Knight's moves in the Gulf

It is in this context that the current struggle over Iran must be viewed. Iran occupies a pivotal position on the tripolar chessboard. Geographically, it is the only nation that abuts both the Persian Gulf and the Caspian Sea, positioning Tehran to play a significant role in the two areas of greatest energy concern to the United States, Russia, and China. Iran also abuts the strategic Strait of Hormuz -- the narrow waterway from the Gulf to the Indian Ocean through which about one-quarter of the world's oil moves every day. As a result, if Washington ever lifted its trade embargo on Iran, its territory could be used as the most obvious transit route for the delivery of oil and natural gas from the Caspian countries to global markets, especially in Europe and Japan.

As the most populous and industrialized nation in the Persian Gulf basin, Iran has always played a significant role in that region's affairs -- a situation that has often troubled neighbors like Saddam Hussein's Iraq (which invaded Iran in 1980, beginning a bloody eight-year war that ended in an exhausted stalemate). In recent years, Iran has also gained regional clout as the center of the Shia branch of Islam. Long despised and abused by Sunnis, the Shia are now in the ascendancy in neighboring Iraq and are gaining greater visibility in Bahrain, Kuwait, Lebanon, and the Shia-populated areas of Saudi Arabia nearest to Kuwait (where crucial Saudi oil fields lie) in what is starting to be thought of as the "Shia crescent."

At present, Iran's military capabilities are not impressive -- a result, in part, of the U.S. embargo on sales of spare parts to the Iranian air force (largely equipped with American aircraft during the reign of the former Shah). But Iran has acquired submarines and other modern weapons from Russia and has developed a ballistic missile capability -- probably with help from North Korea and China. Were it ever to succeed in acquiring nuclear weapons, it would indeed become a formidable regional power, possibly calling into question America's projected military domination of the Gulf. It is for this reason more than any other that Washington is so determined to block its acquisition of nuclear arms.

While both Russia and China claim to be opposed to such a development, they certainly wouldn't view it with the same degree of dread and fury as does the Bush administration -- a consideration that has no doubt given added impetus to its drive to block Iran's nuclear efforts.

Above all, of course, Iran possesses the world's second largest reserves of petroleum -- an estimated 132 billion barrels (11.1% of the world's known reservoirs); and also the second largest reserves of natural gas -- 971 trillion cubic feet (15.3% of known reservoirs). The Iranians may possess less oil than the Saudis and less gas than the Russians, but no other country controls so much of both of these vital resources. Many states including China, India, Japan, and the European Union countries already depend on Iran for significant shares of their petroleum supplies; and China and the others have been busy negotiating deals to develop, and then draw on, its mammoth natural gas reserves. Iran will not only remain a major energy supplier, but also one of the few that has the capacity -– with the right kind of investment -- to substantially boost its output in the years ahead when many other sources of oil and gas will have gone into decline.

In 1953, after the CIA helped oust Prime Minister Mohammed Mossadegh, who had nationalized the Iranian oil industry, American energy firms came to play a commanding role in Iran's oil industry with the blessing of the Shah. This remained true until he fell in the Khomeini revolution of 1979. They would no doubt love to return to Iran, if given the opportunity; but Washington's hostility to the Islamic regime in Tehran now precludes their reentry. Under Executive Order 12959, signed by President Clinton in 1995 and renewed by President Bush, all U.S. companies are barred from operating in Iran. But should "regime change" ever occur there -- the implied objective of U.S. policy -- this Executive Order would be lifted and U.S. firms would be able to do what Chinese, Japanese, Indian, and other firms are now doing, exploiting Iranian energy supplies. Just how much energy figures into the administration's desire for political change in Iran cannot be fully judged from the outside, but given the close ties Bush, Cheney, and other key administration officials have with the U.S. energy industry, it is hard to believe that it doesn't play a highly significant one.

For China's energy plans, Iran's "pariah" status has certainly been a boon. Because U.S. firms are barred from investing and European companies face American economic penalties if they do so (under the congressionally mandated Iran-Libya Sanctions Act of 1996), Chinese companies have had a relatively open playing field as they shop for promising energy deals like the $50 billion one signed in 2004 to develop the massive Yadavaran gas field and to buy 10 million tons of Iranian liquefied natural gas (LNG) annually for 25 years.