Explaining The WTI-Brent Spread Divergence

Something totally bizarre has happened in the last three years. Oil in America has become much, much cheaper than oil in Europe. Oil in America is now almost $30 cheaper than oil in Europe.

This graph is the elephant in the room:

3 year brent spread

And this graph shows how truly historic a move this has been:

brent-WTI-spread

Why?

The ostensible reason for this is oversupply in America. That’s right — American oil companies have supposedly been producing much, much more than they can sell:

This is hilarious if prices weren`t so damn high, but despite a robust export market for finished products, crude oil is backing up all the way to Cushing, Oklahoma, and is only going to get worse in 2013.

Now that Enterprise Products Partners LLP has let the cat out of the bag that less than a month after expanding the Seaway pipeline capacity to 400,000 barrels per day, The Jones Creek terminal has storage capacity of 2.6 million barrels, and it is basically maxed out in available storage.

But there’s something fishy about this explanation. I don’t know for sure about the underlying causality — and it is not impossible that the oil companies are acting incompetently — but are we really supposed to believe that today’s oil conglomerates in America are so bad at managing their supply chain that they will oversupply the market to such an extent that oil sells at a 25% discount on the price in Europe? Even at an expanded capacity, is it really so hard for oil producers to shut down the pipeline, and clear inventories until the price rises so that they are at least not haemorrhaging such a huge chunk of potential profit on every barrel of oil they are selling? I mean, that’s what corporations do (or at least, what they’re supposed to do) — they manage the supply chain to maximise profit.

To me, this huge disparity seems like funny business. What could possibly be making US oil producers behave so ridiculously, massively non-competitively?

The answer could be government intervention. Let’s not forget that the National Resource Defence Preparedness Order gives the President and the Department of Homeland Security the authority to:

(c)  be prepared, in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements;

(d)  improve the efficiency and responsiveness of the domestic industrial base to support national defense requirements; and

(e)  foster cooperation between the defense and commercial sectors for research and development and for acquisition of materials, services, components, and equipment to enhance industrial base efficiency and responsiveness.

And the ability to:

(e)  The Secretary of each resource department, when necessary, shall make the finding required under section 101(b) of the Act, 50 U.S.C. App. 2071(b).  This finding shall be submitted for the President’s approval through the Assistant to the President and National Security Advisor and the Assistant to the President for Homeland Security and Counterterrorism.  Upon such approval, the Secretary of the resource department that made the finding may use the authority of section 101(a) of the Act, 50 U.S.C. App. 2071(a), to control the general distribution of any material (including applicable services) in the civilian market.

My intuition is that it is possible that oil companies may have been advised (or ordered) under the NDRP (or under the 1950 Defense Production Act) to keep some slack in the supply chain in case of a war, or other national or global emergency. This would provide a capacity buffer in addition to the Strategic Petroleum Reserve.

If that’s the case, the question we need to ask is what does the US government know that other governments don’t? Is this just a prudent measure to reduce the danger of a resource or energy shock, or does the US government have some specific information of a specific threat?

The other possible explanation, of course, is ridiculous incompetence on the part of US oil producers. Which, I suppose, is almost believable in the wake of Deepwater Horizon…

What’s Next in the Middle East?

While the missiles, planes and rockets fly over Gaza and Israel, both Hamas and the Israeli government have been engaged in a battle of social media.

Hamas:

And Israel:

It is a battle to shape the perceptions of the rest of the world.

The IDF appears so far to have the upper hand in terms of social media, having notched up 143,000 followers on Twitter, although Hamas’ al-Qassam Brigades are in swift pursuit having just climbed above 20,000 followers.

Yet to view this as a simple conflict between Hamas and Israel is too superficial. It ignores the history and the context. This is a much bigger and broader tapestry.

Glenn Greenwald writes:

Israel‘s escalating air attacks on Gaza follow the depressingly familiar pattern that shapes this conflict. Overwhelming Israeli force slaughters innocent Palestinians, including children, which is preceded (and followed) by far more limited rocket attacks into Israel which kill a much smaller number, rocket attacks which are triggered by various forms of Israeli provocations  — all of which, most crucially, takes place in the context of Israel’s 45-year-old brutal occupation of the Palestinians (and, despite a “withdrawal” of troops, that includes Gaza, over which Israel continues to exercise extensive dominion). The debates over these episodes then follow an equally familiar pattern, strictly adhering to a decades-old script that, by design at this point, goes nowhere.

And Michael Chussudovsky writes:

On November 14,  Hamas military commander Ahmed Jabari was murdered in a Israeli missile attack. In a bitter irony,  barely a few hours before the attack, Hamas received the draft proposal of a permanent truce agreement with Israel.

“Hours before Hamas strongman Ahmed Jabari was assassinated, he received the draft of a permanent truce agreement with Israel, which included mechanisms for maintaining the cease-fire in the case of a flare-up between Israel and the factions in the Gaza Strip.”(Haaretz, November 15, 2012)

F-16 fighter planes, Apache helicopters and unmanned drones were deployed. Israeli naval forces deployed along the Gaza shoreline were involved in extensive shelling of civilian targets.

While Israel continues to enforce extreme restrictions on the lives of Palestinians, it has been inevitable that organisations like Hamas who promise resistance against Israel and Zionism will thrive. And while Hamas has thrived, Israel has continued to impose sanctions and restrictions. Both sides have been locked into a cycle of brutal retaliation (and a particularly suicidal cycle for the Palestinians).

In the latest skirmishes, Hamas has inflicted three Israeli casualties in rocket strikes, the Israeli military has already assassinated two high level Hamas commanders, and carried out successful strikes on dozens of Gazan targets resulting in thirty deaths.

But Israel and Hamas share a deeply interwoven history. The WSJ notes:

“Hamas, to my great regret, is Israel’s creation,” says Avner Cohen, a Tunisian-born Jew who worked in Gaza for more than two decades. Responsible for religious affairs in the region until 1994, Mr. Cohen watched the Islamist movement take shape, muscle aside secular Palestinian rivals and then morph into what is today Hamas, a militant group that is sworn to Israel’s destruction.

Instead of trying to curb Gaza’s Islamists from the outset, says Mr. Cohen, Israel for years tolerated and, in some cases, encouraged them as a counterweight to the secular nationalists of the Palestine Liberation Organization and its dominant faction, Yasser Arafat’s Fatah. Israel cooperated with a crippled, half-blind cleric named Sheikh Ahmed Yassin, even as he was laying the foundations for what would become Hamas.

And co-operation has continued between Hamas and Israel, even while they throw rockets at each other, and even while Hamas continues to receive funds and weapons from Israel’s major rivals, including Iran. Upon Ahmed Jabari’s killing, Haaretz noted:

Israel killed its subcontractor in Gaza.

The political outcome of the operation will become clear on January 22, but the strategic ramifications are more complex: Israel will have to find a new subcontractor to replace Ahmed Jabari as its border guard in the south.

Co-operation between Hamas and Israel should not be surprising. The two factions of hardliners — on one side Hamas, and on the other side Netanyahu’s coalition — validate each other’s existence. Without a state of perpetual enmity, the hardliners would find themselves marginalised. Nothing strengthens Hamas in Palestine like an Israeli rocket attack, and nothing strengthens Likud and Yisrael Beitenu in Israel like a Palestinian rocket attack.

However, Israel’s co-operation with Hamas may now be at an end. The surprise strike on Jabari may well be a sign that Hamas is to be cast aside and driven out of Gaza. This seems like the beginning of a new era in the middle east.

Now that the American election is out of the way, Netanyahu may be stepping toward engaging with Iran.

John Glaser, writing for AntiWar.com lays out one theory:

Israel, lest we forget, instigated this resumption of missile exchanges last week when two Palestinian civilians were shot and killed and Israeli tanks intruded into Gaza, prompting Gaza militants to respond by targeting Israeli soldiers, which then gave Israel an excuse to unleash successive airstrikes. And Israel had numerous chances to pacify the situation, considering Hamas publicly offered to establish a total ceasefire and Egypt appeared about to broker a truce between the two. Israel has intentionally inched towards escalation from the beginning. Are we to believe this isn’t strategic?

A ground invasion, and a reoccupation of Gaza by the IDF could be the first step toward engaging Iran. It would allow for Israel to dislodge Hamas, and create a buffer between Israel and Egypt, and the forces of the Muslim Brotherhood. The Morsi government in Egypt has pledged to support the Palestinians — but is this a bluff? Does Egypt have the capability or the desire to really oppose Israel? Does Iran really have the capability or the desire to oppose Israel in a more active way? Ultimately, Iran may have no choice, as Netanyahu is certain that they are on the nuclear threshold.

The world is in motion. Israel is playing its cards. The intent? To create facts on the ground that cement Israel’s position as the dominant power in the middle east for the next century.

Now, Iran’s move.

The Great Pacification

Since the end of the Second World War, the major powers of the world have lived in relative peace. While there have been wars and conflicts  — Vietnam, Afghanistan (twice), Iraq (twice), the Congo, Rwanda, Israel and Palestine, the Iran-Iraq war, the Mexican and Colombian drug wars, the Lebanese civil war — these have been localised and at a much smaller scale than the violence that ripped the world apart during the Second World War. The recent downward trend is clear: Many thinkers believe that this trend of pacification is unstoppable. Steven Pinker, for example, claims:

Violence has been in decline for thousands of years, and today we may be living in the most peaceable era in the existence of our species. The decline, to be sure, has not been smooth. It has not brought violence down to zero, and it is not guaranteed to continue. But it is a persistent historical development, visible on scales from millennia to years, from the waging of wars to the spanking of children.

While the relative decline of violence and the growth of global commerce is a cause for celebration, those who want to proclaim that the dawn of the 21st Century is the dawn of a new long-lasting era of global peace may be overly optimistic. It is possible that we are on the edge of a precipice and that this era of relative peace is merely a calm before a new global storm. Militarism and the military-industrial complex never really went away — the military of the United States is deployed in more than 150 countries around the world. Weapons contractors are still gorging on multi-trillion dollar military spending. Let’s consider another Great Moderation — the moderation of the financial system previous to the bursting of the bubble in 2008.

One of the most striking features of the economic landscape over the past twenty years or so has been a substantial decline in macroeconomic volatility. Ben Bernanke (2004)

Bernanke attributed this outgrowth of macroeconomic stability to policy — that through macroeconomic engineering, governments had created a new era of financial and economic stability. Of course, Bernanke was wrong — in fact those tools of macroeconomic stabilisation were at that very moment inflating housing and securitisation bubbles, which burst in 2008 ushering in a new 1930s-style depression. It is more than possible that we are in a similar peace bubble that might soon burst. Pinker highlights some possible underlying causes for this decline in violent conflict:

The most obvious of these pacifying forces has been the state, with its monopoly on the legitimate use of force. A disinterested judiciary and police can defuse the temptation of exploitative attack, inhibit the impulse for revenge and circumvent the self-serving biases that make all parties to a dispute believe that they are on the side of the angels. We see evidence of the pacifying effects of government in the way that rates of killing declined following the expansion and consolidation of states in tribal societies and in medieval Europe. And we can watch the movie in reverse when violence erupts in zones of anarchy, such as the Wild West, failed states and neighborhoods controlled by mafias and street gangs, who can’t call 911 or file a lawsuit to resolve their disputes but have to administer their own rough justice.

Really? The state is the pacifying force? This is an astonishing claim. Sixty years ago, states across the world mobilised to engage in mass-killing the like of which the world had never seen — industrial slaughter of astonishing efficiency. The concentration of power in the state has at times led to more violence, not less. World War 2 left sixty million dead. Communist nations slaughtered almost 100 million in the pursuit of communism. Statism has a bloody history, and the power of the state to wage total destruction has only increased in the intervening years. Pinker continues:

Another pacifying force has been commerce, a game in which everybody can win. As technological progress allows the exchange of goods and ideas over longer distances and among larger groups of trading partners, other people become more valuable alive than dead. They switch from being targets of demonization and dehumanization to potential partners in reciprocal altruism. For example, though the relationship today between America and China is far from warm, we are unlikely to declare war on them or vice versa. Morality aside, they make too much of our stuff, and we owe them too much money. A third peacemaker has been cosmopolitanism—the expansion of people’s parochial little worlds through literacy, mobility, education, science, history, journalism and mass media. These forms of virtual reality can prompt people to take the perspective of people unlike themselves and to expand their circle of sympathy to embrace them.

Commerce has been an extremely effective incentive toward peace. But commerce may not be enough. Globalisation and mass commerce became a reality a century ago, just prior to the first global war. The world was linked together by new technologies that made it possible to ship products cheaply from one side of the globe to the other, to communicate virtually instantaneously over huge distances, and a new culture of cosmopolitanism. Yet the world still went to war.

It is complacent to assume that interdependency will necessitate peace. The relationship between China and the United States today is superficially similar to that between Great Britain and Germany in 1914. Germany and China — the rising industrial behemoths, fiercely nationalistic and determined to establish themselves and their currencies on the world stage. Great Britain and the United States  — the overstretched global superpowers intent on retaining their primacy and reserve currency status even in spite of huge and growing debt and military overstretch.

In fact, a high degree of interdependency can breed resentment and hatred. Interconnected liabilities between nations can lead to war, as creditors seek their pound of flesh, and debtors seek to renege on their debts. Chinese officials have claimed to have felt that the United States is forcing them to support American deficits by buying treasuries.

Who is to say that China might not view the prize of Japan, Taiwan and the Philippines as worthy of transforming their giant manufacturing base into a giant war machine and writing down their treasury bonds? Who is to say that the United States might not risk antagonising Russia and China and disrupting global trade by attacking Iran? There are plenty of other potential flash-points too — Afghanistan, Pakistan, Venezuela, Egypt, South Africa, Georgia, Syria and more. Commerce and cosmopolitanism may have provided incentives for peace, but the Great Pacification has been built upon a bedrock of nuclear warheads. Mutually assured destruction is by far the largest force that has kept the nuclear-armed nations at peace for the past sixty seven years.

Yet can it last? Would the United States really have launched a first-strike had the Soviet Union invaded Western Europe during the Cold War, for example? If so, the global economy and population would have been devastated. If not, mutually assured destruction would have lost credibility. Mutually assured destruction can only act as a check on expansionism if it is credible. So far, no nation has really tested this credibility. Nuclear-armed powers have already engaged in proxy wars, such as Vietnam. How far can the limits be pushed? Would the United States launch a first-strike on China if China were to invade and occupy Taiwan and Japan, for example? Would the United States try to launch a counter-invasion? Or would they back down? Similarly, would Russia and China launch a first-strike on the United States if the United States invades and occupies Iran?

Launching a first-strike is highly unlikely in all cases — mutually assured destruction will remain an effective deterrent to nuclear war. But perhaps not to conventional war and territorial expansionism. With the world mired in the greatest economic depression since the 1930s, it becomes increasingly likely that states — especially those with high unemployment, weak growth, incompetent leadership and angry, disaffected youth —  will (just as they did during the last global depression in the 1930s) turn to expansionism, nationalism, trade war and even physical war. Already, the brittle peace between China and Japan is rupturing, and the old war rhetoric is back. These are the kinds of demonstrations that the Communist Party are now sanctioning:

And already, America and Israel are moving to attack Iran, even in spite of warnings by Chinese and Pakistani officials that this could risk global disruption. Hopefully, the threat of mutually assured destruction and the promise of commerce will continue to be an effective deterrent, and prevent any kind of global war from breaking out. Hopefully, states can work out their differences peacefully. Hopefully nations can keep war profiteers and those who advocate crisis initiation in check. Nothing would be more wonderful than the continuing spread of peace. Yet we must be guarded against complacency. Sixty years of relative peace is not the end of history.

Iran’s Insane Rhetoric

Iranian officials are once again firing off belligerent rhetoric.

 

Via the Jerusalem Post:

Hojjat al-Eslam Ali Shirazi, the representative of Iran’s Supreme Leader Ayatollah Ali Khamenei to the Islamic Republic’s Qods Force, said this week that Iran needed just “24 hours and an excuse” to destroy Israel.

In his first public interview in a year, reported in the Persian-language Jahan News, which is close to the regime, Shirazi said if Israel attacked Iran, the Islamic Republic would be able to turn the conflict into a war of attrition that would lead to Israel’s destruction.

“If such a war does happen, it would not be a long war, and it would benefit the entire Islamic umma the global community of Muslims. We have expertise in fighting wars of attrition and Israel cannot fight a war of attrition,” Shirazi said, referring to Iran’s eight-year war of attrition against Iraq.

Such claims are — more or less — inconsequential rubbish. The fact remains that Israel has nuclear weapons and a nuclear second strike, and Iran has no such thing, and the fact remains that the Iranian leadership knows this and are extremely unlikely to start a war where Iran (as Shimon Peres put it) will be the one wiped off the face of the Earth by Israeli plutonium. Yet the facts of military science will do little to stop the hawks of the West sounding off that Iran is irrational and that Iran is cooking up a plan to destroy Israel, and so must face regime change.

To grasp what is really occurring here we must look at how authoritarian Middle Eastern regimes (or, indeed, authoritarian regimes in general)  function. Authoritarian regimes  must maintain a cloak of authority. Tyrants do not attempt to look or sound weak; they try to project an aura of invincibility and indefatigability. We saw this during the last Gulf War, where Iraq’s information minister Muhammad Saeed al-Sahhaf — nicknamed Baghdad Bob in the American media — shot off hundreds of absurd statements during the war about how Iraqi troops were crushing the Americans, quite in contrast to the facts on the ground and right up until American tanks were rolling through the streets of Baghdad.

Baghdad Bob was not deluded. He was merely playing his role, and trying to project an aura of regime invincibility — providing propaganda for domestic consumption to keep the Iraqi population loyal to Saddam Hussein. It was a dog and pony show.

Iran’s belligerent rhetoric in this case is also strictly for domestic consumption — fierce rhetoric to keep the Iranian population fearful of the regime. Just like Baghdad Bob, the Iranian propaganda is far-removed from the real facts of the conflict. Whether the Iranian people really believe the regime’s propaganda — especially as the Iranian economy continues to worsen under sanctions — is dubious.

Yet one group of people — the Western neoconservatives, who are looking for another war — are more than happy to buy into the dog and pony “destroy Israel” bullshit.

As Robert Gates noted this week:

Painting a picture of internal political dysfunction in a dangerous world, former Defense Secretary Robert Gates warned Wednesday night that a U.S. or Israeli attack on Iran would have disastrous consequences.

Neither the United States nor Israel is capable of wiping out Iran’s nuclear capability, he said, and “such an attack would make a nuclear-armed Iran inevitable. They would just bury the program deeper and make it more covert.”

Iran could respond by disrupting world oil traffic and launching a wave of terrorism across the region, Gates said.

“The results of an American or Israeli military strike on Iran could, in my view, prove catastrophic, haunting us for generations in that part of the world.”

And as I wrote last month:

A regional war in the Middle East could result, potentially sucking in the United States and Eurasian powers like China, Pakistan and Russia. China and Pakistan have both hinted that they could defend Iran if Iran were attacked — and for good reason, as Iran supplies significant quantities of energy.

Frustratingly, the Iranian regime keep giving the neoconservatives more rope with which to hang themselves — and the West — on a cross of imperial overstretch, debt and blowback. 

The 71%

According to a recent FPI poll, 60% of Americans want go to war with Iran to prevent them from getting nuclear weapons.

This in spite of the fact that the US intelligence community is fairy unanimous that Iran is not even currently pursuing nuclear weapons. According to Micah Zenko:

First, as Director of National Intelligence James Clapper has repeatedly reaffirmed since late January, “we don’t believe they’ve actually made the decision to go ahead with a nuclear weapon.” Just yesterday, James Risen reported in the New York Times that the IC continues to believe (based on an assessment first made in November 2007) that Iranian Supreme Leader Ayatollah Ali Khamenei halted his country’s nuclear weapons activities in 2003.

This might be hard for many to grasp, since polling has found the American people disagree with the collective judgment of the 210,000 civilian and military employees and 30,000 private contractors comprising the IC. A recent poll found that 84 percent of Americans think Iran is developing nuclear weapons, while another from February 2010 concluded that 71 percent of Americans believe that Iran currently has nuclear weapons.

So 60% of Americans believe Iran should be attacked to prevent nuclear proliferation. Simultaneously 71% of Americans — in total contradiction to the evidence recognised by both the CIA and Mossad that Iran is not currently even developing a nuclear weapon — believe that Iran currently has nuclear weapons. There is almost certainly a high degree of overlap — and that’s some severe cognitive dissonance. Where are such ideas coming from?

There are some voices in the wilderness that are expressing the view that Iran already has a nuclear weapon to anyone who will listen.

According to Reza Kahlili, who claims to be a former CIA spy who infiltrated the Iranian Revolutionary Guard:

The pressure the United States and the West is bringing to bear on Iran to keep it from acquiring nuclear weapons is all for naught. Not only does the Islamic Republic already have nuclear weapons from the old Soviet Union, but it has enough enriched uranium for more. What’s worse, it has a delivery system.

And where did Iran supposedly get those weapons?

In the early 1990s, the CIA asked me to find an Iranian scientist who would testify that Iran had the bomb. The CIA had learned that Iranian intelligence agents were visiting nuclear installations throughout the former Soviet Union, with particular interest in Kazakhstan.

Meanwhile, Paul Muenstermann, then vice president of the German Federal Intelligence Service, said Iran had received two of the three nuclear warheads and medium-range nuclear delivery systems from Kazakhstan. It also was reported that Iran had purchased four 152 mm nuclear shells from the former Soviet Union, which were reportedly stolen and sold by former Red Army officers.

To make matters worse, several years later, Russian officials stated that when comparing documents in transferring nuclear weapons from Ukraine to Russia, there was a discrepancy of 250 nuclear weapons.

Lt. Col. Tony Shaffer, an experienced intelligence officer and recipient of a Bronze Star, told me that his sources say Iran has two workable nuclear warheads

Unlike the 71%, I’m not really convinced by this — if anything, it could be Iranian disinformation to try and avoid an American or Israeli attack. More importantly, the US and Israeli intelligence community at large don’t buy it. If they had any real evidence that Iran had a bomb today, Netanyahu would have been presenting it at the UN instead of drawing red lines on Wile E. Coyote bomb diagrams.

But if it were true, it would illustrate an extremely important point — that Iran with a nuclear weapon has not tried to obliterate Israel or the United States.

And if America were to attack Iran to prevent Iran from gaining a nuclear weapon, and Iran already has a nuclear weapon, the consequence could be thousands or millions of death — an attack on Iran would be even more dangerous and misadventurous for both the West and Israel than it already seems.

That makes the fact that a majority of Americans — as well as a disturbing number of hawkish policy analysts and talking heads like Reza Kahlili — agree that Iran already has a nuclear weapon, and that Iran should be attacked even more mind-boggling. To conclude (based on rumours and hearsay) that Iran already has a nuclear weapon, and simultaneously to encourage an attack on them is the height of foolishness.

Iran’s Imminent Nuclear Weapon

Here’s some context behind the claims that Iran will imminently possess a nuclear weapon.

It started a long time ago (but not, unfortunately, in a galaxy far, far away):

1984: Soon after West German engineers visit the unfinished Bushehr nuclear reactor, Jane’s Defence Weekly quotes West German intelligence sources saying that Iran’s production of a bomb “is entering its final stages.”US Senator Alan Cranston claims Iran is seven years away from making a weapon.

Seven years away? And did they have a bomb in 1991?

1992: Israeli parliamentarian Binyamin Netanyahu tells his colleagues that Iran is 3 to 5 years from being able to produce a nuclear weapon – and that the threat had to be “uprooted by an international front headed by the US.”

1992: Israeli Foreign Minister Shimon Peres tells French TV that Iran was set to have nuclear warheads by 1999. “Iran is the greatest threat and greatest problem in the Middle East,” Peres warned, “because it seeks the nuclear option while holding a highly dangerous stance of extreme religious militancy.”

1992: Joseph Alpher, a former official of Israel’s Mossad spy agency, says “Iran has to be identified as Enemy No. 1.” Iran’s nascent nuclear program, he told The New York Times, “really gives Israel the jitters.”

So was there a bomb by the late 1990s?

1995: The New York Times conveys the fears of senior US and Israeli officials that “Iran is much closer to producing nuclear weapons than previously thought” – about five years away – and that Iran’s nuclear bomb is “at the top of the list” of dangers in the coming decade. The report speaks of an “acceleration of the Iranian nuclear program,” claims that Iran “began an intensive campaign to develop and acquire nuclear weapons” in 1987, and says Iran was “believed” to have recruited scientists from the former Soviet Union and Pakistan to advise them.

1997: The Christian Science Monitor reports that US pressure on Iran’s nuclear suppliers had “forced Iran to adjust its suspected timetable for a bomb. Experts now say Iran is unlikely to acquire nuclear weapons for eight or 10 years.

So now we’re looking at a nuclear-armed Iran by 2007. Scary stuff, right?

2007: President Bush warns that a nuclear-armed Iran could lead to “World War III.” Vice President Dick Cheney had previously warned of “serious consequences” if Iran did not give up its nuclear program.

2007: A month later, an unclassified National Intelligence Estimate (NIE) on Iran is released, which controversially judges with “high confidence” that Iran had given up its nuclear weapons effort in fall 2003.

June 2008: Then-US Ambassador to the United Nations John Bolton predicts that Israel will attack Iran before January 2009, taking advantage of a window before the next US president came to office.

May 2009: US Senate Foreign Relations Committee reports states: “There is no sign that Iran’s leaders have ordered up a bomb.”

And Iran still doesn’t have a bomb today — all of those reports, all of that scaremongering and warmongering was wrong. Both the CIA and Mossad agree that there is no specific evidence that Iran is working on nuclear weapons today. And many experts believe that even if Iran were working on a bomb it could take up to ten to fifteen years.

Yet, it seems that nothing except a war will satisfy Binyamin Netanyahu, who felt the same way about Iraq:

There is no question whatsoever that Saddam is working towards nuclear weapons.

And how did that work out? A hugely expensive war and occupation, American imperial overstretch, thousands of dead soldiers, hundreds of thousands of dead Iraqis and no weapons of mass destruction. We should judge people on their predictive record.

On one level, I understand Netanyahu’s paranoia especially in the context of the 20th Century and the holocaust. Iranian Generals have talked about annihilating Israel.

In August 2012, Brigadier General Gholam Reza Jalali, who heads Iran’s Passive Defence Organisation, said “No other way exists apart from resolve and strength to completely eliminate the aggressive nature and to destroy Israel.”  And just six days ago in September 2012 Brigadier General Amir Ali Hajizadeh threatened to attack Israel and trigger World War III, saying that “it is possible that we will make a pre-emptive attack” which would “turn into World War III.” In the same statement, Hajizadeh threatened to attack American bases in the Middle East as well. Hajizadeh said that as a result of this attack, Israel would “sustain heavy damage and that will be a prelude to its obliteration.”

All disturbing rhetoric, yet almost certainly baseless threats given the context of Iran’s technological and military disadvantage. Iranian missiles fired at Israel would likely be shot down long before they reached Israeli airspace by Israel’s advanced missile defence systems that can intercept even short-range fire from Gaza and Lebanon. And Israel’s nuclear submarines in the Persian Gulf would almost certainly retaliate in kind. As Shimon Peres noted in 2006: “The President of Iran should remember that Iran can also be wiped off the map.” Most importantly, if Iran attacked Israel, it seems far less likely that other powers would come to Iran’s aid.

Yet an attack on Iran by Israel could well trigger a larger conflict, sucking in Iran’s trade partners who do not want to see the flow of oil and resources out of Iran disrupted. Just this week China announced new contracts to provide super-tankers to deliver oil from Iran to China. Would Russia and China sit idly by and see their Iranian investments liquidated while America and Israel invade Iran and destroy its infrastructure? Would they sit idly by and see their ally deposed? China and Pakistan have both hinted that they could defend Iran if Iran were attacked. An attack on or invasion of Iran is an incredibly risky adventure — and in my view the real danger to Israel. And for what? To discover that like Saddam Hussein, Ahmadinejad is not working on a nuclear weapon, and all the hot air about weapons of mass destruction is once again just bullshit?

Blowback Works Both Ways

Mahmoud Ahmadinejad knows how to inflame American and Israeli leaders.

He’s claimed 9/11 was an inside job:

Making reference to what he called the “mysterious September 11th incident” and the “slave masters and colonial powers” of the West, Iranian President Mahmoud Ahmadinejad excoriated Western member nations in an address to the United Nations General Assembly in New York

Ahmadinejad said after the speech that as an engineer he’s sure the Twin Towers at the World Trade Center in New York were not brought down by jetliners.

Ahmadinejad, in an interview with The Associated Press, says it would have been impossible for two jetliners to bring down the towers simply by hitting them. He says some kind of planned explosion must have taken place.

(Amusingly, this sparked al-Qaeda to supposedly put out a counter-statement defiantly claiming responsibility and condemning Ahmadinejad, although such disputes have not prevented America from claiming that Iran and al-Qaeda were jointly responsible for 9/11).

He’s claimed that the holocaust may have never happened:

During an interview with CNN, which aired Monday on “Piers Morgan Tonight,”the Iranian president said he will not judge Nazi Germany’s extermination of the Jews during World War II.

“Whatever event has taken place throughout history, or hasn’t taken place, I cannot judge that. Why should I judge that? I say researchers and scholars must be free to conduct research and analysis about any historical event,” Ahmadinejad said.

And today, he claimed that Israel was a “nuclear armed fake regime”, and that Israel will be eliminated:

 Iranian President Mahmoud Ahmadinejad said on Monday Israel has no roots in the Middle East and would be “eliminated,” ignoring a U.N. warning to avoid incendiary rhetoric ahead of the annual General Assembly session.

Ahmadinejad also said he did not take seriously the threat that Israel could launch a military strike on Iran’s nuclear facilities, denied sending arms to Syria, and alluded to Iran’s threats to the life of British author Salman Rushdie.

Ahmadinejad claims that Israel and America are bluffing in their threats to attack Iran:

In a series of combative interviews in New York on the eve of the UN General Assembly, Iran’s political leader said Israel was making a lot of ‘noise’ and encouraging the West to prevent legitimate scientific progress in his country.

Reiterating that he was open to dialogue with the United States on the nuclear issue he also said he was prepared to defend Iran from any external threat.

“Fundamentally, we do not take seriously threats of the Zionists,” he said. “We believe the Zionists see themselves at a dead end and they want to find an adventure to get out of this dead end. While we are fully ready to defend ourselves, we do not take these threats seriously.”

He may be right on that count, because America can ill afford another costly invasion, and nothing less than a full invasion and regime change is likely to in the long run prevent Iran from gaining a nuclear weapon.Yet while I believe that an American or Israeli attack on Iran is an entirely foolish policy that will only serve to weaken America and Israel in the long run, it is foolish and dangerous for Ahmadinejad to needlessly enrage the ferocious neoconservative beast.

Ahmadinejad may well be playing the same long game as Osama bin Laden:

We are continuing this policy in bleeding America to the point of bankruptcy.

Osama bin Laden

And they may succeed (although those who believe that war is a stimulus that can end a depression will surely disagree — as Antal Fekete has noted, Western governments may look to a new hot war in the middle east as an opportunity to exit an economic depression that they cannot control).  But for Ahmadinejad and Iran, it may come at a huge, huge cost — a long painful invasion, ending in death in the street or on the gallows. Neoconservatism — and Obama and Romney are both to lesser and greater degrees neoconservatives — is a violent utopian ideology that seeks to force the entire world — by whatever means and at any cost — to conform to American foreign policy imperatives. As America should have learned a long time ago — and as Ahmadinejad may well soon learn — needlessly pissing off violent utopian ideologues creates blowback.