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Who is Stronger: Iran or the West?

Politics / Iran Feb 19, 2012 - 12:12 PM GMT

By: Pravda


While developed countries continue to print their money as fast as they can to overcome the debt crisis, investors turn their heads to the East. The West introduced sanctions against Iran, but it appears that the Islamic Republic is capable of throwing the world economy into deep crisis.

The European consumers of Iranian oil shudder at the thought that Iran may block the Hormuz Strait in response to the economic sanctions from the West. If it happens, all the efforts aimed at overcoming the financial crisis, will be wasted in an instant.

Tehran holds the indisputable advantage in the Islamic world: the Iranian economy is the strongest one. As long as the United States stays afloat with all its debts and problems, Iran will manage to stand the hardship for months. Just a few months will be enough for the country to cause global economic depression.

There is one problem, which many Western countries have. They still consider the Islamic Republic a wild country with a wild regime that exists owing to its oil riches. However, the efforts of the Iranian administration have already brought their results. Iran has left Turkey behind in terms of the GDP. The country has been successfully developing its space industry, machine-building and nuclear industry, not to mention the field of nanotechnologies. There is nothing surprising about the fact that Iran has become of the "hottest hotspots" in the Middle East. Nowadays, Iran can exert serious influence on major international events.

Not so long ago, few people believed that Iran could block the Hormuz Strait. The USA quickly made up a resolution, which labeled Iran an empire of evil. Iran has been trying to prove it to everyone that the countries of the Arab world can be as important in global economy as Western countries are. Everything that the West can do in return is to answer with a wall of silence and misunderstanding.

However, the Iranians know what may happen in case they decide to block the Hormuz Strait. The crisis pushes the prices on WTI oil higher and higher, whilst the economies of the G7 countries decline speedily. Washington is interested in interfering in Iran's internal affairs under the guise of noble actions. Europe puts on a brave face saying that it will be purchasing oil from Saudi Arabia. However, European official realize that they will have the hardest time. Saudi Arabia can increase its oil output by only two million barrels a day. This is only one side of the coin.

The other one shows us unpleasant consequences for the reduction of demand on fuel in developed countries. Everything that has been achieved so far in the struggle against the debt crisis can be wasted. Italy and Spain have just succeeded in reducing refinance rates. However, the economies of these two countries can be destroyed if Brussels intends to put Iran's nose out of joint. The countries that depend on the Iranian oil do their best not to notice the "Iranian problem."

It is worthy of note that Iran exports most of its fuel to China (20%), Japan (18%) and India (16%). Europe is not the largest customer at this point. None of those countries consider the embargo a justifiable move.

Darya Deryabina


Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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20 Feb 12, 18:58

Who's shuttering, not even the French. Iran a hot spot? I have several friends with family in Iran and a friend who visited a few weeks ago. They all say the economy for the average person is terrible.

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