EDITORIAL: Iran’s oil risks to global economy
Once again, regrettably and mysteriously, the developed world finds itself lockstep in its eagerness to attack Iran.
The prelude is eerily similar to the modus operandi in the build-up to the Iraq war.
We revisit this topic again simply because if actions against Iran trigger a shutdown of the Strait of Hormuz, through which about 40 per cent of the world’s daily seaborne oil passes, oil prices will spike, the world’s teetering economy will slump, hastening another global financial crisis.
It is useful to remember that the United States is in an election year and a military attack on a weak enemy is never bad strategy. It would however unleash a global tsunami on an already fragile economic recovery.
We say regrettably because Iran has not threatened any other country, and war should never be used simply because the current art of diplomacy is inadequate and, quite frankly, not a preferred tool nowadays in the conduct of international affairs. The threat of war or sanctions is the solution.
A quick view of the United States military presence around Iran, coupled with the Iraqi experience of being attacked for supposed weapons of mass destruction that did not exist (nor were used to threaten the United States), reveals why Iran may be so motivated to develop a nuclear weapon.
Last month, the United States signed into law the National Defence Authorization Act, freezing any and all financial institutions that deal with Iran out of America’s financial markets. This action is equivalent to a financial bomb.
As a signatory to the Non-Proliferation of Nuclear Weapons Treaty, Iran maintains it has every legal right to enrich uranium for peaceful purposes, such as making nuclear fuel rods for a research reactor, and is claiming that all its current work is toward this end.
Even so, many analysts say there’s nothing in the treaty that provides for military action to pre-emptively prevent any nation-state from carrying out such work.
In fact, there are no international laws or treaties that could justify the action.
We say mysteriously because this is a particularly horrible economic moment to go about risking much higher oil prices.
In each of the years 2008, 2009 and 2010, significant worries emerged that Western nations might attack Iran. Here in 2012, similar concerns are once again at the surface.
Even if the strait remains open but Iran is blocked from being an oil exporter for a period of time, it bears mentioning that Iran is the third largest exporter of oil in the world after Saudi Arabia and Russia.
Despite the speculation, the risk to the global economy from an attack on Iran is serious enough to warrant our attention. The economic stakes are much too high and the timing might not be an accident.
The very last thing the world economies need is increased oil prices, which is precisely what a war with Iran would deliver.