Israel and the US preparing for Iran: The Economic Impact
by Peter Eyre on 05 Mar 2010 0 Comment

We have looked at the military and environmental impact of a possible attack by the US and Israel on Iran, but such a conflict has more far-reaching implications. There are many commercial ventures already in place involving Iran and other countries, with some pretty large projects on the horizon. Such an attack could cause immeasurable damage to the economy of Europe and to countries involved in Joint Venture projects.


Israel itself stands to loose in a big way, especially in its current programme of receiving vital energy imports such as oil, and in its long range plans to have a subsea pipeline from Turkey to Israel.


Israel vowed it would never buy Iranian oil, but most people didn’t realize that this was not the case. Huge amounts of oil have been shipped to Rotterdam and Israeli commercial agents have been buying up the entire load which is then on shipped to Haifa. How’s that for being two faced?


Currently the key to this economic jigsaw is Turkey - the only Islamic link between Iran and the EU. As far as the supply of energy to Europe goes, Turkey is at the crossroads for the transfer of this vital resource and involves many major projects.


For many years now UK and EU have been actively trading with Iran via Turkey, but one would not think so with the hostile political spin that appears to flow back and forth. One has to understand that Turkey is very sensitive to any intimidation by any Islamic country that Turkey may support or trade with, especially when its own economy is so dependent on such relationships. We see this clearly with Iran which is a life ine for Turkey and in many ways a lifeline for the UK and EU.


An attack on Iran could severely unbalance the current trade between Iran and Turkey and cause Turkey to take sides with its economic partner. The other dangers are that the current energy supply chain could be severely interrupted if any action is taken by the US, Israel or NATO, of which Turkey is a member.


Let’s look at the trade in more depth. Turkey has strong diplomatic ties with many countries in the Middle East, especially Iran. As far as UK is concerned, Turkey remains the fifth largest export and seventh largest import partner with the EU, and thus makes any disruption to this relationship a severe economic blow to the UK alone. The EU is seeking to strengthen its economic ties with Turkey as it stands to gain substantial commercial growth.


If the US, UK, EU or Israel attack Iran, this could disrupt the vital link. Why? The answer goes back to a long term plan to give the whole of the UK/EU another option in its oil and gas energy requirements. Currently Russia dominates the market and as a result can from time to time switch off, as with Ukraine. Any oil or gas that comes from Iran into Turkey automatically turns its nationality of origin to Turkish before it is on-shipped, even though that pipeline from Iran is only transiting Turkey on its way to the European marker. That’s makes sanctions an absolute joke.


One of the major developments between Iran and Turkey was the start of discussions in September 2009 for a joint project to build an international free industry and commerce zone on the two countries’ borders. With Iran’s cheap energy and Turkish technology, the countries are aiming to produce goods in Eastern Turkey near the Iranian border and export them to Central Asia and Middle East. This would be counter productive for the EU which does not want such activity to take place. The energy prices in Iran are about one-tenth of the prices in Turkey, which will be vital for diminishing production costs for manufacturers in Turkey. This would make both Turkey and Iran extremely competitive.


Other developments focus on energy. Turkey has recently gained the rights to extract and use 50% of the natural gas reserves in the Iranian South Pars region and sell it to other countries. Basically we are looking at a situation whereby this 50% could transit from Iran to Turkey to serve the EU Market; therefore an attack on Iran could cause this to fail and directly cause supply to the EU to cease, resulting in higher fuel prices and damage to the UK/EU economy.


Currently Iran exports 50 million cubic meters of natural gas to Turkey daily, and with the implementation of this plan another 23 million cubic meters would be added. This will make Turkey a seller of natural gas to Europe rather than simply a transit country. Turkey and Iran have also agreed to build an oil refinery in Northern Iran in a joint venture project. Once the project is completed, it will be able to deliver an annual volume of about 35 billion cubic meters of gas from Iran to the EU member states.


Despite the sanctions imposed on Iran, Europe requires a secure and cost effective way to gain access to Iran’s energy and Turkey is seen as one of the most prominent channels that can deliver that. Now you can see the two-faced approach taken by the UK and EU when they stab Iran in the back on one hand and buy its natural resources via the backdoor in Turkey. This is exactly what the Israelis do when they buy Iranian oil via the Netherlands.


Another arch enemy of the US, UK and EU is Syria which, much like Iran, continues to go about life and does not succumb to intimidation by the west. Syria has good ties with Turkey. The trade volume between the countries was $1.8bn in 2008, more than twice the $0.8bn registered in 2003. Furthermore, exports to Syria increased by 25.1% and 40% by volume in the first 10 months of 2009 and 2008 respectively.


Relations between Turkey and Israel are currently not the best and this is linked to the Israeli -Gaza conflict. One would assume that any action taken by Israel and Iran will directly disrupt trade with Turkey. It’s all very complicated and yet what is funny about this entire scenario is that the West is on the brink of conflict with Iran which may involve NATO, of which Turkey is a member. What damage would such an event have on the economy of Israel? A free trade agreement exists between the two countries and Turkey is Israel’s sixth biggest trade partner. Most of the trade with Israel is currently in the defence sector.


Finally, we have the much talked about Turkish-Israel pipelines to bring Water, Oil and Gas to Israel. These would transit Israel and go down to Eilat. Supertankers would then pick up the product and go via the Red Sea to Asia, SE Asia and beyond. This would bring incredible wealth and security to Israel, so is there any logic in Israel attacking Iran? This pipeline would also carry Iranian’s natural resources via Turkey to Israel.


To attack Iran is pure insanity with the added danger that Iran may well surprise the west with its own little nest egg. The US, UK and Israel know the risks involved, especially when you are missing some of your own nuclear weapons that could well be in the hands of countries that were once your trading partner. One can truly understand the meaning of “what goes around comes around”. I am sure past and current Presidents, Prime Ministers, Senior Members of Staff, Members of Congress, and Members of Parliament do not sleep so well when they reflect on the errors of their ways and how they became implicated in the sordid world of dealing in arms.


The Hutton Inquiry and the current Chilcot Inquiry is just another false flag to make the government appear to be doing the right thing. As we have since learnt, Dr Kelly was assassinated and the demand by 13 doctors to have his case re-examined has been ignored. The original report has been locked away for 70 years and this in itself is deeply suspicious.


The Chilcot Inquiry is a total farce with a carefully handpicked team and will follow the same trend as the Hutton Inquiry. Both the Conservative and Labour Party are implicated in an extremely unpleasant past, the level of which is beyond imagination. Hopefully one day those responsible will have their time in court, rather than participating in a Kangaroo Court.


Peter Eyre, a former British Naval officer, worked at NATO headquarters, and spent a lot of time in the Middle East and South East Asia as a petroleum consultant; he lives in the UK and writes regularly for the Palestine Telegraph

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