ICYMI: Courtesy of the always resourceful @EIAgov, I got data back to 1949 of U.S. *net* petroleum imports (that's crude oil and refined products). The latest forecast is for 2019 net imports to drop to 1.5m b/d — lowest since 1958. #OOTT Full story here: https://t.co/itjliIuOzT pic.twitter.com/LXz1GvmULM
— Javier Blas (@JavierBlas) May 9, 2018
When Peter the Great died in 1725, the Russian empire covered an extent unimagined when he came to power. From his deathbed, he commanded his successors to follow his example. His will provided:
“My successors will make [Russia] a great sea destined to fertilise impoverished Europe, and if my descendants know how to direct the waters, her waves will break through any opposing banks. It is just for these reasons that I leave the following instructions, and I recommend them to the attention and constant observation of my descendants… IX To approach as near as possible to Constantinople and India. Whoever governs there will be the true sovereign of the world. Consequently excite continual wars, not only in Turkey, but in Persia… And in the decadence of Persia, penetrate as far as the Persian Gulf.”
For most of the period since, it was Persia’s fate to be contended over by great powers, a proxy for other battles, picked over for its spoils. It was a pawn in the nineteenth century great game between Britain and Russia. By 1907 it was formally partitioned into zones of influence, an arrangement that was superseded only after the Communists took over in Moscow.
Russia (and then the USSR) invaded Persia/Iran four times in the twentieth century. On the fourth occasion, in 1941, the USSR and Britain acted in concert occupying Iran as one of the anti-German manoeuvres in the Second World War, the USSR holding the north and the British taking the oilfields in the southwest (a revival of those zones of influence). The Russians needed some intense pressure from the USA before they were winkled out of northwest Iran after the end of the Second World War: the USA then stepped into the void. In 1953, the CIA sponsored a coup after the Iranian government nationalised British oil interests, and replaced it with a friendlier one.
In 1979, Iran had a revolution in more than one way. A secular shah was replaced with an Islamic republic and Iran, for so long a pawn, decisively broke with all foreign would-be patrons, becoming a regional power. This was made possible by the vastly increased oil revenues Iran benefited from in the wake of the oil shock of the early 1970s.
This unhappy history explains why Iran is now so determined to secure its independence of action. Its nuclear programme was a part of that. Ironically, given subsequent events, Iran’s nuclear programme was started with American help in the 1950s and 1960s.
Which brings onto the US interest in Iran. This historically has twofold: first, the oil itself. And secondly, the stability of the wider region, which historically has been very important to the US partly because of oil, partly, historically, because it could help check Russian ambitions in the region and partly because of Israel.
So when Iran seemed to be upping its nuclear ambitions in the last decade, the USA (along with much of the rest of international opinion) became seriously worried. On the one hand, it did not want another nuclear power, especially one as hostile and so heavily driven by an ideology with a worrying emphasis on the merits of the afterlife.
On the other hand, it had an interest in keeping oil supplies as undisrupted as possible (and oil prices as low as possible), which the sanctions regime against Iran worked strongly against. This meant that it was keen to reach a deal with Iran, even an imperfect deal. And so, eventually, it did: after a decade of tightening sanctions, the P5+1 (the permanent security council members and Germany) reached a deal with Iran in 2015 over its nuclear programme.
This deal was always controversial with the US right and was never ratified in the USA. Donald Trump made it a campaign pledge that he was going to walk away from the deal, a pledge he made good on last week.
Was this Donald Trump being crazy, belligerent and short-sighted? Belligerent, yes. But not particularly crazy or short-sighted, at least not from a US perspective. Look at the chart at the top of this piece. When UN sanctions began in 2006, the USA was just about at its peak of net petroleum imports. Any rises in oil prices or disruption to supplies really hurt it.
Now, the position is transformed. The USA is heading fast for needing no net petroleum imports. Moreover, this is in part a function of high oil prices: US producers need high oil prices to be economic. This trend has accelerated sharply even since 2015.
So the USA simply does not have the same pressing need to reach an imperfect deal. Its strategic interest in the Middle East is becoming, for the while at least, much less about oil and much more about supporting Israel.
The calculation has changed. The USA can therefore seek a much more favourable deal or consider using force to curb Iran’s ambitions, if it thinks the existing deal is inadequate, without particular fear of economic blowback. That is what it has done.
The same considerations do not apply to the EU. It is a heavy net petroleum importer (Britain is now a net importer too). Rises in prices or disruption to supply are far more worrying for European countries. So it is unsurprising to see EU countries, including Britain, working hard to salvage the deal. Everyone is acting in accordance with their rational interests.
So this development is bad news for the EU, including Britain. It is also bad news for the Middle East. If the USA no longer has a particular interest in maintaining the peace on a compromise basis and those in power in the USA are no longer compromisers by temperament, we can expect to see more conflict. Brace yourselves.