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It’s Not Just the Economy, Stupid

At a international conference last month in Almaty, Kazakhstan, leading Russian political scientist Igor Panarin explained American policy toward Iran as follows: “Everybody knows that the real reason for American belligerence is not the Iranian nuclear program, but the June 2004 decision by the Tehran government to launch an Iranian oil bourse where oil will be traded in euros instead of U.S. dollars.” The oil market, he continued, would break the dominance of the dollar and lead to a decline of global American hegemony, something the Bush administration is determined to stop at all costs, even war.

It sounds like a crackpot idea lifted from a conspiracy theorist’s Web site, but views like Panarin’s are increasingly heard among well-informed circles in Western Europe. Plenty of academics and intellectuals are keen to show that while others more naive than they may fall for American propaganda, they see through the spin — they know that the real forces shaping world events are economic.

These otherwise intelligent thinkers are following a long European intellectual tradition. During the Cold War, revisionist thinkers frequently argued that America’s containment policy against the Soviet Union was driven by business interests, not by concern for national security or the desire to defend liberty. When the first President Bush launched Operation Desert Storm to liberate Kuwait from Iraqi troops in 1991, protesters in Europe (as well as the United States) accused him of spilling “blood for oil” — of fighting a war only to gain control over Persian Gulf oil reserves and boost the profits of the American oil industry. That reproach was repeated when the incumbent President Bush began targeting Iraqi dictator Saddam Hussein after the September 11 terrorist attacks. So it should come as no wonder that these critics also search for pecuniary motives in Iranian policy.

These economics-centered arguments are really a form of crude Marxism, perpetuating Karl Marx’s belief that everything in the world is driven by economics. But they are not limited to the left, as one might perhaps expect. While European leftists usually suspect that Bush’s buddies in the oil industry are behind his Middle East policy, right-wing thinkers prefer the geo-strategic angle: World politics is nothing but a big race for energy and commodities, so economic considerations must therefore dictate American foreign policy.

On closer inspection, most of these theories fall apart. To be sure, the United States was also defending the security of global oil supplies when it drove Iraqi troops out of Kuwait. But that consideration was just as much in the interest of the European and Middle Eastern nations who joined the American-led campaign. The Gulf War was not particularly beneficial to the American economy.

Economic motives do even less to explain the current war in Iraq. The United States does not need to occupy other countries to satisfy its energy needs. Just like other gas-guzzling states, it buys its oil on the world markets. If Washington felt the need to use military means to secure its oil, it would send an aircraft carrier or two to Venezuela, a key oil supplier to the United States governed by the rabidly anti-American Hugo Chavez.

The theory of the Iranian oil market may sound more sophisticated than previous crackpot ideas, but it is even more far-fetched. The use of a currency for international commodity transactions, such as oil trading, has no impact on the currency’s strength. That depends on what the oil exporters do with their receipts afterwards — whether they invest them in dollar-denominated securities, or instead in stocks, bonds or real estate in other countries. Oil could just as well be traded in British pounds, Russian rubles or Polynesian pearls. Perhaps the United States would suffer a slight loss of prestige if crude oil was no longer traded in dollars, but that is certainly insufficient cause for bombing Iran.

Conspiracy theories are usually mistaken, and the neo-Marxist interpretation of American foreign policy falls into that category. By barking up the wrong tree, critics of the Bush administration are doing a disservice to their cause. They miss the strong ideological component in Republican policies, particularly the misguided notions of security that has led Washington down the road to pre-emption in the wake of the September 11 attacks.

In relying on neo-Marxism to explain international affairs, however, Europeans intellectuals are far from alone. Much the same fallacy can be found among American academics and commentators who perceive Europeans as caring only about commercial interests in their dealings with Iraq, Iran or other Middle Eastern countries. These critics argue that Europeans would never agree to sanctions against Iran because they fear for their profits and jobs at home. “Europe is addicted to Iran’s oil and to Iran’s purchase of European goods,” influential New York Times columnist Thomas Friedman has argued, a view echoed by not a few Israeli commentators.

But a quick look at the figures tells a different story. Take Germany, Iran’s main trading partner in Europe. Last year sales from German businesses to Iran reached 4.4 billion euros, or about $5.4 billion, double the amount just three years earlier. It may sound like a lot — but sales to Iran account for only 0.6% of Germany’s total export volume. By comparison, last year Germany sold nearly 70 billion euros in goods to the United States.

Surely some German companies depend heavily on business with Iran, but these trade ties are just not important enough to the German economy for the country’s foreign policy to be guided by them. The same goes for other European countries.

If Europeans takes a skeptical view of anti-Iranian sanctions, they do so out of a belief that sanctions usually don’t change a country’s behavior for the better. Looking at the record of sanctions against other pariah states, such as Slobodan Milosevic’s Serbia or Saddam’s Iraq, they might be right.

Even if one disagrees with Europe’s penchant for soft diplomacy, insinuating that greed and other dishonest motives are behind the continent’s policy on Iran is simplistically misguided and simply unproductive — an accusation similar to the “blood for oil” argument concocted here to criticize the Bush administration’s follies in Iraq.

Eric Frey is managing editor of the Vienna daily Der Standard.


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