I haven't posted in awhile and I've gotten rusty so I'll try for a few per month to stay active in the forum. This article caught my attention - it basically lays out the argument why doing nothing may be the best long term strategy in confronting Iran since its petroleum economy is slowly leaking into the ground.
For the mullahs, the short-run political return on investment in oil production is zero. They are reluctant to wait the 4 to 6 years it takes for a drilling investment to yield revenue. So rather than reinvest to refresh production, the Islamic Republic starves its petroleum sector, diverting oil profits to a vast, inefficient welfare state. Employment in the loss-making state-supported firms of this welfare state is essential to the regime's political survival.
Refinery leakage exemplifies all that is wrong with the Iranian petroleum sector. According to the state-run Iran Daily, leaks account for 6 percent of total production, yet go unattended. This colossal revenue loss persists due to the Soviet-style logic of Iran's state-planned economy. Subsidized energy prices force the state oil firm to sell at a loss to the domestic market. Therefore, while Iran could gain billions by fixing the leaks, the state oil firm would be worse off because the maintenance would generate no new revenue. Thus oil and money simply seep into the ground.
The mullahs are doing a good job of destroying Iran's economy. They should be left alone to complete their work. Attacking Iran would allow the regime to escape responsibility for the economic disaster it created. Worse, an attack could unite Iran behind the clerical terror-sponsors whose grasp on power may be slipping. For these reasons, the best policy towards Iran may be to do nothing at all.
At last, the Carter administration is paying dividends. Without the unsustainable Soviet-style state-planned economy, we might have been forced to risk American lives to keep this country at bay. As it stands, just let them do their thing while we move the world in the direction of hydrogen fuel cells which will ultimately strip the oil-producing countries of their source of wealth and they can go back to living in the Middle Ages as they prefer.
1 comment:
I think the economics of this article are misapplied. The Soviet style system will no doubt cause economic problems within a state, but when does economic collapse lead to political collapse? Look at Cuba, North Korea and even Saddam’s Iraq. As long as dictators to keep a strong hold over the people nothing changes politically.
Gorby’s mistake which he for some reason gets “credit” was thinking that he could introduce economic reforms that would keep communism viable. When the people saw the beginning of reform and things getting better that’s when they stood up the Russians tanks and demanded political reform.
If Iran’s oil woes lead to economic collapse, Iran will be in a more desperate situation to develop WMD for the purposes of leverage against the West. And Academics like Stern here will give them cover as they do so. Former dictatorships in Spain and Chile under Franco and Pinochet that grew the economy transitioned very easily into liberal democracies. Even our China approach reckons that the growth of their economy will promote future political reform. So why should we think the opposite outcome in Iran will be beneficial?
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