You may well know that a major feature of history is that it never stops being repeated. Recent British attempts to impose an EU embargo on Iranian oil imports are reminiscent of the Mossadeq crisis (1951-1953). At the time due to Iran’s unilateral decision to nationalize its oil industry, London imposed an all out embargo on Iranian oil sales forcing Iranian Prime Minister Mossadeq to rule Iran without oil income and to rely exclusively on commercial and agricultural profits. This crisis ended with the overthrow of Mossadeq and the restitution of Mohammad Reza Shah Pahlavi through British and US intelligence “Ajax” intervention in Iran. Contemporary developments in British foreign policy on Iran tend to follow more or less the same pattern in terms of goals and methodology.
Yet the world has changed ever since. Although a major world power nowadays, Great Britain does not enjoy the status of the declining superpower after WW2. Islamic Iran is at the peak of its geopolitical influence in the region forming its own geopolitical agenda and investing on various aspects of the foreign policy of the Shah in the Middle East. London on its part attempts to increase its global profile by siding with the goals of Washington. Iran gets increasingly isolated but it is far from being weakened. A common feature between then and now is that the cause of the crisis and the means of Britain to exert pressure on Iran are related to energy.
Regarding the cause of the conflict, it is not oil but the advanced form of the nuclear energy. Iran has the ambition to develop an independent national nuclear programme, preventing any foreign country from monitoring, let alone controlling, its efforts. It is the same nationalistic sentiment that characterized Mohammad Mossadeq’s nationalization of Iranian oil at the expense of the Anglo-Iranian Oil Company, at a time that no other oil producer in the Middle East had dared to take such a step. Throughout its dispute with certain western countries over its nuclear aspirations, Iran has displayed Mossadeq-style resilience, this time not only against Britain, but mainly to a wider front of western countries under the lead of the US and Israel. This time however, Iran is not alone and this is due to various factors: its geopolitical influence, the systematic Iranian foreign policy and its energy reserves which are vital for many Asian booming economies.
Although it is not the cause of this crisis, crude oil is increasingly becoming for Britain and other major western countries the means to step up pressure on Iran over its nuclear stubbornness and make it comply with western demands. Recent British proposal to the EU member states to stop buying Iranian oil is to this direction. This time London does not have the ability to observe such a ban not any time soon. If London succeeds, then Iran will be forced to find other buyers for the 18% of its total oil production that goes to Europe annually. This is not expected to be a difficult option for Tehran that in the last three decades has been used to acting under various embargoes and restrictions. Asian countries are likely to absorb this amount of oil without any considerable delay. Bu this will not go ahead without major obstacles.
British-Western pressure over the Iranian oil issue is combined with a simultaneous effort to stop any banking transactions between Iranian banks and the rest of the world. Such an effort has already caused major liquidity problems to the Iranian economy. Thus Iran does not rely on banks anymore to get the money for the oil it sells abroad. It sends its own employees to negotiate with the governments and their refineries. This is a complicated and time consuming process but it seems that it pays off in the end for Iran. Recent articles on the case of Greece buying oil from Iran without letters of credit describe the extent of planning, activity and flexibility of the Iranian government in their effort to overcome the western embargo.
Moreover London may not intend to stop there. If an EU Iranian oil embargo is enforced, then Iran will suffer a major, though temporary, economic setback in terms of income. London plans to make the EU Iranian oil embargo gain momentum worldwide could include a move in the UNSC context, highlighting the Iranian nuclear programme as a global threat.
Yet for now the British initiative for an EU embargo on Iranian oil sales has not addressed the need of fragile economies of the European South for Iranian oil and the fact that they cannot find alternative sources for fine quality oil in reasonable prices. As long as Saudi Arabia or other countries cannot replace the quantity of Iranian oil which is sold to Europe in a good price, then British efforts will not pay off. And even if the latter issue is addressed, London, Washington and Tel Aviv have a long way to go before, if ever, convincing Beijing and Moscow to expand the EU embargo. Moreover, the isolation of Britain in the recent EU summit over the Eurozone is expected to weaken London’s initiative over Iran in the EU context.