President Rouhani’s congratulatory note to the new British prime minister expressed hope that he may play a major role in easing current tensions in the Persian Gulf region. This encouraged me to investigate whether Boris Johnson has taken on the English Job which Iranians always see lurking behind Washington’s policies. So, I asked a Senior Research Fellow at an Institute of University College London, Mr. Chris Cook whether he considered the new Prime Minister would improve on his dismal predecessor.

He said: “I believe Boris Johnson’s appointment by his party members is immensely promising for British-Iranian relations for several reasons. Firstly, he is an optimist and is inherently positive and constructive in outlook. Secondly, he is both self-centred and expedient to a fault: as Groucho Marx used to joke, if you didn’t like his principles, he had others. Third, he is in fact extremely intelligent, and takes an interest in the strategic big picture and sweep of history. Finally, if you believe what his father Stanley recently said in an interview with Press TV outside the British Parliament, while his son made his first appearance as Prime Minister, Boris Johnson is, like his father, an admirer of Iran’s great culture and history”.

Many observers point out that Boris Johnson’s performance as British Foreign Secretary was very poorly regarded, in particular for his highly criticised visit in December 2017 to Tehran. Why is he criticised in this regard?  What went wrong? Chris Cook believes:  “Firstly, and famously, Boris Johnson simply does not ‘do detail’. His tenure as Mayor of London demonstrated a love for high profile announcements, and a tendency to delegate implementation to trusted staff. Secondly, he is the complete opposite to Theresa May, who was a notorious control freak who detested contact with the average man or woman on the street, whereas even his worst enemies will confirm Boris Johnson has a gift for charming almost everyone he meets. In my view, Boris Johnson came to Tehran believing that he could fulfil an understanding that repatriation of long-outstanding Iranian funds would be reciprocated by a humanitarian gesture of goodwill by Iran. Unfortunately, he was over-ridden by Theresa May when the US got wind of this, and the outcome was to confirm Iran’s low (English Job) opinion of her government”.

Many analysts have observed that the recent British seizure of Iranian oil tanker off Gibraltar, and Iran’s subsequent seizure of a British tanker in the Straits of Hormuz, appears to have made a bad situation worse? But, the Senior Research Fellow at UCL Institute for Strategy, Resilience & Security says:

“This was the final misconceived political judgment of probably the least politically astute British Prime Minister of recent times. I have no doubt an accommodation can be reached but it must necessarily commence with a strategic understanding between Britain and Iran, followed by an implementation road-map rather than through fragmented tactical expedients.”

In the course of collaboration with Mr. Chris Cook from 2002 to 2004 in respect to the Kish Island International Oil Bourse project, he and I came to share the view that whatever may be the political or religious differences between nations, it is always possible to collaborate in relation to resources such as water and energy which are of existential importance. On that basis, I asked Mr. Cook whether he considered PM Johnson may be interested in a strategic regional initiative based upon Energy for Peace.

“In my view, an ambitious Energy for Peace initiative is exactly the kind of strategic and wide-ranging grand bargain which will not only appeal to Johnson’s sense of history, but will also represent a radically constructive approach to international trade and development. The first element of the FINSTEX proposal would be for Iran’s participation in the North Sea Rhum gas field asset to form the basis of issuance of Gas Energy Credit Obligation (GECO) instruments which Iran could accept in payment for the flow of Rhum field gas instead of £ sterling paid into a frozen account. The £400m amount of British debt due to Iran could then provide further collateral for issuance of GECO instruments which would operate in parallel to the INSTEX Euro payment mechanism. Since banks are not gas producers and therefore cannot issue GECOs, FINSTEX would not involve banks in payments, although they could potentially retain a role in banking services such as risk management, administration, advice & the  introduction of gas investors to ‘gas loan’ investments.

In my view FINSTEX is a great label. In fact, I recall that Mr. Cook first proposed a gas-based unit (which he then called the Petro) in Tehran in 2008. In Moscow in May 2018, he then presented an updated version of his 2008 Petro proposal (renamed GasCoin, because Venezuela had called their cryptocurrency the Petro) at the invitation of the Russian Deputy Energy Minister and he further elaborated on GasCoin in Moscow in September 2018.

As Mr Cook pointed out during his February visit to Tehran, change never comes from within. Now that PM Johnson has been appointed with an explicit mandate from his party to deliver Brexit, with one foot inside the EU and one outside, Britain and the city of London are well placed to originate a FINSTEX which is additional or complementary to the Euro-centred INSTEX. Furthermore, through a constructive and positive FINSTEX proposal Britain could guide further de-escalation of current difficulties through an agreed road-map and deliver Energy for Peace.

Turning now to developing regional cooperation between Iran, Russia and Turkey following the recent Astana summit, and the announcement of a joint cooperation commission meeting between Turkey and Iran during coming September, Mr. Cook observed:

“I have always agreed with the strategic view of Iran as the ‘Golden Gate” and Turkey as a ‘Golden Bridge’ for strategic regional energy flows and indeed we were both disappointed that the workshop convened on 12 October 2016 on the sidelines of the World Energy Council chaired by the Energy Charter Treaty and involving both Iran’s TAVANIR and Turkey’s TEAS was not followed up. ”

Upon reflection, Mr. Cook considered it would be more immediately fruitful to focus upon regional physical natural gas supply swaps with financing/funding via FINSTEX to bring together both Eastern Mediterranean and Caspian regions within a holistic clearing union agreement.

World Energy Strategies

The upcoming World Energy Strategies Congress and Exhibition 2019 (WESCE-2019) at the YILDIZ TECHNICAL University in Istanbul through 26-28 August 2019 aims to create a unique international platform for discussing challenges, opportunities and future directions in energy strategy. Mr. Cook and I have been invited to participate alongside invited ministers, energy leaders and experts as plenary and keynote speakers to elaborate on the physical and financial energy strategies underpinning the FINSTEX concept.

So, Mr. Cook recommended during our conversation that the Joint Turkey /Iran Commission should review the role of governments in facilitating research, development and commerce and act to create new complementary international frame work agreements for public, private & academic collaboration. He further proposed that an International Resilience Network should be established. He recalled that this concept received a positive reception at his February 2019 Tehran workshops not least from the British ambassador during a concluding courtesy visit. So with the support of the Turkish hosts at the aforementioned WESCE-19, he hopes in cooperation with Research Institute for Energy Management and Planning –University of Tehran and Education and Research Institute (ICCIMA), to develop this concept further in Istanbul.

My final question was to ask what role the Economic Cooperation Organisation (ECO) Trade & Development Bank based in Istanbul could play in FINSTEX.

Mr. Cook replied that as he highlighted earlier during our discussions, since banks are not gas producers they cannot issue gas Energy Credit Obligations (GECOs). It follows that a regional FINSTEX would not involve ECO banks in payments, but would rather offer a value-added role in services such as risk management, administration, advice &  introduction of gas investors to ‘gas loan’ investments. He considered that the ECO Trade & Development Bank could provide banking services to what could essentially be – in every sense – FINSTEX for the ECO nations.

So, finally I recall that the concept of the Kish Oil Bourse initiative in 2004 incorporated the basic legal design of the concepts which have now evolved into FINSTEX. Let’s hope policy makers and decision takers accept the fact that 21st century problems may not be resolved with 20th century solutions.

So, 15 years later, is it now too late to start? To which Mr. Cook responded: “We have a saying – better late than never!”