Going after market's moral cohesion re: Iran

Interesting story on how the US is using the threat of attack (not specifically mentioned, but implied) to increase uncertainty of investments in Iranian energy projects. It appears that this effort is proving successful as foreign banks/companies pull out of projects needed to sustain current production levels (the only wild card is China). This is a form of financial systems sabotage. It is also a good example of how states can use 5th generation warfare to their own advantage (from an earlier post):

Within this new calculus, actions that undermine the moral psychology of these markets vis-a-vis the target country, is the new measure of victory. Market psychology (of investors, trading partners, etc.) is marginally influenced by traditional terrorism. Systems sabotage is different. It can radically impact market psychology by building uncertainty (kryptonite for markets), menace to contracted export flows (resources in this case -- 1/3 of Europe's natural gas comes from Russia), and mistrust (a flight to alternative suppliers and investment opportunities).

Comments

[dan tdaxp]

How is this "5th generation warfare"?

[londamium]

The problem with the strategy is that blowback via the pricing mechanism can be quite severe - especially in tight markets; there's little doubt that the gas price spikes of Summer 2006, motivated in part by the oil market fear premium of another Persian Gulf war, had an effect on the "moral cohesion" of US voters.

External "wild-cards" are liable to play a part as well: a cold winter, another bad GoM hurricane season, depletion issues, a well-executed terrorist attack are all capable of "rebalancing the equation".

As a medium-term strategy, this is unlikely to succeed - especially if the PO proponents are correct in asserting that we are currently on the bumpy plateau.

[John Robb]

Exactly, which is usually the case due the asymmetry of 4th and 5th GW. Break the market, we lose. Break the state, we think we win, but we ultimately lose.

[Ben Hyde]

Boy it could be bad if Microsoft found out about this technique!