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The Daily Wildcat

The Daily Wildcat


    Iran’s Achilles heel: Oil

    Matt Stonecolumnist
    Matt Stone

    It’s a steady, ominous thump in the distance, but those war drums are approaching, getting louder and heralding another fiasco in the Middle East.

    For over a year, The Weekly Standard – that bastion of neoconservative pipe dreams (and, on occasion, good sense) – has been advocating military strikes against Iran. And recent events in Iraq and Iran suggest that we’ve reached a critical moment in the region.

    On Jan. 11, U.S. forces stormed an Iranian government office in Irbil, Iraq, where they detained six Iranians presumed to be connected to violence against American troops.

    Nine days later, in a brazen and well-coordinated attack in the Iraqi city of Karbala, unidentified assailants dressed in military garb drove into a secure compound, kidnapped four U.S. soldiers and later shot them to death.

    Even supported by high oil prices, the Iranian
    economy is a house of cards. A swift,
    unexpected drop in oil prices could engender a political crisis in the country.

    A fifth U.S. soldier died in the raid. Within days, U.S. officials announced that they had started a probe into possible Iranian involvement. The implication was all too clear: Karbala was a response to Irbil.

    In a recent National Public Radio interview, Nicholas Burns, the No. 3 official at the U.S. State Department, alluded to Iran’s involvement in the deaths of American soldiers. In that same interview, Burns stated, “”The larger point is this: Iran is seeking a position of dominance in the Middle East. It’s very clear. Iran has a regional agenda, which is very much at odds with that of the United States.””

    Left unspoken is America’s agenda in the Middle East: regional dominance. No wonder our two agendas are “”very much at odds”” with each other.

    Our squabbles with Iran over “”regional dominance”” cannot – should not – be solved by war. With our military tied down in Iraq and Afghanistan and a nuclear North Korea making threatening noises in East Asia, an invasion of Iran would go beyond the doctrine of strategic sufficiency – doing just enough to achieve one’s strategic aims. Our aims are not necessarily regime change in Tehran, but rather the prevention of Iranian nuclear capability.

    More subtle, yet effective, measures are in order.

    The Iranian economy is teetering on the brink. A recent Jerusalem Post piece, titled “”Ahmadinejad’s reign threatened by soaring house prices,”” laid out the dilemma that inflation poses to Iranian president Mahmoud Ahmadinejad’s government. More recently, 150 prominent Iranian businessmen signed a letter berating Ahmadinejad for “”policies that led to a surge in inflation.””

    Economic malaise led Ahmadinejad’s party to a thorough drubbing in local council elections in January. The ayatollahs – the religious leaders of Iran who hold the real power – have taken notice and have restrained Ahmadinejad’s more blustery nuclear rhetoric.

    The health of Iran’s economy is contingent upon high oil prices – and thus, the ability to buy off political opposition. Even supported by high oil prices, however, the Iranian economy is a house of cards. A swift, unexpected drop in oil prices could engender a political crisis in the country. That goal would be best served by a dramatic fall in world demand for oil.

    But how?

    In the pages of The Wall Street Journal, economists have occasionally argued for oil import tariffs to reduce oil prices. It sounds counterintuitive, but it’s not – and it also offers a real chance to undermine Iran’s shaky government.

    Because the United States acts as a quasi-monopsonistic buyer of oil on world markets ð- that is, we purchase vastly more hydrocarbons than the next country – our demand for oil influences world prices. Let’s say the U.S. government slaps an import tariff on all imported oil. This would reduce American demand to the extent that world prices would actually fall, and perhaps quite dramatically.

    Domestic consequences notwithstanding, such a policy would generate quite a few grumbles in the oil-exporting capitals of the world. Caracas, Moscow, Riyadh and Tehran would be acutely conscious of it. The Saudis might not be pleased, but at least they could sign on to the strategic intent of the move. The Iranians would especially feel the heat, already under an international sanctions regime and pinned down as the world’s bad guy.

    The drop in oil demand, and thus the drop in oil prices, would be warmly welcomed by the oil-importing Chinese, who indeed might even support more of our efforts in the Security Council to hold Iran accountable and to stop the genocide in Darfur.

    An oil import tariff would be a decisive non-military action that might indeed cause significant economic disruption in Iran and bring them back to the negotiating table over deleterious nuclear shenanigans.

    Otherwise, the war drums will only get louder.

    Matt Stone is a senior majoring in international studies and economics. He can be reached at

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