The Persian Gulf is one of the most strategic areas in the world and contains abundant strategic resources. The entire Persian Gulf was once part of Iran’s territorial waters and has had a huge influence on the country’s cultural, social, and economic life, and still does. The great geostrategic importance of the region has always attracted the attention of the major powers. The colonial powers once dominated the region and benefited greatly from its vast resources, and when they were forced to leave the area, they made serious efforts to maintain their interests in the region. Sowing discord between Persian Gulf states is one of the main policies adopted by the Western hegemonic powers for maintaining their interests in the Persian Gulf region. The recent claims by the United Arab Emirates about three » Read more
Archive for April 2012
Iran accords priority to its relations with the other states in the region and with the rest of the Islamic world. This includes a strong commitment to the Organization of Islamic Cooperation (OIC) and the Non-Aligned Movement. Relations with the states of the Persian Gulf Cooperation Council (PGCC), especially with Saudi Arabia, have improved in recent years.Iran is also pursuing a policy of stabilization and cooperation with the countries of the Caucasus and Central Asia.
On the international scene, it has been argued by some that Iran has become, or will become in the near future, a superpower due to its ability to influence international events. Others, such as Robert Baer, have argued that Iran is already an energy superpower and is » Read more
The movement toward republicanism which begun by Iranian nation after Islamic Revolution continues within the framework of Islamic values and so far Iranian leaders have had full and all-out support of their people in this regard.
The term “Islamic Republic” is a combination of two words: “Republic” which is a suggested governance form of Iran and “Islamic” which determines the contents of this governance form. “Islamic” means that this political regime should be ruled based on Islamic principles and norms. Islam, as a religion as well as an ideology, defines a guideline for different aspects of human life. One of them is public governance, namely, a governance framework which allows the people to elect their governor. Further, this governance is in » Read more
Iran’s first efforts to acquire nuclear technology were detected in the 1950s. United States and Israel were the earliest countries who encouraged Iran to pursue nuclear technology and even transferred the technology to country. Today, however, both countries officials are considered as the most serious opponents of Iranian nuclear program.
After the Islamic revolution and overthrow of the Shah regime, Islamic Republic of the Iran decided to remain in compliance with its Nuclear Non-Proliferation Treaty (NPT) commitments, safeguards agreement and IAEA Constitution. Despite those commitments by Iran and its good faith, Iranian nuclear agreements were not led to a good finish. After the Islamic revolution, Siemens Company » Read more
Forty-five years ago, the United States sold my country a research reactor as well as weapons-grade uranium as its fuel. Not long afterward, America agreed to help Iran set up the full nuclear fuel cycle along with atomic power plants. The U.S. argument was that nuclear power would provide for the growing needs of our economy and free our remaining oil reserves for export or conversion to petrochemicals.
That rationale has not changed.
Still, after the Islamic Revolution in our country in 1979, all understandings with the United States in the nuclear field unraveled. Washington even cut off fuel deliveries to the very facility it supplied. To secure fuel from other sources, Iran was forced to modify the reactor to run on uranium enriched to around 20 percent. The Tehran Research Reactor still operates, supplying isotopes used in the medical treatment of 800,000 of my fellow Iranians every year.
But getting to this point was not easy. In 2009, we put forward a request to the International Atomic Energy Agency for fuel for the reactor as its supply was running out, threatening the lives of many Iranians. When we agreed to exchange a major portion of our stock of low-enriched uranium for reactor fuel in 2010 — a proposal by the Obama administration — the response we got from the White House was a push for more U.N. Security Council sanctions.
Again, we did what every government is obliged to do: protect and ensure the well-being of our citizens. Thanks to the grace of God and the hard work of our committed and growing cadre of scientists, we managed to do something we had never done before: enrich uranium to the needed 20 percent and mold it into fuel plates for the reactor. We have never failed when faced with no option but to provide for our own needs.
All relationships — whether between parents and children, spouses or even nation-states — are based on trust. The example of the Tehran Research Reactor vividly illustrates the key issue between Iran and the United States: lack of trust.
We have strongly marked our opposition to weapons of mass destruction on many occasions. Almost seven years ago, Iranian Supreme Leader Ayatollah Ali Khamenei made a binding commitment. He issued a religious edict — a fatwa — forbidding the production, stockpiling and use of nuclear weapons. Our stance against weapons of mass destruction, which is far from new, has been put to the test. When Saddam Hussein attacked us with chemical arms in the 1980s, we did not retaliate with the same means. And when it comes to our nuclear energy program, the IAEA has failed to find any military dimension, despite an unprecedented number of man-hours in intrusive inspections.
Being sovereign and independent does not mean that there is no room for dialogue or diplomacy. It means that one enters any debate as an equal, based on mutual respect and justice. To reestablish trust, all sides must assume an honest approach with a view toward moving past the barriers to sincere dialogue.
A key aspect of entering a conversation based on mutual respect is recognizing the other side’s concerns as equal to one’s own. To solve the nuclear issue, the scope of the upcoming talks among Iran and the “P5+1” (the United States, Britain, China, France, Russia and Germany) must be comprehensive. The concerns of all sides must be addressed. Complex matters that have been left unaddressed for decades cannot be solved overnight. Another sign of mutual respect is a willingness and readiness to both give and take, without preconditions. This form of reciprocity is distinct from approaches that involve only taking. Most important, and this cannot be stressed enough, is that dialogue must be seen as a process rather than an event. A house can burn to the ground in minutes but takes a long time to build. Similarly, trust can easily and rapidly be broken, but it takes a long time to build.
If the intention of dialogue is merely to prevent cold conflict from turning hot, rather than to resolve differences, suspicion will linger. Trust will not be established. Despite sanctions, threats of war, assassinations of several of our scientists and other forms of terrorism, we have chosen to remain committed to dialogue.
In the upcoming talks, we hope that all sides will return to the negotiating table as equals with mutual respect; that all sides will be committed to comprehensive, long-term dialogue aimed at resolving all parties’ outstanding concerns; and, most important, that all sides make genuine efforts to reestablish confidence and trust.
source: washington post
The cost of a month-long general war, which includes massive missile fire against all of Israel, could reach tens of billions of shekels.
Are Israel’s leaders taking into account the economic cost of military actions? Imagine the following scenario: the prime minister, sitting in his room, bowing under the weight of the responsibility of a fateful decision whether to attack Iran, weighing the pros and cons, and tells his advisers, “I understand that this is an expensive proposition. Will someone please tell me how much it will cost?”
To the best of my knowledge, this is a fantasy. Usually, calculations of the economic cost of wars - even preventative wars - are made after the fact. It is known that war is costly in blood and tears, but there is an avoidance of trying to estimate the economic cost of a war. It seems that the planning of an attack on Iran’s nuclear facilities is no different.
There are several reasons for this. There is an axiom that national and military interests, especially existential interests, cannot be measured in money. In other words, they are worth any price. There is also uncertainty about how a war will develop and how long it will last, factors that affect its cost.
In the case of an attack on Iran, these uncertainties are especially great. How would Iran respond? Would it respond directly or through proxies, such as Hizbullah and Hamas? Would it be a focused and painful response, or prolonged actions?
Despite the uncertainties, I will try to provide a conceptual structure of the expected costs.
First, it must be stated in all honesty, that the costs of an attack on Iran’s nuclear facilities should be presented together with the costs of the alternative. In other words, the cost of not attacking Iran and its success in developing an arsenal of nuclear weapons. The reality of a nuclear Iran would have far-reaching economic consequences for Israel.
I will break down the cost of attacking Iran and the resulting war into several layers.
The first layer is defense spending on equipment and munitions. The 2006 Second Lebanon War provides an indication of these costs. For this limited conflict, the defense establishment received NIS 8.2 billion to refill its bunkers and buy new equipment. In addition to this expense is the future growth in the defense budget, as happened in the case of the Brodet Report that followed the Second Lebanon War.
The second level is the repair of damage to the home front from missile strikes. This item cost Israel NIS 2.5 billion in the Second Lebanon War, in the form of property tax reimbursements, and an additional NIS 4.5 billion to reinforce the north. These figures can be considered as the starting point of the cost in a general war, given that the other side has greater quantity of means of destruction.
The third layer is loss of production during the fighting. Israel’s GDP per day is NIS 3 billion. Assuming that, during a war in which the home front is attacked by hundreds of missiles a day, schools are closed, and people don’t go to work, GDP per day will be halved. This means that a 30-day war will cost NIS 50 billion in lost GDP, which will slash tax revenues and send the budget soaring.
The fourth level is the long-term effects on the economy. An open economy can respond to crises and recover very fast. On the basis of economic indicators, such as exchange rates, GDP growth, and stock prices on the Tel Aviv Stock Exchange (TASE) before and after the Second Lebanon War, it is hard to see that there was a war here at all. This was also the secret of Israel’s ability to withstand the global economic crisis of 2008-09.
The fifth level, which is relevant in the case of Iran, is the impact of an attack on its nuclear facilities on the global economy, and therefore the repercussions on the Israeli economy as a small and open economy with substantial imports and exports. This is the place to discuss the effect of a surge in the price of oil and drop in global growth, given the current fragile state of the global economy, especially in Europe.
Tens of billions of shekels
In conclusion, when making a decision of such importance as an attack on Iran’s nuclear facilities, the economic aspects of an attack cannot be ignored, just as the economic aspects of not attacking and a nuclear Iran cannot be ignored. This is only one of many considerations, and while it is definitely not the most important factor, neither can it be ignored.
The length and intensity of a war has dramatic economic effects on its economic costs and the price that the economy is liable to pay in the long term. It is possible to estimate the boundaries of the costs based on different attack and response scenarios.
The cost of a month-long general war, which includes massive missile fire against all of Israel, could reach tens of billions of shekels. This figure does not even take into account the war’s effect on the price of oil and the global economy. A longer war, such as a war of attrition, could have a much higher cost and longer negative long-term effects on the economy.
The author is chairman of Lavi Capital Markets Ltd. and a former director general of the Ministry of Finance.