Iran threatens oil disruption in event of US 'mistake'

Financial Times:

By Roula Khalaf in London and Negar Roshanzamir in Tehran

June 5 2006

Iran's supreme leader yesterday warned that energy supplies from the Gulf would be disrupted if the US made a "mistake" against his country, as officials in Tehran prepared to receive the details of an international package of "carrots and sticks" aimed at resolving the nuclear dispute.

In an attempt to raise the diplomatic stakes and deflect growing international pressure, Ayatollah Ali Khamenei, the ultimate decision-maker, appeared to contradict earlier assurances from Tehran that the world's fourth largest oil producer would not use the oil weapon. "If Americans make a mistake about Iran, the flow of energy from this region will definitely be jeopardised," he said in a speech, insisting, however, that Iran would never be the initiator of war. His comments are likely to unsettle oil markets when they open today.

Iranian analysts say the regime considers one of its most potent cards the ability to disrupt energy supplies through the straits of Hormuz, from which much of the world's oil shipments pass.

But Condoleezza Rice, the US secretary of state, yesterday played down the leader's threats, highlighting that Iran depended heavily on oil revenues.

Mr Khamenei did not specifically mention last week's US offer of talks with Iran if it agreed to suspend uranium enrichment and processing activities. But he referred scathingly to a "recent message from Americans", describing it as "rude, cheap and full of foolish arrogance".

Sticking to Iran's official position that it has no intention of building a nuclear bomb, he suggested the regime felt emboldened and saw no need to make concessions. He said the government in Tehran was "one of the most popular in the last 100 years since the constitutional revolution", while the Bush administration was "one of the most hated governments in the history of the US".

Despite an agreement reached last Thursday by the US, UK, France, Russia, China and Germany, to offer Tehran a package of incentives in return for suspending uranium enrichment, Mr Khamenei insisted that there was no international consensus on Iran policy.

Yet the bold rhetoric combined with milder messages from other senior officials. President Mahmoud Ahmadi-Nejad said on Saturday Iran would study the international proposals and not rush to judgment. The package is set to be delivered to Iran by Javier Solana, the European Union foreign policy chief, possibly this week.

Analysts in Tehran said the occasion of Mr Khamenei's speech marking the anniversary of the death of Ayatollah Ruhollah Khomeini, founder of the Islamic republic, required the projection of a defiant image.

But the leader's comments also highlighted the challenge ahead for the world community in trying to persuade the regime to give up uranium enrichment. "The leader wants to show that Iran can stand firm and that it won't falter," said one analyst. "At the same time. Iran will study the proposals and postpone any decision on them as long as possible."