Iran — A War has Begun

A war has begun in Iran; a com­bi­na­tion of covert action, eco­nom­ic sanc­tions, polit­i­cal iso­la­tion and the threat of mil­i­tary pre-emp­tion have not just crip­pled the Iran­ian econ­o­my but have check­mat­ed Iran’s war wag­ing poten­tial. The threat of unleash­ing an asym­met­ric con­flict is more pres­sure tac­tics than a cred­i­ble denial strat­e­gy. Crit­i­cal aspect is assess­ing Iran’s abil­i­ty to close the Gulf as threat­ened peri­od­i­cal­ly. Iran and espe­cial­ly the naval ele­ments of its Rev­o­lu­tion­ary Guard Corps, has sought to devel­op a unique denial naval force based large­ly upon flotil­las of fast, attack crafts backed up by a vari­ety of crafts capa­ble of lay­ing mines, con­ven­tion­al and midget sub­marines. These are sup­port­ed by shore-based anti-ship­ping mis­siles, air­craft, rock­ets and artillery all with rudi­men­ta­ry com­mand and con­trol. How­ev­er they are not equipped mate­ri­al­ly nor tech­no­log­i­cal­ly for any sus­tained denial oper­a­tions when up against US and coali­tion forces. What they could achieve is dis­rup­tion through low lev­el spo­radic attacks on ship­ping. Whether Iran has the polit­i­cal sagac­i­ty to cope with the cur­rent sit­u­a­tion with­out giv­ing oppor­tu­ni­ty for the US to take recourse to arms is a moot ques­tion. And what of the strat­e­gy of despair: terror? 

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On the morn­ing of 29 Novem­ber 2010 the Iran­ian nuclear physi­cist Majid Shahri­ari was work­ing his way on Artesh Street in cen­tral Tehran when a motor­cy­cle pulled up along­side his sedan, stuck a metal­lic object and sped away. With­in moments a shaped charge tore through the door and left the sci­en­tist a man­gled mass of flesh. The sci­en­tist died instant­ly. Some twen­ty kilo­me­tres north­ward and a few min­utes lat­er in the foothills of the Alborz Moun­tains close to the Pas-e-Qaleh neigh­bour­hood anoth­er motor­cy­clist drove up to the car of Fer­ey­doun Abbasi Davani and placed his explo­sive, only this time the vic­tim man­aged to get out of the car to safe­ty before the bomb went off. Abbasi was a lead­ing bal­lis­tic mis­sile sci­en­tist. It was also the same day that Iran­ian Pres­i­dent Ahmadine­jad admit­ted that soft­ware that con­trolled high speed cen­trifuges used to enrich ura­ni­um for nuclear reac­tor fuel and (pos­si­bly) to weapon grade lev­els had been dam­aged in cyber attacks.

Wars through the ages occur when the estab­lished order is chal­lenged and this chal­lenge is resist­ed; and as Clause­witz so one-dimen­sion­al­ly put it “wars take place main­ly for the defend­er”. But the trig­ger has var­ied from dec­la­ra­tion to direct mil­i­tary action and some­times more insid­i­ous­ly through covert action or by polit­i­cal rid­dance. In each case, empires and dis­pen­sa­tions had fall­en through ero­sion of the found­ing canon, that of oblig­a­tion of the cit­i­zen­ry. Some­times this occurs rapid­ly due to sheer weight of an inter­ven­ing pow­er or due to a slow­er process of exhaus­tion of inter­nal ener­gies. The nature of war that we are cur­rent­ly wit­ness to in Iran does not read­i­ly fall into any mould. Covert action, cyber attacks and polit­i­cal alien­ation suf­fi­cient­ly rein­forced by eco­nom­ic sanc­tions and intru­sive nuclear inspec­tions on the one hand, has unleashed glob­al­ly dis­rup­tive nation­al­ism on the oth­er. Poten­tial­ly a far more dan­ger­ous effect is what nations over the last cen­tu­ry have turned to, the strat­e­gy of despair: terrorism. 

Here you can find more infor­ma­tion about:  The Glob­al Cyber War­fare Mar­ket 2011–2021 The Glob­al C2/C4ISR Mar­ket 2011–2021 The Glob­al Mil­i­tary Radar Mar­ket 2012–2022 The Glob­al Mis­siles and Mis­sile Defense Sys­tems Market

Sanc­tions and the com­ing oil shock

The UN rat­i­fied four rounds of sanc­tions against Iran between 2006 and 2010 in reac­tion to its refusal to halt ura­ni­um enrich­ment and co-oper­ate with the Inter­na­tion­al Atom­ic Ener­gy Agency (IAEA). These sanc­tions include a ban on the sup­ply of heavy weapon­ry and nuclear-relat­ed tech­nol­o­gy to Iran, a block on Iran­ian arms exports and an asset freeze on key indi­vid­u­als and com­pa­nies. Res­o­lu­tion 1929, passed in 2010, man­dates car­go inspec­tions to detect and stop Iran’s acqui­si­tion of illic­it mate­ri­als. The Euro­pean Union (EU) has imposed its own restric­tions on trade in equip­ment which could be used for ura­ni­um enrich­ment and has put in place an asset freeze on a list of 39 indi­vid­u­als and 141 com­pa­nies and organ­i­sa­tions which it believes are help­ing advance the country’s nuclear pro­gramme. On 23 Jan­u­ary 2012, EU approved a ban on imports of Iran­ian crude oil, a freeze of assets belong­ing to the Cen­tral Bank of Iran and a ban on all trade in gold and oth­er pre­cious met­als with the bank and oth­er pub­lic bod­ies. The EU cur­rent­ly buys about 20 per cent of Iran’s oil exports. 

This arti­cle is pub­lished with the kind per­mis­sion of “Defence and Secu­ri­ty Alert (DSA) Mag­a­zine” New Delhi-India

The Strait of Hor­muz is one of the most crit­i­cal mar­itime choke­points of the con­tem­po­rary glob­al ener­gy sys­tem. Through its nar­rows (less than 34 miles) close to 18 mbl of oil, a fifth of glob­al con­sump­tion, cours­es through every day along two, 2 mile wide ship­ping lanes car­ried onboard 5,800 hulls (approx) annu­al­ly (all fig­ures sourced from Ener­gy Infor­ma­tion Admin­is­tra­tion, USA). The north and east­ern side of the strait is dom­i­nat­ed by the Iran­ian coast­line while the south­ern side by Oman and the Unit­ed Arab Emi­rates. Traf­fic den­si­ty is high and well reg­u­lat­ed, the waters are shal­low and do not favour sub­ma­rine oper­a­tions and the con­strict­ed nature of the sea­way does not sup­port large scale stealth oper­a­tions or large force manoeu­vres. The Gulf nations pro­duce near­ly 30 per cent of glob­al oil while sit­ting on 57 per cent of the world’s crude reserves. It is also the repos­i­to­ry of 45 per cent of proven world gas reserves

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The oth­er economies that are like­ly to take the brunt of denial are Chi­na, Japan and South Korea. In the end analy­sis, restora­tion of oil sup­plies from Libya and Iraq and con­trolled ramp­ing up of Sau­di oil pro­duc­tion serves to sta­bilise prices and for the west­ern mar­kets and replace EU depen­dence on oil sourced from Iran. Con­trol of Libyan and Iraqi oil not only pro­vid­ed the strate­gic log­ic for the recent wars in these two nations, but also presents a con­vinc­ing argu­ment to answer one of the crit­i­cal ele­ments for a pos­si­ble war in Iran. It is there­fore hard­ly any sur­prise that Libya today glob­al­ly exports 1.4 mbl / day and Iraq 2 mbl / day of which 20 per cent goes to the EU which amounts to 6,80,000 bl / day against 4,30,000 bl / day that was com­ing from Iran (all fig­ures in this sec­tion sourced from Glob­al Trade Atlas and Ener­gy Infor­ma­tion Admin­is­tra­tion, USA). So as far as ener­gy secu­ri­ty is con­cerned, a war in Iran will raise not only anx­i­ety lev­els amongst the east­ern economies, but will rack these mar­kets through anoth­er oil shock

The USA has long-stand­ing com­pre­hen­sive sanc­tions in place on Iran. Since 1980 the US has imposed suc­ces­sive rounds of sanc­tions, cit­ing what it says is Iran’s sup­port for inter­na­tion­al ter­ror­ism, human rights vio­la­tions and refusals to co-oper­ate with the IAEA. The US sanc­tions pro­hib­it almost all trade with Iran, mak­ing some excep­tions only for human­i­tar­i­an activ­i­ty. In late Novem­ber 2011 the US, UK and Cana­da announced more bilat­er­al sanc­tions on Iran, in reac­tion to an IAEA report which sug­gest­ed Iran’s nuclear pro­gramme may have a mil­i­tary pur­pose. The US expand­ed sanc­tions to tar­get com­pa­nies that aid Iran’s oil and petro­chem­i­cal indus­tries. Oth­er coun­tries includ­ing Switzer­land, Japan, Aus­tralia and Cana­da have also imposed bilat­er­al sanc­tions on Iran in recent years in response to Iran’s lack of co-oper­a­tion with the IAEA. A US law signed on 31 Decem­ber 2011, imposed new sanc­tions on finan­cial insti­tu­tions deal­ing with Iran’s cen­tral bank. The law is intend­ed to ham­per Tehran’s abil­i­ty to sell oil abroad. A fall in Iran’s oil exports would not only have a big impact on the Iran­ian econ­o­my but its fall out could dri­ve up the glob­al oil price and harm glob­al economies.

The EU’s ban of 23 Jan­u­ary on imports of Iran­ian crude oil, is expect­ed to have a more sig­nif­i­cant impact on the econ­o­my of the Islam­ic Repub­lic, because the EU cur­rent­ly buys about a fifth of Iran’s oil exports. Japan and South Korea, which togeth­er account for 26 per cent of Iran’s oil exports, are non-com­mit­tal as yet. The sanc­tions are designed to bring the Iran­ian econ­o­my to its knees. The grim real­i­ties of its effects are there for all to see as the Rial has dropped close to 70 per cent against the US dol­lar in recent months.

Rus­sia has reject­ed any fur­ther sanc­tions against Iran. Chi­na and India have indi­cat­ed that they do not intend to curb Iran­ian oil imports. Turkey, too, has sig­nalled that it will not adopt any oil embargo.

Impact of sanc­tions on ener­gy security

In order that the per­spec­tive is not lost sight of, the read­er must come to grips with what uni­ver­sal sanc­tions will mean to the world par­tic­u­lar­ly in the oil sec­tor and how its denial will influ­ence glob­al ener­gy secu­ri­ty in gen­er­al terms with spe­cif­ic ref­er­ence to the Indi­an sit­u­a­tion. Table 1 below makes a graph­ic state­ment of Iran’s oil export des­ti­na­tions. When viewed against the total world con­sump­tion of 86 mil­lion bar­rels / day (mbl / day), Iran’s exports amount to about 2.5 per cent of glob­al needs. How­ev­er this does not give a whole­some pic­ture of the sit­u­a­tion. The largest con­sumer of oil, the USA, which accounts for over 25 per cent of glob­al con­sump­tion does not import any oil from Iran; and as far as the EU is con­cerned, 20 per cent of Iran’s exports is des­tined to Euro­pean con­sumers of which close to 15 per cent goes to the weak­er economies of Italy, Spain, Greece and Turkey for whom alter­na­tive sources are being put in place. The graph­ic, then, makes it amply clear that it will be the east­ern economies that will be sore­ly hit by a denial regime.

India is the world’s 4th largest oil con­sumer at 3.5 mbl / day, which rep­re­sents 4 per cent of glob­al use and the amount that it imports from Iran is 3,44,640 bls / day against a total import of 3 mbls / day which approx­i­mates 11.5 per cent (all sta­tis­tics in this sec­tion are sourced from the US Ener­gy Infor­ma­tion Admin­is­tra­tion, Inter­na­tion­al Ener­gy Sta­tis­tics). Giv­en these fig­ures any dis­rup­tion in sup­ply or attempt to find alter­na­tive sources will have seri­ous adverse impact on an already stren­u­ous eco­nom­ic growth to the extent of one to two per cen­t­age points (writer’s esti­mate). The oth­er economies that are like­ly to take the brunt of denial are Chi­na, Japan and South Korea.

In the end analy­sis, restora­tion of oil sup­plies from Libya and Iraq and con­trolled ramp­ing up of Sau­di oil pro­duc­tion serves to sta­bilise prices and for the west­ern mar­kets and replace EU depen­dence on oil sourced from Iran. Con­trol of Libyan and Iraqi oil not only pro­vid­ed the strate­gic log­ic for the recent wars in these two nations, but also presents a con­vinc­ing argu­ment to answer one of the crit­i­cal ele­ments for a pos­si­ble war in Iran. It is there­fore hard­ly any sur­prise that Libya today glob­al­ly exports 1.4 mbl /day and Iraq 2 mbl / day of which 20 per cent goes to the EU which amounts to 6,80,000 bl / day against 4,30,000 bl / day that was com­ing from Iran (all fig­ures in this sec­tion sourced from Glob­al Trade Atlas and Ener­gy Infor­ma­tion Admin­is­tra­tion, USA). So as far as ener­gy secu­ri­ty is con­cerned, a war in Iran will raise not only anx­i­ety lev­els amongst the east­ern economies, but will rack these mar­kets through anoth­er oil shock.