Consequences Of Attacking Iran And Why Tehran Is Not Worried

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Azerbaijani analyst: Iranian missiles threaten not the USA or Russia, but Azerbaijan

Azerbaijan’s southern neighbor is working under its nuclear program and missile manufacturing that pose danger not to the USA or Russia, but directly to Azerbaijan, political analyst Rasim Musabekov said to a REGNUM correspondent commenting on a statement of director of the US Missile Defense Agency Henry Obering that in the framework of deploying the air defense in Eastern Europe, the USA plans to place a radar system in the Caucasus.

“It is worth mentioning, there are two radars in Azerbaijan installed with Americans’ support. If the USA places a radar system, there will be nothing reprehensible in it. On the contrary, Azerbaijan will get an opportunity to increase greatly control over its air space. Why Russia can afford having the very powerful Gabala RLS that monitors air traffic thousands kilometers away from Azerbaijan, and the USA is forbidden to do it? Besides, one should not forget that our southern neighbor works under its nuclear program and increases missile manufacturing. The missiles pose threat not to the USA and Russia but directly to Azerbaijan,” the analyst says. At that Rasim Musabekov does not rule out that timing of Obering’s statement was not accidental – it is continuation of the information and diplomatic stand-off between the USA and Iran. Earlier, Azerbaijan’s defense ministry rejected a possibility of deploying elements of the American air defense in its territory.

Source: http://regnum.ru/english/iran/790613.html

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Sevak Sarukhanyan: Iranian extremists and American Republicans. A conspiracy story

Celebration of an Islamic Revolution anniversary in Iran and the tension around the Iranian nuclear program made many people turn to historical events of the far late 1970s – early 1980s (“far” from the point of view of current international relations’ dynamics). Nothing would have attracted special attention in this reminiscence, if it were not some certain events directly connected with the current reality.

US embassy hostage crisis in 1979 and presidential election in the USA

On November 4, 1979, about 400 Iranian students seized the US embassy in Tehran and arrested 63 US diplomats. Two days later, the Iranian interim government handed over the country to Ayatollah Khomeini, who would determine Iran’s foreign and domestic policies for the next ten years paving the way for the first Islam theocracy in the world.

Seizure of the US embassy coincided with the active stage of the presidential election campaign in the USA, in which Republican Ronald Reagan started gaining the lead. After his victory at the race, there was a leak to the press that Ronald Reagan, with the help of his future deputy George Bush (farther of the current US president) and national intelligence officer Robert Gates (current US Defense Secretary) entered secret talks with the Khomeini regime about an issue, which was important for the US Republican Party (Congress hearings were held on results of the investigation of the Republicans-Iran talks, but resulted in no sanctions): the Iranian leadership was asked not to release the US hostages until the presidential campaign is over in the USA that, thanks to Iranians, was to end up with unconditional defeat of the president-Democrat. In exchange, Tehran was promised that Republicans would lift the ban for selling technical equipment to Iran and resume buying Iranian oil as they did before. To the credit of the Iranian side be it said that Tehran fulfilled its obligations to the Republicans (released the hostages practically right after Reagan’s victory), contrary to the Republicans. Later, Iran had to resort to a policy of taking US citizens as hostages in Lebanon in order to make US leadership start selling arms to Iran in the hard times of the Iran-Iraq war.

Iraqi war and presidential election in USA in 2008

The historical reference above is interesting for several reasons:

- Taking American diplomats as hostages in Tehran put unprecedented impact upon US domestic policy process, partially determining the outcome of the presidential election and the Republicans winning.

- Continuity of the current level of the Iran-US relations is secured by presence of people and forces involved directly (Robert Gates and Mahmoud Ahmadinejad, if he really participated in seizing the US diplomatic mission) or indirectly (the Republicans in the USA and ultra-Conservatives/neo-Khomeinists in Iran).

- Presence of the same Iraqi problem in the relations of the two countries.

- Forthcoming presidential race in the United States, during which, however, the Republicans face a task of remaining at power instead of winning it.

Paradoxically, just like 28 years ago, outcome of the presidential elections mostly depends on the position and policy pursued by the Iranian leadership. The key difference is, instead of 63 US diplomats in Tehran, the US troops in Iraq and the whole US Mideast policy became hostage to the Iranian leadership. In many ways, thanks to the Iranian side, the US Mideast policy is suffering a partial setback: developments in Iraq fall out of control, which makes many US traditional partners in the area cast doubt on eternal nature and invulnerability of their main ally and start accepting more and more often top-ranking visitors from Beijing or Moscow. All this, accompanied by numerous bodies of dead American soldiers and reports on increasing number of US military equipment being struck by militants’ missiles, is seen and assessed by American public as well, which is to determine next year, with whom it wants to associate its future for at least four years after 2008.

The Iraqi problem (today, it is the Iranian problem indirectly as well) will become the key factor that will influence the presidential election outcome in the United States. Although, many see the Democrats winning undoubtedly, a lot depends on development of the Iranian-American relations. Whether the US administration would go for an overt military confrontation with Iran or not is the crucial element that can really influence presidential perspectives of the two US parties. Robert Gates’ returning to politics and reanimation of promises to make short work of Iran evidently remind the Republicans’ tactics traced back to 28 years (apparently Reagan positioned himself in such a way during the presidential race; her promised to apply the policy of threats and bribery against Iran). From the Iranian side, another “expert in resuscitation” of the past, Mahmoud Ahmadinejad assists Americans returning to the anti-Israeli, anti-American rhetoric of Iran’s early post-revolutionary development.

However, there is essential difference in the US and Iran’s conditions: Iranians do not need any military or technical or whatever support of the USA in the light of liquidation of the Saddam Iraq; Iran is really in pursuit of nuclear weapons capability and has not shown any reaction yet to claims for releasing current American hostages. At the same time, it is not a realist and major strategist Reagan sitting in Washington; it is George W. Bush, who is obsessed by missionary ideas, which are not comprehensible for everyone. This can bring the relations between Washington and Tehran to quite another stage. Although, it can happen so that in 28 years Iran will bring the power in the USA back to Democrats, the one they helped to bereave in their time.

Source: http://regnum.ru/english/iran/788481.html

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Zerkalo': Whatever the Case May Be, Armenia Will Be Loser, If USA

Current stage of peace talks on regulation of Garabagh conflict was
discussed in Washington by Minister of Foreign Affairs of Armenia,
Vardan Oskanyan and US Secretary of State, Condoleezza Rice.
As information and press section of the Ministry of Foreign Affairs
of Armenia informed, in the course of the meeting bilateral relations
were also focused on: realization of program `Challenges of
millennium', forthcoming parliamentary elections in Armenia,
Armenian-Turkish relations and USA's mediation in this direction. We
should remind here that soon our Minister of Foreign Affairs, Elmar
Mamadyarov, will leave for Washington to meet US Secretary of State.

Most likely, official information in this connection will be
distinguished with the same scantiness. However, it is not difficult
to guess what issues are discussed by C. Rice, E. Mamadyarov and V.
Oskanyan. First of all we may say that Washington is making last
attempt to regulate Armenian-Azerbaijani and Armenian-Turkish
relations, at least, this year. Not long time ago, high rank
representatives of political and military leadership of Turkey
visited Washington. At least slight warming of relations between
these 3 states taking into account aggravation of situation caused by
possible action against Iran, is vitally important for Washington.

The matter is that permanent members of UN Security Council (Russia,
China, France and UK) having supported first resolution of Security
Council on Iran, initiated by USA, have deprived themselves of any
chance for manoeuvre. It is hard to imagine that anyone ever believed
that Iran would bend in UN Security Council's will. Now permanent
members of UN Security Council should either support, of course with
minor reservations, new tougher resolution proposed by USA, which
will be ignored by Iran once adopted, or to recognize their own
weakness before Tehran's regime. In first case USA will make pressure
on Iran with `compelled' support on the part of UN Security Council,
precisely, Russia and China, in the second case, Washington will
blame Moscow and Beijing for inconsequence starting to act in
alliance with London and Paris.

USA's attacking Iran will take place, but the question is what way
will it take place?', political scientist, Levon Melik-Shakhnazaryan,
who can't be suspected in pro-American sentiments, declared at press
conference in Yerevan. It was informed by Panarmenian.net.
Accordingly to political scientist, Washington did too much for this
to go back.

Accordingly to him, USA has developed 3 directions of actions. `Fist
direction - `punctuated bombing' accordingly to method used in
Belgrade, when industrial objects get out of the order and
infrastructure suffers destruction. Second - direct land invasion
just like Iraqi scenario, and at last, third direction, `traditional'
- to cause unstable situation inside the country, making Turkish
speaking citizens and Persian speaking ones quarrel and to establish
pro-American regime', he stressed.

Armenian political scientist said that in last case the role of
Azerbaijan increases, on the borders of which Turkish speaking
population of Iran is living numbering `12-16 mln.'. `Upcoming visit
of Minister of Foreign Affairs of Azerbaijan, Elmar Mamadyarov, to
USA is connected with possible participation of Azerbaijan in solving
of Iranian issue', Melik-Shakhnazaryan stressed.
Political scientist also pointed out that USA's allies for Iranian
campaign may be Israel, Azerbaijan and Georgia. Armenia will under no
circumstances join it as authorities of the country are not suicides.
If Baku joins Iranian campaign then Washington will grant bonus to
Azerbaijan not in the form of regulation of Nagorni Garabagh conflict
in favor of Azerbaijan, but in the form of part of Iranian territory,
as Armenian lobby in USA is strong enough.

However Armenia, as political scientist thinks, will be loser
whatever the case may be. `No matter what USA does regarding Iran,
isolation of Armenia will be complete. Unfortunately, this way
Armenia can change nothing. We have very influential diaspora, which
should take steps to prevent complete isolation of the country', said
he adding that US's attitude towards Armenia is the most loyal. `The
fact that only Armenia is permitted to have commercial affairs with
Iran can't be disregarded', said Melik-Shakhnazaryan.

However, Iran won't be in somebody's `debt'. Political scientist
underlines that Iranian missiles may freely reach the above states at
the same time Americans need military basis on Middle East. `Even
today Tehran has drawn up plan concerning 900 `objects under attack'
in Israel, Azerbaijan and Georgia. However, not only Armenia can face
humanitarian disaster but also Azerbaijan. No economy will stand such
flow of refugees, especially such economy as Armenian. Don't forget
that population of Iran is 80 mln., half of which living at the
border with Armenia, Azerbaijan and Turkey', Melik-Shakhnazaryan
stressed. Armenian political scientist doesn't rule out even
fantastic variant of developments, that is, possible conquer of Baku
by Iranian military forces.

Omitting some `trifles', such as number of Azerbaijanis living in
Iran and Melik-Shakhnazaryan's oblivion concerning active military
actions of allies of Armenians - Kurds - against Iranian governmental
forces, then everything is almost truth. As for conquer of Baku by
Iran, Armenian political scientist went too far. It conflicts with
Armenian interests. Land forces of Turkey, commander of which, Ilker
Bashbug visited Azerbaijan, can march up to Baku. However it hardly
can meet Armenia's interests. If we take seriously
Melik-Shakhnazaryan's saying, then aggravation of situation brings
nothing to Armenia...

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Iran-Armenia gas route to be opened by late March



YEREVAN (ARKA) -- The Iran-Armenia gas route is to be opened late in March, Armenia's Deputy Foreign Minister Gegham Gharibjanyan told ARKA.

"The official ceremony is scheduled for the end of March," Gharibjanyan said. The gas main was to be commissioned last December, but the process was later postponed until this spring. The construction project is estimated to cost $120 million. The construction of the first 40km-long section of the pipeline started on November 30, 2004. The second section, which passes through the Armenian cities of Kajaran, Sisian, Jermuk and Ararat, is being constructed by the Iranian company Sanir.

At the initial stage Armenia will receive 300-400 million cubic meters of gas from Iran annually, with the volume to be increased to 2.3 billion cubic meters. Under an Armenian-Iranian agreement, the former soviet republic is to receive a total of 36 billion cubic meters of natural gas in 20 years. The agreement may be extended, and the gas supply volume may be increased to 47 billion cubic meters.

Link: http://www.tehrantimes.com/Descripti...&Cat=9&Num=014

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried



Armenia debates its US, Iran relations

Fears are growing in Armenia that a military conflict between the US and Iran could materialize, forcing Yerevan to choose between the two sides. Both Washington and Tehran are presently key political and economic partners for the South Caucasus state.

Iran is probably the most important country among Armenia’s neighbors, a position encouraged by Turkey and Azerbaijan’s blockade of Armenia’s borders for over a decade. Despite the differences in their political systems, Western-oriented Armenia and the Islamic Republic of Iran have maintained a steady friendship and have expanded their economic cooperation in recent years.

Against this backdrop, belligerent rhetoric used by Bush administration officials when discussing Iran’s controversial nuclear research program has prompted serious concern in Yerevan. Although US officials insist that Washington has no intention of launching a preemptive strike against Iran, local media throughout the South Caucasus presented such a scenario as a very real possibility. For example, the 8 March issue of the Armenian daily Zhamanak Yerevan pondered "Will Armenia be included in the Iranian turbulence?"

A recent statement of Lt Gen Henry Obering, head of the US Missile Defense Agency, that an anti-missile radar defense system in the South Caucasus would be "useful, but not essential" has fueled these concerns. The Armenian public has largely interpreted Obering’s words as another sign of increasing tensions in the region, and a tip-off that Washington intends to counter not only Iran, but also Russia.

Of all three South Caucasus states, Armenia alone has clearly expressed opposition to the prospect of such a deployment. "Armenia, as a member of the Collective Security Treaty Organization, does not want an increase of armament[s] in the region," Gen Mikael Haroutiunian, chief of staff of the Armenian Armed Forces, told reporters on 5 March.

Analysts and politicians alike share the opinion that a military response to Iran would be highly dangerous for Armenia. "Iran has a very important stabilizing role in the region, including in the relations between Armenia and Azerbaijan," Armen Ashotian, a member of the parliamentary faction of the ruling Republican Party of Armenia, told the Noyan Tapan news agency on 6 March. He expressed a concern that preparations for Armenia’s 12 May parliamentary elections may distract its political elite from preparing to face the danger of such a conflict.

Like officials in Georgia and Azerbaijan, political leaders in Yerevan have given no sign that it believes a conflict between the US and Iran is possible. Foreign Minister Vartan Oskanian told reporters on 9 March that the Iranian issue was not discussed during his 5 March meeting with US Secretary of State Condoleezza Rice in Washington DC. Oskanian also reaffirmed the commitment of his government to the foreign policy of "complementarity," the attempt to remain on good terms with all three regional powers 0 the US, Russia and Iran.

Meanwhile, one political scientist, Levon Melik-Shahnazarian, has already come up with likely scenarios for what he sees as an inevitable US attack against Iran. Among the options, according to Melik-Shahnazarian, recently named the director of the DeFacto news agency, are "pinpoint hits" on Iranian nuclear facilities (a scenario, he warns, that could pose "a new Chernobyl" for Armenia), and land invasion and domestic uprisings using Iran’s large ethnic Azeri population.

Not all Armenian analysts share this widespread pessimism about how US-Iran relations could affect Armenia, however. A US attack on Iran would do little to change Iranian policy on nuclear development or decrease the Islamic Republic’s influence on the region, noted Aleksander Iskandarian, director of the Caucasus Media Institute in Yerevan, in a 13 March interview with Noyan Tapan. "It seems to me that the role of rational thinking is not small in American politics," Iskandarian added.

Nonetheless, defining Armenia’s alliances in such a tangle is a problem whose existence few analysts dispute. The policy of "complementarity" must be abandoned as "no longer suitable" for the current situation in the South Caucasus, argued political scientist Melik-Shahnazarian. Andranik Migranian, a Moscow-based political scientist, shares this view, telling Shant TV on March 5 that Armenia cannot continue to keep silent, "hoping that the problems may be resolved by themselves."

Abandoning the policy, though, could force a clear-cut choice to be made about where Armenia’s sympathies lie, observers say. The pro-Western Zhamanak Yerevan daily has posited that Armenia should side with the West, or risk losing to Azerbaijan territories that it controls south of the disputed region of Nagorno-Karabakh.

Aleksander Iskandarian of the Caucasus Media Institute, however, contends that another consideration should come into play. Washington understands, he said, that Armenia has no other option but to cooperate with Iran, and does not wish to reinforce the country’s traditional dependence on Russia.

"If Armenia hangs on one thread only, the Russian one, it will have much less room for maneuver than in case of having any second thread to hang on," Iskandarian commented. "With more freedom, Armenia will have a better opportunity to follow its natural path of development, to the West."

News source: http://www.speroforum.com/site/artic...idarticle=8497

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

OPENING OF IRAN-ARMENIA PIPELINE A CRUCIAL EVENT

The project of constructing an Iran-Armenia gas pipeline, origined from the early 1990’s, the period of economic and energetic crisis for Armenia, was finally realized yesterday, March 18, 2007. This is a crucial and historical event for Armenia, no matter what diameter has the pipe, what company owns its Armenian part or what attitude have certain political powers to it.

Construction of the Iran- Armenia pipeline was the second most important strategic move of Armenia after recovering the Nuclear Power Plant. Armenian authorities had do work hard so as to achieve the realization of this project, as two powers – Russia and the USA were against it. The first - because it was the only provider of gas and other fuel to Armenia and did not want to lose its monopoly, the second – because Iran was considered the number 2 enemy after Iraq and its economic success was not welcome. The new gas line will allow Armenia to get gas from Iran and thus diversify the energy resources of the country as well as increase its independence from Russia. The project of a second pipeline from Iran to Armenia, which will permit to increase Iran Armenia gas supply.

The presence of the Presidents of both the States to the opening ceremony displays the political implication of the event. This is Armenia’s bets chance to enhance its relations with its only reliable neighbor, which is especially precious when Azerbaijan is trying by all means to isolate Armenia. Iran in its turn is interested in extending its gas market and anyhow upsetting the policy of the USA. A wider pipeline would also provide Armenia the opportunity of becoming a transit state, but this idea was not realized due the interests of Russia, which would not allow a rival on the gas market of Georgia and Ukraine.

Source: http://www.azg.am/?lang=AR

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried



Ahmadinejad: Iran-Armenia Cooperation Serves Interests of Both Nations

TEHRAN (Fars News Agency)- Iranian President Mahmoud Ahmadinejad in the ceremonies marking inauguration of the pipeline project for the transfer of Iran's natural gas to Armenia reiterated that Iran-Armenia joint projects reinvigorate friendship bonds between the two nations and cause expansion of mutual cooperation to the interest of the two nations as well as regional peace and security.

Following the inauguration ceremonies, president Ahmadinejad stated that in the recent 15 years, relations between Iran and Armenia have been on the expanding while the Iranian and Armenian nations are intent on further expanding and deepening mutual relations.

Stressing the point that Iran-Armenia joint projects help to strengthen friendship between the two nations and that the Iranian and Armenian nations maintain historical and cultural relations, president Ahmadinejad added that border bridges, electric power lines, gas pipeline, and hydroelectric installations consolidate friendly bonds between the two nations.

Prior to the inauguration of the gas pipeline project, the Iranian and Armenian ministers of energy signed an agreement for the construction of a joint hydroelectric power plant.

News source: http://english.farsnews.com/newstext.php?nn=8601010052

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Iranian FM doubts U.S. would dare invade his country



The United States is unprepared for a possible military campaign against Iran, the Middle East country's foreign minister said Thursday. A massive U.S. military buildup near Iran's borders has been reported this week following Iran's detention of 15 British sailors in the Persian Gulf last Friday. Russian intelligence said the U.S. Naval presence in the Persian Gulf has for the first time in the past four years reached the level that existed shortly before the invasion of Iraq in March 2003.

"We doubt that anyone would dare attack Iran, and we do not think America can bring about a new crisis, particularly given that it is surviving its own interior crisis," Manouchehr Mottaki told Saudi newspaper Al-Riyadh, apparently referring to the Republicans' losing ground in the U.S. Congress to the Democrats, who have endorsed a timetable for U.S. troops withdrawal from Iraq.

Tehran and Washington have been embroiled in a political standoff since Iran resumed nuclear enrichment in January 2006. The U.S. and some other Western countries suspect Iran is pursuing a covert nuclear weapons program, although Tehran has consistently claimed it needs nuclear energy for peaceful power generation. The minister reiterated the legitimacy of Iran's ambitions to develop civilian nuclear research warranted by the Nuclear Non-Proliferation Treaty, which the Islamic republic is signatory to.

Mottaki said Iran has the right to develop peaceful nuclear energy, although "the country that used nuclear weapons against Hiroshima and Nagasaki" wants to strip Tehran of the right. Commenting on the seizure of the 15 British sailors, the minister said the United Kingdom should admit its mistake as the first step to their release. Mottaki said the Iranian military would soon make public all data on the incident, which he said had been recorded by satellites.

On March 23, the U.K. Defense Ministry announced that Iran had detained 15 Navy sailors and marines from the HMS Cornwall in Iraqi territorial waters, which in accordance with a UN Security Council mandate under Resolution 1723 was inspecting ships in the Persian Gulf. Following Britain's claims, the Iranian Embassy in London issued a statement in which it said the sailors and marines had been 0.5 kilometers (0.3 miles) inside Iranian waters at the time. Iran's Foreign Ministry accused the Royal Navy of illegally entering Iranian territorial waters.

News link: http://www.rian.ru/

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Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Experts: US operation in Iran supposes usage of nuclear weaponsRead it in Russian

“A US military operation in Iran supposes usage of tactical nuclear weapons. Meanwhile, consequences of a US nuclear strike on Iran will affect neighboring territories as well,” First Vice President of the Academy for Geopolitical Issues, Capt. Konstantin Sivkov said at a news conference “When and how will be Iran attacked?” in Moscow, a REGNUM correspondent reports.

“Nuclear weapons will be mostly used against headquarters and nuclear development facilities in Iran, there are 128 of them; besides, administrative facilities will be also attacked,” Vice President of the Academy for Geopolitical Issues Vladimir Anokhin believes.

“Bush and the Republican Party need a fast, short and winnable operation in Iran in order to secure their positions and influence in the USA,” President of Academy for Geopolitical Issues, Gen.-Col. Leonid Ivashov added.

Source: www.regnum.ru

[Armenian]

Re: Consequences Of Attacking Iran And Why Tehran Is Not Worried

Guns and bombs will not hurt ZOG controlled America - only the economy will.

The following articles underscore the strategic importance of moving away from the US Dollar. Iran, Venezuela and Russia have gradually begun to implement such measures. If and China joins them in the future, that is precisely when American power and influence - worldwide - will go into remission.

The international danger posed to the US Dollar by Iran, Russia and others today is coming at a time when the US treasury is severely stressed with debt that is running in the many tens of trillions of US Dollars. The US Dollar is also losing ground to the increasingly popular Euro. What's more, Iran's wise move may actually be playing into the hands of politicians in Europe who would like to see the Euro gain further value. I really have to give Iranians allot of credit. I always knew they had a good diplomatic core, but I had never see them in action like this before.

Nonetheless, I'm glad Armenia has good relations with them.

Iran to stop selling oil in dollars

Iran plans to stop pricing its oil in dollars, the state-run television quoted the Central Bank governor as saying Friday. Ebrahim Sheibani noted, "Iran plans to stop selling its oil in dollars," adding that Iran had reduced its dollar-held assets to 20 percent. The report did not give further details. Iran said in December it would replace the dollar with the euro in foreign transactions and state-held foreign assets, in an apparent response to mounting U.S. pressure on its banking system. Iran is under UN sanctions over its refusal to halt its nuclear enrichment. The sanctions include a freeze on the assets of institutions and individuals involved in the program.

New source: http://www.presstv.ir/detail_iran.as...onid=351020102

United Russia backs ban on "dollar", "euro" terms among MPs

MOSCOW, April 14 (RIA Novosti) - The pro-presidential United Russia faction backs a proposal by the head of Russia's Public Chamber to ban MPs and officials from using the terms "dollar" and "euro" in domestic economic debates, a faction top official said Friday. "This is a very timely initiative," Vyacheslav Volodin said commenting on the initiative voiced by academician Yevgeny Velikhov Thursday. "We believe we should use only the word 'ruble'." "If today government members [and] deputies calculate expenses and revenue in foreign currency, speak and think about foreign currency, we will never establish our national currency," he said. "We need to start with ourselves, to convince society that our ruble is the most stable currency, and that it's strengthening," Volodin said. Volodin said the lives of Russians could improve if officials dealing with finance and economics were to begin counting everything in rubles.

Source: http://en.rian.ru/russia/20060414/46423009.html

Iran - a threat to the petrodollar?

By Emilie Rutledge

Iran's decision to set up an oil and associated derivatives market next year has generated a great deal of interest. This is primarily because of Iran's reported intention to invoice energy contracts in euros rather than dollars. The contention that this could unseat the dollar's dominance as the de facto currency for oil transactions may be overstated, but this has not stopped many commentators from linking America's current political disquiet with Iran to the proposed Iranian Oil Bourse (IOB). The proposal to set up the IOB was first put forward in Iran's Third Development Plan (2000-2005). Mohammad Javad Assemipour, who heads the project, has said that the exchange will strive to make Iran the main hub for oil deals in the region and that it should be operational by March 2006.

Geographically Iran is ideally located as it is in close proximity to major oil importers such as China, Europe and India. It is unlikely, in the short term at least, that large numbers of energy traders will decamp and set up shop in Iran; a country which happens to be categorised as a member of the "axis of evil" by the president of the world's largest oil-importing country; the United States. But over time, Iran could take some business away from the two incumbent energy exchanges, the International Petroleum Exchange and the New York Mercantile Exchange who both invoice sales solely in dollars.

Economic motives

If successful, the IOB will provide Iran with concrete economic benefits especially if it invoices at least some of its energy contracts in euros. Iran has around 126 billion barrels of proven oil reserves about 10% of the world's total, and has the world's second largest proven natural gas reserves.

From an economic perspective, invoicing oil in euros would be logical for Iran as trade with the euro zone countries accounts for 45% of its total trade. More than a third of Iran's oil exports are destined for Europe, while oil exports to the United States are non existent. The IOB could create a new euro denominated crude oil marker, which in turn would enable GCC nations to sell some of their oil for euros. The bourse should lead to greater levels of foreign direct investment in Iran's hydrocarbon sector and if it facilitates futures trading it will give regional investors an alternative to investing in their somewhat overvalued stock markets.

Euro zone countries alone account for almost a third of Iran's imports and currently Iran must exchange dollars earned from hydrocarbon exports into euros which involves exchange rate risk and transaction costs. The decline in the dollar against the euro since 2002 - some 26% to date - has substantially reduced Iran's purchasing power against its main importing partner. If the decline continues, more states will increase the percentage of euros vis-à-vis the dollar they hold in reserve and in turn this will increase calls both in Iran and the GCC to invoice at least some of their oil exports in euros.

A move away from the dollar and a strengthening of the euro would further benefit Iran as according to a member of Iran's Parliament Development Commission, Mohammad Abasspour, more than half of the country's assets in the Forex Reserve Fund are now euros. It is primarily the US which stands to lose out from any move away from the petrodollar status quo, it is the world's largest importer of oil and a move away from invoicing oil in dollars to euros will undoubtedly have a negative effect on its economy. Fewer nations would be willing to hold the dollar in reserve which would cause a significant devaluation and result in the loss seigniorage revenues. In addition, US energy-related companies stand to lose out as they will be unable to participate in the bourse due to the longstanding American trade embargo on Iran.

Political considerations

In the 1970s, not long after the collapse of the gold standard, the US agreed with Saudi Arabia that Opec oil should be traded in dollars in effect replacing the gold standard with the oil standard. Since then, consecutive US governments have been able to print dollar bills and treasury bonds in order to paper over huge current account and budgetary deficits, last year's US current account deficit was $646 billion.

Needless to say, the current petrodollar system greatly benefits the US; it enables it to effectively control the world oil market as the dollar has become the fiat currency for international trade. In terms of its own oil imports, the US can print dollar bills without exporting commodities or manufactured goods as these can be paid for by issuing yet more dollars and T-bills. George Perkovich, of the Washington based Carnegie Endowment for International Peace, has argued that Iran's decision to consider invoicing oil sales in euros is "part of a very intelligent strategy to go on the offense in every way possible and mobilise other actors against the US."

This viewpoint however, ignores Iran's economic motives, just because the decision, if eventually taken, displeases the US does not mean that the rationale is purely political. In light of such sentiments and the US's current insistence that Iran be referred to the UN Security Council Iran must consider and weigh carefully the economic benefits against the potential political costs. Although a matter of conjecture, some observers consider Iran's threat to the petrodollar system so great that it could provoke a US military attack on Iran, most likely under the cover of a preemptive attack on its nuclear facilities, much like the cover of WMD America used against Iraq.

In November 2000, Iraq began selling its oil in euros, its Oil For Food account at the UN was also transferred into euros and later it converted its $10 billion UN held reserve fund into euros. At the time of the switch many analysts were surprised and saw it as nothing more than a political statement, which in essence it may have been, but the euro has gained roughly 17% over the dollar between then and the 2003 US invasion of Iraq. Perhaps unsurprisingly, since the US led occupation of Iraq its oil sales are once again being invoiced in dollars.

The best policy choice for Iran would be to proceed with the IOB as planned as the economic advantages of such a bourse are clear, but in order to mitigate against the potentially greater political "threat" should provide customers with flexibility. It would make it much harder for America to object to the new bourse, overtly or covertly, if Iran allows customers to decide for themselves which currency to use when purchasing oil, such an approach would facilitate for euro purchases without explicitly ruling out the dollar.

Emilie Rutledge is a British economist who is currently based at the Gulf Research Center in Dubai.

Source: http://english.aljazeera.net/NR/exer...CDBA08A6E9.htm