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Declining Oil Prices Will Not Lead to Iran's Surrender on the Nuclear Issue

March 12, 2015 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

Global oil prices have plunged dramatically over the past six months, with the commodity now selling for under $50 per barrel on world markets. The United States has been more than an idle spectator regarding that development. Low-cost producers—especially Washington’s close ally, Saudi Arabia—can still operate profitably even at the current depressed prices, but higher-cost producers find their profit margins severely squeezed. Two such higher-cost producers are Russia and Iran, both geopolitical adversaries of the United States.

Contrary to conspiracy theories that have begun to circulate, there is little evidence that Washington and Riyadh orchestrated the price plunge to advance mutual foreign policy objectives. Global economic conditions, especially slowing growth rates in China and Europe, led to an oversupply of oil and the subsequent price correction. Nevertheless, the Obama administration is not unhappy about the economic discomfort that low oil prices are causing for Moscow and Tehran. U.S. officials hope that the mounting financial pressure will impel both countries to make concessions on key foreign policy issues. The decline in oil prices thus serves as a complement to the international economic sanctions that Washington and its allies have imposed to punish Russia and Iran.

Anti-Iranian hawks who indulge in such expectations are deluding themselves.”

U.S. leaders are likely to be disappointed regarding expectations of dramatic concessions from either country. It is wishful thinking to believe that Russia will ever relinquish its control of Crimea or tolerate Ukraine’s membership in NATO. And prospects regarding Tehran’s behavior are just marginally better. True, Iran has been increasingly willing to negotiate regarding its nuclear program, but that greater flexibility predates the decline in oil prices and seems primarily the result of a more moderate political leadership, especially President Hassan Rouhani, coming to power.

Throughout history, governments have been willing to watch their populations endure deprivation and even severe hardship if the strategic stakes were high enough. Tehran’s conduct over the past two decades confirms that gaining international acceptance of Iranian rights with respect to nuclear technology is a high priority for the clerical regime.

The combination of international sanctions and depressed oil prices may inflict even greater pain on Iran’s economy than it has so far, but that is still unlikely to change the government’s stance on the nuclear issue. Washington and the other Western powers need to be more realistic about what kind of agreement can be achieved. If the objective …read more

Source: OP-EDS

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