Options running out after Iran snub

Jephraim P Gundzik, Asia Times:

Seemingly oblivious to increasing the chances of potentially fateful confrontation, Iran this week abruptly informed the International Atomic Energy Agency (IAEA) that it would resume nuclear-fuel research next week, and as a follow-up, failed to show up for a scheduled meeting with the UN watchdog to explain what it intended doing.

Senior Iranian officials snubbed Mohamed ElBaradei by missing a meeting in Vienna after the IAEA chief demanded an explanation of Tehran's nuclear plans. Earlier, Iran told the IAEA that it was resuming research into nuclear fuel after a two-year suspension, but refused to supply details.

As matters drift in this sea of uncertainty, and talk inevitably focuses on the possibility of a military strike against Iran - either by the Israelis or the US, or a combination of both - international oil prices can be expected to rise higher in late January, propelling the price of gold above US$600 per ounce.

And if a military strike against Iran does materialize, it is reasonable to expect oil prices to leap well above $100 per barrel and the price of gold to approach $800 per ounce. READ MORE

Positions appear to be hardening, with the Iranians showing no signs of backing off, and US Secretary of State Condoleezza Rice warning that "patience is running out".

Rights and wrongs

According to Article IV of the nuclear Non-Proliferation Treaty (NPT), signatory countries are specifically allowed the right to convert and enrich uranium for use as fuel in civilian nuclear power plants. Iran was one of the original 43 countries that signed the NPT after its negotiated implementation in 1968, and Tehran began to assemble its civilian nuclear power program in the 1970s.

The 1979 revolution and subsequent US economic sanctions slowed but did not extinguish the program. The program was of little international interest until 2003, when Tehran divulged to the IAEA that it had been building centrifuges for enriching uranium for nearly 20 years. This revelation immediately brought accusations from Washington that Iran was secretly trying to develop nuclear weapons.

To reassure the West that its activities were purely civilian in nature, Tehran voluntarily suspended uranium-enrichment activities. This was intended as a confidence-building measure for nuclear negotiations with Britain, France and Germany (the EU-3), which opened in October 2003. Initially, the EU-3 sought better international control over Iran's nuclear program through the IAEA.

In late 2003, Iran signed an Additional Protocol to the NPT, which allowed snap inspections by the IAEA of Iran's nuclear facilities. The protocol also gave the IAEA wider power to search for nuclear material in Iran and required Tehran to fully document its foreign nuclear procurement activities. Subsequent IAEA snap inspections in Iran unearthed traces of highly enriched uranium on centrifuge components.

Tehran maintained that the centrifuges were contaminated in their country of origin, not in Iran. This claim was eventually corroborated by the IAEA last September. However, the discovery of the contaminated centrifuges renewed speculation in Washington, supported by Iranian exile groups, that Tehran had a secret nuclear-weapons program. This spurred the EU-3 to try to persuade Tehran to abdicate its right to master the nuclear fuel cycle.

Last March, Tehran submitted to the EU-3 a detailed proposal for even stricter IAEA monitoring than provided for under the Additional Protocol. This was intended to give the world objective guarantees that Iran's nuclear program had no military component. The EU-3 countered in August with an offer of commercial incentives, including nuclear power plants, in return for Tehran's repudiation of its right to master the nuclear fuel cycle. Unsurprisingly, Tehran rejected the EU-3's offer and resumed uranium-conversion work at Isfahan.

Incensed that Tehran restarted uranium conversion (converting raw uranium or yellowcake into uranium hexafluoride gas), the EU-3 threatened to haul Iran before the United Nations Security Council. However, when the IAEA vote was finally held in September, resistance from Russia, China and most members of the Non-Aligned Movement thwarted Iran's immediate referral to the Security Council. Instead, the IAEA passed a resolution describing Iran as having breached its NPT obligations and that these breaches constituted noncompliance.

The resolution further called on Iran to end uranium conversion and to provide additional information to the IAEA about its program. The resolution also threatened Tehran with Security Council referral at an unspecified date. An IAEA governors' meeting, held in November, decided to give Iran time to consider a proposal that would allow Iran to convert yellowcake, but that further enrichment would be carried out in Russia.

Tehran has rejected the Russian plan, insisting that it has the right to enrich uranium in Iran under the terms of the NPT. Hence Tehran's announcement this week that it was resuming research on nuclear fuel - and that it was not even prepared to talk about it, despite the EU-3's and Washington's demand that it abandon uranium conversion and enrichment.

Friends in need

Though the EU-3 has coordinated its diplomatic efforts with Washington, Iran is by no means isolated. Russia is clearly in Iran's corner. Moscow has repeatedly rebuffed Washington's pleas to take a hard line against Tehran. Several Russian officials, including Foreign Minister Sergei Lavrov, have been emphatic that Iran's nuclear program should be handled by the IAEA and not by the Security Council. Moscow has also maintained, in contradiction to the US and EU-3, that Iran is in compliance with its NPT obligations and that Iran has the right to master the nuclear fuel cycle.

In a very strong show of support for Tehran, Moscow agreed to sell Iran an air-defense system known as the Tor-M1. Arguably the most advanced system of its kind, the Tor-M1 uses a mobile launcher to track and destroy multiple targets, which can include incoming missiles, aircraft and helicopters.

Moscow's deal with Tehran, which was signed early last month, calls for the delivery of 30 Tor-M1 systems in 2006 and is worth more than $1 billion. According to Russian sources, it is the largest weapons deal between Moscow and Tehran in the past five years.

China also clearly supports Iran. Chinese Foreign Minister Li Zhaoxing told EU-3 representatives that placing Iran's nuclear dossier before the Security Council "could encourage Iran to take extreme measures". While Russia has strong commercial ties with Iran in the nuclear and military fields, China has strong ties to Iran's petroleum sector. Given China's growing thirst for oil, it is unlikely that Beijing would abandon Tehran in favor of the US and EU.

Facing almost certain veto by Russia and China, any US-EU attempt to impose sanctions on Iran in the Security Council will fail - a situation both Washington and the EU-3 are aware of. Though individually the EU-3 have practically renounced a military solution to the growing diplomatic impasse, the US and Israel have not.

Because of its commitment of resources to the occupation of Iraq, a US military strike against Iran has been generally described as not feasible. The partial withdrawal of US troops from Iraq this year could give the Pentagon's military planners greater confidence in the success of a strike against Iran.

Israel could also mount a major military strike against Iran, with or without Washington's support. Last month, stories surfaced in the international press indicating that Israeli Prime Minister Ariel Sharon had already approved a strike against Iran to be mounted this March. Israel's recent acquisition of "bunker-busting" bombs from Washington indicates that an Israeli strike may well be under consideration.

Jephraim P Gundzik is president of Condor Advisers, Inc. Condor Advisers provides country risk analysis to individuals and institutions globally.