January 18, 2010
Israel will not be complicit in a second Holocaust. If Iran or any other nation that has called for the destruction of Israel is about to acquire nuclear weapons, the Israelis will attempt to destroy that nation’s uranium-enrichment facilities. In June 1981, Israel launched a successful air attack on an Iraqi nuclear reactor, and in 2007 it bombed a Syrian factory suspected of producing plutonium warheads.
[efoods]But Americans should be aware that when Iran becomes the next target, it will be a blow to the U.S. economic recovery.
In an effort to prevent a military resolution to the problem, the nuclear club has tried to persuade Iran to stop its weapons program. But President Mahmoud Ahmadinejad responded recently by threatening to build 10 new enrichment sites. There is no evidence that sanctions will persuade Mr. Ahmadinejad to abandon the opportunity he foresees to destroy his hated enemy. That leaves Israel with no choice.
The economic repercussions of an attack will be far reaching and painful. The price of oil will quickly shoot through the roof. Judging by what happened in 1973, the price could easily go above $300 a barrel in the short term. There will be long lines at U.S. gas stations again and probably a rationing program. The long-term outcome will depend to a considerable extent upon what the Saudi position is, but in the short run, the lack of oil will be a severe and immediate shock to the U.S. economy. Unemployment would quickly exceed the post-World War II high of 1980-81. Financial institutions that have barely recovered from the Great Recession will again sink toward the crisis level.
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