JFP 1/11: IAEA says Fordo under inspection; NPR responds to criticism

Just Foreign Policy News, January 11, 2012
IAEA says Fordo under inspection; NPR responds to criticism


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Go Straight to the News Summary

I) Actions and Featured Articles

Update on request for corrections on Iran nuclear program reporting to PBS, NPR
We sent out an alert this morning asking people to contact PBS and NPR to object to their reporting on Iran's nuclear program. That alert is here:

Tell PBS, NPR: No proof Iran has a nuclear weapons program
http://www.justforeignpolicy.org/act/misleadingoniran

With respect to NPR, we objected to their reporting that the goal of the U.S. was "to convince Iran to give up a nuclear weapons program," since that implies that Iran has a nuclear weapons program to give up, and the question of whether Iran has a nuclear weapons program is in dispute.

The alert also asked people to contact PBS to complain concerning NewsHour's selective editing, as noted by FAIR, of Defense Secretary Panetta's remarks to Face the Nation, excluding his statement: "Are they trying to develop a nuclear weapon? No," and then using his remarks to imply the opposite.

We were contacted this afternoon by Anna Christopher, Director of Media Relations at NPR. She said: NPR has gotten a lot of correspondence; they dispute that their report implied that Iran has a nuclear weapons program; they will not do a correction. She claimed that the quote was taken out of context, but she acknowledged that we quoted the story accurately and linked to the transcript.

We have not heard from PBS.

On Iran IAEA Reporting Complaints, NYT Public Editor Rules for the Plaintiffs
In response to complaints over a New York Times report that purported to cite "a recent assessment by the International Atomic Energy Agency that Iran's nuclear program has a military objective,", the New York Times Public Editor wrote, "I think the readers are correct on this. The Times hasn't corrected the story but it should because this is a case of when a shorthand phrase doesn't do justice to a nuanced set of facts. In this case, the distinction between the two is important because the Iranian program has emerged as a possible casus belli." As of this writing, there is still no correction.
http://www.huffingtonpost.com/robert-naiman/on-iran-iaea-reporting-co_b_1197905.html

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II) Summary:
U.S./Top News
1) The IAEA says that "All nuclear material in the [Fordo Fuel Enrichment Plant] facility remains under the agency's containment and surveillance," Bloomberg reports. Iran said all activities the site, where it began enriching uranium drawing U.S. condemnation, are under the permanent supervision of the IAEA. "Every step we have taken so far and will take in the future has been and will be under IAEA containment and surveillance," Iran's delegate to the IAEA said.

2) Obama Administration officials conceded that new sanctions would hurt Iranian civilians, claiming that was not the intent but nonetheless expressing hope that the suffering of Iranian civilians would cause the Iranian government to change its policies, the Washington Post reports. But they conceded that the sanctions could have the opposite effect, making it more likely that Iran would decide to build a nuclear bomb. They said the intelligence community stands by its 2007 conclusion Iranian leaders have not decided to build a nuclear bomb. One official suggested that obtaining a nuclear weapon "actually might temper [Iran's] behavior."

3) Writing in the Atlantic, Robert Wright and Ta-Nehisi Coates note that Ron Paul "routinely performs a simple thought experiment: He tries to imagine how the world looks to people other than Americans… This is such a radical departure from the prevailing American mindset that some of Paul's critics see it as more evidence of his weirdness," as when Paul suggested that it would be natural that Iran's leaders would want to have a nuclear weapon to get international respect, just like the U.S., Israel, and China.

4) Peace Now says Israel's government broke all its settlement-building records in 2011, Reuters reports. A Palestinian government spokesman said Peace Now's figures were proof of the accuracy of their warnings that settlements would block a peace agreement.

5) Human Rights Watch is objecting to the Obama Administration's plans to transfer Taliban prisoners from Guantanamo to Qatar as part of its efforts to promote peace talks with the Taliban, the Washington Post reports. [The Post fails to quote anyone or cite any argument in favor of the transfer, such as wanting to end the war, or secure the release of the American soldier held by the Taliban. You can weigh in at letters@washpost.com - JFP.]

Iran
6) Another Iranian nuclear scientist was assassinated, the New York Times reports. Iranian officials accused the US and Israel of responsibility. The White House condemned the attack and denied any responsibility. An Israeli military spokesman gave a "much more vague" denial, the Times says.

7) Chinese officials again rejected U.S. appeals to cut oil imports from Iran, the New York Times reports.

8) No-one knows what the impact will be on oil prices or Iran's revenues of new sanctions, writes Reuters market analyst John Kemp. None of the leading sanctions advocates has published meaningful estimates of how much oil would be lost from the market, how much Iran might be forced to discount its oil, or how far traded prices might rise.

Pakistan
9) A U.S. drone missile strike killed four suspected militants in northwest Pakistan on Wednesday, ending a six-week hiatus in such attacks, the Los Angeles Times reports.

10) Pakistan is rejecting U.S. protests over the construction of a natural gas pipeline from Iran, McClatchy reports. Pakistan's President said Pakistan would not be drawn into new American "theaters of war" in the region - a clear reference to fresh U.S. sanctions against Iran. Washington is backing an alternative pipeline project that would supply a similar amount of natural gas from Turkmenistan, via Afghanistan, to Pakistan. But the project is lagging about four years behind the Iranian pipeline. Pakistani officials express doubts Turkmenistan has sufficient gas - and note that the pipeline could only be constructed once violence ebbs in Afghanistan.

Contents:
U.S./Top News
1) Iran Says Work at Fortified Enrichment Site Supervised by IAEA, Bloomburg,
Nicole Gaouette and Ladane Nasseri, Bloomberg, January 10, 2012
http://www.businessweek.com/news/2012-01-10/iran-says-work-at-fortified-enrichment-site-supervised-by-iaea.html

Iran said that all activities at a fortified nuclear site, where it began enriching uranium drawing U.S. condemnation, are under the permanent supervision of the International Atomic Energy Agency.

Fordo "was declared more than two years ago and since then the agency has continuously monitored all the activities," Ali Asghar Soltanieh, Iran's delegate to the IAEA, told the state- run Press TV news channel. "Every step we have taken so far and will take in the future has been and will be under IAEA containment and surveillance."

Iran has started the production of uranium enriched up to 20 percent in the Fordo Fuel Enrichment Plant near the holy city of Qom, International Atomic Energy Agency spokesman Gill Tudor said in an e-mail yesterday. "All nuclear material in the facility remains under the agency's containment and surveillance."

The start of enrichment activities at the Fordo facility, which is built into the side of a mountain south of Tehran, the capital, has aroused Western ire and may accelerate the imposition of tighter sanctions on the country.

U.S. State Department spokeswoman Victoria Nuland said yesterday the enrichment represented "a further escalation" of Iranian violations of United Nations agreements on its nuclear program, and called on Iran to suspend enrichment activities.
[...]
The IAEA conducts safeguard inspections of the facility. The existence of the Fordo plant was revealed in 2009 through Western intelligence reports, raising concerns at the time about its purpose.

[The existence of the facility was disclosed to the IAEA by Iranian officials. See Gareth Porter, "U.S. Story on Iran Nuke Facility Doesn't Add Up," http://ipsnews.net/news.asp?idnews=48649 - JFP]

[…]

2) Public ire one goal of Iran sanctions, U.S. official says
Karen DeYoung and Scott Wilson, Washington Post, January 10
http://www.washingtonpost.com/world/national-security/goal-of-iran-sanctions-is-regime-collapse-us-official-says/2012/01/10/gIQA0KJsoP_story.html

[The Washington Post has a noteworthy correction on top of this story: "An earlier version of this article incorrectly reported that a U.S. intelligence official had described regime collapse as a goal of U.S. and other sanctions against Iran. An updated version clarifies the official's remarks." Juan Cole writes on his blog: "I believe WaPo got it right the first time."- JFP]

The Obama administration sees economic sanctions against Iran as building public discontent that will help compel the government to abandon an alleged nuclear weapons program, according to a senior U.S. intelligence official.

In addition to influencing Iranian leaders directly, the official said, "another option here is that [sanctions] will create hate and discontent at the street level so that the Iranian leaders realize that they need to change their ways."

The intelligence official's remarks pointed to what has long been an unstated reality of sanctions: Although designed to pressure a government to change its policies, they often impose broad hardships on a population. The official spoke this week on the condition of anonymity to discuss internal administration assessments.

The comments came as the administration readies punitive new sanctions that affect Iran's central bank and the European Union moves toward strict curbs on Iranian oil imports.

A senior administration official, speaking separately, acknowledged that public discontent was a likely result of more punitive sanctions against Iran's already faltering economy, but said that is not the direct intent.

"We have a policy that is rooted in the notion that you need to supply sufficient pressure to compel [the government] to change behavior as it's related to their nuclear program," this official said.

"The question is whether people in the government feel pressure from the fact that there's public discontent," the official said, "versus whether the sanctions themselves are intended to collapse the regime."

A Western diplomat familiar with the policy said that it was "introducing in the cost-benefit analysis a new parameter in the calculus" of the Iranian government. "To the extent we have done that, it is not because we want to collapse the government. It is because we want the Iranian government to understand that is a possible cost in continuing the way it is," the diplomat said, speaking on the condition of anonymity to describe the intent of the policy.
[...]
Obama's Iran policy, which began with an attempt to engage that nation's civilian and clerical leadership, has come under withering criticism from Republican presidential candidates eager to cast him as weak abroad. The GOP front-runner, former Massachusetts governor Mitt Romney, has said that "if we reelect Barack Obama, Iran will have a nuclear weapon."

The GOP candidates have accused Obama of being insufficiently attuned to the immediacy of the Iranian nuclear threat. The intelligence official, however, said the intelligence community stands by its controversial 2007 conclusion that Iranian leaders have not decided whether to build a nuclear bomb.

As the intelligence community thinks through the Iran situation, the official said, it realizes that the sanctions-induced pressure has a possible downside. "It could have the opposite effect from what's intended," he said, "and impel the Iranian leader to decide, 'We're going to build that nuclear weapon.' We've thought of that."

Although not advocating such a course, the official said that obtaining a nuclear weapon "actually might temper [Iran's] behavior," enabling the United States to warn that it, too, has nuclear weapons. "It puts them on an even playing field, where they might not want to be," he said of the Iranians.

Although Obama has declined to rule out a military strike against Iran's nuclear sites to prevent the Islamic Republic from building a nuclear weapon, the president has emphasized international diplomacy, which has helped build broad allied support for stringent economic sanctions against Iranian officials, key businesses and now the nation's central bank.

Those measures are already producing economic hardship in Iran and pressure on the Iranian government, which has responded with threats to close key shipping lanes vital to international oil exports.

Although Iran has continued to develop its nuclear infrastructure - including a recently revealed second uranium-enrichment facility - the "pause" in the nation's direct march toward a weapon continues, the intelligence official said.

"Our belief is that they are reserving judgement on whether to continue with key steps they haven't taken regarding nuclear weapons," he said. "It's not a technical problem," he said, adding that Iran already has the capability to build a bomb.

Israel, the intelligence official said, has "a different opinion. They think [Iran] has already made the decision.
[...]
The International Atomic Energy Agency's latest report on Iran, in November, cited evidence suggesting a resumption of weapons research after 2004, including work on triggering devices as recent as 2007. Officials for the nuclear agency have acknowledged in interviews that the evidence is ambiguous.

"The information indicates that Iran has carried out activities relevant to the development of a nuclear explosive device," the nuclear agency said in its report. "The information also indicates that prior to the end of 2003, these activities took place under a structured programme, and that some activities may still be ongoing."

Although different countries and agencies are looking at the same evidence, U.S. officials have tended to be conservative in their interpretation, in what some of the European counterparts regard as a reaction to the U.S. intelligence missteps before the 2003 U.S.-led invasion of Iraq.

"It is clear to everyone that, early in the last decade, a decision was made by Iran to close the 'formal' program," said one European diplomat involved in internal IAEA discussions about Iran. "The question is whether the work is still being carried on, and to what end. It is harder to pin that down with exactitude."

3) The Radical Imagination
Ta-Nehisi Coates, The Atlantic, Jan 5 2012
http://www.theatlantic.com/politics/archive/2012/01/the-radical-imagination/250915/

My new colleague Robert Wright (Hurrah!) makes an interesting point:

"Paul is making one contribution to the foreign policy debate that could have enduring value. It doesn't lie in the substance of his foreign policy views (which I'm largely but not wholly in sympathy with) but in the way he explains them. Paul routinely performs a simple thought experiment: He tries to imagine how the world looks to people other than Americans.

This is such a radical departure from the prevailing American mindset that some of Paul's critics see it as more evidence of his weirdness. A video montage meant to discredit him shows him taking the perspective of Iran. After observing that Israel and America and China have nukes, he asks about Iranians, "Why wouldn't it be natural that they'd want a weapon? Internationally they'd be given more respect."

Can somebody explain to me why this is such a crazy conjecture about Iranian motivation? Wouldn't it be reasonable for Iranian leaders, having seen what happened to nukeless Saddam Hussein and nukeless Muammar Qaddafi, to conclude that maybe having a nuclear weapon would get them more respectful treatment?"

One of the depressing things about politics is not simply that elected politicians exist "in the world of the possible" but that those who are about the business of expanding that world are generally denigrated. I wrote about this for the Times, last summer, so I don't want to repeat the argument. Suffice to say that I don't think we've yet come to terms with the fact that the Iraq War proceeded with the endorsement of "serious people," while those who dissented were consigned to quackery.
[...]

4) Israel breaking settlement records, says Peace Now
Ori Lewis, Reuters, Tue, Jan 10, 2012
http://news.yahoo.com/israel-breaking-settlement-records-says-peace-now-143930491.html

Jerusalem - Israel's government broke all its settlement-building records in 2011, diminishing prospects for establishing a viable Palestinian state in the occupied West Bank, Israel's anti-settlement activist group "Peace Now" said Tuesday.

The group's annual report on building in Arab East Jerusalem and the West Bank - land the Palestinians want for a future state along with the Gaza Strip - showed that despite international calls to halt construction, thousands of new homes were being built.

"In 2011 (Israeli Prime Minister Benjamin) Netanyahu broke his government's building records and turned it into a very fruitful year for the settlers and a very sad one for the citizens of Israel," Peace Now director Yariv Oppenheimer said.

"At the current rate of building we will lose the chance for a two-state solution."
[...]
Peace Now reported a 20 percent increase in settlement construction during the year and said about 35 percent of 1,850 housing starts were on land beyond a separation barrier Israel is erecting, which is expected to demarcate Palestinian areas. [Of course, that would be a unilateral demarcation, since the Israeli government has unilaterally decided the route of the separation barrier, which passes through the West Bank - JFP.]
[...]
A Palestinian government spokesman said Peace Now's figures were proof of the accuracy of their warnings about settlements.
[...]
"By allowing Israel to build ... it will destroy all the opportunities to continue the peace process and it will wreck the opportunity for a two-state solution as these settlements are being built on land that will be part of the future Palestinian state."

5) On 10th anniversary, Guantanamo Bay's future is unclear
Peter Finn and Julie Tate, Washington Post, January 10
http://www.washingtonpost.com/world/national-security/on-10th-anniversary-guantanamo-bays-future-is-unclear/2012/01/10/gIQAtxzBpP_story.html

Just over a year ago, Saiid Farhi, an Algerian, was flown home from the military detention center at Guantanamo Bay, Cuba, after a federal court ordered his release. No one has left since.

The string of victories that Guantanamo detainees enjoyed in U.S. District Court has been reversed by the federal appeals court in Washington. The Obama administration has insisted that restrictions imposed by Congress are so onerous, it cannot repatriate or resettle the detainees it has cleared for transfer. And as the facility approaches its 10th anniversary on Wednesday, human rights groups have bemoaned its seeming permanency and the Obama administration's failure to close it.

To mark the anniversary, Guantanamo detainees on Tuesday began three days of protests, according to an attorney for a handful of the men. Some refused to return to their cells for the four-hour nightly lockdown and slept in the recreation areas. Others said they would refuse food for the duration of the protest.

"These peaceful protests are the most eloquent response to the U.S. government's refusal to shutter the prison and its claims that Guantanamo is a normal, state-of-the-art facility," said Ramzi Kassem, a law professor at the City University of New York and counsel to some of the detainees.

Last month, it was reported that the administration had seriously considered transferring five Afghan detainees as part of a package of mutual confidence-building with the Taliban. Initially, it was proposed that the five would be held under house arrest in Qatar.

But for some activists, the prospect of renewed movement on emptying the detention center was clouded by the inclusion of Mohammad Fazl, a former Taliban deputy defense minister, on the list of those who could take their first steps toward freedom in a villa in Doha.

Almost immediately after Fazl's capture, in late 2001, Human Rights Watch urged the U.S. government to ensure that the former Taliban commander be brought before a tribunal to answer allegations that he had a role in war crimes committed by Taliban forces in central Afghanistan in 2000 and 2001.

U.N. and Human Rights Watch investigators found that at least 170 members of a Shiite Muslim ethnic group, the Hazara, were summarily executed by the Taliban in January 2001. Numerous witnesses testified that Fazl visited the district where the massacre occurred, during the four days when the men were shot in public by firing squads, according to Human Rights Watch. The commander who oversaw the killing and served directly under Fazl was also held at Guantanamo but was released in 2003, before the United States knew who he was.

Human Rights Watch also said that the records of at least two of the other four Afghans who could be transferred to Qatar should be investigated for possible prosecution.

"It's sad, tragic and ironic that someone who could have been prosecuted may be let go, but we're not saying that Guantanamo is the proper place to hold war criminals," said John Sifton, advocacy director for Asia at Human Rights Watch. "What we are saying is that they should be investigated and, in Fazl's case especially, tried for war crimes."
[...]
[The Post cites Human Rights Watch's objection to the transfer of the Taliban prisoners, but doesn't cite any arguments or voices in favor, which have appeared elsewhere, such as 1) impunity for human rights abuses committed during that period is the norm in Afghanistan, and three prosecutions isn't going to change that; 2) the family of the U.S. soldier held by the Taliban has said that they are looking forward to US talks, in the hopes that the talks will lead to their son's release, and prosecuting three of the five Taliban prisoners would very likely jeopardize that; 3) these men have already been imprisoned in Guantanamo without charge or trial for years 4) according to press reports, transfer of the prisoners is a key element of the Obama Administration's strategy for starting peace talks with the Taliban, with the goal of ending the war and facilitating the withdrawal of US troops - JFP.]

Of the 171 detainees remaining at Guantanamo, 59 have been cleared for transfer. The Obama administration has determined that an additional 30 Yemenis could be repatriated if conditions improve in their homeland. The remainder would be prosecuted or held indefinitely, the administration has said.

White House spokesman Jay Carney said Monday that President Obama remains committed to closing the facility at Guantanamo.

A number of human rights groups, including Amnesty International, are planning a demonstration outside the White House on Wednesday, followed by a march to the Supreme Court.

Shaker Aamer, a Saudi citizen who was formerly a British resident, said he and other detainees are "very grateful for this expression of solidarity by Americans with the prisoners at Guantanamo and their families," according to Kassem, his attorney. Aamer is held in Camp 5, a lockdown facility for detainees who are not "compliant" with the military's detention rules.

Amnesty International and other groups are are also organizing events across Europe, including the construction of a Guantanamo-like cell in Berlin, a protest flash mob in Paris and the delivery of a giant replica of a detainee to the U.S. Embassy in Madrid.
[...]

Iran
6) Blaming U.S. and Israel, Iran Reports Killing of Nuclear Scientist
Alan Cowell and Rick Gladstone, New York Times, January 11, 2012
http://www.nytimes.com/2012/01/12/world/middleeast/iran-reports-killing-of-nuclear-scientist.html

London - A bomber on a motorcycle killed a scientist from Iran's Natanz uranium enrichment site and his bodyguard-driver on Wednesday during the morning commute in Tehran, Iranian media reported, in an assassination that could further elevate international tensions over the Iranian nuclear program and stoke the country's growing anti-Western belligerence.

It was the fourth such attack reported in two years and, as after the previous episodes, Iranian officials accused the United States and Israel of responsibility. The White House condemned the attack and denied any responsibility. The official reaction in Israel appeared to be more cryptic.

Iranian news accounts said the suspected assassin had attached a magnetized explosive device to the scientist's car and escaped during the rush hour in northern Tehran. News photographs from the scene showed a car, a Peugeot 405, draped in a pale blue tarp being lifted onto a truck. Some photographs published by Iran's official Islamic Republic News Agency showed what it said was the body of the scientist still inside the car. The head was covered with a white cloth.

The scientist was identified as Mostafa Ahmadi Roshan, 32, a professor at a technical university in Tehran, and a department supervisor at the Natanz uranium enrichment plant - one of two known sites where Western leaders suspect Iranian scientists are advancing toward the creation of a nuclear weapon.

The Mehr news agency said the explosion took place on Gol Nabi street, on the scientist's route to work, at 8:20 a.m. The news agency said he was employed at the Natanz site as the director of commercial affairs.

"The Islamic Republic of Iran expresses its deep concern over, and lodges it strong condemnation of, such cruel, inhumane and criminal acts of terrorism against the Iranian scientists," Iran's United Nations ambassador, Mohammad Khazaee, wrote in a letter sent to Secretary General Ban Ki-moon and other U.N. officials. Iran says its nuclear program is for peaceful purposes, but is facing a growing battery of international sanctions intended to force it to halt its enrichment program and negotiate with the West. On Jan. 23, European Union foreign ministers are to discuss a possible oil export embargo, adding further pressure.

Despite those pressures, Iran's Atomic Energy Organization said it would not be diverted from its pursuit of nuclear technology. "America and Israel's heinous act will not change the course of the Iranian nation," it said in a statement quoted by Reuters.


The semiofficial Fars news agency, which has close links to the powerful Revolutionary Guards Corps, said the Wednesday bombing resembled the methods used in attacks in November 2010 against two other nuclear specialists - Majid Shahriari, who was killed, and Fereydoon Abbasi, who survived and is now in charge of Iran's Atomic Energy Organization.

Almost exactly two years ago in January 2010, a physics professor, Massoud Ali Mohammadi, was also assassinated in Tehran.

Iran blamed Israel and the United States for the attacks in 2010, and the latest killing is bound to deepen an embattled mood in Tehran as the country's divided leaders approach parliamentary elections in March. News of the blast emerged quickly on Iran's state-run media.

"The bomb was a magnetic one and the same as the ones previously used for the assassination of the scientists and is the work of the Zionists," Fars quoted Tehran's deputy governor, Safar Ali Baratlou, as saying, reflecting a suspicion that the West and its allies were waging a covert war.

In Washington, Tommy Vietor, a spokesman for the White House's National Security Council, said in reaction to the attack: "The United States had absolutely nothing to do with this. We strongly condemn all acts of violence, including acts of violence like what is being reported today."

In Israel, which regards Iran as its most significant security threat, the denial was much more vague. Brig. Gen. Yoav Mordechai, the Israeli military spokesman, wrote on his Facebook page that "I don't know who took revenge on the Iranian scientist, but I am definitely not shedding a tear," Agence France-Presse reported.
[...]

7) China Balks as Geithner Presses on Iran Curbs
Michael Wines, New York Times, January 11, 2012
http://www.nytimes.com/2012/01/12/world/asia/china-balks-as-geithner-presses-on-iran-curbs.html

Beijing - Timothy F. Geithner, the U.S. Treasury secretary, pressed Chinese senior leaders Wednesday to join an American-led campaign to put pressure Iran over its nuclear program by sharply reducing Tehran's lucrative oil export business. And as they had before Mr. Geithner's arrival here Tuesday, Chinese officials said publicly that they wanted no part of it.
[...]
Treasury Department enforces American sanction laws, Mr. Geithner spent time explaining the new legislation, which would generally deny access to the U.S. financial system to foreign financial institutions that do business with the Iranian central bank.

The law exempts institutions in nations that achieve "significant reduction" in Iranian oil imports. How much is significant is not defined, giving the White House broad leeway to promise dispensations to big oil purchasers that make at least some effort to meet the requirement.

China is among Iran's biggest oil customers, relying on Tehran for more than 11 percent of its oil imports and 5 percent of its entire oil inventory, and it has extensive business interests in the Iranian oil industry. Although China has carried out U.N. sanctions on Iran, it also has worked hard to water down sanctions proposals that have gone before the Security Council.

On Wednesday, a Chinese foreign affairs vice minister, Zhai Jun, dismissed the latest American proposal, just as a second vice minister, Cui Tiankai, had in a meeting with foreign journalists Monday. "We oppose pressuring or international sanctions because these pressures and sanctions are not helpful. They have not solved any issues," he said. "We believe these problems should be solved by dialogue."
[...]

8) Iran oil sanctions are an unpredictable gamble
John Kemp, Reuters, January 10, 2012
http://www.reuters.com/article/2012/01/10/column-iran-oil-sanctions-idUSL6E8CA2TZ20120110

[Kemp is a Reuters market analyst.]

[…]
Iran produces just over 3.5 million barrels of crude a day, and exports around 2.5 million.

The only country with significant unused production capacity is Saudi Arabia, which produced 9.75 million b/d in November, according to the IEA, and slightly more according to Saudi sources, but has capacity to pump as much as 12 million b/d.

Iran's output is therefore roughly equivalent to total spare capacity in the global market. The market cannot afford to lose all or a significant part of that output as it would cut spare capacity to zero and make the market exceptionally vulnerable to any unexpected growth in demand or output losses elsewhere.

If sanctions cut Iran's exports, losses would have to made up by higher Saudi production or from emergency stocks held by IEA member countries and other importing countries such as China.

Any increase in Saudi output will cut the market's margin of spare capacity. Release of emergency inventories cannot be sustained indefinitely (IEA government-controlled stocks were just 1,500 million barrels at the end of November).

So assuming the oil market is currently "balanced" at present levels of supply, demand, capacity and inventories with prices at $112 per barrel, any bid to cut Iran's exports would force prices substantially higher to reduce consumption until the margin of spare capacity and inventories has been restored.

If sanctions cut Iran's exports significantly, the most likely consequence will therefore be higher prices and a slowdown in both global growth and oil consumption.

To avoid this costly outcome, early sanctions proposals suggested the EU would embargo imports from Iran and force the country to boost its exports to Asian markets at a discount. The total volume of exports would not change, ensuring world prices did not rise, but the composition of Iran's markets and its earnings would be adversely affected.

But sanctions legislation approved by the U.S. Congress seeks to cut off, or reduce, Iran's access to markets in Asia as well. The combination of the restrictions contained in the National Defense Authorization Act (PL 112-81) and the proposed EU import ban implies Iran's exports could fall significantly in the coming months by anywhere from 200,000-300,000 b/d to as much as 1 million b/d or more.

Saudi Arabia could certainly offset these losses by increasing its own exports, and the IEA would almost certainly cut several hundred million barrels from government inventories.

Whether it would succeed in averting a rise in prices depends on whether the market perceives the loss of exports as temporary or permanent, and whether any confrontation worsens and leads to the loss of even more, perhaps cutting exports to zero, or results in a swift compromise.

It is far from clear Iran would back down quickly. Sensing an existential threat, the government in Tehran might remain defiant or choose to escalate. If so, exports could be lost for an extended period, gradually running down emergency stocks and eroding Saudi spare capacity.
[...]
The global oil market could probably just about absorb the loss of up to 1 million b/d of Iranian exports on an ongoing basis, albeit at higher prices. But it is not clear what would happen if more output was lost because of the deteriorating political situation in Iraq and protests in Nigeria, production losses in the North Sea or a natural disaster such as hurricane in the Gulf of Mexico.

Would the EU and the United States relax sanctions (temporarily or permanently) to offset the intense upward pressure on oil prices?

The impact on Iran's revenues remains unclear. Most strategic studies analysts assume sanctions would cut volumes and/or force the country to discount its crude, reducing its export earnings. But Iran might see little or no impact, even gain, if sanctions push traded oil prices higher.

For a small reduction in volumes (200-300,000 b/d) and small discounts ($5 per barrel), the impact on Iran's earnings might be offset by a $10-20 per barrel increase in international oil prices. For a really big cut in volumes (1 million b/d or more) and hefty discounts ($20 plus), the impact on earnings would probably be negative, but oil prices might surge $50 or more, risking serious harm to the world economy.

None of the leading sanctions advocates has published meaningful estimates of how much volume would be lost, how much Iran might be forced to discount its oil, or how far traded prices might rise in response to the combination of an EU embargo and lower crude purchases by Asian customers such as Japan and South Korea.

For all the detailed planning behind the scenes, sanctions policy, like battle plans, is unlikely to survive first contact with the enemy. Once sanctions are imposed the results in terms of oil supply and prices are likely to be quite unpredictable. No one knows for certain how Iran would respond, how much export volume would be lost, or for how long, and how the market would evolve in the light of other shocks to supply and demand.

To improve their political acceptability, advocates have portrayed sanctions as a carefully calibrated and low-cost way to ratchet up pressure on Iran and force the country's government to suspend its enrichment programme without sparking an uncontrolled escalation of violence.

In reality, sanctions are a gamble: a bet Iran will not choose to escalate further; a bet the oil market can absorb the loss of exports without serious difficulty; and a bet nothing else will go wrong in other producing countries. Once sanctions go into effect, no one is quite sure how Iran and oil prices will respond.

Pakistan
9) U.S. drone strike in Pakistan ends six-week pause; 4 dead
Alex Rodriguez and Zulfiqar Ali, Los Angeles Times, January 11, 2012
http://latimesblogs.latimes.com/world_now/2012/01/drone-strike-in-pakistan-ends-six-week-pause.html

Islamabad, Pakistan -- A U.S. drone missile strike killed four suspected militants in northwest Pakistan on Wednesday, ending a six-week hiatus in such attacks, imposed by Washington following American airstrikes late last year that killed 24 Pakistani soldiers and severely marred relations between the two nations.

The missile strike hit a three-room house less than a mile from the town of Miramshah in North Waziristan, a tribal region along the Afghan border and a major stronghold for a variety of Islamist militant groups, including Al Qaeda, the Pakistani Taliban and the Haqqani network, regarded by the U.S. as the biggest threat to its troops in Afghanistan.
[...]
In retaliation for the airstrikes, Islamabad shut down the use of Pakistan as a transit country for NATO shipments bound for Western forces in Afghanistan. The U.S. was forced to vacate an air base in southern Pakistan that the CIA had used to launch drone flights into Pakistan's volatile tribal areas, though Washington still can carry out drone flights from bases in Afghanistan.

Pakistan also threatened to set up air defense systems at the Afghan border that could shoot down U.S. military aircraft crossing into Pakistani territory, and has demanded a new set of ground rules governing cooperation between the two countries.

A parliamentary committee on national security is crafting recommendations for those rules, and one of them is a cessation in drone strikes on Pakistani territory, according to a senior Pakistani official familiar with the committee's deliberations. He spoke on the condition of anonymity because he was not authorized to comment on the matter.

Since the Nov. 26 incident, drone strikes in Pakistan have stopped. Current and former U.S. officials recently told The Times that the CIA had suspended drone missile strikes on gatherings of low-ranking militants suspected in attacks on U.S. troops in Afghanistan. The move, they said, was an attempt to patch up steadily eroding ties between the two countries.

10) Pakistan Speeds Pursuit Of Iranian Pipeline, Defying U.S.
Tom Hussain, McClatchy Newspapers, January 11, 2012 08:39:25 AM
http://www.mcclatchydc.com/2012/01/10/135449/pakistan-speeds-pursuit-of-iranian.html

Islamabad - With a decision to fast-track the construction of a natural gas pipeline from Iran, Pakistan is underscoring not only the energy needs of its flailing economy but also its growing estrangement from Washington.

The move came despite the objections of the United States and could put Pakistan at risk of violating U.S. sanctions on Tehran aimed at denying Iran hard currency that it needs for its nuclear and ballistic missile programs. But as President Asif Ali Zardari said in a rare television interview last week, Pakistan has no choice but to seek greater ties with its neighbors - Iran, China, India and Afghanistan - "because the economies of the West are in trouble and not in a position to help us."

Zardari's comments were the clearest enunciation yet of a change in Pakistan's foreign policy away from the United States as Islamabad plans for 2014, when U.S.-led NATO combat forces are expected to stand down in Afghanistan.

Zardari said Pakistan would not be drawn into new American "theaters of war" in the region - a clear reference to fresh U.S. sanctions against Iran and tensions stemming from Tehran's threat to close the Strait of Hormuz, a vital waterway for oil traffic. Pakistan, he said, would accelerate the construction of a natural gas pipeline from Iran to plug a supply shortfall that in December brought the economy here to a near standstill.

"We will not limit our commercial relations with any country because of the political whims of any outside power," Zardari told the Geo cable news channel in an interview aired Friday. "Our priority is the needs of our population of nearly 200 million people."
[...]
With Iran under increasing pressure, Pakistan in December turned to China to underwrite the pipeline project. At Pakistan's suggestion, China is considering whether to import Iranian gas via an extension of the Pakistan pipeline - a move that would make it the third prospective partner in the project. China would replace India, which backed out in 2008 after signing a deal with the United States for the transfer of nuclear power generation technology.

Pakistan demanded a similar deal from the United States but was rebuffed because its former top nuclear scientist, Abdul Qadeer Khan, was caught red-handed in 2003 selling uranium enrichment technology to Libya. Khan's illicit network also supplied nuclear weapons-related technology to Iran.

Washington is backing an alternative pipeline project that would supply a similar amount of natural gas from the central Asian republic of Turkmenistan, via Afghanistan, to Pakistan and onward to India. But the project is lagging about four years behind the Iranian pipeline.

While Pakistani officials have been involved in negotiations over the Turkmenistan project, they privately express doubts that Turkmenistan has sufficient gas - and note that the pipeline could only be constructed once violence ebbs in Afghanistan.
[...]
Demand for natural gas in Pakistan is outpacing supply by 25 percent, forcing the country to institute rationing for homes, motorists and factories and phase out subsidies, which has sparked nationwide protests. Currently, gas stations are open just three days a week in a nation that reportedly has 2.5 million compressed natural gas-powered road vehicles.

Gas-powered fertilizer plants haven't been able to produce at full capacity, creating nationwide agricultural shortages and doubling prices during the crucial wheat-planting season. The shortages also have harmed Pakistan's textile industry, the biggest private sector employer and producer of $22 billion in export earnings, easily Pakistan's biggest source of foreign currency.
[...]
-

Just Foreign Policy is a membership organization devoted to reforming US foreign policy so it reflects the values and interests of the majority of Americans. The archive of the Just Foreign Policy News is here:



http://www.justforeignpolicy.org/blog/dailynews








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