Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened. -- Winston Churchill

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Wednesday, March 08, 2006

Iran Battening Down the Hatches

Two developments pointing to Iranian intentions of letting the situation worsen arose today. After the decision to refer Iran to the U.N. Security Council, a statement delivered by Iranian Ambassador Ali Asghar Soltanieh to the 35-member board of the International Atomic Energy Agency, said:

"The United States has the power to cause harm and pain. But the United States is also susceptible to harm and pain. So if that is the path that the U.S. wishes to choose, let the ball roll." The statement also slammed the IAEA, saying the "opportunity for diplomacy and collaboration ... was thus kicked out of the window."

Meanwhile, Iran's parliament has ratified a budget allowing the government to ration petrol. Iran is OPEC's number two producer of crude oil. Ironically, they import 40% of the gasoline they consume, due to a lack of refining capacity. The Iranian government pays heavily to subsidize the cost of this gasoline to consumers.

Authorizing rationing will be quite unpopular with the average Iranian. For the government to make this move indicates that they see tough times ahead. They may be anticipating Iran cutting exports to punish being referred to the Security Council, or preparing for sanctions by the council limiting Iranian exports. Either way, Iran would have fewer dollars to buy refined oil.

China and Russia issued statements that indicate getting much in the way of tough language, let alone action out of the Council will be an uphill battle. Iran knows this, and some of the bravado may be counting on U.N. ineffectiveness. Overall, the signs for a resolution coming soon are not favorable.

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