The Iranian proposal to rejoin EU-led talks over its nuclear program is a classic divide and rule tactic. Iran wants talks with the 5+1 contact group comprising the five permanent members of the UN Security Council plus Germany. Two of the five permanent Security Council members – Britain and France – are members of the EU together with Germany that makes 50% of the votes. When one adds the sympathy that Iran enjoys from China and Russia, the Iranians are banking that the US will be isolated in this forum. As an inducement Iran has postponed its missile tests although the postponement is said to be a brief one.
Iran is banking on the fact that the European Union would jump at the opportunity. Iran remains a major trading partner with Germany and still conducts trade fairs in that country. Europe given its parlous economic conditions would not relish a conflict breaking out over Iran that could lead to skyrocketing oil prices. The Iranian threat to close the Straits of Hormuz in the event of an embargo on Iranian oil already had the effect of driving up oil prices pass $109 per barrel. Talks with Iran would of course boost the prestige of the European Union that will welcome a shot in the arm from any possible direction.
The Iranians fear the talk of an embargo on Iranian oil on which their economy depends. While an embargo may start with the Europeans and the Americans it could easily spread to America’s major allies such as Japan and then if China or India were willing to increase their purchases of Iranian oil (at the risk of angering Iran’s enemies in the Arab world) they would expect a discount in return for saving Iran’s economic hide.
The Europeans were suckered into this game in the previous decade and the question is whether they will insist this time on serious concessions from Tehran as an entry price or will Baroness Ashton’s remarks about no preconditions represent the European stance.
The Iranian policy of stepping up tensions is a double edged because they create financial jitters at home. Iranians all withdrawing money from savings accounts and putting them into safe havens with the result being that the Iranian currency has plummeted.
Iran’s talk of closing the Straits of Hormuz has also alarmed the Chinese who are dependent on Middle Eastern oil and not only that produced in Iran. The Chinese were sufficiently troubled by the Iranian threats to dispatch Vice Foreign Minister Zhai Jun to Iran for talks officially “on Sino-Iranian relations and regional issues”. The Chinese envoy expressed hopes that peace and stability could be maintained in the straits.
