Transcript (Edited) – The Corona Virus Spreads Through The Middle East (Continued) – Part One. KGNU 1390 AM, 88.5 FM – Hemispheres, Middle East Dialogues with Ibrahim Kazerooni and Rob Prince. Tuesday, April 28, 2020. 6-7 pm Mountain Time. Hosted by Jim Nelson.

Coronavirus – Tunis. Photo Credit: Admed Zarrouki

KGNU – Hemispheres – Middle East Dialogues – April 28, 2020

_________________________

Iran thus is facing a three part crisis: the economic crisis caused by the sanctions and the drop in oil prices, the Coronavirus and now the threat of war has resulted in a huge challenge to the Iranian government, although on the other had, economically they have been able to produce non-oil exports in order, literally, to stay alive.

– Ibrahim Kazerooni. KGNU. April 28, 2020 – 

_________________________

Jim Nelson: Good evening and thanks for tuning in to Hemispheres; I’m your host Jim Nelson and thanks for tuning into listener-supported radio at KGNU Boulder-Denver-Ft. Collins, kgnu.org for those listening on line.

Rob Prince: There is a tendency in the United States – not just here, but here it’s particularly strong to view this pandemic only within the limited framework of what is happening in our country as if what is happening in the USA itself is enough or is separate from how the pandemic is growing/playing itself out globally.

We are dealing with a phenomenon that is truly global and we need to look at how it moves across the world.

Oil

Let’s start with the collapse of oil prices. the strangest thing…but those of you who have followed the oil markets in recent years…perhaps not as surprising as it seems.

– On April 20, the price of oil (bought in the United States) went below zeros for the first time in its history. Sellers are actually paying buyers to take oil… Oil has no price

Ibrahim Kazerooni: Before we move on into the oil glut, let’s remain focused on one or two issues within the Middle east.

I agree that starting the discussion with oil when you want to talk about the Middle East is inseparable – the production, selling of oil. Any threat to oil becomes existential for the Middle Eastern countries.

Just before the program started there was a BBC report from Lebanon related to the economy and healthcare in light of the current pandemic. This oil glut, oil crisis plays out its own dynamic when it comes to the pandemic in the Middle East, particularly when it comes to the case of Iran.

From the 1979 beginning of the Islamic Revolution, Iran has literally been under economic sanctions, military sanctions by the United States. Since then, the United States has never shied away from using oil excess capacity of various countries (Saudi Arabia) to break Iran’s back, it’s oil based economy. It has used this weapon against Iran as well as Russia and a few other countries., but it has been done specifically with regard to Iran.

In this most recent crisis of which we have to suffer the consequences – again – it was triggered in someway with “the green light” from Washington. The intended victims were supposed to be Iran and Russia, without taking into consideration how an oil glut would undermine the generally unstable shale industry/fracking in the United States.

Now the United States is paying a price for this as is this shale oil industry.

The shale oil industry is unstable by default (meaning that it is highly subsidized and to be profitable requires the price of oil be above a certain level). It needs to sell its product to survive, but the problem is that both the Canadian and U.S. shale industry is in trouble as now the market for oil has collapsed. There is no storage capacity, air travel has come to a halt, factories have closed down, people don’t drive, etc.

Rob Prince: There is a major factor Ibrahim, in that shale production is a highly subsidized industry and for it to function the global price of oil must be somewhere above $50 a barrel.

Ibrahim Kazerooni: The initial modus vivendi of the shale industry was to borrow the money (the subsidies) to break even was around $35/barrel but yes, they were hoping that the price would be somewhere between $45-50/barrel to stay profitable.

In the case of Iran, we have two issues that exist side by side.

Iran suffered from the pandemic and lost a huge number of people – I personally have lost a number of friends to the coronavirus. The economic consequences along with the sanctions and the low price of oil certainly comes into play as a factor in giving the Iranian government the tools to provide some kind of a cushion for the Iranians, permitting them to participate in self-isolation and to stay at home. Because there is no money. Iran cannot provide that kind of support the population.

Yesterday, the day before, (April 27, 2020) I have been watching people pouring out into the streets, going to work (in Iran). They all argue that they cannot stay at home because they have to work, to earn a living to provide food, etc., for their families and the government is unable to help much as a result of the impact on sanctions.

Coming back to the crash in oil prices… It certainly has had a huge impact on the Iranian population and has hampered its ability to address the health issues caused by the pandemic. The BBC reported that the economic nosedive will adversely effect healthcare and the manner in which hospitals can deal reducing and containing the pandemic.

Iran has already started the second phase – Phase Two – of the pandemic. But they are hoping that this time they will be able to contain it better.

In a more general sense, the Coronavirus pandemic has now spread right across the Middle East. It is not just localized in Iran. All other countries in the region are suffering to one extent or the other.

Another consequence of this pandemic is that there is now a new threat against Iran as the United States has stated that it intends to go to war; Washington is pushing for confrontation using the pretext that the Trump Administration has given instruction to its ships in the Persian Gulf – that if any ship is perceived to be a threat, the Trump Administration has given the permission to shoot at it.

The problem is that the Iranians have already said that if one bullet is fired at one of its speed boats …”then the gloves are off” – which means that they are going to attack . The case of the Iranian missile attack on the Al Asad military base (in W. Iraq) proved that only does Iran have the capacity, they are daring and they are prepared to use that capacity to attack irrespective of what happens.

What is going to happen – and this is why Arab commentators are talking about this – is that if one Iranian ship is sunk, then we, the Arabs, are going back to the stone age because Iran will attack the entire oil industry in the region without discrimination.

Just imagine if Washington would start a war in order to increase the price of oil, in order to help prop up its domestic oil shale industry – what will happen if all these refineries and oil wells (in the Middle East) are going to be shut down – what would be the price of oil then?

This needs to be considered.

Now keep in mind, the United States does not want to go to war deliberately but it could get drawn in by accident. Whether it is by accident or by design, there is a possibility of war now in addition to the Coronavirus and the economic sanctions.

To deal with the Coronavirus, the Iranians now have reduced the number of hospitals nationally to one or two in big cities – rather than in every city. That will result in a huge amount of loss of life on the Iranian part as any people coming down with the virus cannot be transported to hospitals close by, They have to travel somewhere else and even after arriving at those city hospitals, the resources are not available.

Iran thus is facing a three part crisis: the economic crisis caused by the sanctions and the drop in oil prices, the Coronavirus and now the threat of war has resulted in a huge challenge to the Iranian government, although on the other had, economically they have been able to produce non-oil exports in order, literally, to stay alive.

This is one of the fundamental problems that Iran faces. The situation is going to get worse so long as the economy is not getting better. The Chinese and Russian aid is helping, but it is just repressing the casualty rates, keeping the numbers down. But I am worried that something could happen to ignite the situation which will result in a huge number of problems in the region.

Rob, you spoke earlier about the oil glut, can you explain its origins.

End – Part One…

Iranian couple wearing protective masks to prevent contracting a coronavirus walk at Grand Bazaar in Tehran, Iran February 20, 2020.