With these trends in place, it is not unreasonable to contemplate the end of net oil export from Iran within a few years. Although one should be cautious about extrapolating, if Iranian oil production declines at about a ten percent annual rate (in line with EIA's current forecast and the rough natural decline rate for Iran's fields), Iranian production could be down to two million barrels per day sometime in 2015. That would approximately match the country's daily consumption, leaving nothing for net exports. The result would be disastrous for government finances, foreign exchange earnings, and presumably the larger economy.
With this outlook for oil revenues and foreign exchange earnings, Iranian society will have to brace for deepening hardship. The disputed presidential election in June 2009 resulted in a sharp crackdown on dissent. Iran's internal security forces may have to further expand their vigilance should growing economic dislocation result in further unrest.
Western leaders are assuming that economic privation -- the result of their sanctions regime -- will compel a change in Tehran's calculations regarding its nuclear program, but the North Korean experience is not a supportive case study. In the face of crippling sanctions and political isolation, the leadership in Pyongyang has concluded that its nuclear and missile programs are its most valuable bargaining chips -- indeed, a failed test of a long-range missile and a possibly imminent nuclear weapon test show that Pyongyang is pressing on with these priorities regardless of the international consequences. Meanwhile, North Korea's internal security forces, the most repressive in the world, have successfully suppressed any grumbling over the country's collapsed economy. North Korea's economy is a basket case due to both international sanctions and the regime's need to maintain tight political control over society, but that has reinforced, not lessened, the government's repressive tendencies.
Is Iran on the road to becoming the next North Korea? As with Pyongyang, Tehran's nuclear and missile programs are important symbols of prestige, politically popular, and provide an otherwise poorly-armed country with negotiating leverage in a dangerous neighborhood. If this is the view of Iran's leadership, the prospects for a lasting deal with the West would be as poor as they have been with North Korea. To produce their own leverage, Western leaders prefer economic sanctions, which end up striking the broader population rather than the regime itself. And as with North Korea, economic sanctions could gradually compel the Iranian government to institute a police state with a command economy as a means of maintaining internal control. Just like North Korea, the result for Iran could be isolation, crushing internal repression, and economic collapse.
With this bleak outlook, Western policymakers may figure that time is on their side. They must be assuming that the leadership in Tehran will not be able to survive an economic collapse or that it will it not be able to erect the internal security apparatus necessary to maintain control, should deepening economic dislocation result in rebellion.
In this, Western leaders are implicitly asserting that North Korea is a one-off case, not replicable elsewhere. They may be right, but it seems that Iranian society may have to suffer through the experiment in order to find out.
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