The bad news from the global economy keeps coming. The Eurozone is still temporizing and hoping that the appointment of technocrats as Prime Ministers in Greece and Italy will ensure implementation of savage austerity programmes. Even the third quarter uptick in growth in Japan has been accompanied by unanimous predictions of a decline in the fourth quarter. There is little cheer from U.S. unemployment rates, the budget deadlock in Congress and the alarming level of indebtedness.
In this dismal economic scenario, the drumbeat of an attack on Iran’s nuclear facilities coming out of Israel which regards it as an “existential” threat, has been amplified by the latter’s friends in the United States by making it a frontline issue in 2012 Presidential election politics. The latest report of the International Atomic Energy Agency (IAEA) says that although Iran is in breach of its IAEA obligations, there is “no smoking gun” to show that it has developed a nuclear weapon. Nevertheless the opposition Republicans are demanding that U.S. President Obama fulfill his long-asserted policy that Iran will not be allowed to have nuclear weapons. They also regard UN sanctions, first imposed in 2006, as having been ineffective in ending Iran’s nuclear programme.
In any event, China and Russia, both veto-wielding members of the UN Security Council with major interests in Iran, are unlikely to go along with any further tightening of UN sanctions against that nation.
American wars in West Asia are winding down – in Iraq, Libya and in Afghanistan where the U.S. is now believed to be exploring a possible shift to an advisory role by September 2012 after the drawdown of 33,000 “surge” troops, sent in last year, is completed. Israel obviously does not want a nuclear Iran. Nor do Iran’s Arab neighbours, particularly Saudi Arabia which is locked into a longstanding sectarian (Shia-Sunni) and ethnic (Arab-Persian) rivalry with Iran for regional leadership. As the Arab spring plays out around Israel and uncertainty in the region grows, most recently in Syria, Israel and its American supporters have made the Iranian nuclear programme their focus. But Israel, unlike Iran, is not a signatory of the Nuclear non-Proliferation Treaty (NPT), and is known to have a clandestine nuclear weapons programme with around 100 warheads and has recently tested long-range missiles. Iran could legitimately argue that Israel is an “existential” threat to both itself and the region.
The Israelis have been calling for an attack to destroy Iran’s nuclear facilities. It would be recalled that Israel destroyed the Osirak nuclear plant in Iraq (1981) and the Syrian plutonium reactor at Deir ez-Zor (2007). This time, it will not be as easy to take out Iran’s nuclear facilities by a single attack only, since Iran has spread its nuclear facilities across the country. The latest was the new Furdow Fuel Enrichment plant near the city of Qom. Nor is Iran as weak as Syria or Iraq; if attacked, it will surely retaliate. Therefore the argument is being made by Israel’s friends in the U.S. strategic community that instead of being pulled in after a possible Israeli attack on Iran, it will be better for the U.S. to damage Iranian nuclear assets, even partially.
Should the U.S. go to war against Iran, the first fallout would be on the price of oil. Iran, at least temporarily, can block the Straits of Hormuz, through which roughly a third of the oil transported by sea, passes. According to the Rapidan Group, a Washington-based energy consultancy, “in the first hours of the attack prices would surge, on average, by $23 a barrel. Under the worst-case scenario, including the closure of the Strait of Hormuz, prices could increase, on average, by $61 a barrel, lifting Brent crude to an all-time high of $175 a barrel.”
There are other points of retaliation. As the U.S. pulls out of Iraq, Iran, with its Shiite majority, will exert more influence in that country. It could also counterpose the U.S. in Afghanistan’s western provinces by reviving past politico-military and economic ties. Israel itself could be targetted through Hezbollah.
Even if the U.S. wanted to, can it afford to start another war? According to official reports, the wars in Afghanistan and Iraq have cost $1.3 trillion over the past decade. Most of the military war-expenditure was sourced through borrowings taking the accumulated debt to $14.3 trillion. Using the broader approach of The Cost of War study by Brown University and including expenses such as the interest on the Pentagon’s appropriations, veterans’ health care and additional spending on homeland security, the cost of the war would double to $2.6 trillion.
According to World Bank estimates, U.S. military expenditure in 2009 was 17.8% of central government expenditure and 4.7% of the GDP. As the U.S. pulls out of Afghanistan and Iraq, it could, in a back of the envelope calculation, save approximately $235 billion per year. And if the Super Committee created under the Budget Control Act, 2011 doesn’t come to a consensus by November 23 then automatic cuts of $1.2 trillion will be made equally across defense and non-defense budget spending over the next ten years. That would make the question of financing another prolonged engagement in West Asia, provoked by an attack on Iran, that much more problematic.
Where does India stand in this scenario? Any conflict in Iran will have serious repercussions on India, which obtains more than 15% of its oil imports from Iran. The ever-rising price of oil will aggravate already high inflation. Will India align with the West in the UN Security Council, of which it is a non-permanent member, in tightening sanctions against Iran and trying to portray itself as a responsible nuclear power? India accepts Iran’s civilian nuclear programme, as long as it complies with IAEA obligations; but it emphatically does not wish to see more nuclear powers in its extended region. On the other hand, if the U.S. or Israel attack Iran, India will condemn it unequivocally.
India’s position is delicate. Iran is signing deals and strengthening ties with Pakistan – for example, they signed a deal on March 17, 2011, to build a pipeline between the two countries (originally part of the Peace pipeline or IPI pipeline but now only for Iran and Pakistan). China has made large investments in the Iranian energy sector and is one of the main importers of Iran’s crude oil (560,000 barrels per day at the beginning of 2011, around a quarter of Iran’s crude exports). India could lose out.
In conclusion it would be wise to recall what the former U.S. Defense Secretary Robert Gates said in his final address to the cadets of the U.S. Military Academy before he retired, “In my opinion, any future defense secretary who advises the president to again send a big American land army into Asia or into the Middle East or Africa should ‘have his head examined,’…”
Neelam Deo is India’s former ambassador to Denmark and Ivory Coast, and served in Washington and New York. She is the director and cofounder of Gateway House: Indian Council on Global Relations.
Alisha Pinto is a researcher at Gateway House: Indian Council on Global Relations.
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