. Its acquisition of nuclear weapons secured it nation-state and thus Iran has been doing all it could to develop and be able to deploy similar weapons. The Obama deal was one of the most absurd deals ever done by America. Seeking a legacy political to cast him in the role of a heroic President, Obama paid the Iranians with planes of dollars (literally) to pause their nuclear program and claim political success. That money was then almost immediately used to fund Iranian proxy militaries working against American interests. But worst of all the pausing of Iran's nuclear program was just that, a pause. Allowing it to maintain its progress and sit very close to the point where in a matter of weeks Iran could rush for a nuclear breakout by enriching enough uranium to make a number of bombs which would then be placed in the ready-made warheads of missiles.

This nuclear sword of Damocles sits over Iran's neighbours, and hence the paranoia of Israel and Saudi Arabia. Thus, in my opinion, Trump was correct is describing the Obama Nuclear deal as crazy and to rescind it and continue with the maximum sanctions necessary. The fact that the Europeans do not agree with this perspective is testament to possibly bribery (as claimed by the Iranians) but also the head in the sand perspective of European politicians who follow the Chamberlin thought peace at all costs ideology, despite firm evidence that this does not work in the face of an expansive power like Iran. Even if that expansive energy is restrained by sanctions to limit its economy. The sanctions are not only designed to limit the whole economy and Irans ability to fund its military adventures, but also to split the extended religious leadership away from the moderate and highly educated body of the Iranian population. So far they have not had an enduring effect perhaps due to the hidden energy of national pride as Iran, under duress, polarises against its enemies as the Religious regime's press uses external threats such as the recent assignation of General Sulaimani to bind their nation to a common cause and take focus away from their mismanagement of the economy.

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Iran Oil
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Iran brent crude

The Iranian economy is highly dependant on its oil exports. Both production and exports have dropped massively. Although we can assume a certain percentage of smuggled exports are taking place to circumvent the sanctions. This coupled with the oil price decline, that we expect in 2020 down to sub $30, will make the Iranians increasingly desperate. Indeed the capture of two tankers in the Straits of Hormuz, the shooting down of a US drone and the attack on a Saudi oil refinery, has shown a pattern of increasing intensity which we expect is only set to continue into a very unpleasant crescendo. Somewhere in this process, the Iranians should be expected to attempt a nuclear breakout. If caught beforehand we should expect to see an American/Israeli preventive attack to destroy all of the Iranian nuclear facilities. This would then force Iran to the negotiating table as enduring sanctions for a dead nuclear program would seem illogical, however, if Iran manages to achieve nuclear status in secrecy the regional game will change considerably and a middles eastern nuclear arms race will have started.

Notably, Trump did not respond to the shooting down of its drone, or the Saudi refinery attacks which only seems to have emboldened Iran's aggressive actions. Proving the temperance in the face of desperate aggression never solves the problem. Then came the attack on the US Embassy which once again was very serious, demanding helicopter gunships to threaten the encroaching crowds. Hence the Iran orchestrated attack demanded a response and the Whitehouse Hawks finally won the argument. That response was in my opinion appropriate and very successful, taking out the No 2 in Iran and many of his closest associates whilst in Iraq. Notable was the degree of arrogance that after their actions they thought they were untouchable. However whatever belligerent claims Iran's leadership has made. This hit was large enough to make those alive consider their mortality.

As for the killing of a terrorist leader the US has been doing that for two decades so it is not a departure from any normal operating procedures. What was a surprise is that the terrorist in question worked directly for an enemy government and that for a least a decade the US Executive was worried about the reprisals if they killed Sulaimani.

My concerns discussed in Houston We Have a Problem with Trump’s decision-making process is that without his ring of Generals to constrain him, he is becoming increasingly unpredictable and erratic and potentially dangerous. This decision although reinforces my concerns that the next one might not be so well-judged. However, that will not have been missed by the Iranian, Russian or Chinese leadership. Such Unpredictability can work as a deterrent in such situations as it creates fear as to what might come next. Of course, Iran is not the only desperate party in this equation, as this strike is very well-timed for Trump as a distraction from the impeachment process, and I am sure that factored into his thought process and will in the coming weeks if the situation escalates, making Trump more likely to use force if provoked.

Whatever happens, Iran is in a desperate corner trapped like a rat, so it cannot to just choose to do nothing. Whilst it cannot challenge the US in a conventional military struggle, its response will be asymmetric. My guess would be a delayed response attack, some months in the future for public consumption when America's guard is down. Meanwhile, Iran will take every step possible to make a secret nuclear breakout a reality.

Simultaneously America must not be distracted and lose site of its real threats in the form of China and Russia, as its to faces the effects of the impending Oil price in 2020 decline.

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