What They Are Doing To Themselves...

Now this is interesting (HT: Blue Crab Boulevard...)

The last line is the telling one: to paraphrase, what the Iranians are doing to themselves is
much worse than anything we could do to them.

First: Iranian oil and the accompanying revenues will start to run out over the next several years, with a 10%-12% decline per annum, meaning, according to the link, that Iran will cease to be a significant oil producer by 2015.

Second: Iran is not investing in its oil industry, and as a matter of fact has a very lopsided economy. Oil revenues are 65% of the Iranian governement's revenues, which means that the non-oil economy can only support 35% of Iranian government spending. Heavy subsidies for many basics means that the Iranians are, fundamentally, eating their oil, or at least consuming it.

Third: this explains why the Iranians are so adamant about developing nuclear power. They are faced with the devil or the deep blue sea: either they drastically reduce their exports NOW in order to supply their own domestic demand in the future - which would be actually the economically sensible path - and then face massive popular protests when Iranians realize how fundamentally poor they are - subsidies prevent that from happening right now - or they have to have an alternative source of energy.

Doesn't mean that they aren't developing nuclear weapons, it's just that they are trying to finesse acquiring them as a neccessary part of their own development.


Iran is in many ways exemplary for the Arab world and its abject failure to modernize and to make their own futures: they have squandered their oil billions, either on populistic measures that buy temporary stability or on ambitious political and military projects that serve to stabilize the government control of the population.

There are some exceptions: some of the Gulf Emirates have built up significant infrastructure and world-wide holdings that can provide them with a more than comfortable income stream for the foreseeable future. These are small countries, though, with limited demographic problems. Countries like Iran don't have that option anymore. Their demography is working heavily against them, the same demographic development that they embarked on decades ago, aimed basically at increasing their populations such that they would have more than adequate number of soldiers to throw at Israel (this followed from some analysis I saw after Yom Kippur, that basically Egypt lost because they failed to field enough soldiers that would have kept the Israelis permanently on the defensive, unable to risk an attack because of the need to maintain the necessary reserves to counter all the forces fielded).

But fundamentally the Arabs and Iran have squandered what should have been able to upgrade the economies of the area so as to provide an industrialized future.


It's intriguing to think that ultimately the Arabs and Iran invariably screw things up without the West having to do anything about them. I remember reading in the early 1980s about the Iraqi plans to establish their own aircraft industry, developing their own ground-attack aircraft and munitions, of using their oil monies to establish modern industries and develop their country. I remember reading, again in the 1980s, of the massive Iranian investments into engineering schools and technical academies in order to gain the critical mass that they needed to develop indigenous industries.

I don't think at all that their is something "wrong" with Iranians, with the Arabs. There isn't: you can see how many flourish and thrive in the West. But there is a fundamental charachter flaw in Arab, in Iranian culture: the apparent inability to maintain long-term commitments to change for the length of time needed to actually implement the changes. I put it down to the fatal flaw of these cultures. There is an inability of transformation, an inability to combine traditional ways with the demands of modern society.

It is the tragedy of the Iranian and Arab world that they have failed to understand - or have wilfully ignored, or willfully denied - that you cannot have long-term scientific development and the resulting improvement of living standards without coming to some sort of reconciliation with the past. For them, Islam is the core of life, the Koran is not merely their "bible", but rather the literal word of God and as such not subject to interpretation and "modern" rational analysis.

That is the tragedy of what they are doing to themselves. That is the greatest tragedy.


Unless, of course, they do build their own nuclear weapons and destroy Israel, with the resulting destruction of Arab and Iranian culture for generations to come in Israel's retaliation and vengeance strikes.


The question now? How to manage the coming collapse of the old-tier oil economies - not economies using oil, but rather the economies that depend on selling oil - while avoiding the human costs of general collapse in the Arab world and Iran. And while at the same time managing the transition from oil-based economies to ... something else.