Between Iran and a Hard Place

Forced to choose between high gas prices and a nuclear Iran, Barack Obama could very well remake himself into a war president.


When U.S. President Barack Obama enters his White House meeting with Israeli Prime Minister Benjamin Netanyahu on March 5 — angling to dissuade Israel from attacking Iran’s nuclear facilities — there will be one seemingly mundane issue on his mind that he may be too uncomfortable to share with his guest: gasoline prices.

There is no gainsaying the corrosive political impact that high gasoline prices have on an incumbent president’s chances of getting reelected. With prices projected to hit a national average of $4.25 a gallon by Memorial Day, and with a new poll finding that seven in 10 Americans find the gas price issue "deeply important," the president should be concerned. The tension with Iran has already pushed crude prices to their highest level since the onset of the Arab Spring, adding at least 30 cents to a gallon of regular gasoline. Investors, concerned about potential escalation in the Persian Gulf, are likely to push oil prices even higher. Other factors — a decline in the dollar, tensions and supply disruptions in oil-producing nations such as Nigeria and Sudan, stocks building up in refineries in preparation for the summer driving season, and a sense that the American economy is improving, to name a few — have also contributed to the upswing.

No one recognizes the political implications of high fuel prices during an election year more than Obama himself. During the summer of 2008, when he ran against Sen. John McCain, oil prices stood at a historical high of $147 a barrel and gasoline prices surpassed $5 a gallon in some parts of the country. The Republican response — for the most part "gas-tax holiday" and "drill-baby-drill" sloganeering — demonstrated the incumbent party’s helplessness in the face of an out-of-control oil firestorm. At the time, the crisis worked in Obama’s favor. Today, it’s the GOP’s turn to smell blood. Obama knows this. The problem is that Netanyahu, one of the savviest foreign leaders when it comes to American politics, knows this too.

Israel, meanwhile, is running out of patience with diplomatic responses to Iran’s nuclear program, and the momentum for Israeli airstrikes is growing by the day. The economic sanctions against Iran may be biting, but they’re not crippling. Iran is moving full steam ahead with its uranium-enrichment activities, and Israeli Defense Minister Ehud Barak, who also visited Washington this week, says that Iran will shortly reach a "zone of immunity" in which military intervention by the outside world may no longer be feasible. The recent string of apparent Iranian attacks against Israeli diplomats in Bangkok, New Delhi, and Tbilisi have strengthened the perception among Israelis that the regime in Tehran is a loose cannon, while the shameful display of cynicism and apathy at the U.N. Security Council by China and Russia in the face of Bashar al-Assad’s atrocities have reminded the Israelis of how unreliable the international community can be when it comes to their national security.

Fed up with the vague official U.S. line that "all options are on the table" when it comes to Iran, Netanyahu is reportedly going to ask Obama to harden the rhetoric against Tehran and make some unequivocal statements about the United States preparing for a military strike in the event that Iran crosses certain red lines. If Obama refuses to oblige, it would expose clear daylight between the two leaders just as they share the same podium at next week’s annual conference of the American Israel Public Affairs Committee. It would also expose Obama to harsh GOP accusations that he is weak on Iran. Acquiescence, on the other hand, would elevate the temperature in the global oil market, driving prices to a higher level and deepening Obama’s gas price predicament.

As if the horns of this dilemma don’t poke enough, Obama has another mine to diffuse: the potential of an Israeli military strike on Iran prior to the November elections. Should such an attack take place — regardless of its success in destroying Iran’s nuclear sites — the short-term implications for the global economy could be dire. A war in the Middle East means an oil shock and, as was the case in 1973, 1979, and 1990, oil shocks are harbingers of recessions. In testimony before the Senate Budget Committee last month, Federal Reserve Chairman Ben Bernanke warned that a major disruption in oil supply could put the kibosh on the recovery. Indeed, a new oil shock would be just as dangerous as a second heart attack for a fragile patient who is just recovering from his first.

Getting an Israeli commitment to hold its planes on the ground until after the November elections means Israel would have to postpone the attack by at least a year, as a winter strike is more difficult to execute. This is a non-trivial request that — if even considered — would come at a hefty price. While such a quiet agreement would never be publicly acknowledged, there would be telltale signs galore. The release of imprisoned spy Jonathan Pollard, a job-creating U.S. weapons deal, or an overturning of the decision to cut missile-defense spending for Israel in the administration’s fiscal 2013 budget proposal would indicate to the outside observer that the president may have bought himself more time.

But there is another possibility. Instead of postponing the inevitable crisis, the president may decide to own it.

Some historical perspective is helpful here. Forty-five years ago, America was embroiled in a protracted and costly war in Vietnam. Yet President Lyndon Johnson, a Democrat, gave Israel a "yellow light" to preemptively attack Egypt, knowing that such a nod meant stirring the hornets’ nest of the Middle East, an oil shock, and an escalation in the Cold War. Today, the risks of an Israeli attack for the international system are no smaller. While such an act could be a stunning success, it could just as easily unleash a chain of events that would bring the world to the brink of the Greater Depression.

The key difference between then and now is that Johnson did not run for reelection, and could therefore afford to turn on the yellow light and depart from the scene. Obama, by contrast, wants a second term and cannot afford to relinquish control over what could be a spiraling international crisis. If all other measures fail, Obama’s only way of turning lemons into lemonade is to take ownership of, and lead, the military option against Iran, and reinvent himself as a war president in the hope that American motorists will view their pain at the pump forgivingly as part of their patriotic duty. Such an option would also defuse Republicans criticism about Obama being weak on Iran and transform national priorities in the months leading up to the elections.

The link between barrels and bombs — or bunker busters, to be precise — has never been more apparent. And, regardless of what transpires, there is an important, widely ignored lesson in the nexus between the two. For decades, American politicians and pundits have toed a line that calls for the United States to reduce its dependence on foreign oil in order to insulate Americans from the volatility of the Middle East. The only difference between the two parties has been that Republicans advocate supply-side, drill-baby-drill tactics while Democrats prefer dieting and demand reductions through fuel-efficiency standards.

These two responses combined have dramatically reined in America’s oil imports in recent years. Since 2005, oil imports as a share of overall oil use in the United States have fallen from their 60 percent peak to 46 percent, or 1995 levels. In just seven years, in other words, the United States has reduced its demand for oil imports by an amount equivalent to three times the oil imported by the United States from Saudi Arabia. Though some of this is due to the recession, most of the credit goes to a ramp-up in domestic oil production, enabled by technologies such as deep-water drilling, hydraulic fracturing, and horizontal drilling as well as increased fuel efficiency in vehicles. Pundits and energy experts now declare that America is on the road to self-sufficiency.

But here’s the rub: Over the same period of time, oil prices have nearly doubled and the price of a gallon of regular gasoline has increased by 65 percent. In fact, U.S. drivers spent more last year on gasoline than ever before. Should the price of gas hit $4.25 a gallon by the spring, as the Oil Price Information Service predicts, that would represent an 85 percent increase over the 2005 price. The experience of the past seven years reveals nothing less than the collapse of the very energy security paradigm that dominated America’s political discourse throughout the tenure of no fewer than eight consecutive presidents and 20 Congresses. Americans were promised that if they drilled more and saved more they would pay less. They did both, and they’re paying more.

Why? Over the past 45 years, America has failed to address the real root of its energy vulnerability: oil’s virtual monopoly on transportation fuel, enabled by the fact that, for the most part, cars sold in America are made and warrantied to run on nothing but petroleum fuels. As long as most cars are off-limits to competing fuels — whether electricity, gaseous fuels, or liquids made from biomass, coal, or natural gas — American motorists and presidents will be financially and politically vulnerable to the convulsions of the Middle East, regardless of how much we drill at home or how efficient our cars are. Only once Americans have cars that encourage fuel competition, thereby eroding the strategic importance of oil, will American presidents be able to pursue the country’s foreign policy objectives without fearing shock at the pump. But that’s likely small consolation for President Obama as he considers the threats posed by high gas prices on one hand and a nuclear Iran on the other, and his political future — not to mention the fragile health of the U.S. economy — hang in the balance.

Gal Luft is Co-director of the Institute for the Analysis of Global Security.

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