Parsing the Schumer Plan
- By Richard Lourie
- Jun. 09 2008 00:00
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It's not only supply and demand that drives markets, it's fear itself. After the Israeli transportation minister threatened last week to attack Iran's nuclear facilities if Tehran continues with its program for developing nuclear weapons, the price of oil jumped more than $10 a barrel, sending the U.S. stock market down by 400 points.
In a recent Wall Street Journal commentary, U.S. Senator Charles Schumer proposed pressuring Iran to the bargaining table by imposing severe economic sanctions that could even "topple the theocracy." Germany and France are now ready to join with the United States and Britain in imposing sanctions -- though they will not be effective without Russia. China, the last key player, "may go along if everyone else will." This is the weakest link in his argument, which Schumer passes over with no further comment.
The country that matters most is Russia, because of its influence with Iran and because it has blocked sanctions in the past. The trick to getting the country involved, says the New York senator, is making Moscow "an offer it can't refuse."
That offer has three parts. The first is to "treat Russia as an equal partner when it comes to policy in the Caspian Sea region, recognizing Russia's traditional role in the region." The Russian response to this could well be: "Thanks, guys. And if we ever have any similar dealings with Canada, we'll be glad to treat the United States as an equal partner in the Great Lakes region." As one of the five countries that border the Caspian Sea, Russia has had diplomatic relations with Iran since the late 16th century.
The second part of the offer is to compensate for the $2 billion to $3 billion that Russia earns annually from its trade with Iran. The Russians, who have the world's third-largest currency reserves, might think: "What's the difference? Either way we end up with the same amount of money in our pocket, but if we go for the U.S. offer, we will alienate our good customer Iran, and that could cost us later. Besides, as we just saw, every time there are international jitters about Iran or the Straits of Hormuz, the price of oil jumps. If we're exporting 10 million barrels a day, a $10 jump brings another quick $100 million.
"In other words," the Kremlin concludes, "the Americans are offering to acknowledge us for something we already are and pay us money that we're already making -- part three better be good."
It is. Not all of U.S. President George W. Bush's idiocies had negative consequences. The ill-conceived plan to place a missile-defense system in Poland to counter Iran's threat at least provides a bargaining chip with the Kremlin. After being promised that NATO would not move "one inch" eastward after the collapse of the Soviet Union, Moscow now finds itself cordoned off from the Baltic to the Black Seas by NATO countries. Treated by Washington as the loser in the Cold War, Russia bristles at any reminders of the humiliation of the '90s. And so the U.S. missiles are more a matter of insult than injury. Withdrawing the proposed missile-defense system would be a recognition of Russia's return to great, if not superpower, status and a precondition for any further serious changes in the U.S.-Russia relationship.
The rub is that Russia might prefer to wait on that if it means damaging its long-term relationship with Iran. For some reason, the prospect of a nuclear Iran doesn't seem to worry Russia much at all. And if worse comes to worst, the U.S. missiles can always shoot the Iranian missiles down, can't they?
No, Schumer's is an offer the Kremlin can refuse and probably will. It will hold out for something it wants even more -- Ukraine kept out of NATO.
Richard Lourie is the author of "A Hatred For Tulips" and "Sakharov: A Biography."