Guest Post: Iran: Oh, No; Not Again

Tyler Durden's picture

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Iran: Oh, No; Not Again

In each of the years 2008, 2009, and 2010, significant worries emerged that Western nations might attack Iran. Here again in 2012, similar concerns are once again at the surface.

Why revisit this topic again? Simply because if actions against Iran trigger a shutdown of the Strait of Hormuz, through which 40% of the world's daily sea-borne oil passes, oil prices will spike, the world's teetering economy will slump, and the arrival of the next financial emergency will be hastened. 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.

Once again, I am deeply confused as to the timing of the perception of an Iranian threat, right now at this critical moment of economic weakness. The very last thing the world economies need is a vastly increased price for oil, which is precisely what a war with Iran will deliver.

Let me back up. The US has already committed acts of war against Iran, though no formal declaration of war has yet been made. At least if Iran had violated US airspace with stealth drones and then signed into law the equivalent of the recent US bill that will freeze any and all financial institutions that deal with Iran out of US financial markets, we could be quite confident that these would be perceived as acts of war against the US by Iran.

And rightly so.

U.S. imposes sanctions on banks dealing with Iran

Dec 31, 2011

(Reuters) - President Barack Obama signed into law on Saturday a defense funding bill that imposes sanctions on financial institutions dealing with Iran's central bank, while allowing for exemptions to avoid upsetting energy markets.

The sanctions target both private and government-controlled banks - including central banks - and would take hold after a two- to six-month warning period, depending on the transactions, a senior Obama administration official said.

Sanctioned institutions would be frozen out of U.S. financial markets.


The impact of this law was quite pronounced and immediate, with the Iranian rial falling sharply against the dollar in the first few days after the bill was signed into law.

Iran's rial falls to record low on U.S. sanctions

Jan 3, 2012

Jan 3 (Reuters) - The Iranian rial fell to a record low against the dollar on Tuesday following U.S. President Barack Obama signing a bill on imposing fresh sanctions against the country's central bank.

The new U.S. sanctions, if fully implemented, could hamper the world's major oil producer's ability to sell oil on international markets.

The exchange rate hovered at 17,200 rials to the dollar, marking a record low. The currency was trading at about 10,500 rials to the U.S. dollar last month.

Some exchange offices in Tehran, when contacted by Reuters, said there was no trading taking place until further notice.

"The rate is changing every second ... we are not taking in any rials to change to dollar or any other foreign currency" said Hamid Bakhshi in central Tehran.


That represents a more than 70% decline in just a month. Assuming that Iran trades its oil in dollars, this will not necessarily cripple its economy, but the specter of hyperinflation looms large whenever a currency falls by that much. With hyperinflation comes economic, social, and political instability, and these are, of course, precisely the aims of the US in imposing the sanctions.  And of course, everything that Iran imports will become hideously expensive -- quite rapidly.

The US is deliberately poking and prodding Iran right now. Given the glacial pace of nuclear development, we must ask ourselves, why now?

The Story

As with most things today, there is a story created for public consumption that justifies waging war against Iran. The main narrative goes something like this: Iran is trying to develop nuclear weapons, and this is intolerable, so it must be stopped.

In November 2011, the International Atomic Energy Agency (IAEA) issued a report, long denied under the prior director's tenure (Mohamed ElBaradei), finally declaring that Iran was unequivocally trying to build a nuclear weapon:

U.N. Agency Says Iran Data Points to A-Bomb Work

November 8, 2011

United Nations weapons inspectors have amassed a trove of new evidence that they say makes a “credible” case that “Iran has carried out activities relevant to the development of a nuclear device,” and that the project may still be under way.

The long-awaited report, released by the International Atomic Energy Agency on Tuesday, represents the strongest judgment the agency has issued in its decade-long struggle to pierce the secrecy surrounding the Iranian program. The findings, drawn from evidence of far greater scope and depth than the agency has previously made public, have already rekindled a debate among the Western allies and Israel about whether increased diplomatic pressure, sanctions, sabotage or military action could stop Iran’s program.


I've not yet read the report, but I am concerned about the gap between the headlines I've seen that say Iran is building a nuclear bomb and carrying out "activities relevant to the development of a nuclear device."  For example, much has been recently made of the fact that Iran has enriched some uranium to the 20% grade, but there is a huge leap between that and the 90%+ grade needed for a nuclear device.  Iran had told the world it needed the 20% grade for a medical reactor, and then created a fuel rod for that reactor.  To say that enriching to the 20% grade is the same thing as trying to build a bomb is not accurate and possibly deceptive.

As a signatory to the Non-Proliferation of Nuclear Weapons (NPT) treaty, Iran has every legal right to enrich uranium for peaceful purposes, such as making nuclear fuel rods for a research reactor, and Iran is claiming that all their current work is towards this end.

Maybe it is; maybe not. But even if a nuclear bomb is being pursued, there's nothing in the NPT that provides for military action to pre-emptively prevent any nation-state from carrying out such development work. In fact, if a preemptive strike is carried out, it will be done without the benefit of any international laws or treaties that could justify the action. 

Also left out of the narrative is any explanation of why it was okay for Pakistan to develop nuclear weapons or why North Korea is permitted to hold them.

The simple answer is because they don't have any oil. A quick view of the US military presence surrounding Iran, coupled with the Iraqi experience of being attacked for supposed weapons of mass destruction that did not exist (nor were used by Iraq to threaten the US), reveals why Iran may be so motivated to develop a nuclear weapon:

If Iraq had a nuclear weapon in 2002, it is quite doubtful the US would have invaded -- a lesson that has not gone unnoticed.

While I am not a supporter of the current repressive theocratic regime in Iran, I strongly believe that it is up to the people of any nation to decide for themselves what sort of system they will choose to live under. The Arab Spring, as messy as it was, is vastly preferable to the blunt instrument of an externally driven war. 

The Curiosity

The most curious thing about this story is the apparent lack of awareness among US officials about how the oil markets work. I know they know better, but the context-free repetitions in articles such as this next one almost literally drive me crazy:

Geithner to Seek China’s Support on Iran

Jan 9, 2012

U.S. Treasury Secretary Timothy F. Geithner will urge Asia's two biggest economies to cut Iranian oil imports and seek to narrow differences with China on trade and currency disputes on a visit to Beijing and Tokyo this week.


The idea that the world can just stop buying Iranian oil, as though it were the same thing as boycotting McDonald's and buying Burger King instead, is just ridiculous. The world oil markets are far too tight for that.

How is it that China is supposed to cut its Iranian oil imports, exactly?  Oil is a fungible product. If China cuts its oil imports from Iran, it will simply have to buy the missing amount of oil from someplace else. The 2.6 million barrels a day that Iran exports cannot simply be instantly replaced at this time from other spare capacity elsewhere in the world. It doesn't exist at the moment. Where will it come from?

Perhaps Geithner is offering something behind the scenes, like providing China with extra petroleum from the US strategic reserve while events unfold (unlikely). But barring that, it is a remarkably naïve request as it stands and is curious on its own.

The Powder Keg

With the Persian Gulf being so small, and so many tense parties crammed into that tiny arena, the chance of some sort of mischief arising is quite high. One twitchy trigger finger -- such as the one that caused the USS Vincennes, thinking it was under attack by a jet fighter in 1988 during the Iran-Iraq war, to shoot down an Iranian passenger airliner -- and the hounds of war may be let loose.

And it's not just the US. Practically everybody who's anybody has naval assets positioned for whatever may happen next:

Western forces react to Iran's Strait of Hormuz threat

Jan 9, 2012

TEHRAN, Jan. 9 (UPI) -- A buildup of Western naval forces in the Persian Gulf and Arabian Sea is a reaction to Iran's threat to close the Strait of Hormuz, military experts say.

U.S., Russian, French and British air and naval forces moved to the Syrian and Iranian coasts during the weekend, Israeli military intelligence Web site DEBKAfile reported Monday.

The Russian carrier Admiral Kuznetsov anchored earlier than planned at Syria's Tartus port on the Mediterranean Sunday, causing France to respond by consigning an air defense destroyer to the waters off Tartus, DEBKAfile reported. Canada also was sending a warship, the HMCS Charlottetown, to the Mediterranean where it would take over from the HMCS Vancouver.

Meanwhile, Britain has dispatched a missile destroyer to the Sea of Oman, due to arrive at the same time as the French Charles de Gaulle aircraft carrier.

And the U.S aircraft carrier John C. Stennis and its strike group are cruising in the Sea of Oman at the entrance to the Strait of Hormuz after Tehran announced it would not be allowed to cross through.


With all those boats chugging around in those little bathtubs, and with various other forces that would definitely like to see a shooting war develop (a false flag attack is an option here), the risk is quite high of some form of incident that would trigger hostilities.

Of course, there are those in the war rooms of the various OECD countries who think they have a plan for the conduct of that war, but no plan ever survives first contact with the enemy. The one thing we can count on is the war being messier, longer, and more expensive by at least a factor of two than whatever is currently occupying the minds of the war planners.

Iran's Responses

Of course, Iran has been none too happy over the years at being surrounded, poked, prodded, and now finally sanctioned for having done nothing more than cloak its nuclear program in the exact same sort of secrecy that has surrounded literally every other nation's nuclear programs, including Israel and Pakistan, Iran's notable nuclear neighbors.

And now, with the aid of enhanced missile technology obtained from China and Russia, Iran has a credible threat to make:

Iran Has Ability to Block Strait of Hormuz, U.S. General Dempsey Tells CBS

Jan 9, 2012

Iran has the ability to block the Strait of Hormuz “for a period of time,” and the U.S. would take action to reopen it, Joint Chiefs of Staff chairman General Martin Dempsey said.

“They’ve invested in capabilities that could, in fact, for a period of time block the Strait of Hormuz,” Dempsey said in an interview aired yesterday on the CBS “Face the Nation” program. “We’ve invested in capabilities to ensure that if that happens, we can defeat that.”

Should Iran try to close Hormuz, the U.S. “would take action and reopen” the waterway, said Dempsey, President Barack Obama’s top military adviser.


The admission here by the US military is that Iran has the ability to block the Strait of Hormuz "for a period of time," which they do, is an extraordinary admission (even if it really is stating the obvious) by the US brass.

Anti-ship missile technology has come a long way, and an offensive missile is much cheaper than either a large ship or defensive measures. The Falklands war in the early 1980s taught me that the navy is an outmoded concept if the opponent is armed with semi-decent anti-ship missiles, and such devices have improved remarkably since then.

During the most recent Iranian war exercises, the US military test-fired (more of a demonstration, really) their Qader anti-ship cruise missile, which has a range of 200 km and can be fired from a small truck. To visualize the difficulty of defending against such a technology, just imagine how many hiding places for a small truck might exist within this 200 km radius green circle :

In order to neutralize the entire missile, full air superiority would have to be established and every mobile launcher found and destroyed. 

Further, Iran has a number of submarines capable of firing a new breed of torpedo that can achieve speeds in excess of 200 knots. As far as I know, these are extraordinarily difficult to defend against, let alone evade. 

Of course, China is paying close attention to the developments:

Iranian authorities reiterate threats to close Hormuz Strait if sanctions imposed on oil exports

Jan 8, 2012

TEHRAN, Jan. 8 (Xinhua) -- Iranian authorities reiterated threats to close Strait of Hormuz if Western countries impose sanctions on Iran's oil exports, local media reported Sunday.



Once again, regrettably and mysteriously, we find the developed world in lock-step in its eagerness to attack Iran. "Regrettably," because Iran has not threatened any other country, and war should never be used simply because the current art of diplomacy is inadequate. "Mysteriously," because this is a particularly horrible economic moment to go about risking much higher oil prices. 

While we judge the risks of a war, either precipitated by legitimate escalation of frictions or by illegitimate actors seeking to cause the same, to be very high, it is our view that such a war will not go according to plan.  Iran has many more powerful allies, namely Russia and China, than did the extraordinarily isolated Iraq at the beginning of the Iraq war. 

Is it too waggish to suspect that certain Western political powers would love to be able to both divert attention from the crumbling economy and have a scapegoat upon which to blame the next leg of the financial downturn? 

Regardless of such speculation, the risk to each of us and the economy in general from an attack on Iran that closes the Strait of Hormuz is large enough to warrant your attention. Should oil spike in price, you can practically set an egg timer for the beginning of the next leg of the financial downturn.

In Part II: Are You Prepared for $200 Oil?, we explore what likely havoc the high oil prices from a major conflict with Iran will wreak on the financial markets and our petroleum-dependent lifestyle. We also detail specific steps prudent individuals should be taking right now, in advance of such a crisis, to position themselves defensively.

Click here to access Part II of this report (free executive summary, enrollment required for full access). 

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Select your preferred way to display the comments and click "Save settings" to activate your changes.'s picture

Those who could benefit from a full frontal lobotomy is a short list but you are on it.

smiler03's picture

I'd rather have a full bottle in front of me. Da Dah!

Xkwisetly Paneful's picture

So the rational belief is that Iran is NOT pursuing nuclear weapons?

That makes a TON of sense if one is an arabasslicker.




mick_richfield's picture

Thou shalt not bear false witness against thy neighbour.

Spider's picture

There is no war in 2012 against Iran - this is all about the Irani elections in a few months.  US/Israel wants a new regime and they are trying to ratchet up sanctions (and inflation) to hurt the ruling party.  No war just good ole' fashioned saber-rattling's picture

Such saber rattling increases the power of the anti-Western element in Iran. Now why is that a good strategy for the West to pursue?

Teamtc321's picture

"Now why is that a good strategy for the West to pursue?"

Very good question Crockett, I have often wondered myself. It is very possible a % of there timing is Ron Paul imho. 

junkyard dog's picture

Iran already has nuclear weapons. This bullshit about them making their own needs to stop. For some reason the US has decided to help Iran raise capital by pushing up the price of oil- go figure.

The strait will be closed when Saudi Arabia says it will.

Chris, you need to hire an editor. Your bullshit is way to long for reading, or, do what I do, go to Las Vegas every 90 days and fuck the shit out every bitch that can fog a mirror. They don't follow you home and they don't give a shit how important you think you are. That will make you understand that nobody gives a shit and you can stop writing this bullshit.

Fuck you Ipods




Yen Cross's picture

Dominoes Pizza has Management Job for you.  Lay off the pepperioni on " Breaks"!

Blano's picture

I'm not convinced Iran has nukes, other than that you're spot on.'s picture

Pat Buchanan: Let Congress decide on war with Iran

“The secretary was clear that we have no indication that the Iranians have made a decision to develop a nuclear weapon,” said Pentagon press secretary George Little. “He (Panetta) didn't say that Iran would, in fact, have a nuclear weapon in 2012.”

Little added that U.N. inspectors remain in Iran and have access to its uranium stockpile, and should Iran attempt a “breakout” by diverting low-enriched uranium to a hidden facility to convert it to weapons grade, U.N. inspectors would instantly detect the diversion.

“We would retain sufficient time under any such scenario to take appropriate action,” said Little.

In short, the Pentagon does not believe Iran has made a decision to build atomic weapons, and the department is confident that, should it do so, the United States would have ample warning.

Little's definitive statement, “We have no indication that the Iranians have made a decision to develop a nuclear weapon,” coincides with the consensus of all 16 U.S. intelligence agencies, including the CIA and Defense Intelligence Agency, in December 2007.

In that report, the entire U.S. intelligence community stated unanimously, with “high confidence,” that Iran had given up its drive for an atom bomb back in 2003.

Bicycle Repairman's picture

"Let Congress decide on war with Iran"

What is this?  The 1940s?  LOL.'s picture

It feels more like the 1490s. Who's up for an auto-da-fé?

mick_richfield's picture

Is that the new electric car that GM is marketing in Spain ?

malek's picture

I am doubtful the "US military test-fired (more of a demonstration, really) their Qader anti-ship cruise missile"

John Law Lives's picture

"A quick view of the US military presence surrounding Iran, coupled with the Iraqi experience of being attacked for supposed weapons of mass destruction that did not exist (nor were used by Iraq to threaten the US), reveals why Iran may be so motivated to develop a nuclear weapon:

If Iraq had a nuclear weapon in 2002, it is quite doubtful the US would have invaded -- a lesson that has not gone unnoticed."


Iran desires to survive, and they likely believe that developing a nuclear arsenal is the only way to do so.  They may be right in their thinking.  

Sudden Debt's picture

The easiest way for them to hold the world hostage is to make a a bomb, put a remote on to it, lower it into their largest oil field.
One step closer, the bomb exploded and the oil becomes radioactive.

SheepDog-One's picture

Really? Do you know how many atomic bombs have been detonated in the last century? Dozens and dozens, so Youd think everything would be ruined and radioactive today then? So why would 1 bomb hold the world hostage?

Yen Cross's picture

 The higher " QUADRANT" of Nevada is a starting point?

John Law Lives's picture

The proven oil reserves in Iran are believed to be the 2nd largest on Earth.  If someone detonated a nuclear warhead that vaporized the oil extracting infrastructure from one of their major oilfields, it would have an immediate and significant global economic impact.  It would be "scorched earth policy" to the extreme.

Mr Lennon Hendrix's picture
Sun, 08/14/2011 - 21:09 | 1560330 John Law Lives 

It is a matter of backing somebody WHO CAN WIN!  Ron Paul will not be the GOP nominee.

John Law Lives's picture

That has something to do with this thread?

If Ron Paul wins, he wins.  We will know for sure in a few months. 

Mr Lennon Hendrix's picture

Fights will go on as long as they have to

John Law Lives's picture

This thread is about the possibility of nukes in Iran.  There are other threads to discuss the GOP primaries.

SilverDOG's picture

Actually, there were thousands detonated.

When and where, watch below.

IQ avg dropped 12 points during US testing. 

Long term effects are quite noticeable in US infertility and numerous birth difficulties.

We all have been abused. Not held hostage. Fukushima is compounding the effect.

Consume the preventative and protective measures as it all adds up over your life and multiple generations.

mick_richfield's picture

Thanks for that link.

I see now that a war has been fought upon my country.

When I couldn't stand watching any more, I stopped the video -- and then noticed that I had chosen the month of my birth.

Archduke's picture

I think he means thereby rendering the oil fields radioactive. scorched earth insurance.


Yen Cross's picture

 Pop goes the " Weasel" !  Sadam said so. <>

chump666's picture

hahahaha...that was funny. Now I have a spilled drink to clean up.


Yen Cross's picture

I'm on your side " Chump 666".

mick_richfield's picture

No, the easiest way to hold the world hostage is to institute a worldwide fiat currency regime, use that regime to steal the wealth of an entire generation of humanity, and then say to the people of the Earth "Do as we bid you, or we shall close the banks and plunge the world into chaos, destitution, and despair."


SheepDog-One's picture

Youre 'deeply confused' by the timing of all this Chris? Thats because you look at the big mural thru an economic electron microscope only.

BigJim's picture

I'm a bit confused too, though for a different reason. Thinking it would all be over quite quickly, I'd have thought they'd do it nearer the election.

The fact we're on the brink now suggests they're really going to go to town, maybe put boots on the ground and have a real, full blown war.

Krugman must be getting so wet.

Poor Grogman's picture

How can the NWO be bought about if the OPEC is not bought to heel?

Besides we need a price spike so that TPTB can subsequently run the price back down below 50 again, there are profits waiting folks, don't let all this nostalgia about the sanctity of human life or the constitution cloud your judgement.

The financial rape will continue until morale improves......

Chupacabra-322's picture

Posted this the other day on a related article.  Worth posting again.

Since the 1979 Iranian revolution and the downfall of the US Puppet Ruler the Shah, Iran has been an Islamic state. In that interval of time, 1979 to the present, Iran has not invaded anyone. Not once. People of all religions live in peace in Iran, even Jews, who find life so comfortable in Iran they refused an offer by the government of Israel to emigrate!

In the same period of time, Israel, a self-declared Jewish state, attacked Iraq in 1981, bombing the power station at Osirik, claiming it was a clandestine weapons factory. Subsequent examination of the ruins following the 2003 invasion proved Israel had lied. In 1982, Israel invaded Lebanon. This led to the Massacres at Sabra and Shatilla. In February 2003 Israel staged incursions into Gaza and Nablus. In September 2007 Israel bombed Syria, again insisting they were destroying a clandestine weapons laboratory. Again there was no evidence to support Israel’s claims. In 2006, Israel attacked Lebanon, killing 1200, mostly civilians, several UN observers, and littering the landscape with land mines on their way out. In February 2008 Israel again raided Gaza, killing over 100. HAMAS agreed to a cease fire and kept it for 6 months until November 4, when Israel again attacked without warning, killing 6 HAMAS members, and launching operation CAST LEAD. 1300 Gazans, mostly civilians, were killed. Israel lost 13 soldiers. Violations of international law included the use of White Phosphorus incendiary bombs against civilians and non-military targets. The United Nations investigated, but Israel refused to cooperate. In May 2010, Israel attacked an international aid flotilla bringing food and medical supplies to Gaza in international waters. 9 people were murdered including an American from New York.

In the same period of time, the United States, officially a secular nation but predominantly Christian, attacked El Salvador (1980), Libya (1981), Sinai (1982), Lebanon (1982 1983), Egypt (1983), Grenada (1983), Honduras (1983), Chad (1983), Persian Gulf (1984), Libya (1986) , Bolivia (1986), Iran (1987), Persian Gulf (1987), Kuwait (1987), Iran (1988), Honduras (1988), Panama (1988), Libya (1989), Panama (1989), Colombia, Bolivia, and Peru (1989), Philippines (1989), Panama (1989-1990), Liberia (1990), Saudi Arabia (1990), Iraq (1991), Zaire (1991), Sierra Leone (1992), Somalia (1992), Bosnia-Herzegovina (1993 to present), Macedonia (1993), Haiti (1994), Macedonia (1994), Bosnia (1995), Liberia (1996), Central African Republic (1996), Albania (1997), Congo/Gabon (1997), Sierra Leon (1997), Cambodia (1997), Iraq (1998), Guinea/Bissau (1998), Kenya/Tanzania (1998 to 1999), Afghanistan/Sudan (1998), Liberia (1998), East Timor (1999), Serbia (1999), Sierra Leon (2000), Yemen (2000), East Timor (2000), Afghanistan (2001 to present), Yemen (2002), Philippines (2002) , Cote d’Ivoire (2002), Iraq (2003 to present), Liberia (2003), Georgia/Djibouti (2003), Haiti (2004), Georgia/Djibouti/Kenya/Ethiopia/Yemen/Eritrea War on Terror (2004), Pakistan drone attacks (2004 to present), Somalia (2007), South Ossetia/Georgia (2008), Syria (2008), Yemen (2009), Haiti (2010), etc. etc. etc. etc.

So, who is the danger to world peace?



alien-IQ's picture

what an eloquent and well thought response. congratulations.

BigJim's picture

Yen Cross is hard to beat when it come to thoughtful eloquence.

alien-IQ's picture

One normally has to go to a wrestling match to find people with his caliber of linguistic dexterity.

We are truly fortunate to have him here.

Yen Cross's picture

Oxymorons my "  Business Intrest" Per the banksta. 40's style collection system! The History channel, is the accumulation channel!!!

BigJim's picture

Keep it up, is what I say.

Hober Mallow's picture

Yup, fully agree: pure bull shit.

The listing of events is correct (although filtered important elements), the conclusion is false.

Yen Cross's picture

Coming from a ( non ) sophisticate, like your self?  Complements Galore!

Yen Cross's picture

 I'm perplexed? Non the less, good on ya.

Questan1913's picture

Facts are stubborn things.  And cconditioned, controlled herd mentality is even more stubborn.

Alien Invader's picture

I guess the decade long war with Iraq doesn't count?

alien-IQ's picture

Perhaps because it was Iraq that invaded Iran...ya think?'s picture

Don't confuse the warmongers with facts. It just makes them angry.

Xkwisetly Paneful's picture

Do not tap the glass.

Iran is a country of peace loving saints.

Things like the state sponsored assassination plan of the Saudi ambassador in DC is always propaganda and of course Iran is not pursing nukes. Afterall I read it on ZH so it must be true.

Milestones's picture

Xk--I am mistaken but doesn't the USA have an assassination pollicy of it's own and has been used several times already??    Milestones