IRAN, the U.S. and the WTO

The U.S. should oppose Iran’s admittance the World Trade Organization (WTO) on political principal. It’s the right thing to do. Although it may seem like a unique point of leverage for the International community, blocking Iran’s admittance into the WTO is not a particularly effective diplomatic tool to economically isolate the Iranian government. No entity is more suited to isolate Iranians and the Iranian government more effectively than the Iranian government itself. Blocking Tehran’s admittance into the WTO is instead an emphasis to Iranian officials about what they must do before Iran can rejoin the community of nations. If Iran were to join the WTO before ending its destabilizing policies, reforming its broken economy and complying with its contractual agreements with the International Atomic Energy Agency (IAEA), it would be putting its “cart before its donkey”.

More importantly, Iranian officials have given the West no reason to believe they would willingly join the WTO. Rolling out the red carpet or protesting Iran’s admittance suggests the Iranian regime is capable of absorbing progressive political and economic reforms without imploding. Iran's economic policies are consciously engineered to isolate Iran and Iranians from foreign influence and maintain financial authority over those that are not particularly intimidated by the ideology of the Iranian regime. WTO flavored reforms represent a serious threat to Tehran’s hegemonic leadership.

It is noteworthy that the Iranian government’s threats of a unilateral boycott of their petroleum exports are consistence ant therefore, more serious than the West’s threats to sanction Iran’s primary export and economic lifeline, petroleum. Iranian threats to take its petroleum off of the global energy market make clear that the Iranian regime can not rationalize its role among nations. Iranian officials repeatedly demonstrate that they respond to their own crisis making by instituting isolationist policies. Examples like Tehran’s threats to destabilize global energy markets illustrate Iranian governance, in its current form, is an institutionalized destabilizing feedback loop that is threatening to crash the Iranian system, Iran’s neighbors as well as institutions of global democracy.

Tehran’s destabilizing feedback loop, Iran’s current model of governance, is the single biggest indicator that the Iranian government cannot authorize its own admittance into the WTO. If Iran were to begin instituting policies in line with WTO recommendations, it will in effect, empower the Iranian people. Factions of Iranians will rise to demand liberties. The more independent of these factions would not willingly mimic the Iranian governments self defeating destabilization campaign and begin funneling their resources into the Iranian government’s opponents. That sort of challenge in policy would eventually shatter the brittle Iranian government. To illustrate the increasing fragility of the Iranian government, the imprisonment of students, professors and journalists is increasing while greater numbers of media outlets not controlled by the Iranian government are suppressed. Both CNN and BBC have both been banned in Iran, although these bans may be temporary. Expatriate broadcasts originating outside of the country are regularly jammed with sophisticated electronic warfare equipment inside Iran.

Without question, Iran contributes to the global market quantities of petroleum significant enough to cause instability if it were to spontaneously go off line. In combination, individual national strategic petroleum reserves represent an international strategic reserve but this has yet to be legislated in a way that could logically insulate energy markets from erratic petroleum exporting nations like Iran. An announcement to temporarily release reserves may cool energy prices in the short run and is an informal precedent in times of crisis however true energy security would require a well constructed treaty.

An appropriately worded treaty between energy importers has the potential to define a procedure to deal with any single nation’s attempts to trigger a global economic meltdown by withholding resources. A defined a series of decisive steps could be outlined by the treaty to be taken by the interested parties that may include a policy of regime change of the nation that threatens an abrupt withdrawal of its resources from the global market place. Another insulative international program might be to create an international strategic petroleum reserve defined within the treaty. Without one, energy importers are unduly influenced by the likes of Iran. It is within reason to believe resource rich nations have an obligation to supply resources at a pace the global economy can adjust to without crashing. If Iran wants to pull its oil off the market, fine, but in phases that the global economy can adjust to. If not, then the Iranian government is in effect threatening the quality of life of billions of people. That kind of behavior is totally unacceptable… and consequences should come from the countries impacted by such behavior.

For example, let’s consider Japan. Iran is the third-largest oil exporter to Japan, accounting for about 15.9 percent. Japan is a great example of a nation who is destroying international energy security by signing contracts to develop Iranian oil fields. Japan will in effect be feeding ours and their most destabilizing force. Here’s the scenario:

Without broad energy solidarity among energy importers, energy security is a pipe dream. As we are all aware, petroleum is a fungible commodity we all have to have to maintain our quality of life. Unfortunately, the international solidarity and discipline required to manifest energy security is not easy to come by. If Japan and similar energy importing nations were offered a contractual guarantee toward energy security if they opt not to feed the beast, the world community could more easily face down Iran’s threats to destabilize the global economy. As the international community braces itself for energy market instability, a senior official of Japan’s Ministry of Economy, Trade and Industry explained the dilemma.

No matter what consequences result from Tehran’s destabilization tactics, multilateral trade sanctions or an Iranian oil-embargo, energy market instability will hit Japan and similar energy importers hard. Japanese officials are fully aware that their energy insecurity is the responsibility is the Iranian government’s conscious effort to destabilize the region.

The evidence is overwhelming that Iran, in its current form, would make an awkward and uncomfortable partner at the WTO. Until the Iranian regime changes significantly enough to join the community of nations the United States and its allies should block Iran’s admittance to the WTO. Iran knows exactly what the community of nations is asking it to do. The ball is in Iran’s court and has been for decades. Inaction from the international community has become dangerous and the time has come to take decisive action before Iranian officials instigate an international crisis that succeeds in scuttling the global economy.

Iran dilemma -- 01/26/2006 -- By TAKASHI KAMIGURI and HIDEAKI ABE -- The Asahi Shimbun

Iran's publicly stated intention to advance its nuclear technology threatens a key element of Japan's energy strategy--development of the Azadegan oil field. Defying international opposition, Iran announced on Jan. 10 that it had resumed uranium enrichment operations. If Tehran does not alter its position, Japan could lose its rights to the field.

As the international community leans toward Tehran sanctions, a senior official of the Ministry of Economy, Trade and Industry explains Japan's dilemma. "We want to develop the field at any cost," the official said. "But opposing nuclear weapons proliferation is the national policy of Japan as the world's only country to suffer atomic bombings. "It's impossible for Azadegan alone to escape any impact (from the nuclear issue and possible sanctions)."

Chief Cabinet Secretary Shinzo Abe said Jan. 13 that Japan supports a call to send the issue to the U.N. Security Council. While joining the United States and Europe in calling on Iran to drop its nuclear program, resource-poor Japan cannot afford to lose the development rights. With estimated reserves of 26 billion barrels, the Azadegan field is one of the largest in the Middle East.

Japan's Inpex Corp., in which the government has a 36-percent stake, won 75 percent of development rights in February 2004. It was a much-needed enhancement of Japan's energy security after Arabian Oil Co., a Japanese company, lost its rights to Saudi Arabia's Khafji field in 2000. When in full operation, Azadegan is expected to produce 260,000 barrels a day, boosting Japan's imports of self-developed oil by 60 percent.

In fiscal 2004, Japan imported 4.17 million barrels of oil a day, of which only 450,000 barrels came from fields of its own development. Iran's nuclear move came just as Inpex is preparing to begin full-scale development this spring after land mines from the Iran-Iraq war are removed. Inpex is also negotiating with France's Total SA on handing over part of its development rights to reduce risk, industry sources said.

Its integration with Teikoku Oil Co. scheduled in April is intended to tap Teikoku's technical expertise to develop Azadegan, the sources said. But those efforts could be nullified by Iran's nuclear ambitions. "The impact is extremely grave," said Toshihiro Nikai, minister of economy, trade and industry. "We will decide how to act in consultation with other countries."

Some officials of his ministry, however, are set to go ahead with the Azadegan project. Even if the Iranian issue is sent to the U.N. Security Council, it would not lead to a ban on Azadegan development or on imports of Iranian oil, the officials say. The officials are concerned with China's aggressive push to strengthen ties with Iran. It recently won rights to the Yadavaran oil field in the country. "Even if Japan gives up Azadegan, China will move in, resulting in no damage whatsoever to Iran," said a senior ministry official. "We should separate the nuclear issue from oil development."

Pessimism is growing, however, in the oil industry. "The United States and Europe take the Iranian move seriously," an industry source said. "As it stands, it will be difficult to start drilling." The government is stepping up its diplomatic efforts to persuade Iran to drop the nuclear program. Foreign Minister Taro Aso phoned his Iranian counterpart, Manouchehr Mottaki, on Jan. 18 to press for cessation of nuclear activities. Aso told Mottaki that criticism in the international society is far stronger than Iran thinks. But the Iranian minister stuck to the country's stance, telling Aso the moves are intended only for research.

At a news conference on Jan. 19, Aso did not hide his irritation over Iran's hard-line position. "As it stands, the issue will surely be sent to the Security Council. Does Iran understand that?" he said. If the council moves to impose sanctions, its negative impact will be felt strongly by Japan.

The damage will not be limited to Azadegan. If the sanctions involve an Iranian oil embargo, or if Iran, angered by the U.S. and European criticism, halts its oil exports, it will hit Japan hard. Iran is the third-largest oil exporter to Japan, accounting for about 15.9 percent. Aso said he would continue efforts to dissuade Iran from its nuclear development. Since Washington has said it is seeking a diplomatic resolution, a senior Foreign Ministry official said it is unlikely that the council will immediately impose sanctions. But even without sanctions, there are concerns Washington may call for Japan to stop development of the Azadegan field, the official added.(IHT/Asahi: January 26,2006)

SOURCE:

"Gas scandal" starts between Turkey and Iran -- 27 January 2006 [02:11] - Today.Az

Gas crisis happened between Turkey and Iran like Ukraine and Russia.

As APA reports, the reason for the crisis is Iran's decreasing the gas delivered to Turkey after the weather got cold. Iran had delivered 20 cubic meters gas to Turkey a day, but now it is 6 cubic meters only. "Hot line" has been opened in Energy Ministry of Turkey, because of the situation. Energy Minister of Turkey Hilmi Guler said the problem might last 1 or 2 days and the population can not notice the problem and he contacted energy ministers of Russia and Iran, and ambassadors to the country. As a result, Iran pledged to deliver 10.5 cubic meters gas to Turkey a day. At the same time, after prime minister Recap Tayyip Erdogan made a call to Russian president Vladimir Putin, Russia decided to increase the volume of the gas.

bttt

SOURCE:

India fears Iran may extract high price for piped gas ANUPAMA AIRY -- Posted online: Friday, January 27, 2006

NEW DELHI, JAN 26: The real issue regarding the price of the piped gas from Iran has finally come to the fore. The petroleum ministry now fears that given the prevailing high oil prices, the issue of gas price may be “extremely difficult to resolve” as Iran can be expected to seek the highest possible price for its gas.

It is not incidental but these concerns come after two years of intense deliberations among the three countries over various issues concerning the multi-billion dollar Iran-Pakistan-India (IPI) gas pipeline project.

“Since the piped gas is expected to be utilised primarily for power projects in north, north-western and central India, an assessment would have to be made about the price that India can afford; taking into account the price of competing energy sources including coal, hydro and nuclear. Petroleum ministry will closely consult the ministry of power in respect of gas price,” says an internal note of the petroleum ministry.

However, before initiating discussions with Iran on the formula relating to the price of gas, the petroleum ministry is planning to approach the Cabinet to seek its directions on an appropriate project structure for executing the IPI pipeline project. The Cabinet’s view would also be sought on the proposed tri-partite government-to-government framework agreement.

The ministry’s note discussed two options as regards the project structure. The first talks about New Delhi’s participation in a corporate structure, which would mean that India would own, build and operate the entire project. Under the second option, gas will be purchased by India at the Pakistan-India border, with the project being implemented in Iran and Pakistan by the two governments concerned (the pipeline will end at the Indian border after which Indian companies will link it with the natural gas grid).

The first option, as per the note, will not only provide for Indian representation at the apex corporate level but will also enable it to monitor all aspects of the project during the planning, construction and operational phases.

“However, Pakistan is expected to balk at the idea of an intrusive Indian presence monitoring activities on its territory. At the same time, Iran is sensitive to the fact that such a major multi-billion dollar project from which US companies would be excluded due to the US Sanctions Act would attract adverse US attention,” the note added.

While the second option was approved in principle by the Cabinet in February last year, a final view has not been taken in this regard as it would appear that this would be the preferred option for Pakistan and Iran.

From the looks of this article, I think (hope) India will vote against Iran, if it comes to that. However, there were reports of Bush giving consideration to the Russian plan of enriching uranium for Iran, outside Iran, viz., Russia.

http://timesofindia.indiatimes.com/articleshow/1388251.cms

NEW DELHI: While the domestic political battle over India's vote at IAEA on the Iran issue continued, the government drew comfort from its discussions with top officials of Saudi Arabia.

In their discussions on Wednesday, the Saudi side made it clear to India that it was deeply opposed to Iran going nuclear.

Coming as the Left parties sharpened their claws, it provides a breather to the government, which has declared that it is against the creation of another nuclear weapons power in the neighbourhood.

Saudi Arabia has reason to feel disturbed about Iran's nuclear ambitions, said officials, because this rides on Tehran seeking to assume leadership of the Islamic world, a position Saudi Arabia is reluctant to relinquish.

In this, Saudi interests coincide with those of its other arch enemy Israel - both countries being part of a security compact with the US, which is also pushing for a Security Council criticism of Iran. Saudi Arabia's declared position provides New Delhi with the much needed space.

But just as Iran will be a net loser in a renewed India-Saudi engagement, the other country counting its losses is Pakistan.

It's a clear evidence of a reassessment of Saudi strategic options that Abdullah's first visit as head of the state is to China and India.

Pakistan was not on the original list of destinations but was added after Musharraf invited him during his visit to Mecca OIC summit in December 2005.

Abdullah, the hereditary ruler of Saudi Arabia who carries the somewhat archaic title of king, is making the first break from the past - by telling Pakistan that its relations in South Asia are no longer a zero-sum game.

India and Saudi Arabia will enhance intelligence sharing on terrorism, which cannot be good news in Islamabad.

Other strategic realities have influenced the new Saudi-India relationship - New Delhi's love-fest with Washington has not gone unnoticed in Riyadh.

This, said officials, used to be a barrier to Saudi outreach to India, because of the special relationship Saudi Arabia shares with the US.

Saudi Arabia is less than enthusiastic about the existing India-Iran tango, because its biggest threat in its own region is from Iran.

A nuclear-weapons armed Iran is Saudi Arabia's worst nightmare, a fact that Saudi officials told their Indian counterparts during the delegation-level talks.

For the Indian government, looking for outside endorsement of its vote against Iran at the IAEA, there is no stronger support than from Saudi Arabia.

It's a point government managers are telling Congress and Left politicians pushing the Muslim vote as reason to go soft on Iran.

I found this interesting article.It is a bit old though.

The possibility of finding large reserves of natural gas in the Krishna-Godavari basin and the deep waters of the Andamans has cast its shadow on the proposed Indo-Iran gas pipeline project.

While the government maintains that the project is on and a joint working committee, set up in August 2000, is looking into its various aspects, knowledgeable sources insist that the project may eventually be shelved.

The sources said the country's liquefied natural gas import policy was being reviewed in the light of the new estimates about gas reserves.

And even if India chooses to import LNG from Iran, it is unlikely to invest in a pipeline. This is because some LNG import projects in the country are in a fairly advanced stage of implementation.

"It will be foolhardy to make huge investments in laying a pipeline for the gas that India may not need in the future," the sources said.

They said the latest demand-supply projections showed that the country would have sufficient gas supplies to match the expected 135-140 million standard cubic metres of gas per day (mmscmd) demand in the terminal year (2006-07) of the Tenth Five Year Plan. If more discoveries are made, the country may have a surplus of gas.

Under these circumstances, there may not be any need to import LNG. Thus, if India commits itself to 25-50 years of gas imports through a pipeline, it will not be able to opt out because of certain take-or-pay clauses in the contract.

India's aversion to the idea of piped gas from Iran was obvious at the last meeting of the joint committee in Tehran. The Indian side argued that it could import LNG through means other than a pipeline.

This will not only help the country match gas imports with domestic requirements but also prevent the need for making an additional investment.

However, the Iranians said that LNG could be a complementary mode of transfer of gas and not a competing option vis-a-vis the pipeline.

But Indians were of the view that LNG could be a principal option for transfer of gas from Iran to India and not a complementary option.

AND THANKS FOR THE PING!!!

GLOBAL ENERGY UPDATE: IEA ready to compensate Iran's oil export cut

PARIS, Feb. 9 (Xinhuanet) -- The International Energy Agency (IEA)said Thursday that thanks to the strategic stocks managed by the IEA, it could compensate an eventual loss in Iran's oil exports for one year and a half. "If ever, for whatever reason, there was a loss of supplies from Iran, which represent around 2.7 million barrels per day (bpd), strategic stocks managed by the IEA ... would be able to compensate for those lost 2.7 million bpd for a year and a half," IEA's executive director Claude Mandil told French BFM radio. "I therefore say to countries mandated to negotiate with Iran, I do not know what your plans are, but when you consider the different options, you do not have to worry about an eventual loss of Iranian oil because you have the means to deal with it," he said, noting "there is no link between the oil and the nuclear issue".

The 26-member IEA, created in November 1974 amid an energy crisis in the wake of the 1973 Yom Kippur war, seeks to coordinate and monitor energy policies in its members. IEA members hold almost four billion barrels of crude oil in reserve -- including one third emergency stock -- the equivalent of at least 118 days of imports. The Western countries fear that if the United Nations levies sanctions on Iran over its nuclear research program, the big oil exporter would retaliate by suspending oil supply. Enditem

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