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The nuclear power in the Middle East: Its strategic and economic significance

Giancarlo Elia Valori

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If we look at the latest data, the OPEC countries – or anyway the Middle East countries – are those which are investing more resources in nuclear power. Iran, for example, was the first State to directly place a nuclear reactor into the electricity grid for civilian uses in 2011.

Despite the JCPOA recently signed by Iran with the P5+1 which, however, will certainly not stop the Iranian military-civilian research, the Shi’ite country is playing on nuclear power, together with the other countries, for the following reasons: a) nuclear power makes available crude oil quantities which shift from the internal market to foreign sales; b) nuclear power extends the life cycle of oil wells, most of which are now aging, since it reduces domestic demand; c) the use of nuclear power allows a civilian-military “dual use “, independent and autonomous from the old regional alliances, which are now all definitively under crisis.

Hence, in addition to manage the deal with Iran rationally and advisedly, it will be necessary – in a very short lapse of time – to reach a series of bilateral agreements on nuclear power with the other Gulf and Middle East countries – an idea which I do not think is widespread in the current strategic debate.

In this particular case, Iran will use nuclear power for military purposes when it has it, or rather when it has a “threshold” threat, which is what really matters, as a strategic substitute for a large conventional force which is lacking in Iran.

The Shi’ite country has a strategic rationale linked to asymmetric warfare and proxy wars, like those of the Hezbollah in the Lebanon – the structure created by Iran to hit Israel with a hybrid war that the Jewish State cannot oppose with the same techniques.

Or nuclear power is seen as a “game changer”, even only as an ultimate and credible threat, for a non-conventional clash in which Israel is present.

Or a part of the Sunni world.

Therefore, the rationale of Iran’s nuclear power is to force the Jewish State into an asymmetric war in the regions opposing it and outside its borders, in a context of international – but mainly tactical – isolation.

What matters, however, is not the technical ability to actually produce, have and show a series of nuclear devices, but the ability to manage – in the shortest possible time – the transition from an acceptable level for the Non-Proliferation Treaty to the typical one of the operational nuclear power.

Incidentally, the Italian signature of the Non-Proliferation Treaty (NPT) in May 1975 marks the start of the end of its independent and autonomous foreign policy.

And to think that Italy wanted to walk out of the Non-Proliferation Treaty at the G8 Summit held in Birmingham in 1998.

The NPT is used to clip the wings of the Euro-Western and Mediterranean countries, while India and Pakistan which, with their nuclear tests threw the Birmingham G8 Summit in turmoil, rightly view the NPT – like the other Arab and Islamic countries which are currently at the nuclear threshold – as one of the edicts in Manzoni’s novel The Betrothed.

Just think of what would have happened in the Mediterranean currently under fire if we had had an effective level of nuclear deterrence, managed according to the customs, usages and codes agreed upon.

Hence Iran remains at the so-called nuclear threshold, where India and Pakistan, North Korea and, of course, Israel have been for long time.

In fact the JCPOA equalizes the level of maximum threat, namely the nuclear threat, between Israel and Iran.

Iran as a threshold power is exactly what the Iranian leaders wanted.

This causes a revolution in the Middle East strategic equation and, hence, in the European and NATO one.

If the Shi’ite Republic has a threshold power and if, meanwhile, the civilian use of nuclear power still allows nuclear testing (which is possible on the basis of the JCPOA), the Jewish State is turned into a strategic hostage.

I do not know whether Western signatories to the agreement with Iran have been fully aware of this – but I somehow doubt it.

The purely economic obsession, typical of Western diplomacies, has blinded the minds of Western leaders.

If Israel is deprived of its supreme threat, it becomes targetable and vulnerable at conventional level, where the Israeli structural limits are evident and unavoidable.

It would have been better to sign an agreement with Iran allowing to better control also the military sites of the Shi’ite State, in addition to reducing the amount of fissile material for “civilian” production, which is currently too high and guarantees alone the threshold effect of the Iranian nuclear power. All we need to do is only shift it.

The data on the distribution of nuclear plants, globally, is still particularly important.

According to the IAEA, in September 2010 – the date of the last survey – nuclear facilities totaled 441 in 29 countries.

The share of nuclear power in energy production is higher in Europe (27%) while, in 2010, South Asia and the Middle East were, in fact, at zero.

Today, however, as many as 65 new States show an interest in nuclear energy, and among them, at least one fifth is located in the Middle East.

The Gulf Cooperation Council’s will to go nuclear dates back to 2007, while also peripheral Arab nations and, above all, the non-oil countries (such as Jordan) are paving the way for widespread nuclearization.

The projects currently under consideration report the operation of 90 nuclear reactors to be placed in 26 sites in thirteen countries of the region by the end of 2030.

Six Middle East countries, namely Bahrain, Egypt, obviously Iran, Jordan, the United Arab Emirates and Yemen are planning to build a nuclear power plant by the end of 2017.

If all goes according to the Iranian and Russian wishes, Yemen should host a nuclear site – not falling within the JCPOA regulation – right in front of the Saudi coast.

While, however, we have noted some geopolitical conditions for the establishment of the Middle East Sunni and Shi’ite countries’ nuclear power, it should be recalled that the shift to nuclear power has also internal motivations.

Firstly, there is the demographic and economic growth which needs low-cost and abundant electricity.

Moreover, in a situation characterized by a slowing down in energy consumption from hydrocarbons in Europe and in the other industrial countries.

From 1980 to 2010, the demand for electricity grew throughout the Middle East by five times, but also the global demand for electricity is expected to grow by 61% between 2010 and 2050.

In said period, the demand for electricity in the Middle East is expected to rise by 114%.

Obviously, with nuclear power, the Middle East countries also want to present themselves as potential exporters of electricity, as well as hydrocarbons, in addition to meeting their domestic demand.

On the other hand, cheap and abundant energy is inevitable for the very future and survival of the countries in the region.

In Saudi Arabia 50% of electricity consumption is used for air conditioners, for obvious climate reasons.

No to mention the sea water desalination plants needed for the local population’s life.

If the OPEC countries of the Middle East do not free themselves from dependence on their own sources of energy from hydrocarbons, it is obvious that – at a time of shrinking international oil markets and lower structural prices – it will no longer be possible to maintain social peace or to afford the same costs for the survival of the population.

In the Emirates, for example, 97% of electricity production depends on natural gas, while in Egypt 70% of the “wonderful electric light” – as the Futurists called it – is produced by gas, which is either an unmanageable cost or, even worse, an unmanageable bond with those who supplies it to poor countries.

Even in Iran gas is worth 67% of total energy production, while currently Iran’s regulated nuclear power accounts for less than 6% of the total energy produced.

Obviously, as already noted, nuclear energy is used to support the exports of hydrocarbons: the proceeds from the sale of natural gas and oil, for example, are worth 85% of revenues in Qatar and Saudi Arabia, while Iran – and this is a key factor of its strategic autonomy – acquires only 60% of its revenue from the sale of hydrocarbons abroad.

The more or less explicit war in the Middle East will be won by the last country having the ability to sell gas and oil to the West.

The country which will last longer with its active oil wells, will be the real hegemonic power in the region. The fight has already begun.

In the OPEC cartel, which is now ever less important to manage prices, the equivalent of our “wars of succession” has arrived.

Oman, which is not a member of the Vienna cartel, is the largest oil producer outside the oligopoly dominated by OAPEC, the Arab and Sunni sub-cartel established in 1968 with a deal, still relevant today, including Kuwait, Libya and Saudi Arabia.

But nuclearization is a real bargain even for the Arab or Islamic net energy importers, such as Turkey – or, at the time, Jordan – which want to reduce the costs of gas acquisition from Russia and Iran, countries which are always less in line with President Erdogan’s hegemonic designs.

Furthermore, if each country has its own nuclear power plants, the danger of violent energy disruptions, due to the jihadists or to other reasons, is largely diminished.

If each country has its own nuclear system, the “sword jihad” inside the Middle East will soon have no longer reason to exist.

Moreover, it is also worth taking note of a critical date: the time of the Egyptian, Jordanian and Saudi resumption of nuclear energy production coincides with the one according to which the JCPOA between the P5+1 and Iran will enable the latter to resume some research activities – even of a military nature – in the nuclear sector.

Therefore the strategic equation is clear: the Russian Federation will have an interest in managing the nuclearization of the Greater Middle East – and its presence in Syria is a sign in this regard – while both the European Union and the United States will remain linked to the very important oil market.

They will also be conditioned by the nuclear power internal to oil producers.

Nevertheless, in this case, a new variable will appear on the crude oil and natural gas prices: their economic and strategic connection with the quantity and the cost of production of nuclear energy within the crude oil producing countries.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Middle East

Chinese purchases of Iranian oil raise tantalizing questions

Dr. James M. Dorsey

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A fully loaded Chinese oil tanker ploughing its way eastwards from two Iranian oil terminals raises questions of how far Beijing is willing to go in defying US sanctions amid a mounting US military build-up in the Gulf and a US-China trade war.

The sailing from Iran of the Pacific Bravo takes on added significance with US strategy likely to remain focused on economic rather than military strangulation of the Iranian leadership, despite the deployment to the Gulf of an aircraft carrier strike group as well as B-52 bombers and a Patriot surface-to-air missile system.

As President Donald J. Trump, backed by Secretary of State Mike Pompeo, appears to be signalling that he is not seeking military confrontation, his administration is reportedly considering a third round of sanctions that would focus on Iran’s petrochemical industry. The administration earlier this month sanctioned the country’s metals and minerals trade.

The sailing raises the question whether China is reversing its policy that led in the last quarter of 2018 to it dramatically reducing its trade with Iran, possibly in response to a recent breakdown in US-Chinese trade talks.

“The question is whether non-oil trade remains depressed even if some oil sales resume, which I think it will. That’s the better indicator of where Chinese risk appetite has changed. Unfortunately Iran‘s reprieve will be limited—but better than zero perhaps,” tweeted Esfandyar Batmanghelidj, head of Bourse & Bazaar, a self-described media and business diplomacy company and the founder of the Europe-Iran Forum.

A Chinese analyst interviewed by Al Jazeera argued that “China is not in a position to have Iran’s back… For China, its best to stay out” of the fray.

The stakes for China go beyond the troubled trade talks. In Canada, a senior executive of controversial Chinese telecommunications giant Huawei is fighting extradition to the United States on charges of violating US sanctions against Iran.

Reports that Western companies, including Kraft Heinz, Adidas and Gap, wittingly or unwittingly, were employing Turkic Muslims detained in re-education camps in China’s north-western province of Xinjiang, as part of opaque supply chains, could increase attention on a brutal crackdown that China is struggling to keep out of the limelight.

The Trump administration has repeatedly criticized the crackdown but has stopped short of sanctioning officials involved in the repressive measures.

Bourse & Bazaar’s disclosure of the sailing of the Pacific Bravo coincided with analysis showing that Iran was not among China’s top three investment targets in the Middle East even if Chinese investment in the region was on the rise.

The Pacific Bravo was steaming with its cargo officially toward Indonesia as Iranian foreign minister Mohammad Javad Zarif was touring his country’s major oil clients, including China, in a bid to persuade them to ignore US sanctions.

A second tanker, the Marshal Z, was reported to have unloaded 130,000 tonnes of Iranian fuel oil into storage tanks near the Chinese city of Zhoushan.

The Marshall Z was one of four ships that, according to Reuters, allegedly helped Iran circumvent sanctions by using ship-to-ship transfers in January and forged documents that masked the cargoes as originating from Iraq.

The unloading put an end to a four-month odyssey at sea sparked by buyers’ reticence to touch a cargo that would put them in the US crosshairs.

“Somebody in China decided that the steep discount this cargo most likely availed … was a bargain too good to miss,” Matt Stanley, an oil broker at StarFuels in Dubai, told Reuters.

The Pacific Bravo, the first vessel to load Iranian oil since the Trump administration recently refused to extend sanction exemptions to eight countries, including China, was recently acquired by China’s Bank of Kunlun.

The acquisition and sailing suggested that Bank of Kunlun was reversing its decision last December to restrict its business with Iran to humanitarian trade, effectively excluding all other transactions.

The bank was the vehicle China used in the past for business with Iran because it had no exposure to the United States and as a result was not vulnerable to US sanctions that were in place prior to the 2015 international agreement that curbed Iran’s nuclear program.

China’s willingness to ignore, at least to some extent, US sanctions could also constitute an effort to persuade Iran to remain fully committed to the nuclear accord which it has so far upheld despite last year’s US withdrawal.

Iran recently warned Europe that it would reduce its compliance if Europe, which has struggled to create a credible vehicle that would allow non-US companies to circumvent the sanctions, failed to throw the Islamic republic an economic lifeline.

In a letter that was also sent to Russia and China, Iran said it was no longer committed to restrictions on the storage of enriched uranium and heavy water stocks, and could stop observing limits on uranium enrichment at a later stage.

Russian president Vladimir Putin warned in response to the Iranian threat that “as soon as Iran takes its first reciprocal steps and says that it is leaving, everyone will forget by tomorrow that the US was the initiator of this collapse. Iran will be held responsible, and the global public opinion will be intentionally changed in this direction.”

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Middle East

The Iran Question

Dr. Arshad M. Khan

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Will there be war with Iran?  Will there not be war with Iran?  The questions are being asked repeatedly in the media even though a single carrier task force is steaming up there.  The expression is old for the latest carriers are nuclear powered.  Imagine the mess if it was blown up.

There are two kinds of weapons in the world … offensive and defensive.  The latter are cheaper, a fighter plane compared to a bomber.  If a country does not (or cannot afford to) have offensive intent, it makes sense to focus on defense.  It is what Iran has done.  Moreover, its missile centered defense has a modern deadly twist — the missiles are precision-guided. 

As an Iranian general remarked when questioned about the carrier task force:  some years ago it would’ve been a threat he opined; now it’s a target.  Iran also has a large standing army of 350,000 plus a 120,000 strong Revolutionary Guard and Soviet style air defenses.  In 2016 Russia started installation of the S-300 system.  It has all kinds of variants, the most advanced, the S-300 PMU-3 has a range similar to the S-400 if equipped with 40N6E missiles, which are used also in the S-400.  Their range is 400 km, so the Iranian batteries are virtually S-400s.  The wily Putin has kept trump satisfied with the S-300 moniker without short-changing his and China’s strategic ally.  The latter continuing to buy Iranian oil.

Iran has friends in Europe also.  Angela Merkel in particular has pointed out that Iran has complied fully with the nuclear provisions of the UN Security Council backed Joint Comprehensive Plan of Action i.e. the Iran nuclear deal.  She is mustering the major European powers.  Already alienated with Trump treating them as adversaries rather than friends, they find Trump’s bullying tiresome.  President Macron, his poll ratings hitting the lowest, is hardly likely to engage in Trump’s venture.  In Britain, Theresa May is barely able to hold on to her job.  In the latest thrust by senior members of her party, she has been asked to name the day she steps down.

So there we have it.  Nobody wants war with Iran.  Even Israel, so far without a post-election government does not want to be rained upon by missiles leaky as its Iron Dome was against homemade Palestinian rockets.

Topping all of this neither Trump nor Secretary of State Pompeo want war.  Trump is as usual trying to bully — now called maximum pressure — Iran into submission.  It won’t.  The wild card is National Security Adviser John Bolton.  He wants war.  A Gulf of Tonkin type false flag incident, or an Iranian misstep, or some accident can still set it off. 

In Iran itself, moderates like current President Hassan Rouhani are being weakened by Trump’s shenanigans.  The hard liners might well want to bleed America as happened in Iraq and Afghanistan.

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Middle East

Iran’s game just started

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By announcing that Iran will begin keeping its excess uranium and heavy water, the Islamic Republic now sends a firm and clear message to the west, exactly one year after U.S. president, Donald Trump unilaterally withdrew from its nuclear deal with Iran. 

At this point, it seems that Iran has made a wise decision. Over the last year, the European troika has not only done anything to revive the nuclear deal or bring any kind of benefit to the Iranian nation, but they have actually backed up U.S. by developing new plans to undermine Iran’s “missile work”, and diminish its “power in the region” as well as its “nuclear technology”.  

As stated in clauses 26 and 36 of Joint Comprehensive Plan of Action (JCPOA), if the other side fails to meet its obligations, Iran is entitled to partially or completely end its commitments as well. So, Iran’s recent decision could be analyzed both on legal and strategic terms. 
However, it seems that the strategic aspects of Iran’s decision are even more important than its legal aspects. This decision is strategically important because it stops Washington and European troika to carry out their anti-Iran scheme, a dangerous scheme that they actually started devising when Trump took the office in 2017.  

At the time, Theresa May, the British Prime Minister, and Emmanuel Macron, the French president played a major part in carrying out the west scheme. A scheme based on enforcing Iran to keep its “nuclear promises” and stay committed to a “distorted nuclear deal” while “U.S. had abandoned the deal”, and at the same time, trying to “diminish Iran’s power in the region” and “reduce its missile activities”. 

All other actions of Europeans toward Iran were also simply targeted at carrying out this major plan, including how they constantly changed their strategies toward Tehran, and how Germany, U.K. and France intentionally delayed in launching the alternative trade mechanism (Instex) with Iran.  

Now, Iran’s decision to keep its Uranium and heavy water is definitely in compliance with JCPOA, and more importantly, it will seriously undermine the “American-European” joint plan against Iran. This also explains why French government was so distressed by Iran’s new nuclear strategy and had such a quick reaction, considering that Emmanuel Macron, the French president and Jean-Yves Le Drian, the French Foreign Minister both have had important roles in carrying out the American-European anti-Iran scheme. 

At any rate, what is clear now is that the game has just started! And the Iranian political system and specially the foreign ministry have a great mission to run this game wisely.  

In following days, the European troika might want to force Iran into changing its decision by threats such as reviving the European Union sanctions against Iran or even taking Iran’s case to the United Nations Security Council (so that Trump administration can meddle in Iran’s affairs). But, it is time for Iran political system to be adamant in its decision.  

The Iranian Foreign Ministry should clearly ask the Europeans to choose one of these options, either Iran will “further reduce its commitments to the nuclear deal” or the Europeans should do something practical to “protect the rights of Iranian nation”. 

It is also necessary that the Iranian political system reveals the American-European joint anti-Iran scheme to the people so that the true nature of Europeans is showed to Iranians. In that case, Europe and specially the European troika will completely lose their reputation.    

First published in our partner Tehran Times

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