IRAN - A Solution

Clients were alerted November 2004 that Iran’s nuclear ambitions would become the key issue on Rice’s plate. Then in a sketch of May/06 we predicted the following: The International Atomic Energy Agency would continue to suffer from impotency, the same malady affecting its parent; Russia and China would remain squeamish, for the near term blocking any meaningful sanctions birthed by the Security Council and finally, that the US, the UK and a coalition would decide to impose sanctions outside the UN framework. One of these would be the blockage of gasoline imports.

It is far more effective for us to target Iran’s economy, to go on the offensive and undermine the Ahmadinejad government in that manner than to select the military option. This is directly out of Reagan’s book. The Iranian people become the proxy for (now pathetic) Western diplomacy. This is a radical change in approach - target societies and let them do the work for you. See our sketch of Feb/07 and that of Mar/07 for more on this process but it is not cosmic in dimension or complexity, does not take more than an hour or so away from the ball game to understand.

We isolated gasoline imports last year. One need only glance at recent riots and destruction in Iran driven by the government’s gasoline price hike of last month (from absurdly low subsidized levels, something Iranians have come to expect as their birthright) combined with the sudden announcement last week of gasoline rationing to understand that we were right; this is the Achilles heel of this corrupt theocracy. It is amusing that although Iran floats on a pool of oil it can refine no more that 50% of its needed gasoline; the rest is imported from India and gulf states. This fact provides the useful lever.

We recommend the complete blockage of gasoline imports by the US Navy Fifth Fleet. Iran has no capabilities to stop us. The government would not survive the economic catastrophe. The blockade would be lifted when the new government adopted complete transparency in 1) abandoning their nuclear ambitions and 2) ceasing any complicity in Mid Eastern affairs, those of Iraq and Lebanon in particular. The Iranian people would see to that. Unfortunately there are some of our "allies" who disagree, Russia chief among these. In addition to selling Iran a $1 billion nuclear plant and being a major supplier of arms and aircraft, Russia is now, through a private banking conglomerate (Alfa Group) looking to invest $300 million to develop Iran’s infant cellular-phone industry. Being who they are the Russians are naturally anxious to water down any sanction which may curtail this activity.

Still, this lever has not been lost on Congress. Last week, leaders of a bi-partisan House panel led by Rep Mark Kirk (Rep) and Rep Robert Andrews (Dem) proposed legislation intended to punish any company that provides Iran with gasoline or helps it import gasoline after Dec/31/07. Such an offender would loose access to American customers through sanctions.
This is not enough but it is something and a step on the way to what is in our view the only viable solution to the Iranian threat.