In recent years, much of our foreign policy attention has been focused on China’s growing assertiveness in the West Philippine Sea. Beijing’s occasional flexing of muscles, vitriolic rhetoric, expanding naval capabilities, and growing global influence – in light of America’s relative decline – have simply accentuated our sense of territorial as well as political vulnerability. In response, we have not only stepped up our diplomatic offensive, especially within the ASEAN framework, but we have also increasingly tilted to America – or, conversely, welcomed America’s pivot to Asia – to deter further Chinese incursions into areas that clearly fall within our territorial waters as well as Exclusive Economic Zone (EEZ).
Besides China, the Arab world – host to a lion’s share of Overseas Filipino Workers (OFW) – has also caught much of our residual foreign policy attention. In mid-2011, as the ‘Arab Awakening’ morphed into an all-out civil war and political unrest across the region, from Libya in North Africa to Syria, Yemen, and Bahrain in West Asia, the bulk of our resources – from logistics to finance and manpower - has been devoted to the crafting and operationalization of rescue missions, especially in Libya and Syria.
With Syria entering its 13th month of uprisings, and the death toll surpassing the 8,000 mark, our policymakers have expressed growing worries about the fate of thousands of Filipinos – mostly undocumented and domestic workers – stuck in Syria, especially those in cities under constant bombardment by government forces. Beyond Syria, the nightmare scenario is if and when the uprisings hit the Persian Gulf, spreading from Bahrain into Saudi Arabia, United Arab Emirates, Qatar, Oman, and Kuwait, where almost 3 million OFWs reside, whether permanently or on temporary contracts.
Yet, there is another crisis that has been in the making for almost a decade which deserves our utmost attention. It is a brewing crisis that demands not only our intellectual curiosity, but also our operational and policy-centered concerns. The crisis in mind is the simmering conflagration concerning Iran’s nuclear standoff with the West and Israel. What makes this crisis of global concern is the fact that it goes well beyond the issue of a potential showdown between a regional power, Iran, and the global superpower, the U.S – and, of course, all the humanitarian tragedies and economic devastation that could follow.
Given Iran’s capabilities, geography, and importance as a global energy supplier, any conflict involving Iran could have major global repercussions, both in economic and security terms. In fact, we in the Philippines – like much of the world - are already experiencing a foretaste of how an Iran-West conflict could adversely affect our interests. Sanctions against Iran – complicating any form of large-scale financial transaction with Tehran - have not only halted our banana exports, amounting to tens of millions of dollars, but they have also prevented us from sustaining our oil imports from the country. Iran is not only facing problems with conducting dollar-denominated oil transactions, but the Philippines – like other U.S. allies – has also come under tremendous American pressure to halt imports from Iran lest we (and our business institutions) face sanctions under U.S. law.
Iran was our 3rd largest market for banana exports and among our top oil suppliers. For instance, in 2004, Iran provided between 70 to 110 thousand barrels of oil a day, making it among our top 3 largest suppliers. Sanctions against Iran’s Central Bank and myriad state-sponsored financial institutions have also made it difficult for Iran to push through with its investment plans in the country, especially in the energy sector, while thousands of Iranian citizens residing and/or studying in the country are facing difficulties with making dollar-denominated transactions between Manila and Tehran.
Moreover, unilateral Western sanctions against Iran’s oil exports, Central Bank, shipping lanes as well as ports, have reduced Tehran’s ability to keep global energy markets afloat. Worryingly, in response to sanctions, Iran has even threatened to close off the Strait of Hormuz, where a third of global sea-based oil transport occurs. The combination of tightening sanctions that are pushing Iranian oil out of global markets, and Iran’s retaliatory military threats, has sent energy markets – increasingly driven by speculative drive - into a tailspin, with oil prices rising between 25-30 dollars per barrel in recent months, or around 15 percent increase in average crude prices.
Shrinking Iranian exports have been counterbalanced by the unprecedented increase in Saudi output and strategic reserves’ release by developed (OECD) countries. The problem is that such countermeasures have led to a dramatic decline in global spare-capacity, reducing flexibility in global oil supply and making markets highly jittery. In countries such as the Philippines, which are highly dependent on oil imports (around 90 percent of our total oil consumption), have no strategic reserves, and suffer from the whims of deregulated oil markets where no significant regulatory supervision exists, growing volatility in global energy markets is placing - and will continue to place - a heavy (inflationary) burden on our economy – especially the transport sector. The problem with an oil price hike is that it is all-pervasive: any increase in oil prices will eventually exert an upward inflationary pressure on all basic commodities with inelastic demand.
There is another area where we are also feeling the heat. Rising oil prices – significantly influenced by sanctions against Iran – are placing a heavy burden on struggling economies in Europe as well as emerging markets in the South – both crucial to the stability of world economy. Our semi-export-oriented and investment-dependent economy – tied to major emerging economies as well as the Eurozone - is highly bound to global economic trends, so with rising energy costs undermining growth in China, Europe, Japan, and elsewhere, we stand to lose from further sanctions on Iran.
However, the true nightmare scenario is if upcoming negotiations in Istanbul (and in Baghdad) will not bear any substantial diplomatic fruit. Based on estimates by leading economists and forecasting agencies, any conflict with Iran could send oil prices to above $200 per barrel levels. This would effectively choke off the global economy. In fact, there is a growing consensus among experts that the Iranian crisis is the greatest threat to global economic recovery. If sanctions are further tightened on Iran and/or a conflict erupts in the Persian Gulf region – where 65 percent of world oil reserves are concentrated – we will most probably suffer the much-feared double-dip recession, one worse than even the post-Lehman Brothers crisis back in 2008.
We are also vulnerable on a different level. Within the Middle East, tensions between Iran and its Arab neighbors, especially Saudi Arabia, are rising. There are two reasons: first, the Saudis – together with other Gulf Cooperation Council (GCC) members – are leading the way in terms of replacing Iran’s oil in global markets; and second, the Saudi-led GCC is purportedly pushing for further non-economic measures against Iran. Of course, Tehran is (or could) beginning to see its Southern Arab neighbors as not only complicit in the current economic siege, which is undermining Iran’s very socio-economic fundamentals, but also as hands behind a possible military strike against its nuclear installations. This means that in an event of a conflict, Tehran might consider retaliating against any attack by using its considerable ballistic and asymmetrical capabilities against its immediate neighbors and Western military bases and interests placed within them.
There is also a sectarian angle: the uprising in Syria, Shia-led protests in Bahrain and Eastern Saudi Arabia, and growing Shia-Sunni rifts within Iraq’s political system, have already fanned the flames of sectarian conflict in the region. If a conflict erupts we might witness intensified proxy-war and even direct confrontation between Tehran and its regional allies, on one hand, and the pro-Western, anti-Iranian Arab countries, on the other. This would put millions of our OFWs in the region at the center of a regional conflagration.
Of course, an Iranian retaliation against a limited strike – by Israel or/and the U.S. - could very well escalate the conflict into an all-out war, and in that event major powers – with considerable stake in Iran and Middle Eastern affairs – such as China and Russia could step-in. This would practically mean a global war. This has been called a nightmare scenario for a reason.
However, even a more limited form of warfare, one between Iran and its adversaries, especially Israel, could also affect us. Already, there is an ongoing shadow war against Iran, with Western agencies intensifying their sabotage and assassination activities against Iran’s nuclear scientists, strategic military establishments, and nuclear sites. In response, Iran has vowed to bring those responsible to justice and retaliate against outright aggressions that have taken place within its own territories.
Some Western media outlets as well as Israeli politicians have accused Iran of orchestrating recent attacks in Georgia, India, and Thailand as a form of retaliation against terrorist acts within Iran. Last year, Western politicians even accused Iran of masterminding an assassination plot against the Saudi ambassador in Washington. So far, there has been no definitive evidence as to the validity of such accusations. There have also been reports that Saudis and Israelis were involved in propping up secessionist movements within Iran’s troubled regions, especially among Kurds and Balochi citizens.
However, we should bear in mind – as reflected by the commentaries of leading experts such as former CIA agent, Robert Baer - that Iran is known for having one of the most effective security-intelligence agencies (from the VEVAK to the Quds forces) in the Middle East, atop its bourgeoning cyber-warfare capability. After all, Iran is responsible for the development of the Hezbollah group in Lebanon, the only Arab entity to have not only credibly inflicted a defeat on Israeli Defense Forces (back in 2006), but also responsible for numerous successful operations against American and Israeli intelligence agencies in recent decades.
So, if Iran comes under attack or sanctions are pushed to an unbearable level, there is a high probability that Tehran will consider retaliating against all Western (and Israeli) interests across the world, through coordinated covert operations and sustained cyber attacks. This will effectively widen the theatre of war beyond the Middle East, encompassing much of Asia, Northern Africa, Latin America, and Europe.
It is for these reasons that we in the Philippines should watch and closely observe the Iranian crisis with greater interest and concern. Most of all, we should hope that there will be a diplomatic solution to the crisis. Our government should also use its membership within the Non-Aligned Movement (NAM) – with the next Summit to be held in Tehran – and leverage our strong ties with America as a means to encourage a diplomatic resolution to the Iranian nuclear impasse. None of us want further proliferation of nuclear weapons, but surely we also detest further strains on our economic stability and whatever semblance of international security we enjoy from.
An active diplomatic initiative on this front not only helps us to avert a potential global crisis, but most importantly it will serve as a vehicle for us to defend our national interests. Thus, the Philippines should join other Asians as well as rising powers, from China and India to Indonesia, Brazil, and Russia, that have opposed any sort of military threats and interventions and called for sustained negotiations, withdrawal of sanctions in exchange for Iranian cooperation, and a diplomatic resolution of the crisis. This is the best way to strike a balance between our international obligations and our national interests.
Javad Heydarian is a Manila-based foreign affairs analyst focusing on international security and development issues. His articles have been featured or cited in Foreign Policy in Focus, The Diplomat, Asia Times, UPI, the Transnational Institute and the Tehran Times, among other publications. He can be reached at: Jrheydarian@gmail.com.
NEW! What the Iranian Crisis Means to Us in the Philippines
In recent years, much of our foreign policy attention has been focused on China’s growing assertiveness in the West Philippine Sea. Beijing’s occasional flexing of muscles, vitriolic rhetoric, expanding naval capabilities, and growing global influence – in light of America’s relative decline – have simply accentuated our sense of territorial as well as political vulnerability. In response, we have not only stepped up our diplomatic offensive, especially within the ASEAN framework, but we have also increasingly tilted to America – or, conversely, welcomed America’s pivot to Asia – to deter further Chinese incursions into areas that clearly fall within our territorial waters as well as Exclusive Economic Zone (EEZ).
Besides China, the Arab world – host to a lion’s share of Overseas Filipino Workers (OFW) – has also caught much of our residual foreign policy attention. In mid-2011, as the ‘Arab Awakening’ morphed into an all-out civil war and political unrest across the region, from Libya in North Africa to Syria, Yemen, and Bahrain in West Asia, the bulk of our resources – from logistics to finance and manpower - has been devoted to the crafting and operationalization of rescue missions, especially in Libya and Syria.
With Syria entering its 13th month of uprisings, and the death toll surpassing the 8,000 mark, our policymakers have expressed growing worries about the fate of thousands of Filipinos – mostly undocumented and domestic workers – stuck in Syria, especially those in cities under constant bombardment by government forces. Beyond Syria, the nightmare scenario is if and when the uprisings hit the Persian Gulf, spreading from Bahrain into Saudi Arabia, United Arab Emirates, Qatar, Oman, and Kuwait, where almost 3 million OFWs reside, whether permanently or on temporary contracts.
Yet, there is another crisis that has been in the making for almost a decade which deserves our utmost attention. It is a brewing crisis that demands not only our intellectual curiosity, but also our operational and policy-centered concerns. The crisis in mind is the simmering conflagration concerning Iran’s nuclear standoff with the West and Israel. What makes this crisis of global concern is the fact that it goes well beyond the issue of a potential showdown between a regional power, Iran, and the global superpower, the U.S – and, of course, all the humanitarian tragedies and economic devastation that could follow.
Given Iran’s capabilities, geography, and importance as a global energy supplier, any conflict involving Iran could have major global repercussions, both in economic and security terms. In fact, we in the Philippines – like much of the world - are already experiencing a foretaste of how an Iran-West conflict could adversely affect our interests. Sanctions against Iran – complicating any form of large-scale financial transaction with Tehran - have not only halted our banana exports, amounting to tens of millions of dollars, but they have also prevented us from sustaining our oil imports from the country. Iran is not only facing problems with conducting dollar-denominated oil transactions, but the Philippines – like other U.S. allies – has also come under tremendous American pressure to halt imports from Iran lest we (and our business institutions) face sanctions under U.S. law.
Iran was our 3rd largest market for banana exports and among our top oil suppliers. For instance, in 2004, Iran provided between 70 to 110 thousand barrels of oil a day, making it among our top 3 largest suppliers. Sanctions against Iran’s Central Bank and myriad state-sponsored financial institutions have also made it difficult for Iran to push through with its investment plans in the country, especially in the energy sector, while thousands of Iranian citizens residing and/or studying in the country are facing difficulties with making dollar-denominated transactions between Manila and Tehran.
Moreover, unilateral Western sanctions against Iran’s oil exports, Central Bank, shipping lanes as well as ports, have reduced Tehran’s ability to keep global energy markets afloat. Worryingly, in response to sanctions, Iran has even threatened to close off the Strait of Hormuz, where a third of global sea-based oil transport occurs. The combination of tightening sanctions that are pushing Iranian oil out of global markets, and Iran’s retaliatory military threats, has sent energy markets – increasingly driven by speculative drive - into a tailspin, with oil prices rising between 25-30 dollars per barrel in recent months, or around 15 percent increase in average crude prices.
Shrinking Iranian exports have been counterbalanced by the unprecedented increase in Saudi output and strategic reserves’ release by developed (OECD) countries. The problem is that such countermeasures have led to a dramatic decline in global spare-capacity, reducing flexibility in global oil supply and making markets highly jittery. In countries such as the Philippines, which are highly dependent on oil imports (around 90 percent of our total oil consumption), have no strategic reserves, and suffer from the whims of deregulated oil markets where no significant regulatory supervision exists, growing volatility in global energy markets is placing - and will continue to place - a heavy (inflationary) burden on our economy – especially the transport sector. The problem with an oil price hike is that it is all-pervasive: any increase in oil prices will eventually exert an upward inflationary pressure on all basic commodities with inelastic demand.
There is another area where we are also feeling the heat. Rising oil prices – significantly influenced by sanctions against Iran – are placing a heavy burden on struggling economies in Europe as well as emerging markets in the South – both crucial to the stability of world economy. Our semi-export-oriented and investment-dependent economy – tied to major emerging economies as well as the Eurozone - is highly bound to global economic trends, so with rising energy costs undermining growth in China, Europe, Japan, and elsewhere, we stand to lose from further sanctions on Iran.
However, the true nightmare scenario is if upcoming negotiations in Istanbul (and in Baghdad) will not bear any substantial diplomatic fruit. Based on estimates by leading economists and forecasting agencies, any conflict with Iran could send oil prices to above $200 per barrel levels. This would effectively choke off the global economy. In fact, there is a growing consensus among experts that the Iranian crisis is the greatest threat to global economic recovery. If sanctions are further tightened on Iran and/or a conflict erupts in the Persian Gulf region – where 65 percent of world oil reserves are concentrated – we will most probably suffer the much-feared double-dip recession, one worse than even the post-Lehman Brothers crisis back in 2008.
We are also vulnerable on a different level. Within the Middle East, tensions between Iran and its Arab neighbors, especially Saudi Arabia, are rising. There are two reasons: first, the Saudis – together with other Gulf Cooperation Council (GCC) members – are leading the way in terms of replacing Iran’s oil in global markets; and second, the Saudi-led GCC is purportedly pushing for further non-economic measures against Iran. Of course, Tehran is (or could) beginning to see its Southern Arab neighbors as not only complicit in the current economic siege, which is undermining Iran’s very socio-economic fundamentals, but also as hands behind a possible military strike against its nuclear installations. This means that in an event of a conflict, Tehran might consider retaliating against any attack by using its considerable ballistic and asymmetrical capabilities against its immediate neighbors and Western military bases and interests placed within them.
There is also a sectarian angle: the uprising in Syria, Shia-led protests in Bahrain and Eastern Saudi Arabia, and growing Shia-Sunni rifts within Iraq’s political system, have already fanned the flames of sectarian conflict in the region. If a conflict erupts we might witness intensified proxy-war and even direct confrontation between Tehran and its regional allies, on one hand, and the pro-Western, anti-Iranian Arab countries, on the other. This would put millions of our OFWs in the region at the center of a regional conflagration.
Of course, an Iranian retaliation against a limited strike – by Israel or/and the U.S. - could very well escalate the conflict into an all-out war, and in that event major powers – with considerable stake in Iran and Middle Eastern affairs – such as China and Russia could step-in. This would practically mean a global war. This has been called a nightmare scenario for a reason.
However, even a more limited form of warfare, one between Iran and its adversaries, especially Israel, could also affect us. Already, there is an ongoing shadow war against Iran, with Western agencies intensifying their sabotage and assassination activities against Iran’s nuclear scientists, strategic military establishments, and nuclear sites. In response, Iran has vowed to bring those responsible to justice and retaliate against outright aggressions that have taken place within its own territories.
Some Western media outlets as well as Israeli politicians have accused Iran of orchestrating recent attacks in Georgia, India, and Thailand as a form of retaliation against terrorist acts within Iran. Last year, Western politicians even accused Iran of masterminding an assassination plot against the Saudi ambassador in Washington. So far, there has been no definitive evidence as to the validity of such accusations. There have also been reports that Saudis and Israelis were involved in propping up secessionist movements within Iran’s troubled regions, especially among Kurds and Balochi citizens.
However, we should bear in mind – as reflected by the commentaries of leading experts such as former CIA agent, Robert Baer - that Iran is known for having one of the most effective security-intelligence agencies (from the VEVAK to the Quds forces) in the Middle East, atop its bourgeoning cyber-warfare capability. After all, Iran is responsible for the development of the Hezbollah group in Lebanon, the only Arab entity to have not only credibly inflicted a defeat on Israeli Defense Forces (back in 2006), but also responsible for numerous successful operations against American and Israeli intelligence agencies in recent decades.
So, if Iran comes under attack or sanctions are pushed to an unbearable level, there is a high probability that Tehran will consider retaliating against all Western (and Israeli) interests across the world, through coordinated covert operations and sustained cyber attacks. This will effectively widen the theatre of war beyond the Middle East, encompassing much of Asia, Northern Africa, Latin America, and Europe.
It is for these reasons that we in the Philippines should watch and closely observe the Iranian crisis with greater interest and concern. Most of all, we should hope that there will be a diplomatic solution to the crisis. Our government should also use its membership within the Non-Aligned Movement (NAM) – with the next Summit to be held in Tehran – and leverage our strong ties with America as a means to encourage a diplomatic resolution to the Iranian nuclear impasse. None of us want further proliferation of nuclear weapons, but surely we also detest further strains on our economic stability and whatever semblance of international security we enjoy from.
An active diplomatic initiative on this front not only helps us to avert a potential global crisis, but most importantly it will serve as a vehicle for us to defend our national interests. Thus, the Philippines should join other Asians as well as rising powers, from China and India to Indonesia, Brazil, and Russia, that have opposed any sort of military threats and interventions and called for sustained negotiations, withdrawal of sanctions in exchange for Iranian cooperation, and a diplomatic resolution of the crisis. This is the best way to strike a balance between our international obligations and our national interests.
Javad Heydarian is a Manila-based foreign affairs analyst focusing on international security and development issues. His articles have been featured or cited in Foreign Policy in Focus, The Diplomat, Asia Times, UPI, the Transnational Institute and the Tehran Times, among other publications. He can be reached at: Jrheydarian@gmail.com.