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December 04, 2008

Boycott Iranian Oil

Gasoline under $2.00/gallon gives us a unique opportunity to put a peaceful end to Iranian nuclear weapon ambitions.

Previous UN attempts at economic pressure on Iran failed to end the nuclear program because, until very recently, sellers had the upper hand. With oil revenues rolling in at over $150/barrel and seemingly headed ever-higher, tampering around the economic edges didn't scare Mahmoud Ahmadinejad even a little. There would have been no support in the US for anything which increased energy process even further; any oil the US didn't buy from Iran (and we don't buy much directly anyway) would have just gone to another buyer.

But this is now a buyer's market and the shoe is on the other foot.

We can afford to take a chance that oil prices climb a bit; some people think that might even be good for us. More importantly, new Secretary of State Clinton will have a unique opportunity to put together an effective coalition for boycott before which Iran will graciously fold.

Here's the rundown:

OPEC. They're looking desperately for ways to cut production to stop prices from plummeting even further. If the world takes Iranian oil off the plate; we make it that much easier for the rest of them. Countries like Venezuela will bluster and fear (with good reason) that they may be the next boycott target, but Chavez is toast if oil revenue doesn't recover. He'll sell what he can.

Russia. Normally they would block any effective action in the UN against Iran but they are hurting badly from falling oil prices. They'll find a way to go along with a boycott of Iran (if we let them save face).

Europe. They do use Iranian oil and haven't benefitted quite as much from falling oil prices as we have since part of the fall here is due to the strength of the dollar. Nevertheless, they have understood the need for sanctions against Iran and are a closer target than we are for Iranian missiles.

China. Still the major problem. They pay a lot for imported oil; they're hurting, too. They are afraid of the precedent of effective UN sanctions. If they make a sweet-heart deal with Iran, no one else's boycott makes any difference. This is a big job for Secretary Clinton perhaps backed up with a gentle threat to restrict finished goods imports from countries that don't honor the boycott.

A few months ago it looked like war might be the only way to prevent Iran from arming itself with nuclear weapons. Now the adversity of recession and deflation may have given us a better weapon.

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