At first sight, President Trump’s withdrawal from the Iran nuclear deal has no obvious connection with our own decision in June 2016 to pull out of another international agreement – the 1957 Treaty of Rome. But on closer inspection, a link between the two issues becomes clear, and Brexiteers have good reason to be alarmed by the consequences of the presidential announcement in Washington yesterday.
The key link is the oil price. By pulling the US out of the 2015 Joint Comprehensive Plan of Action (JCPOA) and promising to reimpose tough economic sanctions on Iran, Mr Trump threatens to push up the market price of crude oil. The price of crude oil was already under pressure, having climbed sharply since January, and his decision will only make matters worse: Iran is a leading exporter, pumping out around 2.8 million barrels every day, and the price of Brent crude has spiked, by 2.71% (at the time of writing) in the hours that has followed the announcement.
It is this upward pressure that should alarm Brexiteers. In the two years since the referendum decision, they have been blessed with good economic fortune. All those dark prophesies ventured by the high priests of Project Fear turned out to be hollow. Britain has had high output, diminishing levels of unemployment and high capital inflows.
But all that could be about to change if the price of oil shoots upwards. Petrol price increases will affect everyone, not least because higher transport costs are passed onto consumers. These increases then add to inflationary pressures that will force the Bank of England to raise rates. Until now the Brexit cause has been blessed with low oil prices – less than $50 per barrel at the time of the referendum – but that’s now changing fast.
Things will of course get infinitely worse if, as looks likely, the Iranian nuclear dispute now starts to spin out of control. In Tehran, President Rouhani has warned that he will resume the enrichment of uranium ‘within weeks’ if talks break down. Under international law he may be quite entitled to do this ‘for peaceful purposes’ but there is every chance that Israel, or the US, would launch an attack on Iran. In this worst-case scenario, the entire Middle East would be plunged into chaos, sending oil prices soaring and rocking the global economy.
It would be at this point, with high domestic inflation and with consumer confidence and spending shackled by interest rate rises, that Remainers could point the finger of accusation and say ‘I told you so’. Project Fear will be seen to have come true, even if the real culprits lie far away, in a foreign land.
Any Brexiteer who applauds Mr Trump’s tough stance on Iran should think again. The repercussions of his decision are far-reaching, and a worst-case scenario could eventuate quicker than most of us think.
RT Howard is the author of ‘Iran Oil: The New Middle East Challenge to America’ (2006). His most recent books are ‘Power and Glory: France’s Secret Wars with Britain and America 1945-2016’ and ‘Warmongers’.
