Friday, January 27, 2006

Iran. What to do. What to do.

Hmmm.

Iran is in the news lately because the combination of a fruitcake pro-apocalypse nuke wielding madman and .... well. You don't really need to combine that with anything to really make for bad news. So far the substantial number of possible solutions haven't really thrilled me. Most involve either lying supine and waiting for the inevitable attack or doing something even more silly.

But there actually *is* a solution. The key point is to look back at history to the Iran-Iraq War, and the nearly non-existant Iranian domestic economy and just where the oil is in Iran.

To address each point. The Iran-Iraq War came about because Saddam Hussein want to take over the Iranian oil fields and consolidate his control over the more significant sources of Middle East oil. Saddam was also of the opinion, right or wrong, that the Iranian oil fields were actually drawing oil from underneath Iraq. So Saddam instigated a terrible decades long war between Iran and Iraq that saw huge population losses and the widespread use of chemical warfare and human wave attacks. At the end of the War, which was a draw, the Iraqi economy and military was a shambles and the Iranians were fielding "soldiers" who were as young as 13 years old.

The Iranian domestic economy is largely non-existant due to massive corruption, overregulation and mis-management. Additionally the Iranian economy couldn't recover from the debacle of the Iran-Iraq War because so many men had died or were maimed, there simply weren't enough workers available. In essence what domestic economy exists does so either because of corruption that allows it to flourish or because it's a Black Market economy. In some reports the unemployment rate hovers somewhere around 35%-45% though it's probable that nobody, even the Iranian government, doesn't really know how many aren't working. In an economy with high corruption or very strict government regulations many people will prefer to work on a cash basis and thus elude government tracking.

The major Iranian oil fields, production equipment, refineries and export facilities are located in southwest Iran, right next to Iraq. This was one of the reasons why Saddam invaded Iran; to capture the Iranian oil fields and take over their income. And this is the Achilles Heel of Iran.

If the US military were to invade Iran one strategy could be to simply take and control the oil fields. Continue to operate the oil fields at market prices but deposit all funds into a *non-UN* controlled fund to be turned over to the *new* Iranian government once one comes into being. In the meantime it won't matter how deep or how many nuclear facilities Iran has. Without a steady infow of money from oil sales Iran will have to shut them down. Even if Iran is able to survive for a time on financial reserves continuing to fund these nucelar research operations will simply drain their reserves even faster. And with no domestic or international economy, apart from oil sales, to speak of, there aren't any other sources for Iran to tap.

Take the oil, deposit the revenues, put Iran on an allowance.

The only reason that Iran has the ability to fund this sort of nonsense is because of oil, and nothing else. Remove oil from the equation and Iran will either collapse of it's own accord or it will have to acommodate a serious resolution to this issue. And the Iranian government collapsing is entirely possible. Much of the government's domestic control comes from paid thugs who keep locals in order. The key word is "paid". With significantly reduced income the Iranian government will find it harder and harder to continue operating as it has been. The reduction in income will also severely impact Iran's ability to purchase foreign help, political or military.

All in all it sounds workable. Just as long as we don't turn it into Oil-For-Food2.