Wednesday, August 18, 2010

So Much For The Sanctions...

Speaking of Iran, the whole sanctions regime endorsed by the United Nations and strengthened by the United States and Western Europe seems to be rapidly falling apart. Iran and Russia have struck a deal to begin the fueling process at their Russian-built nuclear reactor in Bushehr. Russia began work on the reactor back in 1994, but progress has been incredibly slow, and at times has stopped entirely (partially in response to requests to Russia from the United States that they halt work as part of the “isolate Iran” foreign policy plan). But now Russian officials say that they will start loading nuclear fuel into the plant on August 21, with Iranian officials saying the plant will go online by the beginning of September.

Meanwhile Russia's LUKoil has delivered shipments of gasoline to Iran this month as well. While Iran has vast oil reserves, they lack oil refining capacity, meaning that they have to import much of their gasoline (perhaps as much as 40%). The US and Europe passed a secondary round of sanctions that go beyond the most recent United Nations sanctions, which specifically target the nation's gasoline imports – the idea being that a shortage of gasoline would cause public unrest that could bring about the end of the A-jad regime (a bit of wishful thinking there). But LUKoil's recent deliveries show that Russia's not crazy about the idea of isolating Iran, who is one of their major trading partners. China and India have also indicated that they are not planning to go along with the oil and gas boycott of Iran either. And now you can add Turkey to that list as well, last Thursday the Turkish government said they would support Turkish companies if they decided to sell gasoline to Iran; perhaps another clear indication that after nearly two decades of trying to join the European Union club, Turkey is looking to carve out a niche for itself as a region power in the Middle East.

And to quote the old TV pitchman: “but wait, there's more.” Last week Iraq's oil ministry held talks with their Iranian counterparts and were “open” to an Iranian proposal to build a natural gas pipeline across their country so that Iran could start selling their natural gas to Syria. Iran has one of the world's largest reserves of natural gas and have recently been talking with Pakistan as well about a proposal to build a pipeline to their country as well. But the Iraq/Syria pipeline deal is particularly interesting since not too long ago (say the 1980s), Iraq and Iran were mortal enemies. Since the US-led invasion that toppled Saddam Hussein though, the two countries have set aside much of their old animosity, with Iran wielding an increasing amount of influence in Iraq.

You can chalk that up as another unintended consequence of the Iraq War II. Something to keep in mind if we decide to take military action against Iran, a decision that might be helped along by the continuing erosion of the sanctions regime against that country.
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