The Islamic Republic of Iran said again this morning that it was going to cut off a key waterway for the transport of global oil supplies, if the United States and other European partners impose new punitive economic sanctions on Iran’s oil exports in response to its ongoing nuclear weapons development program. The threat is significant because Iran produces 20% of the world’s oil.
Thus far, large oil-importing Asian nations such as China and Japan have refused to join an Iranian oil boycott that is now threatened by Western European Nations after successive rounds of United Nations-endorsed economic sanctions failed to bring the Iranian weapons program to a halt. Iran, of course, is a theocratic republic with a legal system run under Muslim Sharia law, and is openly hostile to Western democratic ideals. Iran denies that its ongoing nuclear development is for producing weapons.
In response to Iran’s threat, the United States Navy said, in effect, ‘make our day.’ A spokesperson for the 5th fleet, which is based in the region, said “Anyone who threatens to disrupt freedom of navigation in an international strait is clearly outside the community of nations; any disruption will not be tolerated,” according to wire service reports.
Thus is the state of a war of words that has been escalating all year, with the Iranian Navy now conducting ‘exercises’ in the Persian Gulf near the Strait. So far the oil futures markets are taking a ‘wait and see’ position with crude trading at about $100 a barrel in New York, off slightly in light trading, according to Bloomberg.
The latest potential fuel crisis comes as the U.S. continues to be heavily dependent on oil imports, buying 62,000,000 barrels a month from the Persian Gulf region out of a total of 336,000,000 imported. None comes from Iran, but since oil is a fungible commodity, removing 20% of the word’s supply has potentially disastrous negative consequences for the lackluster recovery of the U.S. economy that is underway with 20 million people unemployed or under-employed.
It also presents a political challenge for President Obama since Communist China is Iran’s largest customer for oil exports, and the Middle Kingdom has no interest in supporting the U.S. or U.S.-based multinational corporations. What ultimately happens is unknown. One ‘known known’ is that shutting down the Strait would likely destroy Iran’s own economy in what is now a deadly game of brinksmanship.
The larger issue remains an amorphous U.S. strategy conducted and – alas – at times directed in Washington by big money interests that care not about the health and welfare of the United States or its citizens. U.S. energy policy going all the way back to President Carter and the first OPEC oil embargo four decades ago has failed under one-term Carter and every successive President and Congress since – Democrat or Republican – to eliminate this security threat. The corresponding national economic decline posed by these oil imports and the resulting transfer of U.S. wealth overseas is visible on our crumbling roads and bridges flanked by vacant commercial buildings and repossessed houses.
Unfortunately, as a result of political decisions of our government comprised of craven “pay to play” politicians, we are not as free as we should be right now to act decisively in our own interest. We remain dependent on foreign oil from nations run by despots who are openly or covertly hostile to us. This ongoing national welfare problem distorts our foreign policy and sends our patriotic young men and women off to face death in needless and as Iraq proved unfunded wars. We might be facing another such war, and it is our own fault.
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