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Posts Tagged ‘Israel

Iran’s oil, Europe’s oil imports, many threats, upward prices

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Iranian President Ahmadinejad punches the air in front of a banner of Iran's Supreme Leader Ali Khamenei during rally to mark the anniversary of Islamic Revolution in Tehran. With its threat to block the Strait of Hormuz, Iran is responding to the United States' decision to impose sanctions on financial institutions that deal with Iran's central bank. Photo: Der Spiegel / Reuters

The concern about the multi-bloc confrontation with Iran (the Islamic Republic of, to use the official name) has continued from December 2011 into January 2012. Oil prices and petroleum products markets have been affected. There have been oft-repeated and serious concerns that there could be some armed confrontation, especially involving Israel and Iran. There has also been speculation that Iran’s government would block the Strait of Hormuz, through which about a third of all crude oil shipped worldwide passes. Some of these concerns have abated in the last week, but only partially.

Now, Der Spiegel has reported that although the European Union embargo on Iranian oil will only come into effect in six months, the leadership in Tehran wants to act first: Exports to Europe are set to be halted immediately. It is a move which could mean added difficulties for struggling economies in southern Europe. The Iranian government wants to present a bill to parliament this weekend calling for an immediate halt to oil deliveries to Europe. The move, with most reports citing the Iranian news agency Mehr, has come about in response to the EU agreement to impose sanctions against Iran, which were announced earlier this week.

The sanctions banned any new contracts for buying oil from Iran, but allowed existing deals to continue until July in order to give countries time to find other sources. But that process is now at risk after the latest move from Tehran, a step the Iranian government had already threatened. “If this bill is passed, the government will be forced to stop selling oil to Europe before the actual implementation of their sanctions,” said Emad Hosseini, spokesman for the Iranian parliament’s energy commission, reportedly said. The bill is set to become law on Sunday.

An oil tanker is seen docked next to Iraq's vital al-Basra oil terminal, in Persian Gulf waters. Four decades after the 1973 oil shock, Iran and the West are once again embracing oil as a weapon. Tehran is threatening to block the Strait of Hormuz, while the industrialized countries are considering a boycott of Iranian oil. Photo: Der Spiegel / AP Photo/Kamran Jebreili

The EU sanctions allow for oil deliveries from Iran until July 1. Any pre-empting of this timescale by Tehran could prove problematic for countries like Italy, Greece and Spain, who would need to urgently find new suppliers. China, meanwhile, a major importer of Iranian oil, has also criticized the EU sanctions. The Xinhua news agency quoted the Chinese Foreign Ministry on Thursday as saying: “To blindly pressure and impose sanctions on Iran are not constructive approaches.” Many members of the EU are now heavily dependent on Iranian oil. Some 500,000 barrels arrive in Europe every day from Iran, with southern European countries consuming most of it. Greece is the most exposed, receiving a third of all its oil imports from Iran, but Italy too depends on Iran for 13 percent of its oil needs. If this source were to dry up abruptly, the economic conditions in the two struggling countries could become even worse.

Iran holds around 137 billion barrels of proven oil reserves, or nearly 10 percent of the world total, according to the BP Statistical Review of World Energy 2011. Despite sitting on the world’s second largest reserves of natural gas, Iran’s growing appetite for its own gas, combined with tightening international sanctions that have throttled its fledgling liquefied natural gas (LNG) programme, have made it a net gas importer for most of the last decade. Natural gas accounts for 54 percent of Iran’s total domestic energy consumption, while most of the remainder of energy consumption is attributable to oil, according to the U.S. Energy Information Administration (EIA).

Graphic: Der Spiegel / Reuters

The Gloria Center’s Barry Rubin has said that the claim of Israel being about to attack Iran repeatedly appears in the media (see his article, ‘Israel Isn’t Going to Attack Iran and Neither Will the United States’). “Some have criticized Israel for attacking Iran and turning the Middle East into a cauldron of turmoil (not as if the region needs any help in that department) despite the fact that it hasn’t even happened,” he said. “On the surface, of course, there is apparent evidence for such a thesis. Israel has talked about attacking Iran and, objectively, one can make a case for such an operation. Yet any serious consideration of this scenario—based on actual research and real analysis rather than what the uninformed assemble in their own heads—is this: It isn’t going to happen.”

Rubin said that the main leak from the Israeli government, by an ex-intelligence official who hates Prime Minister Benjamin Netanyahu, has been that the Israeli government already decided not to attack Iran. Israeli Defense Minister Ehud Barak has publicly denied plans for an imminent attack as have other senior government official. “Israel, like other countries, should be subject to rational analysis. Articles being written by others are being spun as saying Israel is going to attack when that’s not what they are saying.”

So why are Israelis talking about a potential attack on Iran’s nuclear facilities, Rubin has asked. Because that’s the only way Israel has to pressure Western countries to work harder on the issue, to increase sanction and diplomatic efforts, is his answer.

A satellite image of the Persian Gulf. About a third of all the crude oil shipped worldwide passes through the Strait of Hormuz between Iran and Oman. Photo: Der Spiegel / DPA / NASA / The Visible Earth

Bloomberg provided a round-up of Iran-related oil and prices news – oil declined a second day in New York as rising U.S. crude inventories countered data showing gasoline demand increased last week in the world’s largest oil consumer. Futures fell as much as 0.9 percent after dropping 0.6 percent yesterday. Crude stockpiles probably rose last week as imports rebounded, according to a Bloomberg News survey before an Energy Department report today. U.S. gasoline demand grew for a second week, MasterCard Inc. data showed yesterday. The European Union embargo on Iranian oil supplies will “bear bitter fruit,” Iran’s Foreign Affairs Ministry said this week.

Ria Novosti, the Russian news agtency, quoting a CNN report, said the United States will use all available options to prevent Iran from getting a nuclear weapon, President Barack Obama said in his State of the Union address on Tuesday. “Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal,” Obama said.

The New York Times reported that as the Obama administration and its European allies toughened economic sanctions against Iran on Monday — blocking its access to the world financial system and undermining its critical oil and gas industry — officials on both sides of the Atlantic acknowledge that their last-ditch effort has only a limited chance of persuading Tehran to abandon what the West fears is its pursuit of nuclear weapons. “That leaves open this critical question: And then what?”

Fox Business has reported that the International Monetary Fund warned on Wednesday that global crude prices could rise as much as 30 percent if Iran halts oil exports as a result of U.S. and European Union sanctions. If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 percent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.

Graphic: Der Spiegel / Reuters

Impacts on refining in Europe was reported by Bloomberg – the European Union’s embargo on Iranian oil threatens to accelerate refinery closures in Europe, the head of Italy’s refiners’ lobby said. “Asian countries not applying the embargo could buy the Iranian oil at a discount and sell cheap refined products back to us,” Piero De Simone, general manager of Unione Petrolifera, said in an interview in Rome. “Italy already risks the closure of five refineries and at a European level we’re talking about 70 possible shut downs.”

Brinksmanship over Iran’s threat to close the Strait of Hormuz sparked a rally in oil prices at the end of last year, The National of UAE reported, with sabre-rattling by Iran and the US sending the price of Brent crude futures to highs of US$111.11 per barrel. Saudi Arabia looks set to benefit from sanctions against Iran as the kingdom is one of the few oil producers with capacity to make up any shortfall they will cause. Meanwhile India’s oil minister said Wednesday the energy-hungry nation was continuing to import oil from Iran and was not bound by new sanctions imposed by the European Union.

Reuters provided a factbox about Iran’s oil exports as OPEC’s second largest producer. Iran sells large volumes of oil to China, India, South Korea, Japan and Italy. But Greece, Turkey, South Africa and Sri Lanka rely most heavily on Iranian oil as a percentage of imports. Sri Lanka imported 39,000 bpd in the first half of the year, IEA data shows. It is completely reliant on Iranian oil.

EU figures show imports of Iranian crude were up more than 7% in the third quarter of 2011 compared to the second quarter. The EU says it imported about 700,000 bpd of Iranian crude oil in the third quarter of 2011, compared to about 655,000 bpd in the second quarter.

The European Union agreed on Jan. 23 to ban Iranian oil imports, but the embargo will not be fully implemented until July 1, to avoid harming economies to whom Iran has been a major supplier. The EU move follows new financial sanctions signed into law by U.S. President Barack Obama on Dec. 31, which aim to make it difficult for countries to buy Iranian oil in an attempt to discourage Tehran’s nuclear programme.

Iran produces about 3.5 million barrels per day (bpd) of crude with another 500,000 bpd of condensate – light hydrocarbon liquids. Iran exports about 2.6 million bpd, of which about 50,000 bpd is refined products, the International Energy Agency (IEA) estimates. The top 10 buyers of Iranian crude last year were as follows:

An Iranian oil technician makes his way at the oil separator facilities in Azadegan oil field, near Ahvaz, Iran. Photo: Der Spiegel / AP Photo/Vahid Salemi

Country – Imports (bpd) – % Imports
1. China – 543,000 – 10
2. India – 341,000 – 11
3. Japan – 251,000 – 5.9
4. Italy – 204,000 – 13.2
5. South Korea – 239,000 – 7.4
6. Turkey – 217,000 – 30.6
7. Spain – 170,000 – 16.2
8. Greece – 158,000 – 53.1
9. S.Africa – 98,000 – 25
10.France – 75,000 – 6.0

[Figures for EU countries are from the bloc’s Eurostat office and are for the third quarter. Figures for other OECD countries are from the IEA and for the second quarter. Figures for China, India and South Africa are for the first half of 2011 from the U.S. Energy Information Administration (EIA).]

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The Doomsday Clock moves to 5 minutes to midnight

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From six minutes to five. The Bulletin of the Atomic Scientists has moved the minute hand of its Doomsday Clock, a simple graphic which reminds us how close human civilisation is to extinguishing itself through its own inaction over its own violent means.

“It is five minutes to midnight. Two years ago, it appeared that world leaders might address the truly global threats that we face. In many cases, that trend has not continued or been reversed. For that reason, the Bulletin of the Atomic Scientists is moving the clock hand one minute closer to midnight, back to its time in 2007,” said the statement.

The last time the Doomsday Clock minute hand moved was in January 2010, when the Clock’s minute hand was pushed back one minute from five to six minutes before midnight.

The January 10, 2012 Doomsday Clock followed an international symposium held on 09 January 2012. The Science and Security Board of the Bulletin of the Atomic Scientists reviewed the implications of recent events and trends for the future of humanity with input from other experts on nuclear weapons, nuclear energy, climate change, and biosecurity.

Questions addressed on January 9th included: What is the future of nuclear power after Fukushima?; How are nuclear weapons to be managed in a world of increasing economic, political, and environmental volatility?; What are the links among climate change, resource scarcity, conflict, and nuclear weapons?; and, What is required for robust implementation of the Biological Weapons Convention?

President of the United States Barrack Obama delivers a press brief along with Secretary of Defense Leon Panetta and General Martin Dempsey, Chairman of the Joint Chiefs of Staff at the Pentagon on January 5, 2012. President Obama and Secretary Panetta delivered remarks on the Defense Strategic Guidance for the Defense Department going forward. They were joined by Deputy Defense Secretary Ashton Carter and the members of the Joint Chiefs and Service Secretaries(DOD Photo by Erin A. Kirk-Cuomo)(RELEASED)

Despite the promise of a new spirit of international cooperation, and reductions in tensions between the United States and Russia, the Science and Security Board believes that the path toward a world free of nuclear weapons is not at all clear, and leadership is failing, according to the participants of the symposium.  The ratification in December 2010 of the New START treaty between Russia and the United States reversed the previous drift in US-Russia nuclear relations.

However, failure to act on the Comprehensive Test Ban Treaty by leaders in the United States, China, Iran, India, Pakistan, Egypt, Israel, and North Korea and on a treaty to cut off production of nuclear weapons material continues to leave the world at risk from continued development of nuclear weapons.  The world still has approximately 19,500 nuclear weapons, enough power to destroy the Earth’s inhabitants several times over.   The Nuclear Security Summit of 2010 shone a spotlight on securing all nuclear fissile material, but few actions have been taken.  The result is that it is still possible for radical groups to acquire and use highly enriched uranium and plutonium to wreak havoc in nuclear attacks.

Obstacles to a world free of nuclear weapons remain.  Among these are disagreements between the United States and Russia about the utility and purposes of missile defense, as well as insufficient transparency, planning, and cooperation among the nine nuclear weapons states to support a continuing drawdown.  The resulting distrust leads nearly all nuclear weapons states to hedge their bets by modernizing their nuclear arsenals.  While governments claim they are only ensuring the safety of their warheads through replacement of bomb components and launch systems, as the deliberate process of arms reduction proceeds, such developments appear to other states to be signs of substantial military build-ups.

The movement of the minute hand of the Doomsday Clock will be of no concern to the US Department of Defense and the current government of the United States of America. On 05 January 2012 US President Barack Obama presented at the Pentagon the document entitled “Sustaining U.S. Global Leadership: Priorities for 21st Century Defense”. Obama insisted that the US military budget would remain higher than those of the next 10 military powers combined.

The past decade, dominated by the “global war on terror” and the simultaneous wars and occupations in Afghanistan and Iraq, saw military spending in the US soar by more than 80%. The plan being implemented by Obama will maintain military spending at this unprecedentedly high level, even as the White House and the US Congress prepare to slash core social programs and benefits, including Medicare and Social Security.

See Defense.gov News Article: ‘Obama: Defense Strategy Will Maintain U.S. Military Pre-eminence’
See ‘You Can’t Have It All’ in Foreign Policy
See ‘New US defense policy challenges trust’ in People’s Daily Online
See ‘Pentagon plan changes game in Asia’ in People’s Daily Online

Powerful corporate interests are pleased with the new document, “Sustaining U.S. Global Leadership: Priorities for 21st Century Defense”, and its promise of continued spending on a new stealth bomber, submarines, star wars technology and other air and sea weapons systems that are seen as the most efficient means of aggressively projecting US military might. US Defense Secretary Leon Panetta directly addressed these interests, declaring the Pentagon’s commitment to “preserving the health and viability of the nation’s defense industrial base.”

In his appearance at the Pentagon, Obama repeated his assertion that, based on the withdrawal from Iraq and the minimal troop reductions in Afghanistan, “the tides of war are receding”. On the contrary, the defense strategic guidance demonstrates that US imperialism remains committed to the use of armed force to assert its hegemony over the oil-rich regions of the Middle East and Central Asia, even as it gears up its war machine for an armed confrontation with China.

Commenting on the Doomsday Clock announcement, Lawrence Krauss, co-chair of the Bulletin of the Atomic Scientists Board of Sponsors said: “Unfortunately, Einstein’s statement in 1946 that ‘everything has changed, save the way we think,’ remains true. The provisional developments of 2 years ago have not been sustained, and it makes sense to move the clock closer to midnight, back to the value it had in 2007. Faced with clear and present dangers of nuclear proliferation and climate change, and the need to find sustainable and safe sources of energy, world leads are failing to change business as usual. Inaction on key issues including climate change, and rising international tensions motivate the movement of the clock. As we see it, the major challenge at the heart of humanity’s survival in the 21st century is how to meet energy needs for economic growth in developing and industrial countries without further damaging the climate, exposing people to loss of health and community, and without risking further spread of nuclear weapons, and in fact setting the stage for global reductions.”

Germany and Iran, a long-running hypocrisy reprised by the blocking of India’s oil payments to Tehran

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The German government has stopped the government from India from paying for oil, bought from Iran, through a German bank. This action has been explained by the German government as halting its dealings with Iran, which America, Germany’s Nato ally, has placed under an economic blockade for allegedly pursuing a nuclear weapons programme.

The extreme but characteristic hypocrisy of Germany with regard to countries of the Middle East has once again come to the fore with this action. Ever since the outbreak, in 1991, of the American invasion of Iraq, Germany’s private sector role in providing engineering and technical know-how to countries of the Middle East – specifically Iran, Iraq (under Saddam Hussein) and Libya – has been exposed. (America’s own complicity in arming, supporting and dealing with all manner of governments is too well-known.) More on the German hypocrisy follows after a brief description of the immediate action.

New media have today reported that India has agreed to stop paying for its Iranian oil imports via Germany. Payments to a Hamburg-based bank handling international trade with Iran had been halted. The Handelsblatt business daily has reported that German chancellor Angela Merkel had intervened by instructing Germany’s central bank, the Bundesbank, to stop clearing payments from India headed to the bank, known as EIH, which is under USA but not EU sanctions.

Reuters has reported that this action will end “a trade conduit that had drawn strong disapproval from the United States and Israel” and that “the decision was a result of consultations between Berlin and New Delhi, and not pressure from Chancellor Angela Merkel at home or abroad to disrupt the payment scheme”. The news bulletin has been picked up by a number of small and regional newspapers in the USA, going under the headline ‘Germany won’t funnel oil money from India to Iran’.

The initial response from India, according to a few early reports, is that India’s finance ministry is now considering routing its payment for Iranian oil through a European bank which is ‘more neutral’ than the European Iranian Trade bank (EIH). The Indian Express has said that so far, India has paid 1.5 billion euros through EIH to the Iranian central bank. The Indian Express quoted a finance ministry official as having said: “EIH can’t be a long-term solution. We are looking at banks in Europe where Iranian central bank has an account. We will also open an account with (that) bank. We will have to look for a neutral bank, which EIH is not.”

India depends on Iran for about 15% of its crude oil imports. Iran is India’s second-biggest oil supplier after Saudi Arabia. India had imported 400,000 barrels per day (bpd) of oil from Iran in 2009-10 and about 178,000 bpd during April-September. India, Asia’s third-largest oil consumer, imports over two-thirds of its oil needs and depends heavily on volumes from the West Asia to power its economy. India and Iran have been negotiating for months on ways to resolve the payment deadlock on a long-term basis and salvage the trade, which is worth around US$12 billion annually.

So much for India’s oil dealings with Iran. What moral standing has Germany in such a matter? Let’s revisit the recent past to see what Germany’s current imperialist ally in Libya – the USA – has itself had to say on German interest in Middle Eastern and North African business opportunities.

Foreign energy in Libya. Map: Stratfor

Remember Rabta? This was reported to be the largest chemical weapons factory in the developing world, and in the 1990s it was estimated that the Rabta factory’s potential output was between 8.5 and 33 tons of mustard gas and nerve agent daily. The Rabta plant, about 65 km south of Tripoli, was seen as having been buit and operated with the assistance of western (i.e. from western Europe) companies. At the time, it was the USA which concluded that a West German company played a central role in the design and construction of the rabta plant. Ronald Reagan was US president then and Helmut Kohl the German chancellor. The company was Imhausen-Chemie, and both the company and the feckless German government of the day claimed that all it was doing at Rabta was making plastic bags.

Let’s turn to Germany and Iran. Germany has been intensely involved in the international effort to thwart Iran’s nuclear weapons development program. Yet, while Chancellor Merkel has vocally stated her opposition to Iran’s acquisition of a nuclear weapon, Germany has continued to be Iran’s largest trading partner in the EU and – whatever shape the coalition government in Berlin has taken – it has been pro-business, favouring commercial ties over the West’s security interests – this is typical, after all, for the country that until last year was the world’s biggest expoert economy, business comes first, never mind who it’s done with and what it’s used for. Germany’s exports to Iran reached about US$426 million in September 2009, while its imports were about US$140 million. This has been reported by The Jerusalem Post (September 29, 2009) and by Tehran Times (December 17, 2009). Which are the major companies that have, with the full knowledge and encouragement of the German government, done business in and with Iran? Some of the best-known are Siemens, ThyssenKrupp, BASF, Bayer, Herrenknecht and MAN Ferrostahl.

It is tiresome to hear sanctimonoius claptrap about Germany’s replacement of the primitive nationalisms of the past with multilateral principles of an integrated Europe, as its lying and double-dealing officials assure the European Parliament and international fora every so often. The “forgetting of power” in the West German peace movements and in the political language of détente used by its over-intellectualised political commentators is plain rubbish, for what Germany does abroad is quite different from what it says at home in Europa.

Neither with the West nor against it, and not ‘Arab street’

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Map of the social uprisings in North Africa and the Middle East, for Le Monde Diplomatique by Philippe Rekacewicz

Map of the social uprisings in North Africa and the Middle East, for Le Monde Diplomatique by Philippe Rekacewicz

In the ever thoughtful Le Monde Diplomatique, senior commentators Alain Gresh and Serge Halimi consider aspects of ‘The New Arab Awakening’, which is the theme for the 2011 March edition.

“The fantasy that the Arabs are passive and unsuited to democracy has evaporated in weeks. Arabs have overthrown hated authoritarian regimes in Tunisia and Egypt” – Gresh has written in his commentary, ‘Neither with the West, nor against it’.

In Libya, they have fought a sclerotic regime in power for 42 years that has refused to listen to their demands, facing extraordinary violence, hundreds of deaths, untold injuries, mass exodus and generalised chaos. In Algeria, Morocco, Bahrain, Yemen, Jordan, Iraqi Kurdistan, the West Bank and Oman, Arabs have taken to the streets in vast numbers. This defiance has spread even to non-Arab Iran.

And where promises of reform have been made but were then found wanting, people have simply returned to the streets. In Egypt, protesters have demanded faster and further-reaching reform. In Tunisia, renewed demonstrations on 25-27 February led to five deaths but won a change of prime minister (Mohamed Ghannouchi stepped down in favour of Beji Caid-Essebsi). In Iraq, renewed protests led to a promise to sack unsatisfactory ministers. In Algeria, the 19-year emergency law was repealed amid continuing protests. The demands are growing throughout the region, and will not be silenced.

The revolutions in Tunisia and Egypt, the uprising in Libya, and all the other popular movements that have shaken the region are not just about how people want to live and develop, but about regional politics. For the first time since the 1970s, geopolitics cannot be analysed without taking into account, at least in part, the aspirations of people who have retaken control of their destinies.

“Governments of very different shades find common ground in the same disinformation. Iran has claimed that the Arabs’ democratic revolt heralded an Islamic revival, inspired by the 1979 Iranian revolution” – Halimi has written, in ‘Could Iran be next?’

Israel repeated this claim, and pretended to be alarmed. But when the Iranian opposition gathered to celebrate the demonstrations in Cairo, the ruling theocracy opened fire on the crowd. The Israeli army does not massacre unarmed civilians – unless they are Palestinian (1,400 dead in Gaza two years ago) – but Binyamin Netanyahu does not welcome young Arabs’ demands for freedom any more than Iran does. Israel fears it might lose excellent partners in power, autocratic but pro-American. Its only recourse then would be to cry wolf against Iran.

But tensions with Israel and international sanctions enable the Iranian regime, emboldened by the weakening of regional rivals Egypt and Saudi Arabia, to play the nationalist card. It sees this as useful, since the 2009 Green Movement has not succumbed to ceaseless repression. The Supreme Leader, Ayatollah Ali Khamenei, hoped the vaccine of hanging and torture had eradicated the virus of opposition. Sadly for him, the Arab revolt and the humiliating contrast between a highly educated population and an archaic political system undermine the dubious legitimacy of his regime.

Rather than follow the Libyan example and order the air force to machinegun the crowd, the ruling elite has unleashed the murderous demands of its followers. When the opposition mustered its forces, 222 of the 290 members of the Iranian parliament called for Mehdi Karroubi and Mir Hossein Mousavi, former government dignitaries under house arrest for opposing the Supreme Leader, to be brought to trial.