Strait of Hormuz: Iran threats , America bargains and Iraq is paying the price ..

Strait of Hormuz: Iran threats , America bargains and Iraq is paying the price ..

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Eyes of the world have  focused  since ancient times on the Strait of Hormuz, which is a conduit for communication, peace and life among the people,  a bridge where tensions and wars are going over it and   on which  international interests are  divided and linked, feeding the world with warmth and  energy, and  stock markets and money rely on it , as  to close  it ,  economies of countries falls down  and global bourses  are shaken and  since the discovery of the bounties of the strait by international powers , its region has become an international affair..

Strait of Hormuz, one of the most important waterways, which connects the east and west, and has great significance in the movement of ships ,it  is located in the Arabian Gulf region dividing line between the Arabian Gulf on the one hand, and the waters of the Gulf of Oman and the Arabian Sea and the Indian Ocean on the other hand, the only Marine port for  Iraq, Kuwait and Qatar  .

The Strait  is located between the circles of 25-27 degrees north , and between 55-57 degrees east , and Iran oversees  its northern and eastern coast through Bandar Abbas area ,  the Sultanate of Oman oversees  through the Musandam province on  its southern and western shore, as well as to the United Arab Emirates  which oversees  its simple  part  from the south coast, a length of 104 nautical miles (if measured from the middle of the distance between the two coasts, currently its wide  is  525 nautical miles  where  the line  connect the top of Dibba  with the area  of Dmajh.

Straits includes a number of small  uninhabited islands and the biggest of it are  the Iranian  Qeshm and Arak and Hormuz  , in addition to the three UAE islands currently occupied by Iran , the Greater Tunb ,  Lesser Tunb and Abu Musa, as the width of the strait at its narrowest point 34 km and a depth of 40-50 fathoms,  and with a depth of 80 fathoms at the Musandam peninsula of Oman, and the width of the corridors to enter into it and get out of it two nautical miles, and crossed by 20-30 oil tanker per day at the rate of a tanker  every six minutes at peak hours , loaded with about 40% of the world’s seaborne oil worldwide.
Highlight the economic importance of the Strait of widening economic activity  including the   international exchange and trade  movement, and the movement of the international economy in maintaining the production and distribution process, and to ensure financial and monetary stability of international markets.

Strait of Hormuz is a lifeline for most of the world due to  its historical importance and its current and future as an  economic and commercial corridor connecting among  international markets.

 

The importance of its geographical location , political and economic terms, as a breather for the Gulf States, and Iran, oil exporters, which has the largest oil reserves in the world,  as the export through it the entire production of oil, and imports of which 90% of its needs.
Strait  has an  equal important for the major industrialized nations, as it represents the basis of the economic and political stability, and in the forefront of those countries and the United States, and the European countries, Japan and China.

And  the discovery of oil  led to increase the strategic importance of the strait  because of the large oil reserves in the region, which  most of  it is exported a cross  the strait, and the political crises that have occurred in the region pushed  countries to reduce their dependence on the Strait, with the help of extension of  pipelines to export oil, but it remained of limited impact, especially for the import of services and technology and weapons, as  the strait remains the subject of a strategic bet  between the major powers.

The former Soviet Union was seeking to reach the strait to achieve its objectives to control the region ‘s oil, while the United States launched their fleets in the Indian Ocean and the Arabian Gulf waters for the same purpose, and has worked to forge closer  political, trade and military ties with countries in the region to ensure their access to oil resources and supervision on its supply ways  from the Strait of Hormuz , which  considered it  as a part of its national security , considering that the secure of the freedom of navigation is a very important issue, especially it is the most important way  for the oil supply  which is  vital artery for the US economy .
There are more than 10 large oil tankers to exit from  the Arabian  Gulf daily through the Strait of Hormuz, while enters through which a similar number of empty oil tankers  that the  tankers are carrying  no less than 20% of daily global demand for oil, the equivalent of 40% of the global oil trade .
And any disability of Shipping will have a direct impact on global oil prices. (There are a few but growing number of tankers transporting  liquefied natural gas, where the demand for gas is increased , particularly in Asia, where the State of Qatar is the largest exporter of liquefied natural gas in the world).

The legal status of the Straits : in the year 1947 after the establishment of  United Nations  , several international organizations  have emerged  concerned with marine affairs such as the United Nations organization  for Food and Agriculture  FAO, and about fishing and IMO omi with competence in the regulation of maritime navigation, and in accordance with international law  for the Convention on the Law of the Sea in 1982, which was not signed by the United States,  not ratified by Iran, so far, which did not prove a clear law to regulate navigation in the strait, which opens the way for interpretations and different interpretations about the legal system of free traffic in the strait,  so  different interpretations  were shown between time and other time  that would raise tension and confrontation in the Gulf.

The importance of the strait for Iran:

The  strait of Hormuz is a vital artery  for Iran  which do not  own the waterfront on the Caspian Sea (Closed Sea can not  link  Iran  to  other seas ), it  owns other  naval  interface   on the Gulf of Oman and the Arabian Sea, a length of 635 nautical miles, but far from the economic activity, but Iran Coast overlooking the Arabian Gulf, it is the one who is a vital lifeline for the export of oil and the import of services and technology and weapons and everything  it needs , from other materials, and the most important ports: Abadan and kharj.

Iran is seeking to find alternatives to the strait in order to dominate the region without hurting its economy, but in the current situation is not able at all, to cover the economic costs related to the strategic ambition in the Caspian Sea, in particular the financing of the Caspian pipeline , which passes through its territory to the Arabian Gulf, and It is  not able to allocate large sums of money to invest in it, and this is due to the massive costs  destined to finance domestic weapons production projects and the purchase of weapons from abroad, in addition to its work on building a base of military capabilities of non – conventional ones (nuclear reactors), without forgetting the effects of economic sanctions  imposed on Tehran  , which  the closure of the Strait of Hormuz led  to make it worse noting that Iran exports 90% of its oil through the Strait of Hormuz, and as the Iranian economy depends on petro dollars, the closure of the waterway would harm Iran ‘s first, knowing that the United States and its allies are still impose further sanctions on Iran ‘s energy sector and the financial sector.
On the other hand, the closure of the Strait of Hormuz would affect Iran in place policies to avoid the US threat  base on  its oil industry since Iran to import 370 thousand barrels per day of oil from Azerbaijan, Kazakhstan and Turkmenistan through a pipeline network of Neka-Rey, for its domestic consumption in exchange for the export of 370 thousand barrels per day of oil fields in the Gulf, and therefore the closure of the strait would negatively affect Iran ‘s relations and Caspian states, especially that these countries are still after independence from the Soviet Union living in difficult circumstances and the situation of security is not  disciplined, and therefore it need to invest its oil wealth with active partners through them , the Caspian Sea states can to achieve  its security at all levels , and thus process of closing the strait would affect the oil trade – off between Iran and the Caspian Sea process, pushing these countries to find new partners and more secure ways .

In the same  context , political analysts pointed out, that the Iranian threat is  no more than  a review in front of the Gulf states, and an attempt to prove the military and political presence at the same time, especially that Tehran is trying to provoke Washington by these moves that could lead to new sanctions against it.

They noted that the Iranian concern of US President Trump’s remarks pushed it  to think and prudence and evaluate things before embarking on such a move  as Tehran knew well the US react on them, which is likely the hypothesis that the real aim of the announcement of the    attempt  of the Iranian  control over the Strait of Hormuz is not more from propaganda to prove its sovereignty over the strait or the ability to impose sovereignty at any time and whether the Iranian move as a matter of political propaganda, or send messages  to reflect the ability to impose its sovereignty over the Strait of Hormuz and the Arabian Gulf and whenever it wishes.

And an Iranian oil exports through the Straits of 90% ,  China ‘s imports from  it about 22%, although the oil trade with Iran , which is rather large that it did not hesitate to approve the sanctions  because it aware of the fact that Iran ‘s ability to meet their needs of oil  is declined ,  so  China resorted to  a variety of oil purchases from Saudi Arabia, passing through Russia, Kazakhstan and Sudan, it has proceeded to the establishment of a strategic program to store enough oil  for  a month of its general consumption , and three months of military consumption.
Japan imports  about 14% of Iranian oil, India 13%, and South Korea 10%, in addition to other Asian countries that depend on Iranian oil in varying proportions.
With all that Iran is using the threat  as a ghost to threaten  the economic world   to close the strait  over its nuclear program.

United States policy toward the Straits:

US commanders assert since Desert Storm , the importance of oil shipments that represent to them  the stability of the global economy, and for the vital interests of the United States in the Gulf region,  the Commander in Chief of US Central Command( centcom) Gen. HJ Binford  said that the unlimited flow of oil materials  from the  friendly Gulf  states to refineries and processing facilities around the world is the one who drives the global economic machine.
And in line with this vision ,  US increases its forces in the Gulf and has taken other steps to protect friendly forces in the region, and at the same time  Washington boosted its ability to intervene in the Caspian Sea nevertheless the Strait of Hormuz and  closing it will affect US interests in the Arab Gulf region  and specially the latter   relies on it  heavily.

And this will reflect positively on Washington in the Caspian region, because it will enhance the western transport  pipeline  of oil wealth , and gas  of the Caspian Sea, and thus Turkey will become a safer roads and more stable countries in the region , and will push  the Caspian Sea states to stop dealings with Iran because close the Strait of Hormuz will undoubtedly be the start point of a war between the United States and Iran in the Middle East  ,.
And the closure of the strait could lead to involve the Caspian Sea States in this confrontation between the United States and Iran , especially Azerbaijan as well as Turkey (linked to the transatlantic alliance with the United States), with the possibility of other regional powers intervention that have ambitions in the region and we mean here , Russia, China, which would intervene in order to protect its interests or maximize it  by exploiting this situation to their advantage, in addition to Israel  , the strategic ally of America in the Arabian  Gulf and the Caspian Sea region . Israel is working to penetrate inside these republics through the Jewish communities in the region and strengthen the military and security cooperation with it, especially in Azerbaijan and Kazakhstan, and thus the conflict between the United States and Iran in the Caspian Sea is affected by what happens in the Middle East.

Add to that influenced by the rest of the regional  and international powers such as Russia, China, Israel and NATO, and therefore, these forces are the strongest ever in the world, where the military expenditures of the United States of America , China and Russia all together were estimated  in 2012 to 938.7 billion dollars, representing a 53.7 percent of the military expenditures in the world.

And therefore, these regional and international powers play a big role in determining the future of the current  ongoing conflict between the United States and Iran in the Caspian Sea conflict.

The US strategy since World War II, the attempt to control the waterways, especially the most important strait “Hormuz”, which represents a strategic focus of the US presence in itself.

If we go back  a little bit of history, we will find that the United States is seeking  always  to preserve its interests in the Middle East,  especially the  vital economic interests   in the region in particular. In 1867  one  of the American officers (Alfred Mahan) visited Muscat, as he said  then  Middle East area is   the most important regions in the world, and  to control it requires   a great navy force  and no way to do this only when control of the Arabian  Gulf, and Iran  realized the  importance of the strait and oil on the international economy in the time of Shah Reza Pahlavi, prompting it to take control of UAE islands (Greater Tunb, the Lesser Tunb and Abu Musa) and appointed Iran itself as the policeman of the Gulf, as Iran was under the Shah   the strongest allies of the United States of America in the face of the Communist tide.

Today , in light of the new statements of US policy against Iran on stopping its nuclear program , which has implications for the security of the Arabian Gulf and the Strait of Hormuz area specifically.
And reflected on the tension of  US military bases deployed in most of the Arabian  Gulf, and on  a permanent military presence of the United States in the Indian Ocean, the US  fleets do not leave the region and the US administration is working to promote it.
For its part , Iran is working to strengthen its naval base at Bandar Abbas , overlooking on  the strait, and conducted a number of military exercises in the area to stir up tension, for regional stability and security of the region. And all of this  are a threat,     messages and  pressure paper addressed to the United States and the Gulf States , to show the  possibility of Iran to  close the Strait but the fact  is on the contrary  noting that Iran is the primary beneficiary of the strait, in the case closure would destroy its economy and the life within it  before  other countries.

Strait of Hormuz and the interests of the Gulf states:

GCC economies heavily dependent on oil revenues that are available from the possibility of building projects to meet the general needs of the state, and meet other citizens requirements, and of Iran’s exports through the Strait of Hormuz 90% of its oil, and Saudi Arabia, about 88%, or about 6 million barrels a day, but Saudi Arabia has coastline on the Red Sea with a length of 1020 nautical miles; thereby reducing the risk of dependence on the strait.

Iraq and Hormuz:

Iraq ‘s oil exports constitutes  through the Strait of Hormuz  the proportion of 98%, and the most important thing here that Iraq will depend on the rate of more than 94% of total revenues on the source of oil, and in the case of closing it, it will lead to the loss of more than 80% of its revenues being export  via the Turkish port of Ceyhan 500,000 barrels per day and two million barrels through the Strait of Hormuz, making oil production rates and prices are  the control process  for  implementing the goals of the budget.
Iraq , which does not have access to the sea to the Gulf only ten miles across the Shatt al – Arab, it would be the biggest losers in the event of the closure of the straits as a result of the huge drop in oil revenues that drives  the economic life  of all aspects of the daily life of the citizen and the state, and here  we must search in earnest way for a quick alternatives to reduce the potential effects of the crisis that could be plaguing Iraq in addition to its current economic  crises; exacerbating the problem of unemployment and a lack of liquidity and the recession and the inability to pay salaries of the staff.
Oil , which is in Iraq , the foundation of life must be invested  in  the development plans and programs for Development to overcome the crises that may take place in the region and directly affect the economic life  and  to deal with potential crises by  placing a conscious and responsible plans to diversify its sources of income in the Iraqi economy, and set up committees comprising specialists in the field  of economy and oil, trade and foreign affairs  to find  the realistic alternatives, and the development of new export outlets for such as lines of transport to be built toward Syria , and to negotiate the line that goes to Saudi Arabia to reduce risks that threaten Iraqi exports.

Emirates exports   through the strait 99% of its oil production equivalent to 23 million barrels, which is the only entrance L13 for commercial and military ports through which passes   more than 55% of the imports of commercial Gulf, Qatar , 100%, and Kuwait , 100%, and Bahrain export million and 88,000 barrels Daily .
The Arab oil features are : easy to find, and low cost, abundant production, the strategic location of the wells.

It is clear of what is mentioned above  that the Strait  is of great importance to the countries of the world; it is crossing waterway for the Petroleum of some of it  , and has  high economic and strategic status , but the dependency ratio will vary between countries of the size of exports and imports, for example , Iraq did not possess waterfront  that it  overseeing the Gulf through the Shatt al – Arab, while  Qatar , Kuwait, and Bahrain depends on it by  100% and be influenced directly  by any small or big political and military events ,  .
The  importance was increased    due to  the fact that the Gulf states contain the world ‘s biggest oil reserves , it contains a:
60% of global oil reserves and 70% of the Arab world reserves, and 90% of Japanese consumption, it is  really an oil depot, as  the Strait of Hormuz , constitutes the main driving factor   for the largest  economies in the world.

And increasingly important as modern statistics and studies, as by expectations of increases of oil production:
1990 production was 18.7 million barrels
in 2010 production was 283 million barrels
in 2020 is expected to be 368 million barrels of production.
This gives great importance to the Strait and perhaps political pressure exerted against each for the economic interests of their own countries.

In light of the growing demand for oil, and the pursuit of nations for more oil reserves steadily rising, competition and conflict between the United States and Iran have increased, undermining international peace and security in the region, and the impact on the existing market economies now.

Shatha Khalil 
Unit Economic Studies

translated by : Mudhaffar al-Kusairi

Rawabet Center for  Research and Strategic Studies