1 Is the conventional view accurate?
The conventional view holds that the events in Bahrain were a once in a generation opportunity for Iran to increase its regional power. However, the Persian Gulf Cooperation Councils (PGCC) intervention in Bahrain has significantly undermined Iran’s growing regional influence, and the opportunity has passed.
2 Threats to global food and energy security
Less well known are the vulnerabilities of the PGCC. The PGCC is dependent on food imports from the Organisation for Economic Co-operation and Development (OECD), and OECD food production is dependent on direct and indirect cheap oil imports from the PGCC. As cheap oil becomes increasingly scarce the stability of the major oil importing countries of the OECD will be threatened. As a result food prices may increase much faster than oil prices. This could pose major food security challenges for the PGCC, which could threaten the stability of the PGCC, which in turn threatens the stability of the majority of the worlds remaining cheap oil exports. As a result a vicious global cycle of energy and food insecurity may develop.
3 The rise and fall of the power of Iran, self sufficient in oil and food.
Initially Iran’s fortunes may be expected to rise considerably as its neighbours begin to struggle with increasingly severe food and water security issues. This article explains how these advantages may become significant vulnerabilities.
4 Is the conventional view accurate?
The conventional view is summarised by George Freidman of Stratfor’s analysis in his recent interview with Jim Paplava on the Financial Sense News Network regarding the next ten years. His analysis is as always based on an extrapolation of certain assumptions.
According to this standard view Iran is now disadvantaged by the recent deployment to Bahrain of Persian Gulf Cooperation Council (PGCC) forces. Iran does not posses the capability to provide significant logistic or military support to the civilian population of Bahrain; therefore any pro-democracy forces will likely be suppressed by the PGCC’s military intervention. Unfortunately the assumptions in the conventional view often fail to cover certain underlying structural challenges now increasingly being confronted by the world.
5 Does the PGCC have hidden vulnerabilities?
In broad strokes we see several global issues emerging. Firstly, oil runs like blood through the veins of the global economy, with cheap, high Energy Return On Invested (EROI) oil critical to the existence of modern civilisation. As cheap to produce, High EROI oil becomes increasingly scarce the oil profits which are critically dependent on the difference between the cost of production and its sale collapse. On current trends we see a catastrophic exponential fall in the available supply and export of high EROI liquid fuels over the next decade. With US and North American high EROI oil production almost disappearing over the next decade. The same is true throughout almost the entire OECD.
6 The dependence of food production on oil
In the developed world, for every calorie of food produced, almost twenty calories of fossil fuel are consumed. The main grain exporters depend on intensive use of fertilizer and industrial mechanisation to grow, process and distribute their food exports. For example in the UK up to 80% of wheat yields are as a direct result of the use of fertilizer and pesticides. In addition fuel is used in machinery to sow, dry, process and transport the final product. As a result we expect that global grain exports which are predominantly sourced from the oil importing OECD countries will be significantly constrained by a reduction in the export of cheap (High EROI) oil from the PGCC.
7 Cheap oil, cheap food
8 The emerging food security challenges of the PGCC
9 Costly oil expensive food
10 Water Insecurity
11 Lack of insight
12 The contrast with “Iran”
13 The Iranian Cultural Region
14 Time is not on the side of the US, OECD or the PGCC
15 The true challenge for Iran
16 Proprietary research
17 The inner edge of the zero survival point
Please note: This analysis was correct before recent events in the Middle East, North Africa and Japan. These recent events may have further shortened the time available to implement mitigation strategies.