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This is a space for me to comment on Economics both in terms of the specific bits if economics, how the discipline works and the academic politics. I might also be tempted into talking about the economy!

Iran Update

Politics and the worldPosted by Huw Dixon Tue, July 09, 2019 12:42:31

Iran update.

Much has happened since the Tanker attacks (the drone shot down, the US attack cancelled 10 minutes before opening fire). On the Tankers, I think that on balance it probably was the Iranians. It was a calculated demonstration of what they could do, but with no loss of life. I think a “false flag” would have been more spectacular with some loss of life. There was a meeting of the UN Security council, called by the US, to discuss both the Tanker attacks and the drone that Iran shot down. Iran was excluded by the request of the US. The US ambassador, Nikki Haley’s successor Jonathan Cohen presented the US evidence on both counts: the Iranians were responsible for the Tanker attacks and the US drone was in international air space when shot down. The net result was disappointing for the US: the Security Council condemned the Tanker attacks but did not blame Iran. The three EU permanent members (Britain, Franc e and Germany) gave a joint press statement calling for “maximum restraint”. The US ambassador had to stand on his own simply repeating the US allegations. Worse still, the UAE has shifted its public statements.

In the earlier attacks on ships in Fujairah, the UAE had agreed with the Saudi government in blaming Iran. However, by the 26th June, it retracted the statement, saying “there is not enough evidence to suggest Iran carried out recent attacks on oil tankers in and around Gulf waters”. Worse still, the UAE is quietly withdrawing from the Yemen conflict (according to the Economist July 6th 2019). Probably their proximity to so many Iranian missiles has focused their minds against a conflict with Iran and the Economist reports growing dissatisfaction with the cost of the Yemen intervention. This is bad news for the Saudis (and their British and American backers): the UAE army is more effective than the Saudi forces, largely because it has a strong mercenary element. If the combined UAE-Saudi forces proved insufficient to defeat the Houthis, then the withdrawal of the UAE forces effectively means game over for the war in Yemen. The Houthis will retain their hold on northern Yemen and possibly recapture some territory. More importantly, if the UAE is drawing back to a position of neutrality vis a vis Iran, then this will make life much more difficult for the Saudi and US in the event of war with Iran. Currently Oman is “neutral”, although in the past both Saud and UAE have accused it of allowing the smuggling of weapons to the Houthis from Iran. It does host the US airforce as a “tenant” in a couple of bases (which were used in both Gulf wars), but in the event of war with Iran may not permit their use. Qatar is “neutral”, but subject to a blockade by the Saudis for over a year now. Qatar has remained friendly with Iran and whilst it would not side with Iran, it would certainly attempt to remain neutral (although the Al Udeid Air Base airbase in Qatar used by the US air force would almost certainly come under heavy attack if war broke out). Kuwait is also a friend of Iran and has been at the forefront of trying to mediate between Iran and the other Gulf States. Iraq has stated that the US cannot use its bases there to attack Iran. The Island of Bahrain is the only anti-Iranian part of the Gulf besides Saudi: it hosts a large naval base for US and Royal Navy ships and has had problems with its majority Shia population since the Arab spring. In the event of war with Iran, the US has little wiggle-room in the Gulf beyond the Saudi coast (ports of Al Jubayl, Ad Dammam and Dharan) and the island of Bahrain.

The US does of course have many bases bordering Iran outside the gulf: in Afghanistan, Pakistan and Turkmenistan. How useful these would be in an Iran-US conflict is doubtful, particularly if the host governments are not participating. Furthermore, in the two Gulf wars, with Nato support, the US was able to transport large quantities of men and material through Incerlik airport in Turkey and use European bases as stepping stones to the Gulf. Without the support of Turkey and NATO this would not be possible except perhaps on a small scale.

So, for me, if the Economist report is correct and the UAE is dropping out of the “coalition” that leaves just the US, the Saudis and probably Israel. The logistics of any war with Iran are formidable without more allies in the region and support from Nato. As an economist, I am interested because a war with Iran would be one of the biggest economic “shocks” since the Second World War, possibly as large as the OPEC shock in the 70s. The Iranians would be able to close the straits of Hormuz and destroy the existing infrastructure of the oil industry in Saudi Arabia. This would lead to a sharp reduction in the world’s oil supply and massive increase in the oil price. The shock would last for a long time. This could trigger a world recession, stagflation and much besides. Let’s hope it does not happen.

Sources mentioned in Blog.

Al Jazeera: “The foreign minister of the United Arab Emirates says there is not enough evidence to suggest Iran carried out recent attacks on oil tankers in and around Gulf waters.” June 26th.

The Economist: The UAE begins pulling out of Yemen (July 6th)

Statements after the UN Security Council meetings (24th June 2019):




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Politics and the worldPosted by Huw Dixon Sat, June 15, 2019 21:51:39

I am fascinated by the interplay of what goes on with what we know and what we are told. Of course, we often do not know what is actually going on: the "truth" will emerge in the future when scholars study the present as history. Of course, some things will never be known to us, but only the people who were directly involved. The current case of the Tankers in the sea of Oman is a fascinating case.

As we know, false flag operations are commonly used to stat wars: from the Gulf of Tonkin to the more recent "babies in incubators" at the start of the first Gulf war. Such events or news can influence public opinion and make it more amenable to war. We also know that two of President Trumps advisors (John Bolton and Mike Pompeo) have frequently spoke of their desire for a war with Iran. Indeed, Iran has been on the "hit list" since 9/11 and before, and we have seen other members of the list (Iraq, Libya and Syria) hit in various ways: Iran and North Korea are the last two standing. Also, although Trump ha spoken out during his election campaign that he wants to end foreign wars, he is also very committed to Israel, and some believe Iran to be an existential threat to the state of Israel. So, it would make perfect sense for a "false flag" operation to kick of such a war. In a sense, the sanctions are an economic war that has already been started by the US. War would be very unpopular in the US with the electorate, so a false flag is needed to make it possible.

A war with Iran would be costly for the US, which has many troops and ships in the area that are very vulnerable. Troops in Syrian and Iraq, naval and air bases in the Persian Gulf. Of course, the US has the resources to defend them: the recent pentagon advice was apparently the need for 120,000 troops. To conduct a war with Iran would require more. The cost for Iran would also be very great, but short of using tactical nuclear weapons, the US could not successfully invade Iran and indeed would probably just use missiles and bombs to destroy as much as possible.

However, we also know that whilst all this is true, there are also tensions in Iran. There may be some who would want a war with the US. To strike now, before the US can beef up its assets would allow Iran to reek a lot of damage. Like Americans, most Iranians do not want war.

So, we see two tankers in the Gulf of Oman hit by something: mines exploding or some "flying objects". One, the Norwegian Tanker Front Altair and the Japanese tanker Kokuka Courageous. The first to report on this were the Iranian Press TV: they showed the pictures of the burning tankers subsequently used by the world press. The Iranian navy rescued the crew of the Front Altair (and released a film of the crew), whilst the US navy rescued the crew of the Japanese tanker. The US navy issued a grainy film of something going on and claimed that this was an Iranian vessel removing an unexploded limpet mine. They also released a picture of the Kokuka with an unexploded limpet mine on it. The owners of the Japanese tanker issued a statement saying that it was not a mine, but some "flying objects" that had caused the fire. Neither tanker was sunk and neither suffered any great damage.

So, what do we make of all this? Well, the US has blamed the Iranians. But this is standard. Pompeo and Bolton (and many Americans) always talk of Iran as a state sponsor of terrorism who “meddles” in the Yemen, Lebanon, Iraq and Syria. Of course, to many of us the Iranians were crucial in helping the Iraqi government defeat ISIS: both helping the Kurds and later helping the Shia militias who were to a large part responsible for fighting ISIS on the ground along with the Americans. Anyway, the Americans do not see it that way: the Iranians follow their own foreign policy which is rarely aligned with US policy (and opposed to it in Syria, Lebanon and Yemen). However, there are of course other possibilities. Public scepticism of US claims (at least in the twitters-sphere) and the grainy video is hardly a slam dunk.

The BBC of course usually follows the US line. This has been the case since the Andrew Gilligan affair on the Today programme, when Gilligan and the director General of the BBC Greg Dyke lost their jobs over a truthful report that there were no WMDs in Iraq (and David Kelly subsequently lost his life). However, to do this they have to be selective in how they present the news. The BBC did not state that the Iranian navy had rescued the crew of the Norwegian tanker, nor did it show the video of the crew. The fact that the fires were first reported by Iranian TV and that the Iranian government had condemned the attacks was quickly forgotten. We were left with the grainy video and repetitions of the US line. In fact, of the British press, only the Telegraph really showed some basic attempt to investigate the claims.

The other main sources are of course RT and Al Jazeera. RT naturally emphasises the US hostility to Iran and the possibility of a false flag. Al Jazeera simply states both sides of the argument. Both the Russian and Qatari governments have called for an investigation. The British government has come out fully supportive of the US “our closest allies”.

In the fog of war the first casualty is the truth. I cannot say who was behind the attack. It could be Iran, trying to do something with “plausible deniability” that will disrupt the oil trade. There are those who would like to draw the US into a war with Iran (Saudi Arabia, the UAE and Israel). Indeed, if the US did a false flag it would use a proxy not its own assets. However, the vehemence of the US seems to be to little avail. They have alienated many of their former allies and no one else wants a war. For Europe a US war with Iran would mean sky high oil prices and a flood of refugees. Even if the Iranians were doing some mischief it would not make a war worthwhile. Whatever Jeremy Hunt might think, being a new Blaire and dragging us into a war with Iran would not be at all popular with the British public.

Over time, we may well start to learn who was behind the Tanker attacks. But for now, we just have to see how the different narratives unfold and hope that cool, calm minds carry the day and we do not drift into war.

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