It is as clear as day that President Trump is obsessed with regime change in Iran. What is not made clear is how much his gambit is damaging to Americans and American interests.
Without cause or justification, Mr. Trump pulled out of the Joint Comprehensive Plan Of Action (JCPOA), striking a hard blow to America's European allies -- and its own credibility. Moreover, he threatened European countries with secondary sanctions should they continue to trade with Iran.
To top it all, in his latest move, he has called for all Iranian oil exports to be cut off by November. Or in practical terms, he is imposing an economic blockade on Iran. This is a similar scenario that was played out by the British in 1951 against Iran and Dr. Mossadegh -- who was later overthrown in the 1953 British-US coup. But today, the IR of Iran is not the Iran of 1953, and the brunt of American demands and actions will not be borne by Iran alone.
Demanding that no country purchase oil from Iran is in fact an economic blockade. It is an illegitimate use of power to force a sovereign nation to surrender. It must be made clear however, that it is not just Iran that is the target here. The Trump administration's demands are an offensive exercise of extraterritorial authority with no regard for sovereign equality between states. All states involved in trade with Iran will either have to cower to his demands or be punished.
But there is more than state sovereignty and indignation that is involved. These actions will have a dire effect on the economy of allies, and they will hit Americans in the wallet -- hard. If Mr. Trump is giving a November deadline, he hopes to postpone the impact this will have on the November elections. He wants total rule over America before totally bankrupting it.
To fully appreciate how Mr. Trump intends to make 'America great again' where his policy regarding Iranian oil is concerned, one must take a look at some numbers and empirical evidence.
The oil strikes leading up to the toppling of Iran's Shah were felt around the world. During the 1978-79 revolution, Iranian oil production dropped 3.8 million barrels per day for 3 months. Although outside production increased by 1.8 million barrels to make up for the loss, the net loss to the world was 150 million barrels of oil. However, the compounding results of the production loss were significant around the globe.
Many Americans may recall the lines at the fuel pumps, but that was just what met the eyes. The increase in oil prices impacted farming, production, transportation of goods and services, and so on. At that time, China, currently the second biggest oil consumer behind America, was a net exporter of oil. The loss to U.S. economy was estimated at many billions of dollars in 1979 and 1980 (Deese and Nye 308-309)[i] .
More recent studies show that Iranian oil has a major impact on the U.S. economy even though America does not import a single barrel of oil from Iran. In 2008, economists Dean DeRosa and Gary Hufbauer presented a paper in which they claimed that if the United States lifted sanctions on Iran, the world price of oil could fall by 10 percent which would translate into an annual savings of $38-76 billion for the United States [ii] .
But sanctions alone were not responsible for oil price hikes in 2008 and beyond. In July 2008, oil had reached a peak of $142.05/bbl (see chart HERE ). This price hike came on the heels of some important events. In May, President Bush sent a 'warning message' to Iran on the same day that additional aircraft carriers with guided-missile destroyers were sent to the Persian Gulf.
In June of the same year, the New York Times reported that: "Israel carried out a major military exercise earlier this month that American officials say appeared to be a rehearsal for a potential bombing attack on Iran'snuclear facilities."
In July, then presidential candidate Barak Obama asked for tougher sanctions to be imposed on Iran.
It was not until September 2008 when President Bush declined to help Israel attack Iran that oil prices started to relax. They hit a low of just over $53 /bbl in December 2008.
Oil prices continued to rise again under Obama's sanctions and reached well past the $100 mark. The prices climbed down once again during the JCPOA negotiations reaching an all time low of $30.24/bbl in January 2016 -- after the signing of the JCPOA.
Today, oil prices stands at $74.30/bbl. A fact not lost on any American who has filled up his/her gas tank lately-- and paid for groceries. The deadline for Iran oil cut off is yet months away, but the impact has started.
Given that other countries may step in to compensate for some of the Iranian oil loss, other factors which effect prices must be considered -- the most important of which is the security of the Strait of Hormuz. As mentioned previously, the British oil blockade scenario of 1951 will have far different consequences in 2018 should America impose an economic blockade or oil embargo.
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