Iranian President Mahmoud Ahmadinejad speaks at the Natanz nuclear enrichment facility
Now that the talks with Iran on its nuclear program appear to be on the ropes, are we on the road to war? The Israelis threaten it almost weekly, and the Obama administration has reportedly drawn up an attack plan. But in a sense, we are already at war with Iran. Carl von Clausewitz, the great theoretician of modern warfare, defined war as the continuation of politics by other means. In the case of Iran, international politics has become a de-facto state of war.
According to reports, the annual inflation rate in Iran is 22.2 percent, although many economists estimate it at double that. In the last week of June, the price of chicken rose 30 percent, grains were up 55.8 percent, fruits up 66.6 percent, and vegetables up 99.5 percent. Iran’s Central Bank estimates unemployment among the young is 22.5 percent, although the Financial Times says “the official figures are vastly underestimated.” The production sector is working at half its capacity. The value of the Iranian rial has fallen 40 percent since last year, and there is a wave of business closings and bankruptcies due to rising energy costs and imports made expensive by the sanctions.
Oil exports, Iran’s major source of income, have fallen 40 percent in 2012, according to the International Energy Agency, costing the country just under $32 billion over the past year. The 27-member European Union (EU) ban on buying Iranian oil will further depress sales, and a EU withdrawal of shipping insurance will make it difficult for Teheran to ship oil and gas to its diminishing number of customers. Loss of insurance coverage could reduce Iran’s oil exports by 1/5 million barrels a day, or $4.5 billion a month. Energy accounts for about 80 percent of Iran’s public revenues.
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Europe’s Perpetual Crisis
Defaced Bank of Greece sign referencing austerity demands being made by Germany. Source: Foreign Policy
Back in the 1960s, the U.S. peace movement came up with a catchy phrase: “What if the schools got all the money they needed and the Navy had to hold a bake sale to buy an aircraft carrier?” Well, the Italian Navy has a line of clothing, and is taking a cut from a soft drink called “Forza Blu” in order to make up for budget cuts. It plans to market energy snacks and mineral water. Things are a little rocky in Europe these days.
Unemployment is over 25 percent in Greece, Spain and Portugal—and far higher among young people in those countries—and most economies are dead in the water, if not shrinking. Relentless austerity policies have shredded Europe’s traditional social compact with its citizens, fueled a wave of debt-related suicides in the continent’s hard-hit south—Greek suicide rates jumped 37 percent from 2009 to 2011—and locked much of the continent into a seemingly endless spiral: austerity means layoffs, fewer jobs equal less revenue, lower revenues leads to more austerity=the classic debt trap.
“The economic situation in Europe is moving from bad to catastrophic,” says Douglas McWilliams, chief executive for the Centre for Economic and Business Research. “There is a danger that economic problems will spill over into social breakdown.” So why hasn’t the U.S. Treasury pressured lending agencies, like the International Monetary Fund (IMF) and the World Bank to shift from austerity formulas to stimulation policies? Why is the Obama administration pressing Europeans to increase military spending? And what should it matter to Washington if Britain remains in the European Union (EU)?
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