There may be only one thing dumber than getting addicted to consuming oil as a country — and that is getting addicted to selling it. Because getting addicted to selling oil can make your country really stupid, and if the price of oil suddenly drops, it can make your people really revolutionary. That’s the real story of the rise and fall of the Soviet Union — it overdosed on oil — and it could end up being the real story of Iran, if we’re smart.Tommy continues:
How Russia deals with its oil and gas windfall [because of the currently high prices] is going to be a huge issue. But today I’d like to focus on how the Soviet Union was killed, in part, by its addiction to oil, and on how we might get leverage with Iran, based on its own addiction.
Economists have long studied this phenomenon, but I got focused on it here in Moscow after chatting with Vladimir Mau, the president of Russia’s Academy of National Economy. I mentioned to him that surely the Soviet Union died because oil fell to $10 a barrel shortly after Mikhail Gorbachev took office, not because of anything Ronald Reagan did. Actually, Professor Mau said, it was “high oil prices” that killed the Soviet Union. The sharp rise in oil prices in the 1970s deluded the Kremlin into overextending subsidies at home and invading Afghanistan abroad — and then the collapse in prices in the ’80s helped bring down the overextended empire.
What? Spot was sure that it was Ronald Reagan who single-handedly brought down the Russkies. You could ask Jonah Goldberg!
So if oil prices fall sharply again, Iran’s regime will have to take away many benefits from many Iranians, as the Soviets had to do. For a regime already unpopular with many of its people, that could cause all kinds of problems and give rise to an Ayatollah Gorbachev. We know how that ends. “Just look at the history of the Soviet Union,” Professor Mau said.
In short, the best tool we have for curbing Iran’s influence is not containment or engagement, but getting the price of oil down in the long term with conservation and an alternative-energy strategy. Let’s exploit Iran’s oil addiction by ending ours.
Tommy, you're a genius! You probably shouldn't have put it in the newspaper though, because the Iranian government might read it. Then the cat would be out of the bag!
Maybe in a score of years, Spotty. And don't forget that the US is not the only net oil consumer. China and India and the rest of the developing world have a voracious appetite for the stuff, too. That's why the prices are so high. Or as Mr. Friedman might say, the world is getting flatter!
Thanks for the reality check, grasshopper. Spot has become very impressed with your thinking lately. So maybe we don't really have Iran over a barrel, so to speak, after all. You know, we might have to talk to them.
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