The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  But then in 1997, unexpectedly, some possibility of normalization emerged with the overwhelming—and totally unanticipated—electoral victory of Mohammad Khatami as president. A cleric, Khatami was a reformist who wanted to move toward what has been called a “proper constitutional government.” He was also an accidental president, having previously been dismissed as minister of culture for being too lenient toward the arts and the film industry, and then relegated to an insignificant position as head of the national library. His presidential victory seemed to represent a rejection of the harsh theocracy by a large majority of the public. After his election, he reached out to the United States with words about a “Dialogue of Civilizations.” After some delay, Washington positively reciprocated with encouraging words of its own, including a call by President Clinton for an end to “the estrangement of our two nations.”19

  It was difficult, however, to assess how to deal with a Tehran in which power was divided between the president and the Supreme Leader. A coalition of hardline clergy, Revolutionary Guards, security services, and judiciary—all under the control of the Supreme Leader—mounted a determined campaign of violence and intimidation to block Khatami’s reforms, neutralize his presidency, limit his flexibility on foreign policy, and undercut his chances for achieving some degree of normalization.20

  Thus it was all the more surprising when, in the immediate aftermath of 9/11, Tehran stepped forward to provide limited support for the U.S. campaign in Afghanistan. The Iranians saw the Taliban as an immediate and dangerous enemy that mobilized Sunni religious fervor against Iran’s own Shia religious zeal, and it was an enemy that the United States was prepared to eliminate. Iran provided intelligence about the Taliban, urged the U.S. to move faster to attack the Taliban, cooperated militarily in some ways, and collaborated in establishing a provisional post-Taliban government. For the first time since the revolution, Iranian and American officials met regularly face-to-face. In the third week of January 2002, at a conference in Tokyo on Afghan economic reconstruction, Iranians approached the U.S. Treasury Secretary Paul O’Neill and James Dobbins, the most senior U.S. diplomat at the meeting, and suggested wider negotiation over “other issues.”

  But several days earlier, the Karine A, a freighter carrying fifty tons of Iranian arms to Gaza, had been intercepted in the Mediterranean. The message was conveyed that Khatami and his circle did not know about the shipment. But for Washington, the Karine A had a much bigger impact than Tehran’s diplomatic probes. The ship and its cargo further confirmed Iran’s commitment to terrorism. It also came at a critical moment in the definition of policy.

  A week after that exchange in Tokyo, President George Bush delivered his State of the Union Address. It was the first since 9/11, and it was a call to mobilization in a new struggle, the war on terror. Bush’s defining phrase was the “axis of evil,” which was deliberately meant to echo the 1930s’ axis of Nazi Germany, fascist Italy, and Japan. This new axis included Iraq and North Korea. Iran, the archenemy of Iraq, was the third. The phrase “axis of evil,” with its clear implication of “regime change,” undercut those in Tehran who wanted some détente with the United States and largely squelched the unusual U.S.-Iranian collaboration on Afghanistan—but not quite. In Geneva, at another Afghan donors’ meeting, a senior Iranian general from the Revolutionary Guards suggested to the Americans that Iran could still work with the United States, including training 20,000 Afghan troops under U.S. leadership. He added that Iran was “still paying the Afghan troops your military is now using to hunt down the Taliban.” 21

  Moreover, some dialogue was resumed during the early phase of the Iraq War, when the United States removed Saddam Hussein, Iran’s main regional enemy and the biggest obstacle to the expansion of its influence.

  RENEWED MILITANCY

  Whatever door to dialogue that might have existed was firmly closed with the 2005 election of Mahmoud Ahmadinejad as president. The former mayor of Tehran and a civil engineer by training, with a doctorate in traffic management, he had been a Revolutionary Guard and remained closely aligned with the guards. That he was determined to return to an aggressive and militant path was made clear by his continuing fusillade of rhetoric. The 9/11 attacks, he told the United Nations, were probably “orchestrated” by elements in the U.S. government “to reverse the declining American economy and its grip on the Middle East.” The mission of Iran was “to replace unworthy rulers” and ensure that the whole world embraces Shia Islam. He threatened that Iran would “wipe Israel off the map”—or in another translation, be “erased from the page of time”—a slogan that also adorned missiles during military parades.22

  With Iraq demolished as its regional rival, Iran communicated its ambition to dominate the Gulf. In December 2006, at a meeting in Dubai of a regional group, the Arab Strategy Forum, Ali Larijani, the sometime Iranian nuclear negotiator and later speaker of the Parliament, told his Arab audience that America’s time in the Middle East was finished, it would be leaving, and that Iran would assume the leadership of the region. But, he pledged, Iran would be guided by the principle of “good neighborliness.” The stony-faced Arab audience was clearly not thrilled by the prospect of being under the stewardship of their Iranian neighbor.23

  THE STRAIT OF HORMUZ

  For many years, both oil-consuming and -exporting countries have been concerned about the security of the Strait of Hormuz, through which ships pass on their way from the Persian Gulf on to the high seas and on to world markets. Twenty-one miles across at its most narrow, the Strait is the number one choke point for global oil supplies. About 20 tankers pass through it daily, carrying upward of 17.5 million barrels of oil. This is equivalent to 20 percent of world oil demand—and 40 percent of all the oil traded in world commerce. On the northern shore of the strait is Iran. The southern shore belongs to Oman and the United Arab Emirates.24

  The strait is also a target for Iranian threats. “Enemies know that we are easily able to block the Strait of Hormuz for an unlimited period,” one Revolutionary Guard general has warned. Strategists argue, however, that Iran’s ability to disrupt the strait is more limited than its rhetoric. The physical characteristics and geography of the strait and its environs would limit the effectiveness of Iran’s arsenal of cruise missiles; mines; submarines; and small, high-speed, explosive-packed boats. Any attacks would be met with overwhelming military force, including from the U.S. Fifth Fleet, which is headquartered in Bahrain and whose primary mission is to maintain freedom of the seas in the region. Moreover, an assault on the flow of oil today would be an attack not just on the West, as might have been the case two decades earlier, but also on the East, including China, which gets about one quarter of its oil from the Gulf. Here is one strategic point where U.S. and Chinese interests as consumers coincide. An effort to disrupt or close the strait would be seen as an assault on the world economy and would likely stimulate a global coalition, as happened in response to Iraq’s invasion of Kuwait in 1990.25

  In addition to all this, any effort to stem the flow of oil would be very costly for Iran itself. Iran depends on the strait to export its own oil, which generates about $80 billion in earnings and about 60 percent of its budget. Unlike other Gulf countries, Iran does not have the financial reserves that would enable it to easily withstand any cessation of export earnings.

  To be sure, attacks on shipping and efforts to disrupt the flow through the strait would very likely panic markets and cause prices to spike, at least initially. And there are many oil assets that could be targeted within the Gulf. But any effort to block the Strait of Hormuz would probably fall well short of the kind of catastrophe sometimes feared.

  THE GAME CHANGER

  But what really threatens to upset the balance of power in the Gulf—and thus the security of world oil—is Iran’s pursuit of nuclear weapons. Iran’s initial nuclear program, launched in the 1950s on a minor scale by the shah under America’s Atoms for Peace, was aimed primarily at developing atomic power. It was d
riven more intensively in the 1970s by the shah’s conviction that Iran’s oil and gas resources would be exhausted within three decades.26

  In the mid-1980s, amid the Iran-Iraq War, the Khomeini regime made the decision to seek nuclear weapons capability. It obtained know-how and technology from the Pakistani A. Q. Khan network. In 2002 a dissident Iranian group revealed that Iran was secretly developing the capability to produce enriched uranium. Under pressure from the Europeans, Iran temporarily halted its enrichment program in 2003.

  After his election, Ahmadinejad restarted enrichment. Iran’s repeated assertion that its nuclear program is for peaceful purposes is met with total disbelief by its Arab neighbors. Ahmadinejad has also accelerated the development of missiles, some of which could carry nuclear payloads. The nuclear program entered a new phase in 2006 with the activation of a large number of centrifuges to enrich uranium. Enrichment is the process by which the ratio of the U-235 isotope to the far more common U-238 is increased. A 3 percent to 5 percent U-235 concentration is required to provide the fuel for a civilian nuclear reactor. A 20 percent level is needed for medical purposes. An atomic bomb needs 90 percent. It is much easier, once having reached the 20 percent level, to go from 20 percent to 90 percent than it is to go the initial distance from 3 percent to 20. In 2010 Iran announced that it had reached the 20 percent level. This was not long after the discovery by Western intelligence of a secret enrichment facility near the holy city of Qom.

  Iran claims that the enriched uranium is exclusively for its civilian nuclear program. Its first large nuclear reactor at Bushehr went online in 2010, with more plants supposed to follow. Iran’s nuclear power program will take many years to develop and will be very costly. Yet Iran is rich in natural gas, and it is to gas that many other countries are turning as one of the most desirable and low-cost fuels for electric power. This mismatch between Iran’s rich hydrocarbon resources and its plans for atomic energy—and the haste to enrich uranium—reinforces the Arab and Western conviction that it is pursuing nuclear weapons.

  THE BALANCE OF POWER

  An Iran with nuclear weapons would change the balance of power in the Gulf. It would be in a position, to borrow a phrase that Franklin Roosevelt had used prior to World War II, to “overawe” its neighbors. It could assert itself as the dominant regional power. Iran could directly threaten to use the weapons in the region—or actually use them—although the latter would likely trigger a massive and devastating response. But such weapons would also provide it with a license to project its power and influence with what it might regard as impunity throughout the region—both directly and through its proxies. On top of all of that, Iran, as a hegemonic nuclear power, would likely try to more directly assert dominance over the flow and price of oil, displacing the Saudis. In short, Iranian possession of such weapons would, at the very least, create insecurity for the region and for world oil supplies.

  Many governments fear that elements in the Iranian government would, if they have not already done so, go into the proliferation business and provide fissile material to other governments, to its proxies like Hezbollah in Lebanon, or to terrorist groups.

  When all is added up, the assessment of the impact of a nation’s acquiring nuclear weapons depends not only on the possession of the weapons themselves but also on the intentions of those who hold them. And that is why the rhetoric from Tehran would take on new significance were Iran to have those weapons. Ahmadinejad has said that the ultimate mission of the Islamic Republic is to prepare the way for the return of the Hidden Imam, who disappeared in the ninth century but whose reappearance will be necessarily preceded by a period of violent chaos and fiery war that will culminate in “the end of times”—and that this moment is imminent. When the Mahdi returns, Ahmadinejad has added, he will destroy the unjust “who are not connected to the heavens”—which means the United States, the rest of the West, and Israel—and lead survivors to “the most perfect world.” All this can only increase the deep anxiety about his finger being anywhere close to the nuclear button.

  Adding to the danger is the lack of communication with Tehran, which could increase the likelihood of an “accidental” nuclear confrontation. Even during the tensest moments of the Cold War, the United States and the Soviet Union had communication channels, including, after the Cuban Missile Crisis in 1962, the “hotline” between the White House and the Kremlin to assure immediate contact during a crisis. No such channels exist with Iran. Indeed, there is very little understanding of how the regime functions, who makes decisions, and how the factions compete for power. All this adds to the risk. The lack of understanding also extends to the Gulf Arab states. The great worry, observed a leader of one of the Gulf nations, “is not how much we know about Iran, but how much we don’t.”27

  The alarm among the other Gulf countries, as well as in Israel, about Iran’s objectives has been rising in direct proportion to Iran’s progress toward nuclear weapons capability. They fear that Iran will become more and more aggressive in seeking to assert its dominion over the region and in trying to destabilize other regimes. As one Saudi put it, “They want to dominate the region, and they express it strongly and clearly.” Many of the Arabs believe that intermittent “negotiations” is a standard Iranian tactic to create a cover while it proceeds with its nuclear program—what one official described as “their usual strategy” of “leading you on with false promises, designed to buy more time.”

  Some Gulf Arabs are convinced that Iran is pursuing a strategy of encirclement, from its presence in Iraq and subversion among the Shia populations in Bahrain and eastern Saudi Arabia and in Yemen to promoting insurgency on Saudi Arabia’s southern border to financing and supplying weapons to Hezbollah in Lebanon and Hamas in Gaza. This encirclement would pressure the Arab Gulf states and, at the same time, put assets in position that Iran could activate during some future time of tension or crisis.

  For years, the Israelis have spoken of a nuclear Iran as an “existential threat” to the very survival of their nation and its people. Now some Arabs also describe Iran as an “existential threat.” As a leader of one of the emirates put it, his country is only “46 seconds from Iran as measured by the flight time of a ballistic missile.”28

  INCENTIVES AND SANCTIONS

  The United States and Europe have been trying for several years to find a mix of policies sufficient to persuade Iran to stop short of the red line—nuclear weapons capability—and thus avoid a situation where another country concludes that it has no choice but preemptive military action. The offers include expanded trade, membership in the World Trade Organization, and—recognizing the broad public embrace in Iran of a nuclear program—support for the development of peaceful atomic energy in Iran under an acceptable international regime. At the same time, they have mounted an increasing array of sanctions, both under the United Nations and unilaterally, that restrict investment, trade, and the flow of finance. In addition to their general impact on the economy, these sanctions have put pressure on Iran by retarding the modernization of Iran’s conventional military forces and by greatly constraining international investment in Iran’s oil and gas industry and Iran’s access to international finance and capital markets.

  Sabotage is another way, short of military action, of slowing Iran’s progress toward the red line. In 2010 a sophisticated Stuxnet computer virus was introduced into the software programs running the centrifuges, causing them to speed up, perform erratically, and self-destruck. Israel, the United States, or possibly a European country is considered the most likely author.

  After intense negotiation, Russia and China have supported the United Nations sanctions but not the unilateral sanctions. As Western oil companies wound down and backed out of Iran in the face of the unilateral sanctions, Chinese companies—not governed by those sanctions—have signed a variety of large oil and gas deals with Iran that would, if implemented, bring much of the technology and investment that the Iranian industry needs. Yet at the same time, C
hina does have many other interests, including avoidance of a conflict in the Gulf that would disrupt oil and gas supplies coming out of the region. While a number of major contracts have been signed, the Chinese companies have been moving slowly to act on them.

  An alternative to conflict is a policy of containment, which would use sanctions and other restrictions to hold Iran in check until such time as Iran concludes that the advantages of real negotiations outweigh the purported benefit of nuclear weapons—or until the political situation in the country changes. That, after all, is what containment meant when George Kennan propounded it in 1947, at the beginning of the Cold War, when he outlined “a policy of firm containment” designed to confront “the Soviet Union with inalterable counterforce at every point” and increasing “the strains under which Soviet policy must operate”—until a settlement was possible or until the “seeds of its own decay” brought down the Soviet Union.29

  This kind of containment would also involve the extension of guarantees, nuclear shields, and extended deterrence to other nations in the region. The prospect of a nuclear Iran has already ignited a conventional arms buildup in the region. The reality of a nuclear Iran could well provoke a nuclear arms race, which, by the very numbers of countries involved, would increase the chances of such weapons actually being used. The nuclear standoff in the Cold War, despite the grave risks, had a certain stability. It was essentially between two parties, each of whom understood the meaning of deterrence and the second-strike capability of the other side. And neither wanted to risk suicide. The deterrence of the Cold War is not necessarily a good analogy at all for the highly unstable—and not very predictable—situation that a nuclear Iran would create.30