STATE's take: 'Collapsing the Central Bank of Iran: A double edged sword opposed by the Adminstration!'

MEPGS excerpts;

'While the uprising in Syria continues to gather the most headlines, US policy makers, aware of their limited ability to affect events there are spending more of their time and attention on a problem of potentially even greater consequence – Iran.  Despite recent setbacks at the UN Security Council, where Russia and China prevented a resolution of condemnation and Russia’s resistance to a strongly worded declaration from the International Atomic Energy Agency, US and European diplomats continue to try to find means to curb, if not stop Teheran’s headlong rush towards development of a nuclear weapon.
​Congress, too, is stepping into the picture with the House poised to pass legislation that would effectively force companies to choose to do business with Iran’s Central Bank (“CBI”) or run the risk of being shut out from the US banking system.  According to informed sources, the Administration, at first, was attracted to this approach.  But upon closer examination, began to have second thoughts as it was seen to have a “double edged sword”, placing countries like Japan and South Korea in a difficult position, since their oil purchases are processed by the CBI.  Perhaps, even more important, would be the effect on the world wide oil market. Should Iran’s ability to sell crude be curtailed, the already shaky economies of the US and the EU could receive another jolt by facing a significant spike in oil prices.

​One solution would be to extract a pledge from Saudi Arabia to make up for any lost Iranian oil... the Saudis have the excess capacity to make up for lost Iranian oil, difficult logistics, not to mention innate caution, so far, have restrained any such bold action.  As one well-placed observer put it this week, “It would probably take a phone call from President Obama to King Abdallah to facilitate such a move.”
​Meanwhile, the Saudis are dealing, most say, quite well, with the elevation of Prince Nayef as Crown Prince to succeed the late Prince Sultan.  One State Department official characterized his elevation as, “The least surprising transition possible.”  He, and  other,  veteran US officials, aware that Nayef has something of a reputation as being less than  progressive, even by harsh Saudi standards, still maintain that as the “top cop” in the country, he will be an ardent foe of Iran.  Moreover, his son Mohammed, who is the chief counter-terrorism official in the Kingdom has as good a working relationship with US officials as any key Saudi figure.  “We expect that this apple was picked to reflect the thinking of the tree from which it fell,” is the way one semi-poetic US official (who must get his quotes from Bazooka Joe gum) boosted Nayef’s current and more important, future attitudes towards the US.
​The Saudis have also lined up along side the US in wishing to see the end of the Assad regime in Syria.  Both governments appear to have adopted the attitude that any regime that replaces the current one in Damascus could not be worse.  And the Saudis, along with the Qataris, were instrumental in the surprising Arab League decision to consider suspending Syria.  While the League has walked back that threat a bit in the past 24 hours, most observers believe that the Syrian regime has been dealt yet another body blow from which it will not be able to recover.  The key questions remain how long and how bloody it will be before the regime collapses.  “Slowly and bloodily” is the one regional expert put it this week... ...
​What was once the epicenter of the so-called “Arab Spring”, Egypt has, to a large extent, disappeared from the front pages.  But, to those who watch development in this, the most populous Arab country, the trend there is becoming increasingly worrisome.  To begin with, the recent election in Tunisia (where the Arab Spring had its beginnings) resulted in a more than expected amount of support for the (mildly) Islamic Party.  Experts had predicted it would receive about 25% of the vote.  Instead it garnered over 40%.  Now, these same experts are revising upwards the percentage of the vote the two main Islamist parties in Egypt will gain in the upcoming elections.  Not only do they expect the Egyptians Islamists to match their Tunisian counterparts’ 40% but more than a third of that vote could go to extreme Islamist parties allied with the radical Salafi movement.  This would leave a scattering of liberal and European leaning parties with low double digit numbers, according to reliable pollsters.  Western observers heap scorn on these progressive parties, calling them “lazy and ill-organized.”  Moreover, the authorities who are supposed to be organizing the elections have, in their opinion, badly stumbled, not providing enough judges, working to improve the electoral process and even “willy-nilly” saying that Egyptian ex- patriots should be allowed to vote without providing a means for them to do so.
​Other regional actors also give US policymakers reason to pause.  In Bahrain, a commission led by Egyptian-American jurist Sharif Bassiouni, is expected to present a  report on the uprising and the regime’s reaction to it next week.  Even those parties sympathetic to the al-Khalifa’s the Sunni royal family which runs this predominantly Shia mini-state, predict the government there will be ill-equipped to deal with the harsh criticisms expected to emerge.  “This is a dysfunctional government that is still shell-shocked by the uprising,” said one US official recently.  Others expect differing responses from various power centers.  “It’s going to be a mess,” says one regional observer.
​(In Libya)... One area of concern remains the power and extent of the Islamists.  Backed by the ever active Qataris during the war, they could pose a threat but one which the US and its allies are taking seriously enough to weigh in heavily with Qatari authorities about it.​