The Strait of Hormuz is international waters, not an international bargaining chip
Any lack of resolve at the Strait of Hormuz will send a message to every ambitious state at every international choke point in the world that all they have to do is squeeze and they will get what they want, writes Christopher Pincher MP
As Iran continues to threaten the closure of the Strait of Hormuz, and as its Parliament debates whether it will pre-empt an EU embargo, we must not be blind or blasé about the consequences of such actions. Nor should we ignore contingency planning to deal with the strategic, economic and political impact of restricting access to the Straits.
Why does this matter? The gateway to the Persian Gulf is one of the world’s key choke points. Every day 14 super tankers carrying 17million barrels of oil – 20percent of the world’s daily oil supply and 35 percent of its sea-going trade – pass through the 21 mile of open water separating the United Arab Emirates from revolutionary, nuclear-ambitious Iran.
Yet despite loudly rattling its sabre, is Iran likely to draw it from its scabbard? Closing the Straits would stifle Saudi Arabian oil exports but would at the same time smother Iran’s own oil routes further crippling its deteriorating economy. Iran relies heavily on its energy exports and the Guardian Council know they would not be able to pay the Revolutionary Guard without the revenue generated by black gold. As students of history, albeit theocratic history, the ayatollahs will be well aware of what happened to Roman emperors could not pay the army – the army put pay to them.
The probabilities of closure are speculative; the consequences are clear: The first tap of the sword hilt sent a slight ripple through the oil price as Brent crude rose by 3 percent. More tapping will mean bigger ripples whilst full blooded action to threaten or close the Straits, speculators suggest, could see that oil price rise to anywhere up to $60 per barrel.
Such a spike will inevitably have an impact on our petro-economy. It could mean that all the hard done work by the Chancellor to clamp down on forecourt prices is undone. To that extent the politics of the Iranian elite and the fortunes of the British motorists are intimately linked. Businesses too would feel the effects of a fatwah on fuel.
Of course some will say it will never happen. And they may well be right. And if it does happen, they say, it will all be over in a few days and the world will quickly right itself. Meanwhile, they say, other routes such as the Red Sea or overland via pipeline will take the strain and prop up the international economy whilst an alliance of global and regional powers jointly prevail upon Tehran to see sense. In the two latter cases “they” could be very wrong.
First, remember history. The 1973 Yom Kippur war lasted just 19 days. Yet it triggered an energy crisis which changed economics for the rest of the decade. Though the politics of that crisis was complex, we should be mindful that short term events can have long term and unforeseen consequences.
Second, a reliance on other routes to market must take into account where those markets are located. 80 percent of oil passing through the Straits of Hormuz heads east not west. The thirsty economies of India, China and the Far East, so vital to the resurgence of international growth, are not helped by a route through the Suez Canal even if China ends up reducing its reliance on Gulf oil. Nor is it safe to rely on pipelines across empty stretches of desert which are particularly susceptible to terrorist attack assuming they are in use in the first place – the Iraq Pipeline across Saudi Arabia has been closed for several years.
So what should happen next?
We must be clear that Iran’s posturing is not about oil, it is about uranium. It is not about the Straits of Hormuz it is about the nuclear enrichment plant at Qom. Iran is using the Straits of Hormuz as a form of triangular diplomacy lever to win concessions from the West on their ambition to become the regional, nuclear-armed, super-power. Our response must therefore be set in that context. We must now allow the Iranians to conflate two issues.
A phased embargo on Iranian oil, 95 percent of which passes the Straits of Hormuz, has already been agreed by the EU plus other measures against their petrochemical industries. A partial freeze on the Bank of Iran’s assets and a ban on gold transactions have also been signed off.
However, why the adjectives “phased” and “partial”? Perhaps they are meant to indicate that unless the leadership backs down international pressure will be ramped up. But that may send the wrong message to Ahmadinejad and co that the international community is neither serious in its intent to protect freedom of navigation in the Persian Gulf, nor determined to clamp down on nuclear proliferation.
More concerning is the partial nature of implementation. William Hague’s statement to the House of Commons on 24th January, clear and concise in other respects, was silent on the stance of Russia and China who are key voices whispering in Tehran’s ear. They must be persuaded to back energy sanctions as a tool of our joint non-proliferation policy. If not Iran will continue to believe they face divided opposition.
The West must be clear that the Straits of Hormuz are international waters, not an international bargaining chip. They must remain open to trade. And it must redouble its efforts to persuade Russia that its interests are not best served by a belligerent Iran. China too must be convinced that its oil supplies, and the economic balance of East Asia, could be critically affected by Tehran’s ambitions.
If this is a blinking Contest the international community, committed to free trade and opposed to nuclear proliferation, must face Iran with its eyes wide open. Any lack of resolve at the Strait of Hormuz will send a message to every ambitious state at every international choke point in the world that all they have to do is squeeze and they will get what they want.
Christopher Pincher is the Conservative Member of Parliament for Tamworth. Follow him on Twitter @ChrisPincher
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