Asia Times Middle East: Jan
the Iran 'nuclear issue' is really about
By Chris Cook
It is said that there is the reason they give;
and then there is the real reason. Nowhere is this
more true, perhaps, than in Iran.
My experience with Iran began four and a half years
ago in June 2001 when, through my Iranian business
partner, I wrote to the then governor of the Iranian
central bank, Dr Mohsen Nourbakhsh. This letter was
written on the basis of my experience as a former
director of the International Petroleum Exchange and
in the aftermath of allegations I made in relation
to market manipulation on the IPE the previous year,
which were dismissed by a commissioner appointed by
the exchange. I still regret that I used the description
"systematic" rather than "systemic"
of this alleged manipulation, but that is another
In this letter I pointed out that the structure of
global oil markets massively favors intermediary traders
and particularly investment banks, and that both consumers
and producers such as Iran are adversely affected
by this. I recommended that Iran consider as a matter
of urgency the creation of a Middle Eastern energy
exchange, and particularly a new Persian Gulf benchmark
It is therefore with wry amusement that I have seen
a myth being widely propagated on the Internet that
the genesis of this "Iran bourse" project
is a wish to subvert the US dollar by denominating
oil pricing in euros.
As anyone familiar with the Organization of Petroleum
Exporting Countries will know, the denomination of
oil sales in currencies other than the dollar is not
a new subject, and as anyone familiar with economics
will tell you, the denomination of oil sales is merely
a transactional issue: what matters is in what assets
(or, in the case of the United States, liabilities
) these proceeds are then invested.
After a couple of years of apparent inaction, my
colleague and I were invited to put together a consortium
to tender for a project to create such an exchange
and, after a presentation at the central bank in Tehran
in May 2004, we were successful, as reported in The
Guardian at the time. We subsequently learned that
the delay had been due to initial opposition from
the Saudis and this opposition was withdrawn after
the attacks of September 11, 2001, and the subsequent
US-led invasion of Iraq.
A major feasibility study was carried out in the summer
of 2004 - for which we still have not been paid by
the Iranian Oil Ministry - and after this, the process
became bogged down in turf battles between the Oil
Ministry and the Ministry for the Economy.
We met president Mohammad Khatami in December 2004
to resolve this problem and then spent considerable
time with his close advisers, from whom we received
powerful backing. Progress was made, to the extent
that an exchange entity was incorporated and premises
purchased on Kish Island in the Persian Gulf.
In the second quarter of 2005 the real opposition
from within the Oil Ministry - from factions opposed
to shedding any light on the sales regime - was becoming
apparent. However, as the battle was about to be joined,
Khatami's period in office came to an end and the
presidential election in August intervened.
Neither we, nor anyone we knew, expected the result
of the election, still less the events after it. Three
times over a period of three months an oil minister
was nominated by the new president, Mahmud Ahmadinejad,
from among his trusted colleagues and three times
they were turned down by the majlis (Iranian parliament),
until finally an experienced insider was appointed
in early December. Only now are further levels of
appointments being made by the new minister.
Ahmadinejad is on record as saying that he favors
transparency in the Iranian oil market. As anyone
familiar with the City of London and Wall Street will
know, transparency is the enemy of private profit,
and it is this factor that was behind the delays in
developing the bourse project.
However, we remain hopeful that the strategy we recommended,
which is based upon (a) gradual and organic introduction
of pricing built upon the neutral function of transaction
registration and (b) a simple (and Islamically sound)
partnership-based "clearing union" synthesis
of bilateral trading and a multilateral guarantee,
will in due course be taken forward.
One of the most interesting aspects of the process
was that during our brief spell of contacts with decision-makers,
some insight into current Iranian policy was possible
- in particular, the nuclear question. In our conversations
we were left in no doubt that it suits both the US
and Iran for the issue to be seen to be that of the
Iranian "threat" from nuclear weapons.
In fact the issue is a proxy for Iraq: try looking
in the media prior to the events in Fallujah, Iraq,
for anything more than desultory mention of this "issue".
But once factions in Iran funded Muqtada al-Sadr to
the tune of $50 million and the US body count started
to rise, then the issue began to attain its current
level of importance.
Now that pro-Iranian Shi'ite elements are taking a
primary role in the emerging government in Iraq, we
see the nuclear temperature rising further.
The realpolitik is of course that those in power
in the US and Iran have the reason they give - and
the real reason - for what they do: and for the US,
the real reason is and has been for many years energy
security above any other consideration.
Chris Cook is a former director of the International
Petroleum Exchange. He is now a strategic market consultant,
entrepreneur and commentator. Reprinted with permission
(Copyright 2006 Chris Cook.)
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