The Obama administration is facing a major dilemma in its approach to Iran. The problem is primarily related to the connection between the election calendar, oil prices and the American economy.
The good news for the Obama administration is that the president’s re-election prospects today look much brighter than a year ago, when his popularity ratings had dropped to around 40 percent. U.S. President Barack Obama’s chances for re-election almost entirely depend on the economy.
The main reason American people are willing to support him is the upturn in the economy. Consumer confidence is slowly coming back and the unemployment rate is sliding slightly downward. It is absolutely crucial for the Obama administration to keep this trend of economic recovery on track without any derailment.
The bad news for the administration is that the economic recovery looks vulnerable, mainly because of rising oil prices. And the main factor leading to the rise in oil prices is the growing tension between Iran and the West, particularly rumors that Israel is getting ready for preventive military action against Israel. Since such a military strike would be very untimely for the Obama administration; all eyes were on the meeting between Israeli Prime Minister Benjamin Netanyahu and Obama last week. Obama promised Israel that it has the full support of the United States and that Washington would continue to exert the highest level of diplomatic and economic pressure against Iran. The consensus that emerged after the meeting among analysts is that we are unlikely to see an Israeli military strike soon and that Netanyahu is willing to wait to see the impact of the financial sanctions.
So, if everything is fine, why is there a major dilemma in Obama’s approach to Iran? The problem is that oil prices are continuing to rise even in the absence of war between Israel and Iran. The plan to squeeze Iran with sanctions and block its oil sales has been so effective that it is becoming the victim of its own success. By removing too much Iranian oil from the oil market at a time when global demand is high, the American strategy is causing a rise in oil prices. And guess which country benefits from rising oil prices? Yes, the very country that is targeted by sanctions: Iran. The sanctions against Iran have entered a phase where they are beginning to hurt the American economy perhaps even more than Iran. The fact that sanctions may end up hurting the American economy more than Iran is not recognized adequately as a problem by the American and world media.
This is a major paradox and dilemma for the Obama administration. One can add to the list of problems the fact that China and India are still buying Iranian oil. India recently indicated that it will make only modest cuts and China has only promised that it will not increase the volume of oil it is buying from Iran. Neighboring countries like Turkey and Pakistan are also likely to continue buying Iranian oil.
As we saw last week with the electoral success of the Islamic leader Ali Khamenei, the future of the Islamic regime does not depend on oil prices. But the future of Obama clearly depends on the economy. Normally, under such circumstances, Saudi Arabia and its ability to lower oil prices thanks to its excess production capacity would be very helpful. But experts think that Saudi Arabia is already producing at a very high level and has therefore little spare capacity to replace Iranian crude oil in the market. Obama can always relax and loosen financial sanctions on Iran on the grounds that he wants to help the American economy. But this would give ammunition to his Republican rivals and Israel that he is mishandling the national security situation by appearing weak in the face of Iran. In short, there is no easy way out from the Iran paradox for the Obama administration. Sanctions will continue to hurt the American economy as much as they hurt Iran.
Published by Turkey’s Today’s Zaman on March 11