{"id":298,"date":"2007-05-25T08:11:07","date_gmt":"2007-05-25T13:11:07","guid":{"rendered":"http:\/\/profcutler.com\/wordpress_blog\/?p=298"},"modified":"2007-05-25T08:12:48","modified_gmt":"2007-05-25T13:12:48","slug":"petro-leverage","status":"publish","type":"post","link":"https:\/\/profcutler.com\/wordpress_blog\/?p=298","title":{"rendered":"Petro-Leverage"},"content":{"rendered":"<p><meta http-equiv=\"Content-Language\" content=\"en-us\" \/> <meta http-equiv=\"Content-Type\" content=\"text\/html; charset=windows-1252\" \/><title>In a recent interview with the F<\/title>In <a href=\"http:\/\/www.ft.com\/cms\/s\/8ec69b4e-0867-11dc-b11e-000b5df10621.html\">a  recent interview<\/a> with the <em>Financial Times<\/em>, Benjamin Netanyahu was  asked about Arab-Iranian tensions in the Gulf:<\/p>\n<blockquote><p><span class=\"bodystrong\">FT: Does the fear many Arab regimes feel for  \tIran create a strategic opportunity for Israel?<\/span><\/p>\n<p><span class=\"bodystrong\">BN:<\/span> Categorically yes.<\/p><\/blockquote>\n<p>So, how much fear do Arab regimes feel for Iran?<\/p>\n<p>It probably depends on the regime.\u00c2\u00a0 But I would argue that Saudi King  Abdullah is not playing Netanyahu&#8217;s game.<\/p>\n<p>The clearest sign of Saudi support to the Iranian regime is the current price  of oil.<\/p>\n<p>As I noted in <a href=\"https:\/\/profcutler.com\/wordpress_blog\/?p=230\">a January  2007 post<\/a>, <em>Washington Post<\/em> columnist Jim Hoagland <a href=\"http:\/\/www.washingtonpost.com\/wp-dyn\/content\/article\/2007\/01\/19\/AR2007011901497.html\"> reported<\/a> that the Bush administration was seeking to use oil as a weapon to  leverage concessions from Iran:<\/p>\n<blockquote><p>The campaign received a big boost last week when it became clear that  \tSaudi Arabia is finally worried enough about Iran to use oil as a weapon  \tagainst the regime of President Mahmoud Ahmadinejad. Saudi oil minister Ali  \tNuaimi publicly opposed Iranian calls for production cuts by the OPEC cartel  \tto halt a decline that has taken crude oil from $78 a barrel in July to just  \tabove $50 a barrel last week.<\/p>\n<p>The Saudis have enough reserve production capacity to swing OPEC prices up  \tand down at will. Their relatively small population gives them a flexibility  \tin postponing revenue gains that populous Iran lacks. Nuaimi\u00e2\u20ac\u2122s  \tpronouncement, although cast as a technical matter that had nothing to do  \twith politics, seemed to give teeth to recent warnings issued in private by  \tPrince Bandar bin Sultan, the Saudi national security adviser, that the  \tkingdom will now respond to Iranian hostility with its own confrontational  \ttactics.<\/p><\/blockquote>\n<p>That was <em>way<\/em> back in January.\u00c2\u00a0 Today, the <a href=\"http:\/\/www.ft.com\/cms\/s\/ec634918-0a25-11dc-93ae-000b5df10621.html\"> price of crude is back up<\/a> to new highs.<\/p>\n<p>Some of that is a &#8220;geopolitical premium&#8221; paid because of rising tensions  between the US and Iran.\u00c2\u00a0 But, as the <a href=\"http:\/\/online.wsj.com\/article\/SB118005655192314229.html?mod=googlenews_wsj\"> <em>Wall Street Journal<\/em> reports<\/a>, the price hike is also a consequence of  OPEC&#8211;especially Saudi&#8211;policy.<\/p>\n<blockquote>\n<p class=\"times\">Two years ago when gasoline prices in the U.S. surged to  \tthe then-lofty level of $2 a gallon, the Organization of Petroleum Exporting  \tCountries sprang into action, seeking to provide relief by pledging to boost  \toil production.<\/p>\n<p class=\"times\">Now, with gasoline topping an average of $3.20 a gallon  \tnationwide, OPEC officials say they see no reason to open the oil spigot  \twider.<\/p>\n<\/blockquote>\n<p>The <em>Journal<\/em> article emphasizes OPEC jealously over the profits of  American oil refiners.\u00c2\u00a0 I suspect there is something more geopolitical in  the Saudi refusal to flood the markets with crude.<\/p>\n<p>An <a href=\"http:\/\/www.iht.com\/bin\/print.php?id=5861435\"><em>Associated Press<\/em>  report<\/a> suggests that Iran is one of the key beneficiaries of current OPEC  policy:<\/p>\n<blockquote><p>Consistently high oil prices over the past few years have left Iran awash  \tin petroleum money.<\/p><\/blockquote>\n<p>The current price of oil is Saudi King Abdullah&#8217;s gift to the Iranian regime.<\/p>\n<p>Petro-leverage, under the circumstances, only go so far.<\/p>\n<p>There are only two other forms of leverage: floating leverage (<a href=\"http:\/\/www.guardian.co.uk\/worldlatest\/story\/0,,-6349653,00.html\">USS  John C. Stennis<\/a>) and political leverage (the threat of a so-called &#8220;velvet  revolution&#8221;).<\/p>\n<p>After that, there is only US accommodation and an alliance with the incumbent  regime.<\/p>\n<p>John Bolton <a href=\"http:\/\/www.telegraph.co.uk\/news\/main.jhtml?xml=\/news\/2007\/05\/16\/wbolton16.xml\"> made headlines recently<\/a> by suggesting that the US &#8220;attack&#8221; Iran.<\/p>\n<p>Here is the &#8220;money quote&#8221; from Bolton:<\/p>\n<blockquote><p>Mr Bolton said: &#8220;It&#8217;s been conclusively proven Iran is not going to be  \ttalked out of its nuclear programme. So to stop them from doing it, we have  \tto massively increase the pressure.<\/p>\n<p>&#8220;If we can&#8217;t get enough other countries to come along with us to do that,  \tthen we&#8217;ve got to go with regime change by bolstering opposition groups and  \tthe like, because that&#8217;s the circumstance most likely for an Iranian  \tgovernment to decide that it&#8217;s safer not to pursue nuclear weapons than to  \tcontinue to do so. And if all else fails, if the choice is between a  \tnuclear-capable Iran and the use of force, then I think we need to look at  \tthe use of force.&#8221;<\/p><\/blockquote>\n<p>Most of the attention has focused on Bolton&#8217;s support for the &#8220;use of force.&#8221;\u00c2\u00a0  But the real story may be the <em>way<\/em> Bolton talks about &#8220;regime change.&#8221;\u00c2\u00a0  He talks about &#8220;bolstering opposition groups and the like&#8221; but then doesn&#8217;t even  seem able to convince himself that the end game of &#8220;regime change&#8221; is actually  in the cards.<\/p>\n<p>Instead, Bolton appears to suggest that the <em>threat<\/em> of regime change  would convince &#8220;an Iranian government to decide that it&#8217;s safer not to pursue  nuclear weapons.&#8221;<\/p>\n<p>Is that &#8220;an&#8221; (<a href=\"https:\/\/profcutler.com\/wordpress_blog\/?p=67\">eternal<\/a>)  Iranian government that would make that decision?\u00c2\u00a0 Or is it <em>the<\/em>  (incumbent) Iranian government?<\/p>\n<p><a href=\"https:\/\/profcutler.com\/wordpress_blog\/?p=296\">Cheney may have already  decided<\/a> that it is <em>the<\/em> (incumbent) Iranian government.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In a recent interview with the FIn a recent interview with the Financial Times, Benjamin Netanyahu was asked about Arab-Iranian tensions in the Gulf: FT: Does the fear many Arab regimes feel for Iran create a strategic opportunity for Israel? BN: Categorically yes. So, how much fear do Arab regimes feel for Iran? It probably [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[6,8],"tags":[],"_links":{"self":[{"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=\/wp\/v2\/posts\/298"}],"collection":[{"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=298"}],"version-history":[{"count":0,"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=\/wp\/v2\/posts\/298\/revisions"}],"wp:attachment":[{"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/profcutler.com\/wordpress_blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}