Alexonomic's Outlook for 2013: South America

Yes, the Brazilians are still the centerpiece of South American economic growth, yet there are competitors arising. While Venezuala faces a period of uncertainty with the potential replacement of Hugo Chavez, Argentina offers a renewed challenge to the Falklands under Cristina Fernández de Kirchner.

Alexonomic's Outlook for 2013: Europe

Europe reminds many historians of conditions during the 1930s. Economically depressed countries are embracing extremist political parties with racial divide, riots, and anger as the symptoms. Currently, most of the population is aware of the European debt crisis. Although a serious as the economic crisis is, the side effects of lower economic output can be more serious.

Americans and their Guns

To stray from the Predictions of 2013 series, I did an infographic of the gun control debate raging in the US, along with some statistics. The objectives of Obama gun control rules come plainly from the White House publication on the topic. As one can see, the proposed regulations are quite practical.

Alexonomics' Outlook for 2013: Africa

Egypt has often been the focus of news in Africa as of late. The removal of Mubarak and election of Mohammed Morsi has proven to be an interesting turn of events, but the excitement is far from over. Morsi symbolically removed ties from the Muslim Brotherhood, but that move hardly removes the influence the party has on the President.

A guide to Environmental Economics

Often, articles will be conclusions with a few supporting facts that will often sway the reader. I find this problematic for two reasons. First, the reader does not have the chance to fully understand the topic because no background is given. Secondly, the reader doesn't really have an opportunity to disagree with the writer's conclusion if the reader has little to no knowledge of the topic.

Wednesday, 14 March 2012

A Persian Problem

Iran has been in the news a lot over the past few years. Named by George Bush as one of the branches of the Axis of Evil, it's nuclear ambitions and anti-Semitic sentiments have risen to infamy. Back tracking for a second, doesn't Axis of Evil sound cool? When George Bush first came out with it I envisioned Kim Jon Il, Saddam Hussein and Mahmoud Ahmadinejad sitting at a table shaped like a swastika all arguing who should press a big red button that triggers Armageddon.

However, the major question is looking at the historical relevance of Iran and why exactly the United States is so interested in the country. For example, Pakistan already has nuclear weapons, is far more unstable than Iran, yet Iran is the country that the United States has been echoing war sentiments about.

Iran stems from where the old Persian empire existed with about a $6000 GDP per capita and interestingly a founding member of the United Nations and OPEC. Unknown to most, the President is not the highest level of power in the country - the Supreme Leader is. With 31 provinces, almost 90% of the country identifies themselves as Shia Muslims. In WW2, Britain and Russia invaded Iran to use their railroad which stemmed the beginning of Western interference in Iranian politics. Dr. Mohammad Mosaddegh was elected Prime Minister and nationalized the oil industry which did not please the British. In response Winston Churchill brought the US onboard to create a coup d'état through Operation Ajax. Remember that, the United States overthrew a democratically elected leader. America assisted the Shah in creating a more modern infrastructure while at the same time destroying political resistance, crushing free speech, and increased autocratic rule. All under the United States watch. Then, in 1979, the Islamic Republic was born through the Iranian Revolution led by Ayatollah Ruhollah Khomeini, who had been exiled by the Shah. Saddam in Iraq decided this would be the perfect time to attack Iraq which ended in a truce 8 years later. Iran then elected Rafsanjani who ran a pro business economic doctrine, then succeeded by the new face of Iran who is the constant figure of Western ridicule, Mahmoud Ahmadinejad. Mr Ahmadinejad has faced constant attacks over election rigging and has been protested against multiple times, the Green movement exemplifying this.  

Looking at the quick history of Iran, it's easy to see why Iran is weary of America, and why it is ridiculous that Iran and Iraq conspired to bring down America. Hussein used chemical warfare in the Iran-Iraq conflict, an action that will not be forgotten quickly in Persia.

Now we come to the present. Simplistically, the United States and the Western world does not want the Islamic Republic to possess nuclear weapons. Nuclear weapons gives Iran leverage in global politics, something that the Western world does not want considering their oil exports give Iran enough influence. Currently, the West has responded with economic sanctions. If you watch Fox News or CNN, you would think these have had no effect whatsoever. However, they have. Black market currency trading has arisen in Tehran as the Rial (Iranian Currency aka the IRR) has declined by over 40% in value in global markets. Goods such as the iPhone cost 30% more than they have, while the bank was forced to pump $200 million into the Iranian market to fight rapid inflation and also gave a 21% interest rate on rial bank deposits. Barack Obama signed a law that banned many financial institutions from working with Iran - a damning document as many Iranian officials stated that Iran's economy is on the verge of collapse. Iranian secret police are trying to control the race for dollars and gold, and even text messaging with the world "dollar" will be censored.

Israel is the most vocal proponent of attacking Iran, as an Israel General stated that Iran acquiring nuclear weapons will set of an Arabian arms race. Saudi Arabia is more of a closet opponent of Iran, but it has been rumoured that they have asked the United States to prevent the development of a nuclear Iran.

Iran has responded by threatening to close off oil exports, and block off the strait of Hormuz. Ending oil exports could be very serious of the European Union as Italy, Spain and Greece are major importers of Iranian crude. Countries such as China have already found ways around the American dollar embargo by buying oil for gold, which is assisting in raising the gold price currently - while the Yen and Real transactions are increasing. In terms of the strait of Hormuz, the strait sees 20% of the world's oil traded, making the point essential for the global economy. The United States has brought in their navy to ensure it stays open, while the Iranian Military held exercises close to the strait and made a few provocative statements regarding bombing American targets.

Israel is obviously the largest advocate for military action against Iran, as Iran's President has openly attacked the Jewish state vocally while even holding a conference with the underlying thesis being that the holocaust was a hoax. Iran is also a financial supporter of Hamas, a militaristic Palestinian political group who has often attacked Israel. To be fair, Israel often retaliated.

Perhaps the last paragraph can provide reasoning for a solution to the Iran problem. First, physical retaliation never works. Israel and Palestine it has never solved problems, and it most likely will not work now. Economic sanctions are heavily disrupting Iranian life and although not as sexy as big American Navy Seals jumping from helicopters blowing Revolutionary guards apart, sanctions do keep this affair from becoming a deathly conflict. Meanwhile, Ahmadinejad is rapidly losing support at home and a new government most likely will be brought upon by Iranians themselves. Instead of once again interfering in Iran, the Western world should try to ensure Iranians have the tools to bring change about themselves. Military occupation will only bring resentment against Western governments, and rally Iranians around their leaders. Peaceful resolution of the argument through diplomacy is what is needed.

A country needs money to build a nuclear bomb. Starve Iran of cash, as a military attack would surely be rash.