The Iranian Refining Crisis: The Argument for Strategic Patience in Relations with the Islamic Republic of Iran
Abstract
The refining industry in Iran is facing a crisis caused by a growing shortfall in production capacity for gasoline and other light fuels to meet rapidly growing domestic demand. The industry is locked into a repetitive cycle of decline due to under-investment in new facilities and total capacity, massive government energy and automotive subsidies that encourage continued growth in demand, and a poor investment climate that discourages badly needed foreign investment in the refining industry. The shortfall in refining capacity causes the government to import fuel, the cost of which is growing beyond the government's ability to control it. This refining crisis creates an opportunity for the United States and its allies to exercise strategic patience in trying to influence the Iranian government's behavior in a direction more favorable to their interests. The Iranian government has historically demonstrated an ability to act pragmatically to stave off economic dislocation. It is reasonable to assume that they will do so again in response to the economic threat posed by the refining crisis. While a policy of strategic patience carries risk, the available evidence demonstrates that the current program of sanctions and economic pressure are unlikely to force a favorable change in Iranian behavior.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 15, 2008
- Accession Number
- ADA485480
Entities
People
- Allan M. Selburg
Organizations
- United States Army Command and General Staff College