Persian Puzzle
With hindsight, Iran's nuclear program appears to be more sophisticated and dangerous than anything going on in Iraq after UNSCOM dismantled Saddam's last attempt to get the Bomb in the mid-1990s. The country we invaded turned out to be a Potemkin village full of walking booby traps, and our presence there has eroded the leverage available to us in dealing with the threat posed by Iran. The approach suggested in yesterday's New York Times editorial is probably as good as any still available to us. It advocates relying on collaborative diplomacy with sizeable carrots and sticks. Unfortunately, this ignores the energy dimension, which remains Iran's trump.

Three years ago the global energy supply could and did lose production equal to Iran's without creating a severe price spike. When Venezuela's oil workers went out on strike, eliminating 2.3 million barrels per day of oil exports, other producers quickly filled the gap. Prices went up for a few months, and then came back down. Since then, though, the combination of rapid demand growth, persistent production problems in several countries, and a conservative approach to new oil investments has eliminated that cushion. Iran's leaders know this.

Although it is just possible that the US and EU could put aside our present differences in order to present a common front to Iran, it is hard to imagine that Iran would sit still for the imposition of joint sanctions without playing the oil card. The existence of this option reduces the likelihood that Iran would take the threat of sanctions seriously enough to abandon its nuclear efforts. In effect, Iran already holds something nearly as good as a nuclear deterrent: the ability to throw a world oil market that is balanced on a knife edge--at twice its historical average price--into chaos.

Unfortunately, the diplomatic stalemate described above raises the odds of an eventual military confrontation. The consequences of a crisis over Iran's nuclear program are unpredictable and potentially disastrous, but in spite of that, the crisis seems all but inevitable.