Iran invasion costs would dwarf those in Iraq

Tuesday January 30 2007

As tension rises between the US and Iran, Econbrowser provides a useful overview of the economic fallout of any US military strike against Iran.

The blog cites a 54-page report from the US thinktank the Centre for Strategic and International Studies, written by Anthony Cordesman - one of Washington's best armchair generals - and Khali al-Rodhan.

Called Iranian Nuclear Weapons? Options for Sanctions and Military Strikes, the study indicates that discussion of a military attack against Iran well predated the Bush administration's sabre-rattling against Tehran of past weeks.

After running through various scenarios, from limited effect on oil prices (best case) to a closure of the Straits of Hormuz (worst case), Econbrowser concludes: "In sum, the expected value of the costs associated with military action in Iran would likely dwarf the direct fiscal and non-pecuniary costs that we have already incurred in Iraq."

As part of its campaign to isolate Iran, the US is putting pressure on European countries to cut economic and financial ties with Iran. But as the International Herald Tribune reports, European governments are dragging their feet in freezing Iranian assets or blocking transactions between European and Iranian banks.

David Seaton's Newslinks picks up on an agreement signed over the weekend by Royal Dutch Shell and Iran that could lead to a multi-billion dollar investment in Iran, which has not gone down well with the US.

"Europe is not willing to sacrifice strategic energy supplies to make life easier for a lame duck American president whose short hairs appear to be in the possession of the Israeli Likud... Does this gang of idiots actually have the chops to sanction European flagship, Royal Dutch Shell?"

By Mark Tran / USA 03:02pm