Secret US-Iranian Dialogue Brings Oil Prices down, Shakes up Mid East Alliances

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Oil prices suddenly slumped Tuesday, July 8, as predicted by DEBKA-Net-Weekly on June 27, under the impact of the secret American-Iranian talks embarked on last month to solve burning issues by diplomatic engagement.
These talks between the US and Iranian delegations, representing President George W. Bush and Iranian supreme ruler Ayatollah Ali Khamenei, have yielded ad hoc understandings on controversial issues. One is an agreement not to allow the price of oil to rocket past $150 the barrel.
DEBKA-Net-Weekly‘s exclusive Gulf and Iranian sources disclosed that the bilateral negotiations were deliberately masked by the war fever engineered by Washington in the form of a stream of leaks indicating that a US or Israeli attack on Iran’s nuclear installations was imminent.
At the same time, neither nation has sheathed its military option. Those understandings are ad hoc and could well break down in the volatile climate generated by hard-line elements of Iran’s Revolutionary Guards, which are dead against deals with Washington.
The last in a string of belligerent statements issued by IRGC chiefs came from Ali Shirazy, senior Navy cleric, who said Tuesday, July 8: If the US attacks Iran, “we will immediately strike back at Tel Aviv. Our first target is Tel Aviv and only then will we attack US shipping in the Persian Gulf; their destruction will represent Iran’s crushing reprisal.”
Behind the saber-rattling, however, DEBKA-Net-Weekly‘s sources reported common ground was covered for three key objectives:
1. The American side was willing to refrain from military action against Iran before the end of the Bush presidency in January 2009, but could not promise Israel would not act unilaterally. In a bid to hold Israel’s hand, sources in Washington have been putting out semi-official comments that Israel is short of the intelligence and military capability for striking Iran without help.
2. Iran undertook to open the way for the US military to continue to go from strength to strength in fighting al Qaeda and the Sunni guerrilla insurgents in Iraq, to allow President Bush to claim his Iraq campaign had ended successfully before leaving the White House. debkafile‘s military sources report that Tehran ordered Iranian intelligence officers working undercover in Iraq to halt attacks on US troops by pro-Iranian militias, including Moqtada Sadr’s Mehdi Army. This has left US and Iraqi government force with free hands for large-scale operations against al Qaeda.
Iranian officers are also sharing useful intelligence on conditions in the field with American commanders.
3. In the background of the secret dialogue is the Bush administration’s ambition to help fellow-Republican Senator John McCain get elected to the White House.
debkafile‘s Iran experts comment that the revolutionary regime in Tehran has traditionally preferred a Republican over a Democrat in the White House since the days when its founder, Ayatollah Ruhollah Khomeini, helped Ronald Reagan defeat Jimmy Carter.
Some of these understandings are still work in progress, but the oil price ceiling of $150 was definitely agreed and resulted in the sharp fall in prices Tuesday, July 6 by $3.92 a barrel. Some traders attributed it to an ease in geopolitical tensions related to Iran’s nuclear program and a strengthening US dollar.
debkafile‘s sources question the first part of this assessment, finding no real ease in tensions around Iran’s nuclear program.
Monday, July 8, the US Navy’s Fifth Fleet announced American, British and Bahraini vessels were to launch a new exercise in the Gulf called “Stake Net,” to practice tactics and procedures for protecting maritime infrastructure such as gas and oil installations.
The exercise was launched in response to threats by more than one Iranian military chief to control shipping in the Gulf and Strait of Hormuz if Iran was attacked or its regional interests jeopardized.
The ball was picked up by the Revolutionary Guards which launched a retaliatory naval maneuver the next day.
Tuesday, too, the New York Times ran an article called “Nearer to the Bomb” by nuclear physicist Peter D. Zimmerman, former chief scientist of the US Senate Foreign Relations Committee. He wrote that all of Iran’s activities, especially in uranium enrichment, are evidence that its “near-term ability to make nuclear weapons is gathering strength.”
He further warned that once Iran begins enriching uranium to weapons grade on an assembly-line basis, “it could transfer this material to groups such as Hizballah and Hamas.” They could then “fabricate low-technology nuclear explosives with yields nearly as high as the bomb which destroyed Hiroshima.”
The understandings unfolding between Washington and Tehran have clearly impacted on Syria and Lebanon. One result was last month’s Doha accord for the election of Lebanese president Michel Sleiman, which has produced a new government in Beirut headed by the pro-Western Fouad Siniora with veto power for Hizballah ministers.
Washington has for the moment lowered the heat of political, economic and intelligence pressure on Iran’s close ally, Syrian president Bashar Assad and even Hizballah leader Hassan Nasrallah, permitting them to assume a role in political processes in Lebanon and the Middle East at large.
The bilateral understandings on Iraq have strengthened its Shiite prime minister Nouri al-Maliki, but even more dramatically revalued the Syrian president’s international legitimacy, although some aspects of his position are still under discussion between Washington and Tehran.
All the same, a senior Saudi official conversant with Lebanese and Syrian affairs put it this way: “On the face of it nothing has changed in Washington’s attitude towards Damascus, but in reality, it has undergone a transformation.”
The threats to the Assad regime have receded, notably the international tribunal for prosecuting the assassins of the former Lebanese prime minister Rafiq Hariri, and Washington has withdrawn its support for Syrian opposition factions.”
The Saudi official further commented: “A US-Iranian earthquake is rumbling under the surface of the Middle East, especially in Syria.”

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