Iran returns sanction fight to Gulf shipping lanes
In this Jan. 19, 2012 file photo, fishing boats are seen in front of oil tankers on the Persian Gulf waters, south of the Strait of Hormuz, offshore the town of Ras Al Khaimah in United Arab Emirates.
Published Monday, July 23, 2012 1:33PM EDT
DUBAI, United Arab Emirates -- When Pentagon officials announced plans to send U.S. Navy minesweepers and warships into the Gulf for exercises, they carefully tried to avoid framing it as a direct show of force against Iran. Tehran took care of that.
Iranian commanders and political leaders -- facing an increasing squeeze from international sanctions -- have sharply stepped up threats and defiant statements in recent weeks over the Strait of Hormuz, a chokepoint at the mouth of the Gulf that is the route for one fifth of the world's oil.
While it appears unlikely that Iran is ready to risk an almost certain military backlash by trying to close Hormuz -- which is jointly controlled with Oman -- the latest flurry from Tehran shows that Iranian authorities see the strait as perhaps their most valuable asset in brinksmanship over tightening sanctions and efforts to resume nuclear talks with world powers.
In Iran's view, the strait offers a rare combination of strategic and economic leverage. Warnings from Tehran in the past about possible closure have been enough to boost oil prices to offset the blow of sanctions. It's also among the potential flashpoints if military force is used against Iran over its nuclear program. Iran could severely disrupt oil supplies and send the shaky global economy stumbling backward.
"Iran is masterful at keeping the world off balance," said Theodore Karasik, a regional security expert at the Dubai-based Institute for Near East and Gulf Military Analysis. "There are few things that get the world's attention more than the Strait of Hormuz."
Iranians and European Union negotiators are scheduled to meet Tuesday to seek ways to restart high-level nuclear talks, which remain snagged over disputes that include the levels of Iran's ability to make nuclear fuel. Israel claims Iran is simply trying to extend talks to move ahead the process of uranium enrichment. The West and allies worry Iran may be advancing toward weapons-grade material, but Iran insists it only seeks reactors for electricity and medical applications.
The U.S. military maneuvers scheduled for September -- to be joined by ships from about 20 American allies -- are part of a Pentagon buildup in the Gulf with more troops and naval firepower seeking to rattle Iran and reassure Saudi Arabia and Washington's other Gulf Arab partners worried about Iran's influence and power.
Iran's powerful Revolutionary Guards both scoffed and raged at the U.S.-led war games, calling American naval power weak while also complaining that U.S. should be pulling its forces out of the region rather than sending in reinforcements.
Comments Monday by a top Iranian naval official highlighted the mix of messages from Tehran.
Adm. Ali Reza Tangsiri, acting commander of the Revolutionary Guard naval forces, claimed Iran has full military control over the strait -- an unmistakable challenge to Washington and its Gulf allies. He added, however, that Iran has no plans to attempt to disrupt tanker traffic -- a nod to ease worries on world markets.
"Enemies regularly say Iran is after closing the Strait of Hormuz. But we say it's not wise to close it while Iran is using it," Tangsiri was quoted as saying by the official IRNA news agency.
He did not elaborate, but the remarks appear to point to Iran's efforts to build pipelines to Asian markets and develop new Iranian ports with direct access to the Indian Ocean.
The United Arab Emirates took a similar approach with a pipeline across the desert to the Gulf of Oman on the ocean-bound side of the strait. Saudi Arabia also has the Red Sea as a bypass route, but its main oil facilities are on the Gulf. Other Gulf states, too, must rely on the tanker shipping lanes that thread the strait through international waters.
At its narrowest point, the Strait of Hormuz is 21 miles (33 kilometers) wide, but the width of the shipping lane in either direction is only two miles, separated by a two-mile buffer zone.
Iran first escalated its threats over the strait in January after the EU announced plans to halt imports of Iranian oil.
"Obviously the sanctions have started to bite," said Samuel Ciszuk, a consultant at KBC Energy Economics in Britain. "Economically, the regime is going to be under pressure in the coming months, and that seems to be a driving force" in attempts to push up oil prices with threats over the strait.
Markets, however, are not as jittery as before -- such as oil prices spiking in early January after Iranian commanders warned of closing the strait and announced naval war games.
Concerns about a slowing Chinese economy and weakening demand for oil in North America and Europe are now higher priorities on traders' minds, said Ciszuk.
"That's been something of a letdown for the Iranians," he said. "There are other concerns weighing on the demand side. The global economy is a strong counterweight right now."
Oil fell below $89 a barrel in early trading Monday as an escalation in Spain's debt crisis and a warning on China's growth prospects suggested demand for crude will weaken.
"The Iranians have sort of captured the imagination of the markets with their threats. But there is a certain element of crying wolf, too. ... Will Iran actually do it?" Ciszuk said.
The prevailing mood suggests probably not, but Iran also has no hesitation to remind the world that it's possible. This enough -- in Iran's calculation -- could discourage talk of military strikes by Israel and others and scare off even more punishing sanctions on its oil industry, which accounts for about 80 per cent of the country's foreign revenue.
Gen. Hasan Firouzabadi, chairman of Iran's Joint Chiefs of Staff, said last week that Iran had the capability to close the strait "from a military point of view," but the final decision rests with Supreme Leader Ayatollah Ali Khamenei.
At the same time, about 150 Iranian lawmakers -- nearly half of the 290-seat parliament -- have signed a proposal urging for the closure of the strait in response to sanctions. It's unclear whether the parliament could force such a military blockade, but it reflects the growing frustration among some officials over Iran's isolated economy.
One lawmaker, Javad Karimi Qodoosi, also raised the possibility of charging tariffs -- 3 per cent of the value of each barrel of oil -- from ships transiting the Strait and "transfer (the money) to Iran's treasury."
Turning the strait into a toll way -- akin to the Suez or Panama canals -- would likely bring an angry backlash from Gulf Arab oil producers and bring retaliatory economic measures from Iran's foes.
Last week, U.S. Defense Department press secretary George Little described the upcoming naval exercises as not specifically a "message to Iran." However, recent Pentagon moves suggest otherwise: Adding a floating assault base, the retrofitted USS Ponce, to the Gulf flotilla and speeding up the deployment of the aircraft carrier USS John C. Stennis to ensure two carriers are in the Gulf region at all times.
"This is a defensive exercise aimed at preserving freedom of navigation in the international waterways of the Middle East and aimed at promoting regional stability," Little told Pentagon reporters.