Iran on Wednesday displayed two of its weapons effectively - oil and nuclear power. On Wednesday oil prices shot up sharply to touch US$ 119 following reports that Iran had decided to stop exports to six European countries — Italy, Spain, France, the Netherlands, Greece and Portugal. Perhaps with the exception of the Netherlands, the news came as nightmare to the others at a time when they are badly hit by the eurozone crisis. It exposed the false sense of economic security that had pushed the European Union to fall in line with tough US sanctions aimed at preventing Iran from exporting oil.
The EU had decided to stop buying Iranian oil from July. But Teheran had warned that it would halt exports immediately. Such a move would deal a blow to the crisis-ridden economies of the eurozone. An announcement was awaited but Teheran delayed it in the hope that arrangements could be worked out to bypass the US sanctions.
Wednesday's report that Iran had stopped oil exports to the six European nations also came at a time when the demand for oil is high due to the unprecedentedly harsh European winter. However, Iran denied later that it had decided to halt exports to Europe. The denial came but not before Iran demonstrated that it could use oil as an effective weapon. In other words, Iran successfully sent a message to the West that any attack on Iran would only boomerang on the attackers.
The West erroneously believes that its allies such as Saudi Arabia could increase their oil output to meet the shortfall caused by Iran's handicap.
Saudi Arabia cannot meet the global demand, market research by multinational investment bank Goldman Sachs says.
Saudi Arabia reached its peak at 9.5 million barrels a day in 2008, Goldman Sachs said in a report in July last year. It said that despite claims that Saudi Arabia had the potential for a 12 million barrel-a-day capacity, there would be a supply shortage by 2012. Well, Goldman Sachs' warning of an oil crisis was based only on the projected global demand and definitely not on any sanction-imposed supply shortage. So depending on Saudi Arabia to meet the shortfall caused by the absence of Iranian oil in the market is like standing on quicksand. In any case, the Saudis would be naïve to overproduce oil, a fast diminishing resource. But given the Saudi Arabian royal family's blind loyalty to the United States, it won't be a surprise if it takes a decision to please the Americans and puts the country on the path to economic suicide.
The next weapon, Iran effectively displayed on Wednesday was its nuclear power. In a televised show of strength, Iran unveiled what was described as its first domestically produced nuclear fuel rod containing 20-percent enriched uranium.
Those familiar with nuclear science or politics know a country that is capable of producing 20 per cent enriched uranium is also capable of producing 90 per cent enriched uranium or the weapons-grade uranium. If Iran's claims were to be believed, weapons-grade uranium is only a decision away.
But Iran insists it has no intention to produce nuclear weapons. It says it wants to use nuclear technology for electricity generation so that it could divert more oil for export. Iran argues that since oil is a diminishing resource, prudence dictates that any country with a modicum of economic acumen should go for nuclear energy.
After his visit to a nuclear reactor in Teheran on Wednesday, President Mahmoud Ahmadinejad made a speech broadcast live throughout the world via Iran's Press TV, a 24-hour news and current affairs satellite channel which gives news one won't find on CNN, BBC or even on al-Jazeera.
Underscoring that Iran's nuclear goal had only a humanitarian face, he said: "It has been estimated that four nuclear reactors in four different spots in the country are needed. Go build them, to carry out research activities and provide radio-medicine needed by the country."
Teheran's announcement, however, unsettled the Western world.
The US called for moves to expel Iran from the global electronic banking system — a network for transfer of money, another step in Western efforts to deprive Tehran of funds needed to develop nuclear weapons. The Reuters news agency said that kicking Iranian banks out of the Belgium-based SWIFT, or Society for Worldwide Interbank Financial Telecommunication, would cut off one of the only remaining avenues for Iran to transact business with the rest of the world.
Israel, meanwhile, said Iran's announcement of new nuclear achievements was exaggerated and meant to fend off action against the Islamic republic.
"They are describing a situation that is better and more advanced than the one they are in, in order to create a feeling among all the players that the point of no return is already behind them, which is not true," Defence Minister Ehud Barak said.
However, there is little the West or Israel could do now. Iran is strong enough to retaliate. It is not clear whether this week's bomb attacks on Israeli diplomats in India and Georgia and the premature blast in Thailand were Iranian retaliation for the killing of its nuclear scientists or a scheme by western intelligence groups to discredit Iran.
Whatever it is, yesterday, from a position of strength, Iran told the International Atomic Energy Agency that it was ready for talks.
Wednesday's Iranian announcement was certainly a turning point in the nuclear standoff. Iran could now stop its nuclear journey at this point and give IAEA full access to all its nuclear sites.
But given the hostility between Iran and the US, it is unlikely that Washington will remove the sanctions even if the IAEA is to give Teheran a clean bill.
Iran, on the other hand, believes it can overcome the adverse effects of the sanctions. The Iranians say they have mastered the art of dealing with sanctions. They say they have been facing sanctions for the past 30 years and sanctions only strengthen their resolve to stand on their own feet. Given Iran's recent achievements in science and technology and in the field of defence, one cannot disagree with them.