Al-Ahram Weekly Online   5 - 11 January 2012
Issue No. 1079
Published in Cairo by AL-AHRAM established in 1875

Iran's last trump

Threatening to cut Gulf oil supplies in retaliation to Western plans to boycott Iranian oil adds fuel to the fires of war, says Amani Maged

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At last, Tehran has decided to counter threat with threat. It has vowed to strike back at the prospect of another round of economic sanctions with an more ominous weapon, one that would affect not only the US and the EU, but all the countries of the Gulf and countries beyond. Iranian officials have declared that they would not stand idle in the event of an embargo on their oil exports and their magic word is the "Strait of Hormuz".

In the latest round of brinksmanship, Iranian naval commander Habibollah Sayari remarked that closing this strategic waterway to oil tankers would be "easier than preparing water soup" if his government felt such a step was necessary. By necessary he meant, of course, if the West upped the severity of economic sanctions on Iran. How serious is this threat and could Iran actually go through with it?

The Strait of Hormuz is one of the world's most important and busiest waterways. Located in the Arab Gulf -- or Persian Gulf, as the Iranians call it -- it connects that body of water with the Indian Ocean. The Gulf is bounded to the north by Iran and to the south by Oman, which supervises shipping in the strait on the grounds that the shipping lines fall within its territorial waters.

Under international law, the strait fall under the heading "high seas", in the sense that all ships have the right to free passage through it so long as they pose no threat to the safety, security and well-being of the countries bordering it. The geo-strategic importance of the straits stems from the fact that it forms a bottleneck that serves as the only naval outlet for the Gulf countries, apart from Saudi Arabia and Oman. Its economic importance resides in the fact that about 35 per cent of the world's seaborne oil shipments, and 20 per cent of oil traded worldwide, pass through it.

According to the Iranian commentator and political analyst, Sadegh Husseini, Iran has the ability to force a new set of equations on the region based on the concept of total confrontation. The threat to close the Strait of Hormuz, as part of these equations, puts paid to the option of limited or partial war, which had existed until now. In taking such a step, Iran would be acting in self-defence against the perils of a Western oil embargo.

Strategic analysts are divided over Iran's ability to fulfil its threat. Some maintain that although it could hamper the movement of shipping, it could not effectively close the strait. Others claim that it could seal that vital naval passage in the space of an hour using military means. The combined air, naval and land forces needed to execute the operation are equipped for the task and ready to carry it out if need be, they say.

Even so, the decision to proceed with such an operation would not be easy. Iranian officials, above all, are certainly aware that the move would be the "spark to the powder keg". So if it proceeded, it would be courting two possible scenarios. The first is the diplomatic scenario whereby the Security Council meets, passes a resolution calling on Iran to reopen the straits, to which Iran counters with a demand to lift the sanctions. The second is the military option: the Security Council members fail to reach a unanimous decision, at which point NATO decides to act independently through recourse to armed force. Military action would precipitate a full-scale war that would suck in the entire Gulf region, Israel and all the military bases and facilities that the US has in some Arab countries.

Closing the straits would have enormous economic repercussions. The interruption of the flow of oil from the countries of the Gulf would cause a global economic catastrophe, especially given the already shaky economic situation in Europe and West in general. Sadegh Husseini also believes that the crisis would cause the political situation in a number of Gulf countries to implode.

The rush of Western threats warning Iran against closing the strait is, in itself, indicative of the scale of the Iranian threat and the repercussions acting on it would have regionally and internationally. Could Western nations, which are gripped by economic straits, sustain the impact of these repercussions? Could the Gulf countries, whose economies are almost entirely dependent on oil exports and whose governments rapidly dispersed aid packages to their citizens in order to avert the type of mass uprisings that have rocked other Arab countries, sustain the economic and political consequences of a halt to the flow of their oil exports? How would other countries fare, given that the immediate impact of a closure of the strait would send oil prices skyrocketing to over $200 a barrel? Consider, too, that a portion of oil tanker traffic would have to be diverted to more distant destinations, such as Venezuela, in order to compensate for the shortfall of oil supplies which, in turn, would drive up international shipping rates which would naturally impact on other sectors of the global economy. It is not difficult to imagine the panic that would beset world commodity markets and the shockwaves that would rip through national economies around the world.

Nevertheless, this grim spectre will not even begin to materialise for some time. What we see now remains within the bounds of Iranian posturing in the hope of averting another and yet harsher round of sanctions. Still, the very mention of the idea of closing the straits causes jitters in international trade and transportation circles. For this reason, observes believe that the port of Salalah in Oman will soon take some of the weight off the UAE port of Jabal Ali by means of a land link between the two ports and that some of the shipping will be redirected to the Red Sea. However, they add, while such measures may offset some of the some of the effects of a closure, the squeeze would still be acute in parts of the Gulf closer to Iraq.

Even without a closure of the Strait of Hormuz, an embargo of Iranian oil would have a powerful impact on some economies. Iran sells around 450,000 barrels of oil, or 18 per cent of its oil exports, to Europe. The primary recipients of these exports are Italy (180,000 barrels per day), Spain (160,000) and Greece (100,000). It is little wonder, therefore, that the EU is divided over a resolution to escalate the economic sanctions on Iran. Even so, EU foreign minister Katherine Ashton said recently, "The EU intends to impose a new series of sanctions against Iran and it will not relent." She added that a resolution on a new round of EU sanctions against Tehran could be adopted in the forthcoming meeting of EU foreign ministers, which is scheduled to be held in Brussels on 30 January.

Washington is not unfamiliar with the Iranian gambit and has undoubtedly taken precautionary measures. After Tehran brandished the closure threat in July, US officials reiterated on numerous occasions that the Obama administration has prepared a plan to keep the strait open.

When Iranian Vice President Mohamed Riza Rahimi announced this week that Iran would respond to an oil embargo by closing off the Strait of Hormuz, the White House spokesman refused to comment. This was most likely an attempt to reduce the heat in the exchanges between Washington and Tehran and to avoid alarming economic markets. The US may be seeking to keep Iranian oil supplies from reaching world energy markets, but in a manner that will reduce the risk of a dangerous price hike or alienate Washington's allies from participating in collective action against Tehran. Even if closing the strait is not as easy as making "water soup", the threat alone is an easy way to rattle nerves.

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