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It's all about oil. The historical parallel is scary: The League of Nations, the U.S., the UK, Australia, and the Netherlands, which had territorial interests in Southeast Asia and the Philippines, condemned the Japanese attacks on China and applied diplomatic pressure. Japan resigned from the League of Nations in response. In July 1939, the U.S. terminated the 1911 U.S.-Japanese commerce treaty, which both showed official disapproval and removed legal barriers to imposition of trade embargoes. Japan continued its military campaign in China and signed the Anti-Comintern Pact with Nazi Germany, formally ending World War I hostilities, and declaring common interests. In 1940, Japan signed the Tripartite Pact with Germany and Fascist Italy to form the Axis Powers.
These Japanese actions led the U.S. to embargo scrap metal and gasoline, and to close the Panama Canal to Japanese shipping. The situation worsened, and in 1941, Japan moved into northern Indochina. The U.S. responded by freezing Japan's assets in the U.S. and instituting a complete oil embargo.<1> Oil was Japan's most crucial resource; her own supplies were very limited, and 80% of Japan's imports were from the U.S. The Imperial Navy relied entirely on imported bunker oil stocks.<2>
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Diplomatic negotiations with the U.S. climaxed with the Hull note of November 26, 1941, which Prime Minister Hideki Tojo described to his cabinet as an ultimatum. Japanese leaders felt they had to choose between complying with the demands of the U.S. and UK — backing down from its actions in China and surrounding areas — and continuing to expand. Concerned about losing status and prestige in the international community ("loss of face") if compelled to comply, and with the perceived threat to national survival posed by the western powers, the Japanese leadership (under Emperor Hirohito) decided to implement contingency plans, choosing war with the United States, United Kingdom, and the Netherlands as a direct response.http://en.wikipedia.org/wiki/Attack_on_Pearl_HarborThis response was just what LCDR Arthur H. McCollum hoped for when he wrote his infamous 8 part memorandum proposal in 1940: 9. It is not believed that in the present state of political opinion the United States government is capable of declaring war against Japan without more ado; and it is barely possible that vigorous action on our part might lead the Japanese to modify their attitude. Therefore, the following course of action is suggested:
* A. Make an arrangement with Britain for the use of British bases in the Pacific, particularly Singapore. * B. Make an arrangement with Holland for the use of base facilities and acquisition of supplies in the Dutch East Indies. * C. Give all possible aid to the Chinese government of Chiang-Kai-Shek. * D. Send a division of long range heavy cruisers to the Orient, Philippines, or Singapore. * E. Send two divisions of submarines to the Orient. * F. Keep the main strength of the U.S. fleet now in the Pacific in the vicinity of the Hawaiian Islands. * G. Insist that the Dutch refuse to grant Japanese demands for undue economic concessions, particularly oil. * H. Completely embargo all U.S. trade with Japan, in collaboration with a similar embargo imposed by the British Empire.
10. If by these means Japan could be led to commit an overt act of war, so much the better. At all events we must be fully prepared to accept the threat of war.
A. H. McCollum
CC-0p-16 0p-16-F Filehttp://en.wikipedia.org/wiki/McCollum_memoNow, back to the present. While the author of this next piece might not see the parallel, the facts laid out show history repeating itself: What's Behind The Crash In Crude Oil?
By Gary Dorsch
January 10, 2007
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Yet given a difficult investment environment and concerns over its nuclear program, Iran has been unable to upgrade its oil facilities, nor increase production capacity for the past few years. Oil production was stagnant last year, which resulted in the oil sector expanding by just 0.6% in real terms. Instead, Iran’s economy is being driven by higher government spending, which grew by 5.4% in real terms in 2006, the highest rate of growth in five years.
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The latest plunge in crude oil, perhaps inspired by Saudi Arabia, is likely to put a squeeze on Iran’s budget surplus, which could turn into a deficit if oil prices fall towards $45 per barrel. To finance the government’s subsidies, Iran’s central bank increased the broad money supply by 36% in 2006, sending inflation soaring to 14.6% in September. Tehran cannot afford to cutback on oil production and reduce its oil income, without cutting back on subsidies and risk riots in the streets.
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While apparently ruling out the military option for 2007, the Europeans and the US are quietly engaging in economic warfare with Iran, by demanding that international banks and oil companies to pull out of dozens of Iranian projects, including development of Iran’s two massive new oil fields Azadegan and Yardavan that could expand Iran’s output by 800,000 bpd over the next four years.http://www.kitco.com/ind/Dorsch/jan102007.htmlThe stakes at this point may be even higher for Iran now than they were for Japan in 1941. Why? Iran has reached Peak Oil as we did in 1970, and their production is declining at a staggering rate:Iran oil industry founders, report says
By BARRY SCHWEID
The Associated Press
WASHINGTON — Iran is suffering a staggering decline in revenue from its oil exports, and income could virtually disappear by 2015 if the trend continues, according to an analysis published Monday in a journal of the National Academy of Sciences.
Iran's economic problems could make the country unstable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.
Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern said.http://seattletimes.nwsource.com/html/nationworld/2003494872_iranoil26.htmlTalk about a New Pearl Harbor in the making!
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