Azernews.Az

By Sara Rajabova

A report issued on Wednesday by the Bipartisan Policy Center (BPC), claims that a nuclear Iran would alter the political landscape of the Middle East and increases the likelihood of instability, terrorism, and conflict.

The BPC report, titled "The Price of Inaction: An Analysis of Energy and Economic Effects of a Nuclear Iran", examines economic impacts of a nuclear Iran. The report says that the expectation of instability and supply disruption triggered by a nuclear Iran could significantly drive up fuel prices. According to report, significant price increases would result in higher unemployment, higher inflation and a reduction in the nation's gross domestic product (GDP).

The analysis employs traditional economic modeling techniques to examine both how energy markets might respond if Iran acquires a nuclear weapon and the possible consequences for the U.S. economy.

The report analyzes five scenarios that project a variety of political, diplomatic, and military consequences of a nuclear Iran including a possible nuclear exchange between Iran and Israel. It also examines the amount of global oil supply each scenario could disrupt, how a disruption would affect fuel prices and how those prices would impact the U.S. economy through inflation, unemployment, housing prices, and a diminished GDP.

According to report, as Middle East oil is critical to the global economy - fulfilling nearly 20 percent of the worldwide daily oil demand - a disruption to the region's oil exports would have a significant effect on the supply and price of oil worldwide. BPC concluded that if Iran were able to acquire nuclear weapons, the price of oil could jump 25 percent and gasoline prices could increase by more than 30 percent within three years. In the United States, inflation and unemployment could increase another 1 percent, while the gross domestic product could contract by more than 1 percent. These increases are projected to occur absent any direct conflicts or significant disruptions. Instead they represent the "risk premium" that would result from increased expectation that a significant disruption in global supply is more likely. If any of the scenarios were to actually occur resulting in a significant global supply reduction, the impact on the global economy would be far more severe.

The center's policy director, Michael Makovsky, said this analysis did not attempt to predict what would happen the day after Iran becomes a nuclear power. He noted the study laid out "plausible scenarios" that could have lasting implications for the U.S. and global economies.