Streetwise Professor

November 9, 2013

Beware Presidents in Search of a Legacy

Filed under: Economics,Energy,History,Military,Politics,Russia — The Professor @ 8:40 pm

There are few things more dangerous than a president in search of a legacy.  Especially those who are in political straits.

A besieged Obama is in search of a legacy in foreign policy by achieving a rapprochement with Iran.  No doubt he is being egged on in this by his Rasputin, Valerie Jarrett, who, you know, is an expert about Iran because she lived there until she was four.

Never mind that even the French think this is insane.  (This being the second time in the past 3 months that the French have made Obama look like the surrender monkey.  Quite an accomplishment.)

Never mind that this is disconcerting-no, infuriating-every traditional American ally in the Middle East, notably Israel and Saudi Arabia.  Quite an accomplishment to get those two singing from they same, um, hymnal.

Never mind that this could actually provoke the increased nuclearization of the Gulf, with the Saudis ordering nukes Prêt-à-Porter from Pakistan.

Never mind that the Iranians have taken president after president to the cleaners.  (And lest you think I am being partisan, the president who was dry cleaned most thoroughly was Reagan.  In attempting to bargain with the Iranians for the release of hostages, Reagan gave the Iranians incentives to take even more hostages, which they did.)

I just read the memoir of former CIA operative Bob Baer (“See No Evil.”)  Baer compellingly ties Iran to numerous major terror operations launched against the US for the last 30 years, including the bombing of the US embassy in Lebanon, the bombing of the Marine barracks in that city, and the Khobar Towers bombing in Saudi Arabia. He also plausibly argues that Osama and the Iranians worked together.

Note: the same people-notably the mullahs (especially Khamenei) and the pesdaren (i.e., the Revolutionary Guards)-who approved and/or carried out all of these operations are still the true powers in Iran today.  (Anyone gulled by the new, and supposedly moderate, Iranian president are truly fools.)

The only hope is that the true realists-like the French! (yes-SWP just wrote that)-will derail this insane train before it gets to the station.

And maybe the Russians will derail it (yes-SWP just wrote that too!)  The Russians are utterly cynical, and utterly self-interested. The Russian economic situation-by the admission of the Economics Ministry and the Russian Central Bank, not to mention the IMF and World Bank-is increasingly fraught.  A substantial decline in oil prices would put substantial stress on the Russian economy, the Russian budget-and the lifestyle of the rent seekers that rule the country.  A deal with Iran that relaxed sanctions would add approximately 1mm bbl of oil to world markets-around 1.1 percent of world liquids output.  Using a short run elasticity of 10, that translates into an 11 percent decline in world prices.  That would put Brent in the mid-90s. Russia needs a Brent price of approximately $117/bbl to balance its budget.  It is already on the edge with a current price of $105: $95 would be a major problem.  Major problem.

The Russians, in other words, want turmoil in the Middle East.  An American rapprochement with Iran that would reduce tensions in the Gulf-at least in the short run-and bring Iranian oil back onto market is the last thing that Russia needs right now.  Which could well lead the Russians to throw a spanner in any deal.

So this is what we’ve been reduced to.  To relying on French realism and stalwartness and Russian cynicism and cupidity to prevent Obama from making a blunder of historical proportions in his narcissistic search for a legacy.

If it works out this way I will never doubt Bismarck again.

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  1. @Professor Like I vented a few days ago, the opportunity to make a deal with Iran has been squandered 10+ years ago. It is too late now. Iran is not interested in a deal – be it a moderate or radical president there. And I am not implying that they have a moderate president. What difference does it make, as someone we haven’t heard the last from would proclaim?

    Iran has decided that having a nuclear bomb is in their strategic interest – much like India did. Everything else is strategically less important to them.
    I think the question from an American perspective is how to deal with it. And I don’t know the answer but am sure it should be searched for along the geopolitical plateaus rather than military-economical.

    Surely Iran would like the sanctions lifted and is very eager to bring more oil into the international markets. The question is paying what price is acceptable to them (in their own perception) in order to do so.

    I think under the best case scenario they will reach the point when they can make a bomb anytime they want and will hold there while entering into some kind of bargain to gain dividends from the hold.

    Iranians generally are a very difficult people but not insane as some would like to portray them. They see the world very differently than most of us however. They also have a sense of being a “great civilization” as once they were and that memory still echoes in their ears – given that they have nothing to take pride in today. And if not on the scale of the world they see themselves bestowed with a historic mission at least regionally.
    Generally, people in this region are rather resilient. You impose sanctions, they tighten the belt, you impose more sanctions – they tighten it more. With each tightening they become unhappier, angrier and more defiant. Along that process any moderate person gets marginalized and any opposition gets labeled as an “American spy.”

    As a result the power there gets consolidated more in the hands of who already has it. And by the way, despite what some in American political circles would claim about the Supreme Ayatollah being the decision maker in Iran, over the last 10 years or so that reality has changed. Despite the appearances the Republican Guard holds the power now while it prepares not to confront the Ayatollah in the open. And the Ayatollah know this rather well and has learned where his place is.

    And for the record, I am adamantly against Iran’s nuclearization but accept its immanency and just express my disappointment at America’s inability to stop it in late ‘1990s early ‘2000s. And stopping it didn’t mean to confront Iran militarily. It certainly will be less realistic and implementable now. And among all the parties with vested interest Iran knows quite well that significant military intervention from USA is not likely while a few drones and tomahawks don’t scare them.

    Comment by MJ — November 9, 2013 @ 10:50 pm

  2. To get back to the moral of your story, Obama is delusional yet in another plate if he thinks he can have a positive legacy building arrangement with Iran.

    Comment by MJ — November 9, 2013 @ 10:52 pm

  3. I meant to say, “… the Republican Guard holds the power now while it prefers not to confront the Ayatollah…”

    Comment by MJ — November 9, 2013 @ 11:19 pm

  4. But is not it beneficial for Russians in the medium-term to support a deal with Iran? I believe any deal reached will leave Iranians in the same spot North Korea was in – with an ability to get to a bomb in a year or so while the world will meanwhile be cheering how amazing Obama is for preventing Iran going nuclear. And once they got the bomb, turmoil in the Middle East would be back and in a much, much larger scale, with Saudis getting nukes and Egyptians wanting some as well, which would lead to a rising oil prices, would not it?

    By the way, regarding the operations of Iranians against U.S. you have read about, Prof, there is this article by Dexter Filkins about a commander of Iranian equivalent of CIA, if you or anyone here was interested (think it is pretty good considering it is written by a journalist). I guess it will repeat many points that are in the book of the former CIA operative, but there are also mentions of Iranian operations in recent years, especially in Iraq and Syria.

    Comment by deith — November 10, 2013 @ 6:57 am

  5. China and Russia are happy to continue helping Iran develop a nuclear weapon (p. 254)

    In the Middle East, my enemy’s enemy is my friend. Just don’t ever forget that rule. …

    [But] other than what you’ve said, we haven’t really heard of any direct links with Al Qaeda. I guess the last one was they were letting some [Al Qaeda fugitives] escape into Iran. But we’re not suggesting that Iran’s fingerprints were on Sept. 11.

    No. How would we ever know, though? Again, put yourself in the position of the Iranians, or an Iranian. Maybe not Iran as a state, maybe it’s an individual Iranian that’s carrying on this war. Would you convey these by telephone, by Internet, a decision to participate in Sept. 11? It’s done orally, face to face, probably outside, so there’s no room audio.

    So we’ll never know. It’s just one of those questions we’ll never know because the people involved will never talk. They don’t keep a record of it. They don’t need to submit receipts on their tax forms at the end of the year. We’ll just never know. … Interviews – Robert Baer | Terror And Tehran | FRONTLINE | PBS

    Comment by Anders Dahl — November 10, 2013 @ 11:59 am

  6. Perhaps this will be the obsession that overtakes Obama as the Palestinian peace accords with Israel did with Clinton. Or perhaps Carter with the release of the hostages. I suspect that the success rate will remain the same.

    Comment by Howard Roark — November 10, 2013 @ 12:11 pm

  7. @Howard-Good analogies.

    @Anders. You’re right. We’ll never know. I just said that Baer’s account was plausible, especially given the other very solid information he presents regarding Iranian involvement in other terrorist operations. I suggest you read the book and make your own judgment.

    But regarding not knowing, this is one of Baer’s main themes. Because starting with Carter, and intensifying with Clinton, the US neutered its human intelligence capabilities. Especially in the Middle East and in Iran. We blinded ourselves. Not that it is certain that we would have been able to penetrate AQ or Iran if we had been intent on doing so, but there was no way we were going to do it if we didn’t even try.

    You mention the fact that it is unlikely the Iranians would use electronic communications to discuss these matters. That’s another Baer point. We have become too reliant on elint and sigint, and no matter how good that is, we can’t hear what isn’t communicated electronically using those means.

    I was at the Naval Academy when Stansfield Turner, Carter’s CIA head, gave a major policy speech arguing that we could rely on satellites, etc., to collect all the information we needed. This was totally wrong, and reflected a very limited view of who was the potential enemy and what were the potential threats. He was focused on the USSR, nuclear weapons, and major conventional forces. Even there, one can doubt whether humint wouldn’t have been useful. But when it came to Iran, Al Qaeda, Fatah, etc., these technical methods were wholly inadequate.

    Ironically, months after Turner’s speech the Iranian revolution occurred, hostages were taken, and the Carter presidency imploded. This was a major CIA failing.

    The ProfessorComment by The Professor — November 10, 2013 @ 3:08 pm

  8. I’m no convinced the Iranians would have assisted al-Q’aeda. They detested the Taliban in Afghanistan and actively supported the Northern Alliance, albeit without much effect. Even in Iraq the common hatred of America was not enough to get Shia and Sunni cooperating to any degree.

    Comment by Tim Newman — November 10, 2013 @ 4:00 pm

  9. @Tim-As Anders said, the enemy of my enemy. It is plausible. And alliances are purely of convenience, and can shift from minute to minute. Don’t discount the possibility too much.

    The ProfessorComment by The Professor — November 10, 2013 @ 4:47 pm

  10. True, but I think the Iranians see the Sunnis as more of a threat than America. At the end of the day, all this “Great Satan” shite is a handy way to convince the Iranian population that there is an external threat, and therefore the Mullahs must remain in power indefinitely. Whereas the ongoing struggle for regional influence and/or supremacy with the Sunnis has far more potential to bring about serious unrest from within as well as without, the sort which could change the shape of Iran permanently. I’m fairly confident the Iranians know who the long-term enemy is, and although they’ll side with their more moderate enemies in the short term, I would be very surprised if they started dealing with the Wahhabist headcases. I think they’re smarter than that.

    Comment by Tim Newman — November 10, 2013 @ 8:37 pm

  11. @Tim . . . but which Sunnis? Remember Osama was also trying to topple the House of Saud, which is Iran’s major enemy.

    Anyways, I’ll read Baer’s book on Iran next, and see what more he says.

    The ProfessorComment by The Professor — November 10, 2013 @ 9:36 pm

  12. Ah, I think they’re concerned about the al-Qa’eda Sunnis, the die-hard Wahhabists. The Sauds are moderates by comparison, who are regional rivals but cannot destabilise Iran.

    And another thing…I’m not sure how much al-Qa’eda would trust the Iranians with any pertinent information or contacts, either. I’m not ruling it out, but I’d be surprised if there was any cooperation. I’d be interested to hear what you discover in the book.

    Comment by Tim Newman — November 11, 2013 @ 1:03 am

  13. Sorry, Prof, but the reality of Iran today is very, very different.

    Iran today is no more religious than Russia was Communist under Yeltsin.

    Ahmadinejad was a puppet for an oligarchic faction chasing the spoils from privatisation,and they were eventually able to populate all the key ministries – except the intelligence ministry – with their people, and most of the capable people lost their jobs leaving a management vacuum. When the faction tried for the intelligence ministry last year, the Khamenei faction acted, and made the rapprochement with Rafsanjani which led to President Rouhani and his technocrats.

    Iran has not been after nukes for years, but keeping up nuclear development made a good bargaining tool on the one hand, and a nationalist distraction for economic incompetence on the other. Conversely it suited the Israelis to make a noise about Iranian nukes as they continued a real estate play to relieve domestic middle class pressure for affordable property, and using religion as an excuse.

    Iran is dead set on ending sanctions,and are completely prepared to make a deal which the rest of the 5 + 1 can live with, even if the head-bangers in Congress can’t. They are also addressing a massive corruption problem only held in check by the fact that the culprits cannot easily loot hard currencies thanks to US financial sanctions.

    Yup,unintended consequences: US financial sanctions have actually acted in Iran’s favour. While oil sanctions have enabled them to increase prices – which they always wanted to do – and blame the Great Satan.

    Iran is looking to develop a constructive policy of ‘energy diplomacy’ (Zanganeh’s expression) and ‘energy co-operation’ on the premise that energy is an ideology and politics free zone, where the only threats to energy security derive from private sector conflicts (cf Russia/Ukraine). In particular they are considering a constructive proposal of an exchange of Western IP, technology and knowhow in renewables and energy efficiency for the value of carbon fuels saved. eg Iran currently flares $7bn of natgas a year.

    How do I know? Well, I’ve been advising Iran at high level since 2001, and have been there seven times since 2004, four times in the last couple of years. I’m advising the ten Economic Co-operation Organisation nations (HQ in Tehran) on strategic energy policy, and ECO is acting upon this advice, for instance in relation to developing a regional power market.

    My colleagues and I have access right to the top of the Rouhani government, and in our opinion Iran represents the greatest foreign and economic policy opportunity for the US there is, if you smartened up your policy. Iran’s interests are also much closer to Israel’s than they are to the Saudis.

    During the most radical period under Khomeini,Iran quietly sold crude to Israel via Marc Rich: once Khomeini died the new regime didn’t see why Marc Rich should keep all the gravy,and it’s got ever more corrupt since then, until financial sanctions made them a bit more honest.

    Take it from me, Prof, you’re off target here.

    Comment by Chris Cook — November 12, 2013 @ 7:19 pm

  14. Ok, Mr. Tamraz.

    FYI Mr. Cook: SWP blogs primarily about commodities when not blogging about geopolitical affairs. Most readers are more than a little bit familiar with Marc Rich- and Iran.

    I don’t discount that you’re well acquainted with Iran, Mr. Cook. I discount that you are completely honest or care on any level regarding what’s in the best interest of the United States or UK. But good luck with your deals and your “top level contacts”.

    Comment by L2 — November 13, 2013 @ 2:39 am

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