Shawn Hagedorn
22 October 2007
opinion
Johannesburg — ODD alliances of political gymnastics with MBA-styled procurement strategies have immunised oil supplies for a generation.
Worryingly, the past weeks have left the US and Iran adjusting to severe political miscalculations, while the supply strategies of key countries foster instability. With Iran having accounted for a third of SA's oil imports last year, whatever form a Washington-Tehran showdown may take, the local effect could be harsh. In the US, the Democrats invested heavily in being able to force the Bush Administration to withdraw from Iraq and take responsibility for a failed war. While still anticipating control of the White House and both houses of Congress after next year's election, the Democrats must now invest in a Middle East success strategy. The shift came primarily from the congressional testimony of Gen David Petraeus, the US commander of the multinational force in Iraq, with Iranian President Mahmoud Ahmadinejad's New York remarks further recasting positions.
Despite controlling both houses of Congress since January, the Democrats have been ineffective in restraining US President George Bush. His strategy of cementing his policies, thus obligating the next administration to continue them, is working.
The next president will assume office with a large number of US troops in Iraq, many of whom are being killed, according to Petreaus and other experts, with considerable Iranian involvement. Iran is also expected to possess a nuclear weapon as the next president sits at his or her desk in the Oval Office.
For the first time since 1952, neither the president nor the vice-president will be a candidate. Bush is not constrained by the next election and he has said he won't leave the tough decisions for his successor. More surprisingly, many domestic and international leaders are signalling quietly -- and, as with France, not so quietly -- their preference for Bush to do whatever it takes to ensure Iran doesn't acquire a nuclear bomb, thus setting off a Middle East nuclear weapons race.
Israel's bombing of an alleged military site within Iran's understudy, Syria, last month evoked virtually no protest from the Middle East or the international community. Iran is seen as so threatening that some Arab leaders would welcome the US -- or even Israel -- attacking Iranian military facilities.
Following Russian President's Vladimir Putin's recently announced brazen scheme to retain power beyond the expiration of his second term and his earlier attempts to use energy as a weapon, Russia can be expected to aggressively assert its interests for many years. Russia supplies weapons and technology to Iran, yet the Iranians know Russia could benefit greatly from an intense US-Iran confrontation. Putin will gladly play chess with Bush if he can sacrifice Iranian interests to better his position elsewhere, while enjoying high energy prices. Bush, however, will rather play Texas p oker and continue to challenge Russia's autocratic advances.
Beyond Iran and its satellites, Japan, China and SA are most at risk. Globalisation rewards interdependence and conformity while often punishing alternative approaches. Historically, secondary nations have sought safety through aligning with one or more of the large powers. Today, however, there is a liberation mentality, which disdains even the notion of great powers.
Geography, history and the potential to advance the southern African region through effective alignments encourage SA to challenge great-power authority. However, by the same logic that the US is a global hegemon, SA is a regional superpower. The foreign affairs department may hope to use anti-great-power positions at the United Nations and elsewhere to overcome the regional distrust which power and racial inequities have inspired. Yet this may prove unworkable and in the meantime incites risks, such as excessive reliance on Iranian oil. The nub is that a working majority of the global powers consider a nuclear-armed Iran a greater threat than short-term oil instability.
During SA's sanctions era and the Cold War, energy security was a top foreign relations priority. More recently, the government briefly mooted the creation of a "super ministry" to align the efforts of finance, economics and foreign affairs. Unfortunately, redressing the sins of the past strains business and government relations, placing SA at a disadvantage in integrating economic interests within its complex and at times conflicting foreign policy objectives.
Archbishop Desmond Tutu and others have criticised SA's support for oppressive regimes and it is hard to argue that SA's foreign policies are fully consistent with its laudable priorities, such as the New Partnership for Africa's Development (Nepad). Efforts to accommodate China's African strategies bring out vastly different views. China only started importing oil in 1993, when most energy import-export relationships were well established. To satisfy its rapidly expanding energy appetite it turned to exporters out of favour with leading western nations, mostly due to their human rights violations.
China is on track to becoming a superpower. Its largest customers include western European and North American nations, while it places high reliance on spurious regimes for raw materials. China wants to be a respected superpower yet its procurement strategies lead to foreign policies at odds with those of its major customers and its long-term interest. China will not benefit from Iran developing nuclear weapons whereas its investments in African infrastructure and schools in return for oil and commodities concessions can be win-win.
China's procurement strategies are only as viable as the governments it supports. Events regarding North Korea and to a lesser degree Sudan and even Burma, show that China can be cajoled by its leading western customers to help constrain rogue states. As the Beijing Olympics approach, coaxing should continue from Washington and Pretoria as China assumes the prestige and responsibilities of global leadership.
Iran is a top oil exporter and a huge importer of refined petroleum. US, and increasingly European, sanctions constrain Iran's access to finance and the expertise to expand its refining and oil extraction capacities. This is a classic case of reliance on neighbours and global players for vital supplies leading to rising insecurity. Many armed conflicts have arisen due to similar patterns -- particularly when accompanied by substantial miscalculations. The Iranians had also bet heavily that the US would soon be pulling out of Iraq.
Iran is not stable. Despite huge reserves, its oil exports are projected by some analysts to plummet within 10 years due to mismanagement. The Iranian strategy seems to place vast reliance on soon becoming the regional hegemon by means of nuclear weapons and extensive influence in Iraq and Syria, with growing influence in Shiite majority countries with Sunni-led governments.
The Pentagon is reported to have completed extensive war games showing that the US military could destroy up to 2000 Iranian targets in a few days. The attack plan would likely resemble the 1991 Desert Storm assault with heavy reliance on precision bombing and a brief ground operation. Oil-flow disruptions could be minimal or substantial. Yet nonmilitary destabilising measures could prove as damaging for SA through higher oil prices or, worse still, prolonged access disruptions. The global oil markets are designed to manage price risks, not delivery risks. Most contracts which are bought and sold are offset by the close-out dates, with limited physical deliveries taking place.
SA's circumstances preclude ideological foreign policies. The foreign affairs department should focus on advancing business interests and job creation. Energy security is only a starting point.
Hagedorn is an independent strategy adviser.
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