# Saudi Arabia severs ties with Iran - what does it mean? **URL:** \ **Category:** Great Debates\ **Created:** [January 3, 2016, 9:57pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105 "2016-01-03T21:57:35Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [January 4, 2016, 6:41pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/61 "2016-01-04T18:41:46Z")
How can OPEC be “an illegal cartel”? ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 4, 2016, 6:50pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/62 "2016-01-04T18:50:19Z")
> [@Really\_Not\_All\_That\_Bright](#): > > How can OPEC be “an illegal cartel”? A large portion of OPEC’s membership (Angola, Ecuador, Indonesia, Kuwait, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela) are also WTO members, and the rest are “observers” in the WTO (observer status means you must begin the membership process within five years, or you can no longer be an observer–and generally indicates a desire to join the WTO since otherwise there would be no reason to have filed for observer status in the first place?) It’s my assertion that under the international law relating to trade that is part and parcel of the WTO membership process OPEC is in clear violation of the law as it operates as an illegal cartel. I believe that the reason no WTO case has occurred is due to political reasons, and because it is generally believed the OPEC member states would leave the WTO if they were pushed on the oil issue. We’d be entitled to levy punitive sanctions against the OPEC member states for violating WTO agreements if we were to pursue such a case (this is what happened to the United States for example when we filed steel tariffs illegal under international law, specifically WTO treaty agreements.) ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [January 4, 2016, 7:06pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/63 "2016-01-04T19:06:12Z")
> [@Martin\_Hyde](#): > > It would depend on your position on the markets. No it has exactely **nothing to do** with that position. > [@](#): > > I don’t believe in state _owned_ industries like Saudi Aramco, I believe in the free market. I am a liberal economist - it is in your terms ‘free market’ economist, but I do not ‘believe’ in things, I analyze as by the orthodox economic sciences… Belief is for **ideologicals** politics. > [@](#): > > I view state owned companies to be tampering. So this is only political ideological claims (as it has not one thing to do with free market economics, which do not care if the ownership has the state or not - not in the real economics, I do not speak to the weird anglo-saxone ideological ideas). > [@](#): > > I also believe in a free market in commodities, I view OPEC in general as an illegal cartel that tampers with oil production to try to affect the global price of oil. Illegal? Even by your follow up post claiming something about the WTO, this makes not much sense. But it again makes no sense that the Saudi company, whatever ownership can be said to ‘tamper’ with its own management decision about what is an economic strategy (since clearly it does not serve the OPEC interests as expressed by the majority of its members)… the strategy of a company to price out other higher cost producers (so long as not ‘dumping’ below the production cost) is not something that is rationally “tampering” with any production of its own, nor does it have anything per se to do with the ownership of the firm, or free markets… indeed it is simply using the markets like any large producer Again you now are just trying to create ad hoc excuses around an empty prejudiced comment that makes not any sense by any rational economic analysis. > [@](#): > > But you seemed to impugn a lot of negativity on the word tamper. My when we see the actual definition of the word in the english language, it is so _ **strange** _ to see this as negative!!! Of course it is a negative word, it is clear in the very definition. > [@](#): > > Tampering is what they’re doing, Really, by what definition of tamper? > [@](#): > > tamper > [tam-per] > Spell Syllables > Synonyms Word Origin > verb (used without object) > > 1. to meddle, especially for the purpose of altering, damaging, or misusing (usually followed by with): > Someone has been tampering with the lock. > 2. to make changes in something, especially in order to falsify (usually followed by with): > to tamper with official records. > 3. to engage secretly or improperly in something. > 4. to engage in underhand or corrupt dealings, especially in order to influence improperly (usually followed by with): > Any lawyer who tries to tamper with a jury should be disbarred. It is their own production, their own resource… there is not one action that does not fit into market actions or can not be understood as a rational market activity (such as the protection of the market share). > [@](#): > > while I don’t like cartels or state owned enterprises Ownership has not one thing to do with the word tamper here - there is no basis in a market analysis to think that a company should act in a way different. Rather you are starting with the ideological dislike and forcing in an analysis pretending to be “free market.” > [@](#): > > a state owned oil company or for trying to control the price of oil, I just disagree with it as a strong advocate of free markets. This is politics, not free market. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [January 4, 2016, 7:07pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/64 "2016-01-04T19:07:34Z")
> [@Really\_Not\_All\_That\_Bright](#): > > How can OPEC be “an illegal cartel”? He is asserting a conclusion that is discussable, but in any case it has nothing to do with the case since the Saudi are not acting inside of the OPEC. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [January 4, 2016, 7:25pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/65 "2016-01-04T19:25:50Z")
> [@puzzlegal](#): > > Seriously! The US happens to be at war (more or less) with Iran, and allied with Saudi Arabia, but by any ordinary accounting, Saudi Arabia is the “worse” country by US standards. Look at human rights, level of education, the existence of a middle class (or lack thereof), etc. But we aren’t more or less at war with Iran. I mean, aside from helping re-install the Monarchy back in the 50s, and then the whole unpleasant embassy thing. And then the Iran-Iraq war. But then we stomped hard on Iraq back in the Gulf War, and then famously invaded Iraq and deposed Saddam, and then allowed the creation of an Iraqi government that was dominated by Iran’s friends. And in the Syrian civil war, we talked a lot about how Assad–the client of Iran and Russia–should go, but in fact we’ve spent the whole time trying to fight ISIS, and we’ve given up on notions that if only we could arm the “moderate rebels” they could beat both ISIS and Assad. The only remaining big issue between the US and Iran (aside from remembrance of past wrongs) is the Iranian nuclear program, which we sort of reached an agreement about. Were we ever on the verge of bombing Iran over it? I don’t think so, and I doubt even the dopiest Republican Tea Partiers would support actually starting a war with Iran over it, for the simple fact that it wouldn’t stop the Iranian nuclear program no matter how many bombs we dropped on them. Also can we consider how we’d feel if Iran bombed stuff in our country? If Iran set off a bomb at an American military base? How do you think we’d feel? Scared, and ready to give in to whatever Iran’s demands would be? Or angry and willing to fight Iran? Now imagine an Iranian and how they might feel after we dropped a bunch of bombs all over Iran. Are they a different sort of person than us? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [January 4, 2016, 7:45pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/66 "2016-01-04T19:45:48Z")
> [@](#): > > It’s my assertion that under the international law relating to trade that is part and parcel of the WTO membership process OPEC is in clear violation of the law as it operates as an illegal cartel. The plain language of Article XI:1 of the GATT prohibits agreements which limit exports in restraint of trade. OPEC doesn’t do that; its agreements limit production. The effect is the same, of course, but the presumption would be that it is not a GATT violation. Since this is a hijack I will refrain from commenting further, though you should feel free to have the last word. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [January 4, 2016, 7:53pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/67 "2016-01-04T19:53:59Z")
> [@Ramira](#): > > He is asserting a conclusion that is discussable, but in any case it has nothing to do with the case since the Saudi are not acting inside of the OPEC. by the way this [set of posts](http://worldtradelaw.typepad.com/ielpblog/opec_and_the_wto/) on the specialist blog about the trade law is interesting, as it can be seen that the OPEC case (even when OPEC had some slight pretension to be truly effectively operational) under the WTO is not truly clear. As an economist (but I do not have any love for either the OPEC or the state producers, it is merely to be non-ideological in the thinking) it is interesting to look at the technical analysis of the economic optimal analysis of the extraction of the non renewable resource to think of the complexity of the decisions. > [@Really\_Not\_All\_That\_Bright](#): > > The plain language of Article XI:1 of the GATT prohibits agreements which limit exports in restraint of trade. OPEC doesn’t do that; its agreements limit production. The effect is the same, of course, but the presumption would be that it is not a GATT violation. > > Since this is a hijack I will refrain from commenting further, though you should feel free to have the last word. it is also the case that even if it fell in this analysis there is the possibility of the exception around the resource extraction. It is far from a straight forward issue. But since OPEC has nothing to do with the Saudi production - they are telling all the rest of OPEC to go to hell - and the idea that their behavior is somehow violating free markets (as is private swing producers do not make exactly the same kinds of market positioning decisions…) it is not really the quesiton. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [January 4, 2016, 8:51pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/68 "2016-01-04T20:51:29Z")
> [@Martin\_Hyde](#): > > But Venezuela, Iran and several other OPEC members _cannot_ keep going on as they have been without disastrous consequences. $40-45 / barrel oil is actually below the cost of production for Iran and Venezuela, and for several other OPEC members, and no other OPEC member had the sort of massive currency reserves built up that Saudi Arabia did to weather this storm. Sounds to me like the most likely outcome will be a series of explosions at Saudi oil facilities, seriously crimping Saudi production, because a few well-placed C4 charges are much cheaper than economic ruin. Everyone will pretend it was the work of some mysterious radical group. ISIS or Spectre or Cobra or whoever could be blamed without starting a major war. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [January 4, 2016, 9:13pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/69 "2016-01-04T21:13:01Z")
> [@botsgotme](#): > > Maybe both regimes will destroy each other. Hardly likely. Any fighting that does get done is more than likely going to be naval and/or air based. Neither country has the wherewithal to actually transport troops across the Persian Gulf and keep them supplied for any reasonable length of time. Realistically, the best we could hope for is that they both bomb the bejeezus out of each other’s oil infrastructure, and that the US oil industry could pick up the pieces in the aftermath, both in terms of rebuilding their infrastructures, and in terms of actual oil production in the interim. Higher oil prices benefit the domestic oil industry more than anyone else. Otherwise, I couldn’t care less what they do. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 4, 2016, 11:21pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/70 "2016-01-04T23:21:42Z")
> [@Really\_Not\_All\_That\_Bright](#): > > The plain language of Article XI:1 of the GATT prohibits agreements which limit exports in restraint of trade. OPEC doesn’t do that; its agreements limit production. The effect is the same, of course, but the presumption would be that it is not a GATT violation. > > Since this is a hijack I will refrain from commenting further, though you should feel free to have the last word. Maybe you’re right, I don’t believe there’s a definitive answer on something that hasn’t been adjudicated in the WTO hearing process. There have been people who have advocated for a case against OPEC WTO members for some time, but they are largely politically marginalized. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [January 4, 2016, 11:23pm UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/71 "2016-01-04T23:23:22Z")
> [@Ramira](#): > > This is politics, not free market. I have never seen such a major tantrum over use of the word “tamper”, I’m sorry if you disagree with how I’ve described Saudi Arabia’s government involvement in the commodity market for oil, but I can only assume based on the reaction you had that you have some sort of personal attachment to Saudi Arabia that renders you unable to see things from an alternative perspective so I don’t see a reason to engage with you on the long list of mostly irrelevant arguments you just put forth over my use of the word tamper. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 5, 2016, 1:07am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/72 "2016-01-05T01:07:17Z")
> [@Ryan\_Liam](#): > > Saudi Arabia reminds me of Tsarist Russia [But it’s bad news when they meet.](http://www.kididdles.com/lyrics/a011.html) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 5, 2016, 1:13am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/73 "2016-01-05T01:13:30Z")
> [@Little\_Nemo](#): > > I agree it’s likely that Saudi Arabia and Iran are now going to start trying to overthrow the other’s regime. . . . Is there any way we can make sure they both succeed? ---
**Author:** ![Sitnam](https://avatars.discourse-cdn.com/v4/letter/s/6a8cbe/32.png) [@Sitnam](https://boards.straightdope.com/u/Sitnam)\ **Post date:** [January 5, 2016, 1:25am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/74 "2016-01-05T01:25:37Z")
Don’t you guys see, Iran is [the victim](http://www.nytimes.com/2016/01/05/world/middleeast/iran-emerging-from-sanctions-faces-more-isolation-after-embassy-attack.html?&hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region®ion=top-news&WT.nav=top-news) > [@](#): > > …Iran took it as a deliberate provocation by its regional rival and dusted off its favored playbook, unleashing hard-liner anger on the streets. Within hours of the execution, nationalist Iranian websites were calling for demonstrations in front of the Saudi mission in Tehran and its consulate in the eastern Iranian city of Mashad. The police, outnumbered, looked the other way as angry protesters set the embassy ablaze with firebombs, climbed the fences and vandalized parts of the building… > > “They knew we couldn’t look the other way,” said Fazel Meybodi, a cleric from the Iranian holy city of Qum, one of the world’s main centers of Shiite theology. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 5, 2016, 1:31am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/75 "2016-01-05T01:31:48Z")
> [@Ramira](#): > > But it is funny how westerners write ‘tamper’ about the Saudis making decisions on production with their own Saudi oil… They are talking about [dumping](https://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29), which is a form of “tampering” with the market no matter who does it or how or why. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [January 5, 2016, 1:31am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/76 "2016-01-05T01:31:55Z")
> [@BrainGlutton](#): > > . . . Is there any way we can make sure they both succeed? Are you sure you want that? Recent history in Libya and Iraq seems to indicate whatever comes next will be worse. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 5, 2016, 1:39am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/77 "2016-01-05T01:39:55Z")
> [@TriPolar](#): > > They can’t agree on who the successors to Mohammed are. Which is weird, since nobody anywhere claims the title any more. Except for Abu Bakr al-Baghdadi, and Iran and SA at least can agree it ain’t him. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 5, 2016, 1:53am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/78 "2016-01-05T01:53:24Z")
> [@coremelt](#): > > Are you sure you want that? Recent history in Libya and Iraq seems to indicate whatever comes next will be worse. True. ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [January 5, 2016, 5:52am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/79 "2016-01-05T05:52:06Z")
I’ve never heard Yemen referred to with a “the”. And we seem to be dropping “the” from the Ukraine, the Netherlands is still The Netherlands it seems. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [January 5, 2016, 6:09am UTC](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105/80 "2016-01-05T06:09:57Z")
Things will be worked out thru back channels. Deals will be made, the details of which we will likely never know. We in the west are to quick to see things through our own eyes. I suspect one of the Emirates will work as mediators. [Previous page](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105.md?page=3) [Next page](https://boards.straightdope.com/t/saudi-arabia-severs-ties-with-iran-what-does-it-mean/742105.md?page=5)