Iran again says it won't give up enrichment of uranium.
March 5 (Bloomberg) -- Iran's top nuclear negotiator said his nation won't renounce its right to enrich uranium and hinted the country might cut oil exports if the United Nations Security Council places sanctions on it.
Iran is still seeking diplomatic and peaceful means to resolve the issue before a meeting of the International Atomic Energy Agency tomorrow, Ali Larijani told reporters at a press conference in Tehran today.
``Referring Iran's file to the Security Council won't change the Iranian stance about uranium enrichment,'' Larijani said. If the file stays within the IAEA, ``we will cooperate accordingly and work with the agency in full transparency,'' he said. Otherwise, Iran will ``decrease its cooperation with the agency and resume'' full-scale enrichment.
The European Union, which is calling on Iran to stop all uranium enrichment activities, said on March 3 that last-minute talks with the Islamic republic failed to resolve the nuclear standoff. The IAEA, the UN's nuclear watchdog, will meet in Vienna tomorrow to decide whether to ask the Security Council to take action against Iran over its nuclear program.
Larijani today suggested the Islamic Republic might cut oil exports in response to UN sanctions. Iranian officials, including Oil Minister Kazem Vaziri-Hamaneh, have said the country, holder of the world's second-largest oil and gas reserves, wouldn't cut crude exports in retaliation.
Changing Situation?
``We have no interest in using oil as a weapon because we value the international community's security, but if the situation changes, our decision making and relationship will change too,'' Larijani said, without elaborating further.
Iran derives 80 percent of its export revenue from crude oil. The nation probably will earn about $45 billion in oil revenue this fiscal year, almost 50 percent more than last year.
``Cutting oil exports isn't like cutting our pistachio trade -- we can't find substitutes generating $45 billion in exports,'' Ali Ghezelbash, associate director at Tehran based Atieh Bahar Consulting, said in a telephone interview on Feb. 7.
Iran would paralyze its economy by cutting oil exports, while the international community could retaliate by cutting gasoline exports to Iran, Ghezelbash said. Iran buys more than a third of its gasoline from other nations.
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Stopping oil exports obviously carries risks on both sides. As usual, Iran's statements on cutting exports aren't terribly clear. They probably regard helping to keep the oil markets guessing on that score is worthwhile (helping to keep the price up and keep them in the news).
Later on in the story, Rice says that even if Iran is referred to the Security Council, there's no immediate pressure to impose sanctions. So this could drag on and on for months more.
There was talk in Iran [link|http://www.payvand.com/news/05/may/1066.html|last year] of forced rationing of gasoline, introducing "smart cards" to enable rationining, and converting engines from gasoline to natural gas. It seems that they recognize the strategic and economic implications of their high consumption and high imports (due, in part to their gasoline price of $0.10 per liter). They need outside investment and expertise to increase gasoline production.
My guess is that they won't soon risk an oil production cut and possible retaliation in their gasoline imports. But if they're able to convert their consumption to natural gas in a big way, or if they're able to dramatically increase their gasoline production, things could change.
That leads to an easy prediction:
October 1, 2008: Iran achieves its goal of dramatically reducing gasoline imports. To punish the US and Western Europe for their restrictions on trade and investment due to Iran's uranium enrichment activities, Iran cuts [link|http://www.eia.doe.gov/emeu/ipsr/t31.xls|oil exports to OECD countries] (.xls) by 50% (to about 0.8 Mbbl/day). The extra 0.8 Mbbl/day can't be made up quickly by Saudi Arabia or any other combination of countries, so prices spike dramatically. Smaller countries in Europe, the major OECD importers from Iran, are hurt dramatically just as winter approaches. Recriminations begin in the USA and in [link|http://www.bundestag.de/htdocs_e/europe/03eu_date.html|Western Europe] in preparation for the coming elections.
I'm sure the mullahs in Iran would love nothing better than to have a large impact on the elections, just as they did in [link|http://en.wikipedia.org/wiki/Iran_hostage_crisis|1980].
I sure hope people of influence are thinking about the potential for new conflicts with Iran and planning policies and contingencies to support our long-term interests.
Cheers,
Scott.