Editorial from PINR

In the lead-up to the February 2 meeting of the Board of Governors of the International Atomic Energy Agency (I.A.E.A.), it is clear that the E.U.-3 (United Kingdom, France and Germany) have moved closer to Washington's line on the case of Iran's nuclear research program.

Nevertheless, it is not clear that referring Iran to the U.N. Security Council will result in effective sanctions against the country. The E.U.-3 moved closer to Washington's line only after the Bush administration moderated its tone on Iran and did not demand the E.U.-3 commit to tough sanctions or military action. Furthermore, while Iran and China have stated that they want Iran to resolve its nuclear issue with the I.A.E.A., both countries have failed to pressure Iran significantly on the issue.

As oil prices approach US$70 a barrel, any move to place meaningful sanctions on Iran will result in oil price instability. Oil prices have moved upwards simply because of Iran's diplomatic standoff with the E.U.-3; if Iran were actually faced with economic sanctions, more volatility would enter the energy markets. These concerns make it difficult for the United States and the E.U.-3 to effectively pressure Iran; Tehran has used this issue to its advantage in pressing for its objective of controlling the nuclear fuel cycle.

On February 2, watch how Moscow and Beijing act in the I.A.E.A. Unlike the United States and the E.U.-3, Russia and China have shown less concern over Iran's nuclear research program. Moscow and Beijing are actively involved in military and energy trade with Tehran. Their level of support for Iran in the I.A.E.A. and in the U.N. will largely determine Tehran's reaction to Western pressure on its nuclear research program. [See: "Intelligence Brief: Iran"]

Increased Instability in Nigeria
The release of four foreign oil workers on January 30 by a previously unknown militia group underscores the chronic instability in the Niger Delta region of Nigeria.

The oil workers were kidnapped by militants at Shell's offshore EA oil rig on January 11. While the group that claimed responsibility for the kidnappings -- the Movement for the Emancipation of the People of the Niger Delta -- is previously unknown, it has links to prominent local leader Mujahid Dokubo-Asari, the imprisoned leader of the Niger Delta People's Volunteer Force (N.D.P.V.F.). Indeed, the kidnappers initially demanded the release of Dokubo-Asari in exchange for the hostages' freedom; the kidnappers also demanded that Shell pay local communities US$1.5 billion to compensate them for the environmental pollution caused by the oil company.

The kidnappings were part of a string of escalated attacks against multinational oil companies in Nigeria. For instance, on January 28, approximately 20 militants in speedboats attacked the riverside offices of Daewoo, an oil servicing company. Authorities reported that the militants stole over US$200,000 and wounded several people. Also in January, 30 militants attacked the offices of Italy's Agip Oil Company in Port Harcourt, killing more than a handful of people and stealing some US$30,000.

The escalating incidents have affected world oil prices, increasing the price of oil due to fears over market shortages. Indeed, the recent attacks in Nigeria have cut the country's daily oil exports by almost ten percent.

Expect attacks against multinational oil companies and government security forces in the Niger Delta to continue. The Ijaw population in the Niger Delta lives in extreme poverty despite the oil wealth that surrounds them. The failure of the government in Abuja to effectively address the concerns of the Ijaw mean that militias will continue to organize and mount small-scale operations against oil and government interests.

Furthermore, the arrest of N.D.P.V.F. leader Dokubo-Asari will continue to spark violent incidents by his followers. As PINR foreshadowed in November 2005, "One indicator to watch is the November 10 [2005] trial of Dokubo-Asari since the outcome could result in the escalation of violence by N.D.P.V.F. members against government security forces and Western energy interests in the Niger Delta." [See: "Intelligence Brief: Nigeria"]
------------------------------

The Power and Interest News Report (PINR) is an independent organization that utilizes open source intelligence to provide conflict analysis services in the context of international relations. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of inquiries@pinr.com. All comments should be directed to content@pinr.com.