The United States global gendarmes and the Shiite Iran were brought together in a common fight against the Islamic States murderers in Iraq and Syria, thus opening the way for a wider understanding between the two until recently sworn enemies. The American government saw one more major geostrategic advantage in the rapprochement with Tehran. And this is nothing else than the accomplishment of the US administration’s target to further cut crude oil prices down to the bone. Of course there are collateral damages in this new American strategy but the White House has never paid much attention to that.
Understandably, for the US administration the crucial point is to convince the Iranian leaders to agree to a nuclear deal. If this hurdle is surpassed then everything else will be a piece of cake for the Americans. The Iranian oil will then again start flooding the dollar oil markets pushing prices further down. Cheaper oil would have some immediate and spectacular results. It will support economic growth in the advanced and the emerging economies and will further tantalize Putin’s Russia and Maduro’s Venezuela. What else could Washington dream of?
Good for the US good for the world
While those two are standard targets of the US diplomacy, the latest White House initiative to approach the Tehran rulers has more and powerful adversaries. One of them is Benjamin Netanyahu and his policy in the Palestinian issue. This Israeli political leader has based a successful and very long presence in his country’s political arena, on the postulation that a more or less peaceful coexistence with a Palestinian State is impossible. This theory has repeatedly convinced the country’s voters and has given him one more victory last Tuesday, rather unexpected this time. Nonetheless this Netanyahu policy has isolated Israel from the rest of the world. The US, the EU and almost everybody else is opposing this Tell-Aviv strategy, but this is not the first time that Israel is faring against all odds.
Despite the latest Netanyahu victory it seems that things are changing in the Israeli society and in one or two years time both Netanyahu and his theory may have to adapt to new realities. Not to forget that Israel is a well functioning democracy with a sound division of powers. So a West-Iran nuclear deal could accelerate this process in the internal Israeli scenery. In any case developments will not be linear. Netanyahu managed to air his strong opposition to this White House policy from the very tribune of the US Congerss.
Republicans on foreign policy
The 47 almost exclusively Republican US senators who oppose this Obama initiative for a deal with Tehran have even written a letter to the Iranian leadership, to undermine their government’s proposal for a nuclear agreement. They were also the main force behind the Netanyahu honorary address of the American Congress on 2 March, a development which boosted his prospects in the 17 March election. Undoubtedly the unexpected electoral victory of his Likud party would create serious obstacles in the West-Iran rapprochement.
There are more Middle East notables who oppose this rapprochement though. The wealthy Sunni kingdoms of the Arab Gulf which base their security almost exclusively on the US, consider the Shiite Iran as their major threat. Understandably they hate to see their mighty friend flirting with their mighty enemy. However Washington has the ability and the powers to convince the wealthy Arab governments that a West-Iran pact will be in their favor too. For one thing it will defuse the tensions in the Gulf and the Arab Peninsula. The unexpected win of Netanyahu’s Likud party last Tuesday may complicate things though. Tell-Aviv has a strong leverage not only in the wider Middle East region, but also within the US government and administration. In this respect the Iranian policy of the White House may have a rough time.
Cheap and abundant oil
Let’s turn now to the repercussions on the oil markets and beyond from a successful conclusion of the West-Iran agreement. As mentioned above a new bonanza of crude oil supplies would have Putin’s Russia and Maduro’s Venezuela as main victims. Both those two major crude producers are depending completely on expensive oil in order to feed their millions more or less adequately. The effect of a crude oil price fall below the 40 dollars a barrel, will be so important in both countries, that it won’t be an exaggeration to say that politically they won’t be the same after one year.
Of course in the case of Russia the impact of the very cheap crude oil would have much wider effects. It’s not by chance that Germany is so strongly supporting the US initiative to unlock the Iranian doors. The very cheap oil would make Moscow and Putin much more susceptible to EU’s pressures over Ukraine and more. Merkel’s and Hollande’s ability to strike the Minsk agreement last month with Putin over Ukraine’s future is not unrelated to that. Not to say anything that cheap oil may help the ailing Eurozone economy start growing again.
In short, if the Barack Obama administration manages to unlock the Iranian gates, in less than a year time the world will be obliged to adapt to some novel realities.