Guest Post by Ron Paul
In May, President Trump pulled the United States out of the Iran nuclear deal despite Iran living up to its obligations and the deal working as planned. While the US kept in place most sanctions against Tehran, China and Russia – along with many European countries – had begun reaping the benefits of trade with an Iran eager to do business with the world.
Now, President Trump is threatening sanctions against any country that continues to do business with Iran. But will his attempt to restore the status quo before the Iran deal really work?
Even if the Europeans cave in to US demands, the world has changed a great deal since the pre-Iran deal era.
President Trump is finding that his threats and heated rhetoric do not always have the effect he wishes. As his Administration warns countries to stop buying Iranian oil by November or risk punishment by the United States, a nervous international oil market is pushing prices ever higher, threatening the economic prosperity he claims credit for. President Trump’s response has been to demand that OPEC boost its oil production by two million barrels per day to calm markets and bring prices down.
Perhaps no one told him that Iran was a founding member of OPEC?
When President Trump Tweeted last week that Saudi Arabia agreed to begin pumping additional oil to make up for the removal of Iran from the international markets, the Saudis very quickly corrected him, saying that while they could increase capacity if needed, no promise to do so had been made.
The truth is, if the rest of the world followed Trump’s demands and returned to sanctions and boycotting Iranian oil, some 2.7 million barrels per day currently supplied by Iran would be very difficult to make up elsewhere. Venezuela, which has enormous reserves but is also suffering under, among other problems, crippling US sanctions, is shrinking out of the world oil market.
Iraq has not recovered its oil production capacity since its “liberation” by the US in 2003 and the al-Qaeda and ISIS insurgencies that followed it.
Last week, Bloomberg reported that “a complete shutdown of Iranian sales could push oil prices above $120 a barrel if Saudi Arabia can’t keep up.” Would that crash the US economy? Perhaps. Is Trump willing to risk it?
President Trump’s demand last week that OPEC “reduce prices now” or US military protection of OPEC countries may not continue almost sounded desperate. But if anything, Trump’s bluntness is refreshing: if, as he suggests, the purpose of the US military – with a yearly total budget of a trillion dollars – is to protect OPEC members in exchange for “cheap oil,” how cheap is that oil?
At the end, China, Russia, and others are not only unlikely to follow Trump’s demands that Iran again be isolated: they in fact stand to benefit from Trump’s bellicosity toward Iran. One Chinese refiner has just announced that it would cancel orders of US crude and instead turn to Iran for supplies. How many others might follow and what might it mean?
Ironically, President Trump’s “get tough” approach to Iran may end up benefitting Washington’s named adversaries Russia and China – perhaps even Iran. The wisest approach is unfortunately the least likely at this point: back off from regime change, back off from war-footing, back off from sanctions. Trump may eventually find that the cost of ignoring this advice may be higher than he imagined.
Iran has said that if their oil exports are closed, then they will close the straight of Hormuz to international traffic. Can they do it? Yeah, probably. If for no other reason than it would result in armed conflict between Iran and the US. Some guys don’t wanna risk millions in oil/ships by sailing them into a war zone. Go figure…
Hello $250 oil.
Trump’s Iran policy brought to you via courtesy of …….
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Leave it to Ron to smoke out the truth. Great interview today with lefty Chris Hedges and a professor, Alfred McCoy that has an actual working brain. McCoy talks about how empires can crumble quickly when they reach the tipping point where the momentum that carried it to it’s pinnacle of maximum influence and power gives way to over-reach and collapse. He makes the case that the u.s. is there now and this, if Ron’s hunch proves correct, is an excellent portend of such. Good bye petrodollar-goodbye empire. Can’t happen fast enough to please me.
I try to wonder what the end of the empire will look like and how it will go down. A devastating economic collapse is baked into the cake. The consequences of that are ominous. What kind of actions will be taken in Washington in reaction to it are bound to be ridiculous and beyond counter-productive. What other calamities erupt from the chaos and disorder can be imagined. Perhaps a complete breakdown in the rule of law. You can see signs of things to come, the divisions that are rife, the mood of what people are saying as well as the other various warning lights that are flashing. I can imagine that for most it will be a tsunami of misery.
I also desire the end of the empire, however I dread the convulsions that will accompany that end. My hope is that in the aftermath survivors can regain liberty, though I see plenty of signs saying that may be wishful thinking. Will the intelligence and surveillance apparatus remain in place? The prison industrial complex? The grasp on the levers of power is hard to pry loose, even in a dying empire. Then you have to worry about the intentions of the new hands that end up pulling those levers once the old hands have been pried loose, and what international bodies like the UN, and BIS would do.
The light at the end of the tunnel I see is that reality will finally slap the shit out of people and they will either become competent, productive, straight and stalwart, or they will die. There will be tragedy, but it gives me hope because the survivors will be people of good strong character who will be shaping the post empire future. Or we could be over-run by carpetbaggers. Who knows.