Gambit

Analysts are cracking their brains finding an explanation for Iran’s recent actions. The episode involving the capture of British sailors in waters that London claims was well within Iraqi boundaries seems totally uncalled for.

That event unduly raised tensions in the world’s most volatile region. Those tensions have, in turn, put speculative pressure on the price of crude oil. Over the last two weeks, the price of oil has spiked against earlier expectation that it would soften as winter demand eased in the northern industrial countries.

That spike in global crude prices was reflected here with the recent 50-centavo hike in pump prices. There might be more price increases the coming weeks should tensions in the region continue to mount.

We have an interest in closely monitoring the situation in the region even as our ability to influence outcomes there might be nil.

One theory proposed about the row between Britain and Iran was that Tehran was left holding the bag after precipitous actions taken by militant Revolutionary Guards. The British sailors were taken by units of the Revolutionary Guards.

The Guards occupy a unique place in the scheme of things in Iran. They are neither part of the regular army nor are they formally designated in government. But they have been, since the Iranian Revolution in 1978, the principal broker of politics in that country.

The Guards are, in a manner of speaking, the private army of the fundamentalist clerics that define the character of the post-revolutionary state in Iran. They are, although the comparison might be rough, akin to the Red Guards in Maoist China decades ago. Unlike the Red Guards, however, the Revolutionary Guards in Iran control the best armaments, have the best housing (at least in Tehran, which I have seen) and receive a generous share of business deals through influential mullahs like Rafsanjani.

There might be no sophisticated ploy, after all, in the seizure of the British sailors who were out doing routine inspection of vessels in the Persian Gulf. They might have been captured out of sheer over-zealousness on the part of the Iranian units. In the normal course of things, when foreign vessels stray across the invisible boundaries of busy sea lanes, naval patrols simply warn them and shoo them away.

When Iran first announced the nautical bearings of the site where the seizure happened, it turned out that the position was well within Iraqi territory which is secured by British forces. Tehran later revised those bearings to put the incident within Iranian waters.

This might seem a trifle. But immediately after the capture of the British sailors, Tehran decided to squeeze the incident to score ultimately worthless political points. The Iranian government, threatening to put the sailors on trial, demanded an apology from London for the incursion into Iranian territory.

There is an obsession here to humiliate a former colonial power. Whatever political points might be gained here will not change the world. But it could be valuable to a regime trying to impress its domestic constituency.

The government in Tehran has been facing mounting discontent in the home front. When I was there a few months ago, the government retreated from an attempt to raise fuel prices in the face of public outcry. Tehran subsidizes domestic fuel consumption to the tune of $20 billion annually — or about a third of its total earnings from oil exports.

Apart from its oil earnings, the Iranian state has no other important source of revenue. In addition to subsidizing domestic fuel and power consumption, it spends a large chunk of its oil revenues building up its military. Add to that, as well, the billions Iran throws away to support the Hamas in Palestine and the Hezbollah in Lebanon.

That revenue and spending profile leaves very little for domestic economic investments and social services. This produces a society that is rundown, an economy that is dependent on a single commodity export and a public that is extremely discontented with the state of things.

The senseless border spat with Britain is, in all likelihood, a gambit by the mullah-controlled regime in Tehran to shore up declining domestic support. It matters very little to them that the rest of humanity suffers from higher crude prices because of the useless tensions created by that gambit.

But this is by no means a no-cost proposition for Tehran.

For all of Iran’s efforts to raise its profile in international politics through the acquisition of nuclear capability, the country does not have adequate technology to refine its own oil and produce the gasoline it needs. Iran actually imports refined fuel. Refinery technology in Iran remains where it was when the mullahs nationalized foreign facilities after the 1978 revolution.

This is a point of vulnerability for Iran. International sanctions could, in fact, cause the ironic situation of severe fuel shortages in one of the world’s major oil producers.

Britain knows that by building an international consensus against the crude gambit of seizing her sailors, it is Iran that will be bound to yield. Iran, for its part, cannot possibly withhold crude exports. These exports are its only source of significant revenues.

Economic isolation will only worsen the domestic problem of mounting public discontent. Fuel shortages and absent social services could further erode the legitimacy of a medieval state reliant on religious fundamentalism for its legitimacy.

The follies of Tehran is a function of a regime that is ultimately unsustainable.