Our foreign policy leaders are not too bright.James Surowiecki
has a piece in the New Yorker explaining one example. President Mahmoud Ahmadinejad (or President "I'm-a-dinner-jacket" as Stephanie Miller calls him) has not been doing too well in Iran. His popular support has waned, inflation is skyrocketing, public subsidies are down, and most importantly oil prices have fallen. Since oil revenue is the main mechanism by which the Iranian leadership placates the masses, loss of revenue has created unrest in Iran.
But never fear George Bush is here!
Anytime fear, chaos or uncertainty is introduced into the oil markets, oil prices rise on the so-called "risk premium". If you're and Iranian leader who is dependent on high oil prices for domestic tranquility, what do you do? That's right, ratchet up the rhetoric with something like "we will annihilate Israel". Of course when Bush takes the bait and responds by sending another carrier group, I'm a dinner jacket merely smiles.
The persistence of the risk premium means that Ahmadinejad, whatever his religious or nationalist inspiration, has an economic incentive to say confrontational things that spook the oil market. But the effect of his pronouncements is limited, because traders know that self-interest is likely to keep Iran from doing anything that would cut off the supply of oil. What really keeps the risk premium high is the American penchant for public responses to Iran’s provocations. So cooling down the martial rhetoric—even if we plan to take military action eventually—would likely bring oil prices down for a time, making Iran weaker.
Quite simply if Bush were to just shut his mouth, get out of Iraq and calm the international waters, Iran would likely fall over of it's own weight.
Bush is once again being played for a fool. I'm a dinner jacket knows that with Bush, it's a win-win for him. If he successfully baits Bush to increase the saber rattling rhetoric, Iran benefits. If Bush attacks Iran then he's secured his place in leadership and been offered an opportunity to increase Iran's influence regionally.
In short, Bush is Ahmadinejad's best friend.