My less conservative response is that this report is in the business of peddling fear. The final line of the op ed says it all, "Time may be shorter than many imagine, and failure could carry a catastrophic cost to the national interest."
Anything is possible, but there is nothing in the Op Ed or what I've read of the report which actually demonstrates what that catastrophic cost would be, unless they mean a unilateral nuclear strike by Israel on Iran--something the authors suggest is likely should Tehran acquire nuclear capability although it is clearly unlikely. Indeed, there is almost zero chance Tel Aviv would do something so utterly self-defeating. Indeed, former Israeli PM Olmert recently told a newspaper that the notion of unilaterally attacking Iran was an example of "megalomania." (Which suggests that there are some hotheads in Israel, but that is true everywhere, and there are plenty of sang-froid individuals in that country.)
It is such an odd assertion that it puts the neutrality of the report in question, an analysis by Glenn Greenwald at Salon.com has done an excellent job of skewering the notion of its bipartisanship.
Furthermore, their analysis of the economic and security benefits to Iran of nuclear power--irrespective of whether Tehran intends to build the bomb--is misleading and based on straw man theories.
They suggest that since Iran does not have more than 20 years of uranium supply domestically, Tehran cannot be honestly pursuing an alternative energy source for energy security reasons. Since Tehran could not rely completely on domestic reserves, the authors argue, the argument that Iran's interest in nuclear power is peaceful must be a disingenuous cover for weapons research.
But it doesn't take too much sophistication to imagine the folks in Tehran might prefer, under normal conditions, to purchase nuclear power feedstock via the market. Since they do not want their thermal generation capacity--you know, heating for grandmothers who keep their money in their mattresses--to be at the mercy of the nuclear suppliers group. They thus might genuinely want to be able to produce the entire nuclear fuel cycle domestically.
That is, should an international conflict arise--a reasonable contingency as history has demonstrated--Tehran wants the ability to be able to produce energy from any nuclear power plants they might have without being hostage to the West. To do otherwise would be to put a considerable part of their planned energy generation at the mercy of the West, which they regard as a committed enemy to their regime likely to take the first opportunity available to cut off their supplies. As a member of OPEC whose historical rise was the direct cause of the second oil shock, Tehran might conceivably have a fear of being beholden to foreign suppliers.
And, in fact, this very report points out Tehran's vulnerabilities with respect to their gasoline imports and natural gas supplies and recommends a blockade of their gasoline imports as a means of coercion. So, whether or not Tehran is an ingenuous interlocutor--and it most clearly is not--what advantage is accrued to US policymakers internationally when obviously bogus analysis is added to the pot??!!!
None, clearly. Unless it is an effort to send a message to Iran and the rest of the world that the American political elite is dedicated to building the political will for war on Iran, willy-nilly, and soon.
For the record, I don't think it's going to happen. I didn't think so three years ago, two years ago, last year, or this year. It would be incredibly self-defeating. Still I think there needs to be "pushback"--as it appears to be called--to these "narratives". (I curse the day French deconstruction entered into the American curricula.)
2. Karen DeYoung at the Washington Post reports that Pakistan is planning to arm anti-Taliban tribal fighters in a bid to put down unrest--and al Qaeda sympathizers--in that region. The tribal fighters will be armed with Chinese-made AK-47s in a purchase arranged during Zadari's visit to Beijing last week! Apparently the strategy is endorsed by the US military. The Dawn reports on another difficult region for Islamabad, as Zadari said that Baluchistan must be made safe for oil and gas exploration. Baluchistan has been another area of Pakistani unrest for some time, with secessionist groups blowing up oil and gas infrastructure in a bid for more autonomy or more largesse from the central government. Zadari suggested that Chinese E&P firms should be looked to to partner in the exploitation of oil and gas fields and underscored the current fuel troubles Pakistan's shaky energy security situation has put it in. In a related story, the Oil & Gas Journal reports that Pakistan had cut tariffs places on petroleum product exports to Afghanistan last month. I suppose the move was seen as conciliatory and irrelevant, given the facts on the ground where Pakistan doesn't have much fuel to export. Pakistan exported $500 million-worth of petroleum products to Afghanistan last year.
3. Linda Rafield at Platts reports that Saudi Oil Minister Ali Naimi said, "who said anything about a cut?" Another Platts article today reported that "Earlier Thursday, Saudi-owned pan-Arab newspaper al-Hayat quoted Attiyah as saying an oil price range of $70-$90/barrel reflected market fundamentals." Al-Hayat has been pretty much the only thing that the market has had to go on with respect to Riyadh's position on production cuts until today. Sam Fletcher at the Oil & Gas Journal reports that after meeting with Russian President Medvedev yesterday, "OPEC Secretary General Abdalla Salem al-Badri said he will not ask Russia to cut production." Benoit Faucon at Dow Jones reports that Chekib Khelil said the banking ciris will hurt the prospects of new supply additions --which is almost tautological, but bears repeating.
Interestingly, he said that Algerian oil projects will not be affected by the credit crisis, because they are mostly funded by domestic banks which do not have the same exposures as the banks at risk internationally.
OPEC's president said he doesn't think a return of oil prices to $90 a barrel would curb economic growth. On the other hand, he said, international oil companies need high oil prices to continue to finance their projects.Khelil also took a shot at Gordon Brown who was publicly "shocked" that OPEC might cut in the current economic environment, saying "An OPEC of finance is being created" and
Projects such as Canada's Athabasca oil-sands development need oil prices to be at least $90 a barrel to proceed, Khelil said.
OPEC member Angola's deepwater oil projects 'need around $70'-a-barrel oil prices, Khelil said.
'OPEC countries that have resilient banking systems haven't been affected by the financial crisis because most of those projects have been locally financed,' Khelil said. 'Those OPEC countries whose projects are being financed by foreign banks definitely will be affected.'
Referring to fellow OPEC member Nigeria, Khelil said, 'I think most projects in Nigeria are financed by foreign banks. Whenever you have a foreign company operating in a country, they will be affected.'"
"U.K. Prime Minister Gordon Brown and U.S. President George Bush 'had to inject (public) capital in private banks' to stop the panic in financial markets, Khelil said. 'That's unheard of - the antithesis of capitalism, of the market economy.'"Khelil also hoped that non-OPEC producers Mexico, Norway, and Russia would join the cut, somewhat ironically I suspect given that production is falling in all three naturally. (The AP reported today that the head of Russia's Energy Ministry's department for oil and gas industries Vitaly Karaganov confirmed analyst expectations saying, "Compared to 2007, when 490 million tonnes of oil was produced, we forecast a 1 million tonne drop (this year)." (1 million tonnes/annum = approx 20 kb/d.)
4. David Osler at Lloyd's List reports that at least one major bulk shipping company has instructed its captains to avoid the Suez Canal and sail around the Cape of Good Hope in order to avoid Somali pirates. It is not clear if this is due to insurance concerns or if in reponse to resistance from crews who refuse to sail the Gulf of Aden. Either way, rerouting will add considerably to the costs of the shipper and if other shippers join, it will have an affect on Egyptian revenues and the availability of ships for short shipping times from Europe to Asia.
5. Ambrose Evans-Pritchard at the UK Telegraph reports that Hungary has raised it benchmark interest rates by 3 full percentage points in an attempt to defend its currency. Evans-Pritchard argues that the rest of Eastern Europe will be forced to follow suit. In this context, Russia's debt was downgraded by Moody's today. (Whatever a rating by Moody means.)
6. Eurointelligence caught the very interesting news that Sarkozy suggested yesterday to the EU that France should continue its Presidency next year, replacing the Czechs. I mentioned the Gaullist proposal yesterday, but had no idea the extent of his propositions, and, of course Germany opposes. It seems to me France is trying to use to opportunity of the financial crisis to seize the leadership of the Union movement. Evidently, a large majority of the European Parliament favors Sarkozy's proposal for centralized euro area financial governance. Le Monde argues that Sarkozy doesn't expect all of his proposals to get through--including extending the Presidency--but the notion is that some will. (h/t Yves Smith at naked capitalism)
7. Dan Levy at Bloomberg reports that US foreclosure filings increased by 71% in the third quarter.
8. Norma Cohen at the Financial Times reports that the British Bankers Association released data suggesting that lending to non-financial institutions in September was a third less than the average seen over the last six months.
9. Scott Lanman and Steve Matthews at Bloomberg report that Greenspan urged more regulation in statements prepared for the US House Committee on Oversight and Government Reform today. The sneering and hisses this move has elicited in the media is pretty overwhelming. I start to sympathize, as the man is evidently saying his mind--what does he have to gain at this stage?--but then I remember that he endorsed variable rate loans on broadcast media, oh, three or so years ago.