US warns Iran over threat to block oil route
screams the headline on the BBC website. According to the report:
The US Navy has said it will not tolerate disruption to a vital oil-trade route, following an Iranian threat to close it.
Iran warned it would shut the Strait of Hormuz if the West imposed more sanctions over its nuclear programme.
The BBC report quotes US Fifth Fleet spokeswoman Rebecca Rebarich as saying that the US navy would be ready to act if required:
The US navy is a flexible, multi-capable force committed to regional security and stability, always ready to counter malevolent actions to ensure freedom of navigation.
Reading the BBC headline and the hawkish quote from Rebarich, I couldn't help but think of a recent piece I read on the Huffington Post website, headlined:
The Coming Accidental War with Iran
The author of the piece, Lyric Hughes Hale, argues that
. . . due to the lack of understanding between our government and Iranian leaders who have been isolated from the rest of the world, war will not be a decision, but a mistake.
She quotes from a recent comment piece in the Los Angeles Times by Trita Parsi, head of a Washington think tank focused on Iran and author of the upcoming book, A Single Roll of the Dice: Obama's Diplomacy With Iran, who wrote:
In Iran, political cannibalism within the Iranian elite has reached new heights. While this has not necessarily given birth to a new Iranian adventurism (beyond the harsh rhetoric), it has paralyzed the state and weakened its ability to maneuver in a changing strategic environment. This is particularly the case when it comes to crucial issues such as its relations with the United States.
. . . The U.S. military leadership is rightfully worried about this situation. The chairman of the Joint Chiefs of Staff, Adm. Michael G. Mullen, has repeatedly raised the lack of communication between the United States and Iran as a major concern in the last few weeks.
"We are not talking to Iran so we don't understand each other," Mullen said last month. "If something happens ... it's virtually assured that we won't get it right." The lack of communication has planted seeds for miscalculation, Mullen argued. And miscalculations often lead to dangerous escalations.
Mullen's diagnosis is on target, as evidenced by the escalation in Iranian bluster. Talking to the Iranians is not guaranteed to resolve the fundamental issues that have created this dangerous atmosphere. But it might ensure that in the midst of the barking, there isn't an accidental bite.
So, will the accidental bite be the closing of the Strait of Hormuz? As the report on the BBC website notes:
The Strait of Hormuz links the Gulf - and the oil-producing states of Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE) - to the Indian Ocean. About 40% of the world's tanker-borne oil passes through it.
In recent months, plenty of analysts have warned that an American and/or Israeli attack on Iran's nuclear facilities would prompt the closing of the Strait of Hormuz - which is only 20 miles wide - and send oil prices through the roof. Few seem to have anticipated the reverse: that is, a pre-emptive closing of the Strait of Hormuz by the Iranians - annoyed by the new set of sanctions imposed on them by the west - which then offers hawks in Tel Aviv, Washington and, let's be under no illusions, London a casus belli for military action against the self-styled Islamic Republic.
But, if one of the arguments offered against war with Iran has always centred on the danger to the global economy of the Iranian regime cutting off not just its own oil exports (which, at around 3.5 million barrels produced per day, amounts to 2.5 percent of the world's oil supply) but the rest of the region's too, via the afore-mentioned blockade of the Strait of Hormuz, why hasn't it had much traction? Why do so many seemingly well-informed western pundits seem so relaxed about the catastrophic economic consequences of a war with Iran?
"I think the market has paid too little attention to the possibility of an attack on Iran. It's still an unlikely event, but more likely than oil traders have been expecting," remarked Bob McNally, head of the consultancy Rapidan Group and a former energy adviser to the White House, in November. McNally added that he believed oil prices could surge as high as $175 a barrel if the Strait of Hormuz is closed by the Iranians.
Meanwhile, according to the most benign of four scenarios presented in a recent paper by Greg Sharenow, a portfolio manager at bond house PIMCO and a former Goldman Sachs oil trader, oil prices would likely spike to at around $140 a barrel if Iran were to be attacked next year.
Noting the possibility of an Iranian blockade of the Strait of Hormuz, Sharenow calls this "the Armageddon scenario" in which "oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won't even begin to forecast a cap or target price in this final Doomsday scenario."
Accidental wars. Armageddon. Doomsday. Bring on 2012, eh?
As we note on the cover of this week's New Year's issue of the New Statesman:
And you thought 2011 was bad. . .