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Bullish EIA Data Pushes Oil Prices Higher

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China Hopes for Progress in Talks between Iran and the UN Security Council

China’s official Xinhuanet news service is predicting that Iran will compromise with the 5 members of the UN Security Council plus Germany as they meet in Istanbul beginning on Friday. The Chinese news service points out that Iran is suffering 25% to 35% inflation at the moment. Moreover, the Iranian currency has fallen dramatically against the dollar, and 25 of Iran’s banks have been kicked off the SWIFT exchange under European Union pressure (the EU in turn acted because it is afraid of US sanctions otherwise.) Xinhuanet does not say that Tehran will just give in, but quotes an Iran specialist to the effect that they will give in on some small issues in hopes of getting the negotiation ball rolling.

China has every reason to hope for this outcome. It is being put in the uncomfortable position of being the chief country defying the United States over the latter’s unilateral boycott of Iranian oil. Other Asian countries are even hoping that China will insure, or arrange to have insured, the ships that will take the oil to Asian ports. European Union sanctions now rule out European companies doing the insuring.

It seems clear that Iran will not give up its civilian nuclear enrichment program, aimed and making reactor fuel for energy plants. But apparently the West will press Iran to give up its program of enriching uranium to 19.75% for its medical research reactor. Iran will likely also be pressed to abandon its nuclear facilities at that cave (Fordow) near Qom, since it is underground and cannot be easily bombed (though it can be inspected and has been inspected).

The flaw in the west’s case is that it is hypocritical as long as the Israelis have some 400 nuclear warheads. Asking Iran to surrender even a virtual nuclear capacity when its rival has a real one makes for difficult strategic calculations. It is hard to believe that India would agree to give up its nuclear weapons if Pakistan did not. And the US has had 20 years after the end of the war to end its own nuclear stockpile, since its Soviet foe no longer exists; but that has not happened. Iran doesn’t even have the nukes to give up, and probably cannot have them for a good ten years even if they decided they wanted them, which Supreme Leader Ali Khamenei emphatically says they do not. But its civilian nuclear enrichment program probably is intended to provide some deterrence and it is not easy to understand why it would relinquish that deterrent capability for nothing in return from Israel.

The mothballing of the program to enrich uranium to 19.75% (for a medical research reactor given Iran by the US decades ago) maybe the easiest thing the Iranians could offer. Whether they will do so, and whether that will be enough to create a sense of forward momentum has yet to be seen.

By. Professor Juan Cole

Juan runs the popular geopolitics blog Informed Comment where he provides an independent and informed perspective on Middle Eastern and American politics.



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