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Iran: International Emotions Running High

News & Features | February 6, 2012

By Kyle Carnes

In 2012, the United States Army will remove all combat troops from Iraq and transition major combat divisions out of Afghanistan. A major 10-year US military presence in the Middle East will be coming to an end. With it, however, comes the rise of some lingering questions about the security and stability of the region. Provocations between the US and Iranian navies in the Strait of Hormuz over the possibility of a ban on Iranian oil and persistent tensions between Israel and Iran over a nuclear program make peaceful relations in the coming year extremely tenuous.
As of January 23 , the European Union voted to enact an embargo on all Iranian oil trade. This is yet another tightening of sanctions intended to reign in the nascent Iranian nuclear program, which many Western powers view as a military nuclear program veiled by civilian declarations. The Iranian government claims that the program is completely peaceful and only civilian in nature, and it hotly disputes Western accusations to the contrary. The EU ban on Iranian oil puts even greater strain on an Iranian economy that revolves from one UN sanction to another. For the last decade, one American dollar has been able to buy, on average, 9,000 Iranian rials. In the last week, the exchange rate rose as high as 23,000 rials per dollar. The rial has seen over 50 percent depreciation since the end of the year, due in part to economic sanctions, the fall in the price of oil, and reports of possible Israeli strikes on Iranian nuclear sites. While still hypothetical, the threat of an Israeli strike on a weakening Iran has only intensified uncertainty in the Iranian economy, leading to massive fluctuations in the exchange rate. According to a recent NPR report, many Iranian business people cannot afford to buy foreign goods, and Iranians are finding it difficult to purchase enough dollars to pay for their children to study abroad. These pressures will only intensify national dissent, especially in a parliamentary year, when President Ahmadinejad and his party are looking to maintain power in the Iranian Majlis.
The United States has used a great deal of aggressive official rhetoric concerning Iran and stands firmly against its possession of nuclear weapons. The Obama administration has made it a point to impose tighter sanctions on Iran and has approached many of Iran’s Asian trading partners to cut oil imports. The EU imports around 25 percent of Iranian oil, and the ban on imports, which goes into effect in the coming month, would be a drastic escalation of past sanctions. The Iranian government has claimed that, if it were unable to export oil, it would attempt to block the straits of Hormuz, where one-fourth of the world’s oil supplies pass. The United States government has stated that they would not tolerate such an action and would respond accordingly. This intensification of diplomatic exchange has left some in Washington worried that the US is on another crash course with a Middle Eastern oil power. The US-led quest to pacify an Iranian nuclear program has created the possibility of economic destruction that would no longer be limited to the Iranian economy alone. A disruption in oil traffic through the Strait of Hormuz, even briefly, has been speculated to send the price of a barrel of oil to well over $100, and put the price of gas  past $4 a gallon in a very short time. This would be disastrous not only for the US, but also for European economies that are slowly emerging from recessions and reestablishing their shaky financial foundations.
In the last two years, three Iranian nuclear scientists were assassinated, each killed by a magnetic explosive device attached to their vehicles. The American government wholly denies any involvement, while Israel gives no comment, which has come to be a standard practice. The pressure is mounting on the Iranian government, and in recent days, the Tehran regime has shown interest in talks over its nuclear program. They have allowed International Atomic Energy Agency (IAEA) inspectors access to the country’s nuclear sites, though the results are yet to be seen. If these inspections help reduce tensions between Iran and the West, we can be more optimistic about the possibility of peaceful relations in the future.
A war between the US and Iran would have major implications, both socially and economically. Over 1.5 million people died in the last war Iran fought (Iran-Iraq), while the US has lost over 5,000 men and women in the wars in Iraq and Afghanistan. The economic impact of the Iran-Iraq war is estimated at $500 billion, while the cost of the wars in Iraq and Afghanistan is estimated at $4 trillion. In a world still recovering from a major recession, a war that would spark a clash of civilizations could have devastating effects.