What
The Iran 'Nuclear Issue'
Is Really About
By Chris Cook
11 March, 2006
Energybulletin.net
It
is said that there is the reason they give; and then there is the real
reason. Nowhere is this more true, perhaps, than in Iran.
My experience with Iran began
four and a half years ago in June 2001 when, through my Iranian business
partner, I wrote to the then governor of the Iranian central bank, Dr
Mohsen Nourbakhsh. This letter was written on the basis of my experience
as a former director of the International Petroleum Exchange and in
the aftermath of allegations I made in relation to market manipulation
on the IPE the previous year, which were dismissed by a commissioner
appointed by the exchange. I still regret that I used the description
"systematic" rather than "systemic" of this alleged
manipulation, but that is another story.
In this letter I pointed
out that the structure of global oil markets massively favors intermediary
traders and particularly investment banks, and that both consumers and
producers such as Iran are adversely affected by this. I recommended
that Iran consider as a matter of urgency the creation of a Middle Eastern
energy exchange, and particularly a new Persian Gulf benchmark oil price.
It is therefore with wry
amusement that I have seen a myth being widely propagated on the Internet
that the genesis of this "Iran bourse" project is a wish to
subvert the US dollar by denominating oil pricing in euros.
As anyone familiar with the
Organization of Petroleum Exporting Countries will know, the denomination
of oil sales in currencies other than the dollar is not a new subject,
and as anyone familiar with economics will tell you, the denomination
of oil sales is merely a transactional issue: what matters is in what
assets (or, in the case of the United States, liabilities ) these proceeds
are then invested.
After a couple of years of
apparent inaction, my colleague and I were invited to put together a
consortium to tender for a project to create such an exchange and, after
a presentation at the central bank in Tehran in May 2004, we were successful,
as reported in The Guardian at the time. We subsequently learned that
the delay had been due to initial opposition from the Saudis and this
opposition was withdrawn after the attacks of September 11, 2001, and
the subsequent US-led invasion of Iraq.
A major feasibility study
was carried out in the summer of 2004 - for which we still have not
been paid by the Iranian Oil Ministry - and after this, the process
became bogged down in turf battles between the Oil Ministry and the
Ministry for the Economy.
We met president Mohammad
Khatami in December 2004 to resolve this problem and then spent considerable
time with his close advisers, from whom we received powerful backing.
Progress was made, to the extent that an exchange entity was incorporated
and premises purchased on Kish Island in the Persian Gulf.
In the second quarter of
2005 the real opposition from within the Oil Ministry - from factions
opposed to shedding any light on the sales regime - was becoming apparent.
However, as the battle was about to be joined, Khatami's period in office
came to an end and the presidential election in August intervened.
Neither we, nor anyone we
knew, expected the result of the election, still less the events after
it. Three times over a period of three months an oil minister was nominated
by the new president, Mahmud Ahmadinejad, from among his trusted colleagues
and three times they were turned down by the majlis (Iranian parliament),
until finally an experienced insider was appointed in early December.
Only now are further levels of appointments being made by the new minister.
Ahmadinejad is on record
as saying that he favors transparency in the Iranian oil market. As
anyone familiar with the City of London and Wall Street will know, transparency
is the enemy of private profit, and it is this factor that was behind
the delays in developing the bourse project.
However, we remain hopeful
that the strategy we recommended, which is based upon (a) gradual and
organic introduction of pricing built upon the neutral function of transaction
registration and (b) a simple (and Islamically sound) partnership-based
"clearing union" synthesis of bilateral trading and a multilateral
guarantee, will in due course be taken forward.
One of the most interesting
aspects of the process was that during our brief spell of contacts with
decision-makers, some insight into current Iranian policy was possible
- in particular, the nuclear question. In our conversations we were
left in no doubt that it suits both the US and Iran for the issue to
be seen to be that of the Iranian "threat" from nuclear weapons.
In fact the issue is a proxy
for Iraq: try looking in the media prior to the events in Fallujah,
Iraq, for anything more than desultory mention of this "issue".
But once factions in Iran funded Muqtada al-Sadr to the tune of $50
million and the US body count started to rise, then the issue began
to attain its current level of importance.
Now that pro-Iranian Shi'ite
elements are taking a primary role in the emerging government in Iraq,
we see the nuclear temperature rising further.
The realpolitik is of course
that those in power in the US and Iran have the reason they give - and
the real reason - for what they do: and for the US, the real reason
is and has been for many years energy security above any other consideration.
Chris Cook is
a former director of the International Petroleum Exchange. He is now
a strategic market consultant, entrepreneur and commentator.