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Ironically, Sanctions Success Strengthens Iran’s Strait of Hormuz Trump Card

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Military strategists appear to have missed a foreseeable outcome in their efforts to pressure Iran.

As the temperatures are rising in the Mideast, as reader chatter about Turkey’s involvement in Syria attests, a Financial Times article describes how the success of economic sanctions against Iran have strengthened its ability to make credible threats to restrict oil shipments.

Market participants have long discounted the idea that Iran would restrict the flow of oil through the Strait of Hormuz, a comparatively narrow channel though which 35% of the world’s oil supplies pass. Threatening cargo ships would also interfere with Iran’s own oil shipments, far and away its biggest source of foreign exchange, and critical food imports.

But that dynamic has now changed. As the Financial Times notes (hat tip Scott):

Sanctions imposed over Iran’s nuclear programme have grown tighter, and the effects are being felt across the country. Fears are rising that Iran’s leadership, facing increasing domestic unrest over spiralling inflation, has less and less to lose through brinkmanship in the channel now that its own oil income is being squeezed to a trickle. For years, oil traders were inured to rhetoric from Iran that it stood poised to shock world energy markets by blocking the seaway in retaliation for sanctions or an Israeli attack. They were sceptical it would engineer a crisis in a region so critical to its own economic survival. But Iran’s plummeting oil exports mean that a cornered Tehran could see a confrontation in the strait as less an act of self-immolation and more a calculated gamble.

It’s a bit disingenuous to put responses to sanctions in the same boat (no pun intended) as a military attack. Israel and the US have been saber-rattling at Iran for years; it’s hard to imagine that Iran would not engage in an aggressive retaliation, and either blocking the strait or launching strikes on cargo ships is a blindingly obvious move (it’s not as if Iran’s enemies aren’t going to be interfering with its shipments at that point). Readers have also pointed out that Saudi refineries are within easy strike distance.

Saudi Arabia and Abu Dhabi have opened new pipelines that will considerably reduce the importance of the Strait of Hormuz, but they won’t be operating at full capacity for 18 months. And even then, the new facilities don’t neuter the Iranian threat, but merely make the effects somewhat less severe. So Iran still has considerable leverage as well as motive to act. And remember, even though Iran has always insisted it would respond fiercely to an onslaught, as opposed to be an aggressor, it has means for applying pressure that fall short of an attack. Again, from the FT:

Fearing Mr Ahmadi-Nejad could seek a diversion through international sabre-rattling, policy makers say that Iran could easily find ways to disrupt world energy supplies without a direct attack. Some argue it could board every supertanker transiting its territorial waters under other pretexts, such as inspecting for weapons smuggling. Others fear it could even use proxies to fight its war, with terrorist organisations carrying out attacks. Those actions would both slow oil flows and push up prices. Tehran would win a double victory: continuing its own remaining oil sales while benefiting from higher prices. Amrita Sen, senior oil analyst at London-based Energy Aspects, says that domestic pressure and economic collapse could force Tehran back to the negotiating table over its nuclear programme. “But, on the other hand, it also makes more likely a provocative action by Ahmadi-Nejad.”

Since the West does not have a good direct response to this basic problem, it is sending more men and material into the region:

Seeking to counter Iran’s influence, many nations are building up their military presence in the Gulf. September’s drills involved dozens of warships from, among others, the US, the UK, Japan, France, New Zealand, the Netherlands, Italy, Australia and Canada. Lieutenant Greg Raelson, a spokesman for the US fifth fleet, which often keeps one of its aircraft carriers in the Gulf, stressed the Strait of Hormuz was critical to “fuel economies around the globe”.

And protection does not come cheap:

It is almost impossible to calculate the cost of policing the Gulf but Sherife AbdelMessih, chief executive of Future Energy Corporation, provides a back-of-the-envelope approximation: that the US spends roughly $90bn on its Bahrain-based fifth fleet or about $15 per barrel that crosses Hormuz.

Now we know why Obama is so keen to talk about fracking. It solves more than one problem.

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71 comments

  1. JGordon

    I am looking forward to seeing oil choked off to America when the petrodollar finally collapses. We can have a nice, relaxing life in the aftermath of that, without so many people running around doing so many god-awful useless things all day.

      1. JGordon

        People, like me for example, are already proactively working on alternatives. The rest of the people will just sort of go away when the time comes.

          1. Bert_S

            As far as I can tell solar still loses money. Plus we have tile roofs around here and they crack and your roof leaks if you try to walk on your roof.

            Plus we have no way to export it for farm products and we can’t stock it up for the winter time.

            Plus if it were a big money maker, you’d think our local capitalist power company would be building out central solar plants like crazy(at least the more cost effective thermal type). They are not, but they encourage us to put PV units on the roof.

          2. Nathanael

            Solar pays for itself in less than 5 years in Hawaii. I think the payback time is closer to 10 years in Arizona, but it’s still worthwhile.

            You have to solve the structural problems with your house, of course.

            But Arizona’s a good place to move away from anyway. No water, no agriculture, no food, and global warming will make it intolerable.

          3. Nathanael

            Bert: The economics of home solar and industrial solar are very different.

            Half the cost of “grid electricity” is the distribution network. With home solar, you can get ahead because you don’t need that. Industrial solar needs it.

            Put it this way: a coal-burning power plant in your home would probably still be cheaper economically than solar, but solar is already cheaper than a coal-burning power plant many miles away and a huge network of power lines.

          4. Bert_S

            Actually, the grid is there already and you do need it if you have home solar – assuming you use lights at night – and you also need to sell your surplus in the afternoon hours back to the power company. And to try and make this economical for the homeowners, power companies do not apply the grid charge for power they buy back from you. Then there is also the state subsidies that we pay for somehow.

          5. Grumpy

            @Bert,
            Expansion/contraction from the 50F (or more?) daily temperature swings will crack and embrittle stuff, specially roof tiles that take the most heating.
            When you replace the roof, and it sounds like you are there, strongly consider white or unpainted galvanized steel.

          6. Bert_S

            Everything built in AZ since around 1990 is in a HOA, and you have to replace roofs to the original spec.

            I’m just checking this out on paper. Thought experiment. I’m one the leading edge thinkers on the subject.

            I think the process works like this:

            Get the cost estimate and phoney non-standardized and non-disclosed methodology for your cost payback (including subsidies).

            Have it installed on your tile roof. If you read a little roofer stuff, they will tell you it’s very difficult, if not impossible, to walk on a tile roof and make repairs without breaking tiles. But somehow, the solar installation is supposed to go OK. If it does then we get high winds sometimes and I think you have an aerodynamic stress problem too.

            When you get the roof leak, it’s $20K for a new tile roof(smaller house), plus de-installation and re-installation (!?) of your solar panels. The subsidies are no longer available, of course.

        1. Jessica

          “The rest of the people will just sort of go away when the time comes.”

          Oh my.
          I am not sure which is worse, if you are successful in your aspiration to become the new, smarter, replacement 1% or if you are not.

        2. ambrit

          Dear JGordon;
          Beware what you wish for. Those people who ‘go away’ just might be the ones keeping civilization intact in your particular neck of the woods. Never underestimate the effects of fear and lawlessness. I offer the present City and Wall Street as examples. Mssr. Pinguids forays into alt-hist can also be viewed as predictive. The Dark Ages came after the glories of Rome. Do notice that the dominant sociopolitical form that emerged from that collapse was Feudalism. Producers settled into the status of chattels, not honoured members of the elite.

    1. alex

      “without so many people running around doing so many god-awful useless things all day”

      Sure, farming without machinery takes little time or effort.

  2. Paul Tioxon

    Unfortunately for the FT, they and some of their readership may be affected, but we won’t be, neither will all of the nations who have waivers from the “sanctions”, including almost all of Europe and Japan.

    http://blogs.wsj.com/corruption-currents/2012/09/17/us-extends-iran-sanctions-waivers-for-eu-countries-japan/

    “The U.S. State Department said late Friday that it would extend a waiver on sanctions against Iran for Japan and 10 European countries.

    The nations–Belgium, Czech Republic, France, Germany, Greece, Italy, Japan, the Netherlands, Poland, Spain and the U.K.–qualified in March for an exception to Iran sanctions because they significantly reduced their oil purchases from Tehran, as required by U.S. law signed last year. The extension lasts another 180 days, when it’s up for renewal again.

    Secretary of State Hillary Clinton said in a statement that the European Union’s oil embargo on Iran and Japan’s steps to reduce its crude purchases led her to extend the exception.”

    ….Also, we, the USA, get almost none of our oil from over there anymore. The top 5 countries we import from are:
    Canada, Saudi Arabia, Mexico, Venezuela and Nigeria.

    http://www.npr.org/2012/04/11/150444802/where-does-america-get-oil-you-may-be-surprised

    Read it and weep Middle East warriors, we are pivoting our force projection towards the Pacific. The Russians send gas directly into Germany by pipeline now. So, the long standing headache of Middle East Oil is being relieved by gas and the sanctions are ignored or “legally permitted waivers”.

    http://www.jpost.com/IranianThreat/News/Article.aspx?id=286719

    “The Geneva-based Vitol — the world’s largest oil trader — skirted sanctions and “bought 2 million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders,” Reuters reported late last month.”

    ….Anyone following this can not avoid seeing that a lot of financial pain is hurting Iran via oil, gas and financial services pressures. At the same time, India, China, Japan have to manufacture the worlds finished goods and they get sympathetic accommodations. Our domestic gas extraction is not poised to do much until infrastructure is built out for it to be consumed. Wells are being shut down in Kentucky due to falling prices and new drilling is being ramped down elsewhere. We just don’t like Iran for playing with the set up that was running nice and smooth. Whether they get nukes or not whether they threaten worldwide oil trade, or not, we still would go after them until someone is in power there more to our liking. It is very difficult for them to cut their own throat and that of there biggest ally in Russia, by disrupting not only there own source of hard foreign currency but also Russia’s, not to mention the Arab Oil Sheikdoms.

  3. Richard Kline

    I am highly tempted to concur with JGordon’s curmudgeonly remark, but some will sit less comfortably then others. I’ll make a few peripheral observations not mentioned in most coverage of the ‘sanctions confrontation.’

    1) Ahmadinejad is largely a non-factor. The media endlessly, bootlessly trundles his face and remarks up because he is deemed a crazy and thus Exhibit A of ‘how horrid is Iran.’ Ahmadinejad will _not_ control any military decision; that falls to other superior to him in he hierarchy, and he is furthermore not in effective chain of command over the components of Iran’s military and clandestine apparatuses which would prosecute any action. Can we, please, _stop_ talking about him, he just doesn’t count for much?

    2) I find the idea that Iran will cave to sanctions highly implausible. The regime is not anywhere near falling, and will endure not only the level of economic pain now imposed but a good deal more. This is an _existential_ issue for Iran in the broad sense, and the regime in Iran in the full sense: this last is an aspect really missing from discussion. The unilateral diktat of the sanctioning powers—essentially illegal under any internationl law, but hey, power talks—cannot be acceded to, and so will not. There is, therefore, no ‘endgame’ to the present trajectory, it’s simply bizarre, imperial blood sport until something blows up or the imposing powers get tired of it and cut a deal.

    3) Iran has signaled many, many times over twenty years that it would accede to and keep any deal within reason. Whether one believes that is another matter, but all the initiative in this has come from Iran or from other friendly neutrals involved indirectly such as Turkey and Brazil. But nothing other than abject and total surrender, will suffice for the imposing powers. And since that is unobtainable, then really nothing short of regime change will be acceptable to the imposing powers: that is what the ‘sanction confrontation’ is rally about, and attempt to impose regime change, let’s be quite frank about that.

    4) Any military action against Iran of any kind is certain to lead to immediate closure of the Strait of Hormuz by Iran. There is absolutely nothing the US or anyone else can to do prevent this, and it is the most powerful strategic option available to Iran to share then pain and hope for a negotiated solution. Iran can launch missles from hundreds of kilometers inland essentially endlessly into the waters, and tankers are plenty big targets, one doesn’t even need to hit one to end shipments. That is part of why there will be no military action against Iran short of absolute insanity. Certainly, the American military and security apparatuses are now _fully on record as saying_ they want no part of this. And they are correct, such an armed confrontation has nothing but steep, nasty, downside for the US. Israel’s situation is quite different, but I’m not going there this day.

    5) Confrontations like this can last a very long time. Take a look at ‘Taiwan.’ That’s a confrontation 63 years and running. The US has the present economic military and material will to sit where’s it’s sitting like King Oaf for generations _without every pushing for a war in no ones interest_. The USA has quasi-blockaded Cuba for 53 years. What I’m saying is that not only is this behavior nothing new for the US, it’s standard operating procedure. This is what we should expect going forward.

    6) A generation+ long blockade is what is likely to result then, barring historically catastrophic stupidity upon the part of Israel. —Wait, I didn’t say Iran there, did I? Look over the past 30 years of Iranian geopolitical policy and action. Iran has made no identifiable major mistake. Ending the war with Iraq several years earlier might be considered a mistake, but peace from where they stood wasn’t politically possible domestically I would say. Those who _actually_ manage strategic policy for Iran—NOT Ahmadinejad—don’t make major mistakes. Given the very poor strategic position of that country, they have conducted their responses exceptionally well, to be frank, the rather odiously repressive nature of the regime itself quite aside from the point here. Israel is the wild card who could set fire to everyone’s pants through a huge strategic error.

    7) I expect Israel to make a huge strategic error to everyone’s loss. Perhaps not this year; perhaps not next; perhaps tomorrow. Who knows when. They’ve made nothing but exceedingly bad, not to say deranged, mistakes in that polity for 33 years, so there’s every reason to believe they’ll keep that string going. This is what happens when one has the thermonuclear backstop, military power, and larger geopolitical backing to enforce ones fantasies and crimes at will upon ones neighbors. There is nothing unique to Israel in that: conquest states have a bad historical record. At somepoint, Israel is going to knock the can over, and we’re all going to get powderburns. That is my view. But when? Dunno. Sooner than 30 years, though; a lot sooner.

      1. Richard Kline

        So Yves, yes, in _any_ geopolitical story where Ahmadinejad’s name is invoked more than in passing, I immediately downgrade the analysis and asterisk the motive. Oddly enough though, the torpedoing of the rial IS likely something for which the guy bears signficant responsibility. The process of the involutary devaluation is ‘unclear’ but signficantly precipitated by a bungled rial-dollar exchange launched by the Iranian authorities, something for which Ahmadinejad is ultimately responsible if not directly, for the economy is very much his brief. For once, international media really _could_ blame the guy for something, but largely this doesn’t seem to have been hung on him; yet.

        Functionally, Ahmadinejad’s role in Iran is much what a PM in a parliamentary system would be, the title of ‘President’ is misleading. He manages the economy, the courts, and certain international negotiations. These are roles which in most respects he is poorly equipped to perform well or flexibly, but he has different agendas. He is an ideologue with a significant constituency in the conservative, rural, Persian population and veterans of the war and the revolution. As such, he has and has evidenced contempt for urban, liberal, internationallized Iranians, and has a hostile relationship with most of the country’s ethnic minorities, many of whom have migrated to cities as well. It’s significant that the economic mistakes of his administration most seriously impact _the urban populations_ with whom he is at odds, not his direct, political constituency. It’s all more complicated than that of course, but everything is. The best American parallel for Ahmadinejad would be a fascist-leaning, religious conservative, heartlander like Rich Perry, the Republican governor of Texas. I’m completely serious, they’re the same guy, separated at birth; absolutists holding one to black and one to white, you chose who has which banner. Think (if your head can get around it without exploding) what the US would be like if Rick Perry ran the economy and police. Yep. —But not the military, nor most foreign relations.

        The collapse of the rial is a very big deal, but I don’t feel in a position to do a wideranging critique, and I would estimate the regime there will survive the situation if with yet more dents and scratches. Perhaps better now, in a way, because this was going to come. Sanctions would eventually destroy the currency, that has been a good bet, so getting on with working around that one might say. The Iranian economy has been poorly managed for a long time, unlike the broader strategy of the country. But that, to me, is a consequence of the very much secondary nature to the regime of concerns with the domestic economy. To this point. Iran could always sell enough oil to make the economy limp along. Or Iran was at war, running a wartime economic situation.

        To the extent to which Iran really is _prevented_ from selling oil on the world market by the Sanctions Confrontation, the situation changes . . . but likely far less than one thinks. There are few, really NO, instances where economic embargo alone has enforced a sovereign state to surrender, and it’s implausible to see that as an outcome here, even given Iran’s disproportionte dependence upon oil revenue. It think its more likely that the sanctions ultimately collapse than the that the Iranian regime does, but that’s a guess. In a real democracy, yes the state of the domestic economy would more severely impact the country’s government, but Iran is not functionally a democracy. And beyond that, the military-security apparatus talks only to the ayatollahs, and they talk only to (their preferred) God, so neither are directly responsible to the country’s population.

        I think that the US policymaking apparatus understands that sanctions will not change the regime—and they don’t care. Sanctions are at least a cost free policy for the US; a bit of a gainer if oil sales go to functional American Allies like Saudi Arabia and Kuwait. Starve the Iranians to keep the sheikhs in power . . . beautiful, NOT. But I really don’t expect Iran to be the first to raise the ante to closing the Strait or similar action, there’s no upside to being first. Ergo, sanctions cost the US nothing, look like the US is doing something, and grind a big huge bootheel on Iran’s policy makers, and that’s the kind of win-they lose policy adored in the US in the absence of any real strategy or vision. We’re so unassailable we don’t NEED real strategy or vision in the US, we can just throw beer cans around and watch the monkey’s jump, so to speak. Beautiful world, ain’t it?

      2. janie

        WRT the focus on Ahmadinejad, the MSM needs to put a face on the BHOTD (black hat of the day), as with Castro, Chavez, bin Ladin; the readership quickly grows bored with analysis and wants personalities.

      1. Richard Kline

        So Valissa, I have so much else that needs doing I’m really short on time and attention often. But I really can’t believe the _dearth_ of analysis on geopolicy, even on the web. I write often because what _I_ want to read just isn’t there, so I have to puzzle things through myself. Doesn’t always mean I’m right, since if I’m moderately well-informed I still work off a fairly narrow body of reportage, fact, and history. Seriously, though, geopolitical commentary as a specialty is WIDE open, the kind of folks who do this for major media are all bought and sold and shade what little they say for effect and for money, while academics seem often to nitpick and be congenitally reticent regarding functional realities of sovereign politics. What I do when I do it well isn’t that hard, it’s just that very few seem to want to do it. That’s my view. Or they’re on a government payroll and don’t speak for public consumption.

    1. Nathanael

      “There is nothing unique to Israel in that: conquest states have a bad historical record.”

      We tend not to notice this because of the small minority of conquest states which have a fairly *good* historical record at competence. Those states are *famous* (Roman Empire, Chinese Empires, Russian Empire, USA). It skews the mental sample — we forget about all the ones which crashed and burned farily quickly.

      Even among the conquest states which didn’t crash and burn as states, an awful lot of their governments made massive internal errors which resulted in huge changes of government (such as the Russian Revolution of 1918). So there is an “Israeli revolution/coup” scenario possible. The general insanity of the ‘settler movement’, who are having the most babies, makes this fairly unlikely though.

    2. Nathanael

      What I’m expecting is more leaks in the blockade/sanctions. Turkey’s incentive to support the blockade is minimal; Russia’s incentive is nonexistent.

      1. Richard Kline

        So Nathanael, that is my view, yes. Russia and China both have incentives to see that sanctions _fail_. Pakistan has already borderline hostile relations with the US and a major financial incentive to tranship Iranian oil (at a hefty toll, likely). Turkey before thingd Kurdled was already shifting a lot of oil out of Iraq, for instance, and has every incentive to look the other way. Turkmenistan is hard to gauge, but one can expect that Iran is offering the regime there major ‘incentives’ to allow a gray market to function.

        To this point, US State and other departments have put a major push behind rapping the knuckles of institutions who won’t cooperate with imposer nation sanctions. I wonder, though, to what extent that is posturing for teh 2012 election. We’ll see, but it wouldn’t surprise me in the least if the US lost a good deal of interest after BO is reelected. A major theme of his second administration is going to be ‘cut our losses and pull back’ in SW Asia, in my view. He’s never really given a damn about anything there to be blunt, and he can’t run for a third term so he doesn’t have to protect his right flank.

        Sanctions tend to erode over the long haul anyway. But a lot of the activity will be in gray market and black market activity which sucks a lot of the profit out of it for Iran. A lifeline, not a power line, so to speak.

    3. Fifi

      Ahmadinejad is largely a non-factor.

      It’s more complicated than that. Power in Iran is highly fractious, many cliques using each other and maneuvering against each other. Who will or will not be a factor in an acute crisis is impossible to determine in advance.

      1. Richard Kline

        So Fifi, agreed. Not only is power fractious in Iran, but different cliques dominate specific sectors of influence while being weak or entirely absent from others. And at the top, the inner cadre of ayatollahs appear quite reticent about exerting power on a personal basis, which leaves an exceptional amount of leeway for others to snatch after circles of influence, a rather unusual circumstance in a modern state, though not unfamiliar from monarchical ones, unsurprisingly: the clerics have a very 18th century view on power and society in not a few respects.

        My larger point, though, is that Ahmadinejad is _several layers of authority distant_ from any command over military activities. What factor his _faction_ may be may be erratic, but he stands in no position to give an order to do X and have it carried out. In that respect, he’s not a factor. If a war situation actually go underway, he might well be in a position to stage in effect an internal coup for much more scope, but that’s really impossible to handicap from where things lie now.

  4. Bert_S

    I think Iran may nuke itself, right on the waterfront of the Straites of Hormuz. That’d mess everyones strategy up. What next I dunno, but none of this has to make sense.

  5. Middle Seaman

    Talk about spreading panic. There are solid plans to stop Iran from blocking the straights. Nothing is totally risk free, but Iran isn’t powerful militarily; its strength lies in terror and incitement.

    Even if the straights will be closed for several days, the US will reopen it.

    Since when have we started to take seriously what the media says?

    1. Richard Kline

      So Middle, you’re with ‘the war will be won by Christmas’ crowd, and completely mistaken. The straits would be closed for years, and likely _many_ years. The real strategic response isn’t to reopen them at all but to get pipelines built across Arabia to ship oil at Jiddah and like places on the Red Sea. But you really don’t understand how very, very easy it will be for Iran to interdict traffic on the Strait of Hormus. You really don’t get that if a shooting war starts in the Gulf, practically every US naval vessel is going straight to the bottom as a government issue coffin. Missle activity really is that dominant, and Iran has all it needs. This is one of the major reasons the US military wants nothing to do with a war with Iran, they’ve war-gamed this and know just how bit a hit they’re going to take in Week One. There’s a lot of mutter about ‘mines and small craft’: that was _the last_ war. They may be used, but it’s the missles that matter. As you may not have bothered to research, Iran has spent more than 20 years getting a deep supply of domestically manufactured missle forces. They don’t have to all work or work perfectly for the strategy to work completely.

      The US would NOT reopen Hormus ‘in days.’ Let’s hope we never have to find out.

      1. BS

        While I don’t belive it the straits would be closed for years… I tend to think the pipelines are would not be too hard to hit? It’s not like they can wiggle around out there when the GPS guided cruise missles head towards them…

        1. alex

          Pipelines are very vulnerable targets. They don’t move and you only have to hit them in one place to stop things.

          As for Richard Kline’s assertion that Iranian missiles would destroy our fleet, I dunno and I don’t think anyone else really does either. It’s certainly possible that missiles would sink the fleet, but nobody ever really knows how weapons and countermeasures work until they’re tried in combat. There’s also the matter of how Iran’s missiles are deployed (fixed, mobile, etc.) and how airpower (and US missiles) would work against that.

          I am interested in RK’s assertion that the military has war gamed this and hence is opposed to war with Iran. Any references appreciated.

          Playing armchair general/admiral is fun. The real tests have a bad habit of getting people killed though.

          1. Bert_S

            Carrier groups have the Aegis system which is supposed to protect them from incoming missiles. The problem is that Iran now has long range cruise missiles and if you launch enough of these it very probably could overload the ability of Aegis to defend the fleet.

            Typically,the military would establish air superiority first, then try and take out all these installations. But Iran would launch a big salvo as soon as they detected a move like that.

            So doesn’t sound so simple to me. But once they do have nukes and long range ICBMs – the whole tactical and strategic problem gets even worse – assuming Iran won’t play nice with the world and that “we” need to have the control to prevent that possibility.

          2. Nathanael

            Of course, Iran *will* play nice with the world — they have for what, 300 years?

            The question is whether the US or Israel will act self-destructively stupid.

          3. Nathanael

            “As for Richard Kline’s assertion that Iranian missiles would destroy our fleet, I dunno and I don’t think anyone else really does either. ”

            Google “Millenium Challenge 2002″. Perhaps the US has a countermeasure by now, but you’d think the government would have advertised it if they had one which actually worked.

          4. Yves Smith Post author

            Google Millenium 2000 war games. Some samples:

            http://www.nytimes.com/2008/01/12/washington/12navy.html

            http://www.slate.com/articles/news_and_politics/war_stories/2003/03/wargamed.html

            Annoyingly, the Army Times story, which had great detail in it, is no longer up at the site. But you’ll get the idea.

            This does not address the issue of missiles, but it illustrates how the officialdom refuses to consider the vulnerability of aircraft carriers. The games were rebooted to try to bury that outcome, but Van Riper quit and made it an issue.

            And the other point is that with missiles a convoy is useless in protecting oil ships. Tell me how many oil ship captains and crews will be willing to sail through the Strait if missiles start being deployed? Iran doesn’t have to hit a ship to stop cargos from moving. A near miss would do, and a hit is gravy.

          5. alex

            Nathanael: Google “Millenium Challenge 2002″

            I’m familiar with it. However as scary as the outcome was, and as seriously as the possibility should be taken, my point was that a war game is still just a simulation. It’s based on numerous assumptions, about both enemy equipment and personnel. You never know how something will work out until it’s tested in the field under actual conditions. Unfortunately with the military that means a war.

            History is littered with weapons and tactics that worked much better and much worse than anticipated.

          6. alex

            Yves Smith: officialdom refuses to consider the vulnerability of aircraft carriers

            Or at least they refuse to let it keep the navy from deploying their favorite toys. What’s the point of deploying carriers in the Persian Gulf when we have airbases all over the place around there?

            Yves Smith: Tell me how many oil ship captains and crews will be willing to sail through the Strait if missiles start being deployed?

            They kept sailing through the “Tanker War” phase of the Iran-Iraq War.

          7. Yves Smith Post author

            Saddam was heavily reliant on scuds, which are notoriously inaccurate. The stat of the art has moved on considerably since then.

          8. alex

            Scuds are land based ballistic missiles used mostly against fixed land targets. Iraq’s favorite anti-ship weapon was air launched Exocet’s (including their successful attack on the USS Stark).

          9. Richard Kline

            So ‘alex,’ if that is in fact your name, you do raise several worthwhile points, which I’ll address. Regarding how equipment and countermeasures function, you present a cliche which is nonetheless true. Iran _did_ spoof down an American drone thought unassailable, so yes, things do evolve not as planned especially by the opponent. Let’s get some perspective to begin, though. There is no counter-missle system which can reliably shoot down an Exocet, a 40-year old system. The new anti-ships are faster and better. The cruise missles are much faster and much better. Iran certainly has cruise missles. How many and how good, that’s less certain. If one in twenty hits (likely a very low rate) that’s perfectly adequate from the operational perspective of eliminating American surface ships from the Gulf and the Strait. If you have any knowledge of _ANY_ effective counter-missle system anywhere, the onus is on you to present that evidence. An argument based upon ‘The US military will have something up it’s sleeve,’ essentially, is no argument. Certainly not something to bet ones life or strategy on.

            Regarding aerial suppression of Iranian missle capacity, that will certainly be tried, but nothing whatsoever gives one confidence in a successful outcome. We have had three instances in the last twenty years when a first rate air force has been deployed to suppress opposing missile forces. The US did not evidently destroy a single Serbian missle in our bombardment of that country, despite destroying quite a lot of transportation infrastructure. It’s still not clear that the US bombed a single Scud in the Gulf War; certainly success was very low. Israel claims to have gotten ‘the big ones’ in trying aerial suppression of Hezollah’s missle capacity in 2007; I wouldn’t advise anyone to take them at their word given what their word’s been worth. But the manifest evidence is that the second best air force in the world couldn’t stop a non-state militia from rocketing it’s territory even when the launch areas were in visual range of Israel’s territory. Yes ‘measures yet unadvertised’ may have been developed in the last five years: where? Nobody anywhere in the world has reported much to that effect. The manifest evidence of recent operations fully supports that Iranian missle capacity will not be deterrable by aerial countermeasures presently available. Hence, the ability of Iran to enduringly interdict surface traffice through the Strait of Hormuz at its discretion _must be assumed_.

            I’ll add that any review of military history gives no support to hugely confident prior assumptions of effectiveness, operationally or technologically. We cannot assume rosy scenarios, and the historical evidence tends to skew toward worst case scenarios in line with the known capabilities of equipment and its deployment. The clearest assessment at this point is that a) ship-targeted missle attacks will largely/entirely succeed, and b) aerial suppression of missle launch capactity will largely fail. Because that has been the overwhelmingly _demonstrated_ outcome for 40 years.

            Regarding wargames, if the US Navy and Centcom have _not_ wargamed missle swarm offensive and interdiction capability in the Gulf, they are grossly professionally incompetant. They are demonstrably not incompetant. We can safely assume that these scenarios have been gamed. But not published, and indeed the outcomes are likely amongst the most deeply guarded military secrets in the Navy’s possession. Let’s consider the contextual backcloth to an absence of information, though. Supposing that the operations had been gamed, and the survival-and-counterforce outcomes _significantly favored_ the US, it would be very probable that the results would have been leaked in the broad sweep, or at least openly alluded to. Why? Deterrence is far more important to the US in the present situation. US policy makers DO NOT want oil movements through the Strait of Hormuz jeopardized in any way. We could all but guarantee that a successful outcome for the US from wargames would be made known—but nothing of the sort has been announced. Ever.

            An argument ‘from silence’ on my part regarding highly negative outcomes for US naval assets in the Gulf from missle swarm attacks is weak, but I’ll stand by the reasoning. The further reason from that is, oh, 50 years of wargames and operational testing which have repeatedly, massively demonstrated that naval vessels are floating mass coffins over that period if engaged by missle-armed adversaries. No one, not even the Naval high command, thinks that these vessels are survivable in a mainforce shooting war, because all the evidence available is that they are not. Surface navies exist presently a) for force projection against grossly inferior, small state military forces, and b) as welfare payments to the military industrial system. Yes, missle countermeasures are ‘improving’ from a zero survival rate to, what 10%? 20%? In the first salvo, anyway. Don’t think that luck is going to hold. Capital ships are the equivalent of wooden palisades crammed with men facing cannon-armed besiegers.

            How do we know that the US military is opposed to a shooting conflict with Iran? Well, it was said so in plain words in September, if you were listening. When Bibi was dribbling madness of the “I’ll shoot them myself” sort. Oh, not by the _serving military,_ that’s not how it’s done. They’ll never stand up in front of a microphone and say, ‘We can’t win that one,’ and probably they shouldn’t. What was said, and how it’s done, is that very senior retire military, and various think tank higher ups joined at the hip with them and the interior of the DoD all held press conferences saying, point blank, “War with Iran is not in our interests and no one should remotely think it will be fast or easy if it comes.” “War with Iran would be worse than Iraq and Afghanistan combined,” was a relevant quote from a land forces type. Really, ‘alex;’ this was adequately reported in the media even if discreetly kept ‘below the fold’ so to speak. That was and is how the serving military signals when it has to go over the head of the oligarchy and the slimey political partisans on an issue of national importance. The US military _does NOT_ want to do this one. And they are correct in that assessment. They would lose many assets very fast at the outset, have very low probability of suppressing Iranian military capacity, and face a grinding contest which at best would be no-loseable.

            I would expect the US to try drone-swarms as a countermeasure for launch supprssion, together with high-altitude stealth plane overwatches, and commando insertion teams. All of that, yes, ‘should’ erode Iran’s capacity to launch missles into/over the Gulf. But Iran could lose, say, three-quarters of its assets in any given cycle and still be completely strategically successfull. Oil tankers ‘in the last way’: quick, how many of them were sunk, then? Very few were even hit. Don’t expect that this time. It’s possible that the US would try putting naval crews on tankers until they were out into the Arabian Sea, but I hope it isn’t _your_ son who volunteers for that suicide duty. Most such crews aren’t coming back if that’s tried. Regarding pipelines, these are likely to be buried. Much harder to take out with a missle. Very, very expensive, but what’s the alternative? The best countermeasure would be bombing against Iran’s missle _building_ capacity, but evidence from multiple wars of the last century suggests that success there will be far less than 100%. Iran doesn’t need to keep very many missles operational to keep the Straits closed. I’ll bet on the builders over the destroyers on that one.

          10. Bert_S

            I’m getting more certain that if we see the Fleet steam out of the Gulf, the war starts 1 week later and uses some other tactics than the traditional Carrier Group approach.

            Wiki is no substitute for a top secret security clearance, but this is what they have to say about the Aegis System – state of the art in carrier group defense.

            http://en.wikipedia.org/wiki/Aegis_Combat_System

            Key paragraph here
            ===============================

            The Aegis Combat System is controlled by an advanced, automatic detect-and-track, multi-function three-dimensional passive electronically scanned array radar, the AN/SPY-1. Known as “the Shield of the Fleet”, the SPY high-powered (6 megawatt) radar is able to perform search, tracking, and missile guidance functions simultaneously with a track capacity of well over 100 targets at more than 100 nautical miles (190 km).[2] However the AN/SPY-1 Radar is mounted lower than the AN/SPS-49 radar system and so has a reduced radar horizon.[3]

            The Aegis system communicates with the Standard missiles through a radio frequency (RF) uplink using the AN/SPY-1 radar for mid-course guidance of the missile during engagements, but still requires the AN/SPG-62 radar for terminal guidance. This means that with proper scheduling of intercepts, a large number of targets can be engaged simultaneously.

            The computer-based command-and-decision element is the core of the Aegis Combat System. This interface makes the ACS capable of simultaneous operation against almost all kinds of threats. The Aegis Ballistic Missile Defense System program is intended to enable the Aegis system to act in a sea-based ballistic missile defense function, to counter short- and medium-range ballistic missiles of the variety typically employed by a number of potential opponent states.
            ==============================================

            The interesting sentence here:

            “This means that with proper scheduling of intercepts, a large number of targets can be engaged simultaneously.”

            So the electronics is fast and we can track – but it takes time to actually fire against threats – so please dear enemy – not too many at the same time.

          11. Richard Kline

            So Bert, the Aegis system has been a large-scale dud since it’s inception. It has been upgraded, but still is of very, very limited capability. Yes, it might just possibly take out a slow, aircraft launced, air-to-air type missle, if seen a long way off, or some snailback Scud type. The real problem isn’t detecting incoming it’s hitting the stuff with counterfire. Nobody has any reliable system to hit incoming traveling at a couple of Mach, which is what cruise missles do.

            If and when we see the Fifth Fleet up anchor and haul out of the Gulf, yes, it’s get-in-the-bunker time. It is not in Iran’s interests to fire first, the real goal is to interdict oil transport, so actually _saving_ the missles works best. A less embittered American public isn’t bad either. We’d see an air campaign start from multiple trajectories—and no oil traffic. That’s a strategic win for Iran. In the end, the US ships are meaningless; we can replace them, and their crews, and they are not the prime target of any Iranian strategy.

          12. Bert_S

            Yup. Cruise missiles fly low. They sneak up on you ’cause shipboard radar can’t see over the horizon. So once you detect one, or 20, you got 40 miles or so for a lot of fancy skeet shooting.

      2. Paul Tioxon

        Richard, the face off between the US Government and Iran as a political mess is uncertainty at it’s worst. But what is objective, clear and present is the danger of anti ship ballistic missiles, developed by Iran and China. One French Exocet missile sunk a British war ship almost 3 decades ago. The missile technology available today would turn our naval vessels into government issued coffins, as you say. The real politik of having a naval power obsolete by this technology is well known.

        From Bloomberg:

        China has developed a “workable design” of the world’s first anti-ship ballistic missile, potentially capable of hitting and disabling a U.S. aircraft carrier, according to Pentagon officials.
        China also has satellites in place “that could provide some targeting data on large surface ships in the region, and this expanding infrastructure is augmented by non-space-based sensors and surveillance assets,” said Navy Commander Leslie Hull-Ryde, a Pentagon spokeswoman on China, in an e-mail.
        “Over the next few years, we expect China will work to refine and integrate many emerging systems, including the DF- 21D” missile, she said.”

        http://www.bloomberg.com/news/2011-08-25/china-has-workable-anti-ship-missile-design-pentagon-says.html

        Bloomberg also reports on Iran missile defense against our naval forces:

        “Iran’s military continues to improve the accuracy and killing power of its long- and short-range ballistic missiles, including designing a weapon to target vessels, according to a Pentagon report to Congress.
        “Iran has boosted the lethality and effectiveness of existing systems by improving accuracy and developing new submunition payloads” that extend the destructive power over a wider area than a solid warhead, according to the June 29 report signed by U.S. Defense Secretary Leon Panetta .

        The improvements are in tandem with regular ballistic- missile training that “continues throughout the country” and the addition of “new ships and submarines,” the report found.
        The report obtained by Bloomberg News was provided to the four congressional defense committees last week to comply with a fiscal 2010 directive to provide an annual classified and unclassified assessment of Iran’s military power. The unclassified version provides the latest snapshot of Iran’s so- called asymmetric capabilities designed to counter the strengths of western militaries.”

        http://www.bloomberg.com/news/2012-07-10/iran-improves-ballistics-missiles-to-target-ships.html

        1. Nathanael

          Don’t forget the Millenium Challenge 2002 wargames either. Strikingly, the tactics used by General Van Riper correspond to what most intelligence believes Iran would do if attacked. The US military deliberately refused to come up with any counter-strategies, preferring to tell Van Riper that his preferred strategies are not permitted in wargames any more.

          The US military is designed for failure right now. Iran’s military is actually designed for success.

          1. charles sereno

            As a postscript, there’s a sobering interview with Larry Wilkerson on the RealNews today. Wilkerson has just come off a meeting with high Iranian officials in NY.

      3. ebear

        “You really don’t get that if a shooting war starts in the Gulf, practically every US naval vessel is going straight to the bottom as a government issue coffin.”

        Kinda like Pearl Harbor, eh?

    2. Antifa

      For the record, the “Straights of Hormuz” is a cross-dressing barbershop quintet based in Dhubai who put on quite an entertaining show at private dance and drinking parties for the wealthy cosmopolitans of the Muslim world. Risque Islamic humor and a bit of burlesque. You know: a few well-turned ankles, a glimpse under the burkha. The usual. They’d do great in Vegas, only with less fabric.

      Oh yeah, they’re all five flaming gays but no one cares. It’s all good while the money and the bubbly flows. Kind of reminds me of Berlin the year before the Reichstag caught fire.

      On the other hand, the “Strait of Hormuz” (singular — there’s only one) is a very narrow waterway through which most of the Middle East’s oil ships in great, hulking supertankers. It’s not as entertaining as the Straights, but performs admirably as a bottleneck for the lifeblood of Western economies.

      Along the entire Iranian shoreline of the Persian Gulf leading up to the Strait are the formidable Atlas Mountains, a desert warren of smuggler’s routes, caves, tunnels and tens of thousands of places to stage ambushes of all sorts. Truly a godforsaken, dried out wasteland of steep slopes, snakes, scorpions and hidey-holes. No army in the world could put enough people in there to police it, to keep it from being a perpetual hornet’s nest of missile-launching Iranian patriots forever and ever, Amen.

      No military vessel of any kind could survive 24 hours in the Gulf or threaten Iran from there in any way. Lloyd’s of London would not insure a single oil tanker going there, so none would. Please note that only one Iranian patriot need sink only one tanker, with one missile, to bring all shipping to a complete halt, compliments of Lloyd’s. Nobody ships without insurance, and insurance would be unobtainable.

      The real risk of war and instability in the Middle East lies not with gay crooners nor sanctions nor imaginary Iranian nukes nor Israel’s psychotic ambitions for Lebensraum. (Wherever do they get such notions?)

      It lies in the imminent collapse of the Saudi monarchy due to political decrepitude and mortal age. There are nothing but very old men in the line of succession, and over half the Kingdom’s male population is under the age of 15 — and half of those are unemployed as a permanent condition. Wards of the state, literally.

      When the Kingdom falls in the next few years, it will be impossible to stop the popular will of the Saudi people for an Islamic state. Nor can American or other Western troops set foot there to forcibly establish a friendly regime. That would be an unforgivable blasphemy upon the land of Mecca. So we won’t be invited to the party, as in Libya.

      The other popular will of the Wahabi Islamists will be to take on Iran, the den of the Shia dogs and infidels. Iran will be delighted to return the sentiments and activities. There will be no lasting peace between Sunni and Shiite fundies. It will very much get in the way of shipping oil in our direction.

      Saudi Arabia is where the collapse is going to come from, and it will be overnight, most likely.

      Everyone over there knows it’s coming, knows the false stability and prosperity of recent decades is hanging by a thread. The Straights even have a cute little ditty about it called “Wahabi Crude.” And those of you who’ve heard them sing it know that it is. But then, that’s their forte.

      The Straights are just divine.

        1. Antifa

          OMG, “Deep Shiite” is one of the Straights’ best songs. They love to mock the Shia obsession with the 12th Imam and their penchant for self-flagellation.

          You mention “Atlas the Sunni.” The Iranian ventriloquist’s doll that’s all the rage in Tehran this fall. Kind of Iran’s answer to Jeff Dunham’s “Achmed the Terrorist” over here in America.

          You are obviously conversant with all these local entertainers. Are you a diplomat, a contractor, or a terrorist?

          1. Bert_S

            umm, I’m just learning from you post and trying to stay out of guatmo.

            But you think they might mountain attack, with whatever they Wahabi?

      1. Valissa

        More on Mossadegh here http://en.wikipedia.org/wiki/Mohammad_Mosaddegh

        Mossadegh… was the democratically elected Prime Minister of Iran from 1951 to 1953 when he was overthrown in a coup d’état orchestrated by the British MI6 and the United States CIA.

        An author, administrator, lawyer, prominent parliamentarian, he became the prime minister of Iran in 1951. His administration introduced a wide range of progressive social and political reforms such as social security, rent control, and land reforms.

  6. amateur socialist

    Well at least the electorate is getting a clear choice regarding future diplomatic and military relations with Iran. Both candidates have clear and distinct positions so I’m sure this will enter the campaign dialogue at some point.

  7. mary

    FYI – When I search for Naked Capitalism thru google, it takes me to pages from Sept. still. Then I have to add the date up in the www. header line.

  8. Nathanael

    It is important to make it clear that actual military strategists want nothing to do with any sort of war with Iran, or even with sanctions; it’s all a guaranteed loser for the US. Papers on this have been published.

    The sabre-rattlers are not the same as actual military strategists.

  9. The Dork of Cork

    The sabre rattlers simply want to reduce Irans internal consumption of oil so that more can be exported.

    Its already working ….Iran peak oil consumption was in Y2009….
    However The Saudis who are far bigger consumers despite their much smaller population (but who buy more western goods) are increasing their internal consumption at a high rate….reducing its export capacity.

  10. skippy

    @Millenium 2000 war games.

    MIC publication – dog and pony show – to validate the next level of naval expenditure.

    http://www.defensenews.com/article/20120212/DEFREG02/302120001/10-Ships-U-S-Navy-New-Budget

    http://www.dailymail.co.uk/sciencetech/article-2128986/The-7-billion-dollar-warship-built-maintain-American-naval-supremacy-China-21st-Century.html

    One of the largest, most expensive and advanced warships ever commissioned for the U.S Navy is taking shape at Bath Iron Works shipyard in Maine.
    Named the U.S.S Zumwalt, the $7 billion guided-missile destroyer is at the cutting edge of technology and now deemed vital for defence following President Obama’s Asia-Pacific pivot.
    Featuring a radical wave-piercing hull known as a ‘tumblehome’, the odd looking ship incorporates stealth technology that makes the 600-foot, 14,500 ton warship seem like a fishing vessel to enemy radar.

    The-7-billion-dollar-warship-built-maintain-American-naval-supremacy-China-21st-Century.html

    One of the largest, most expensive and advanced warships ever commissioned for the U.S Navy is taking shape at Bath Iron Works shipyard in Maine.
    Named the U.S.S Zumwalt, the $7 billion guided-missile destroyer is at the cutting edge of technology and now deemed vital for defence following President Obama’s Asia-Pacific pivot.

    Featuring a radical wave-piercing hull known as a ‘tumblehome’, the odd looking ship incorporates stealth technology that makes the 600-foot, 14,500 ton warship seem like a fishing vessel to enemy radar.

    With 32 ships originally envisioned for the class, that was lowered after a government review to 24, then to seven and eventually shot down to just three.

    skippy… Anywho as soon as the enemy employs a belt buckle philosophy, the high tech loses much of its advantage or goes straight out the window. Hence the – shoot everything that moves – everything is a threat (see: Air Flight 655) – conundrum. BTW the Strait of Hormuz is a horrible place to have a naval battle, especially for the side with the most, biggest, expensive ships.

  11. goat_farmers_of_the_CIA

    From Skippy: “With 32 ships originally envisioned for the class, that was lowered after a government review to 24, then to seven and eventually shot down to just three.”

    The same has happened to the F-22 and the F-35 (JSF). Boondoggles, white elephants… All meant to fill the pockets of the revolving-door “Pentarchy” (see the hilarious essays on the subject by the late Jeff Huber). As Huber and not a few above said, the US can afford to waste its money with military adventures and fancy useless toys because it has two big oceans protecting it from any real, potential adversaries. As Huber put it so wittily regarding the “if we don’t fight them there…” WoT lie,

    “No enemy, actual or potential, has an air force or navy big enough to bring a suitable occupation force to America. The oceans are too wide to swim or jump across, and big grown up generals like John Abizaid should know better than to believe a hoard of Hajjis can get here on flying carpets or can wish themselves here by rubbing a magic lantern. ”
    http://zenhuber.blogspot.com/2008_09_01_archive.html

  12. Jack Parsons

    Someone asked for geopolitical analysis.

    There is Persia and there is Iran. Persia is a giant bowl with mountains on three sides and the Black Sea on the fourth. It has had Persians, a fairly constant ethnic presence, for 5000 years. Iran is Persia plus some land outside the mountain bowl. On the west side of the mountains next to Iraq is a lot of oil. Next to the oil in Iraq, oddly. It is most of Iran’s oil, and it sits under Arabs, not Persians, on the wrong side of Persia’s natural defenses.

    The Iraq-Iran war was started by Iraq in 1980 by Saddam Hussein. Every history you read will say he wanted to own the Strait of Hormuz. Wrong. He wanted to steal Iran’s oil that was on the wrong side of the mountains. That is why we have harrassed Iran ever since. That is why Iran badly needs a commercial nuclear industry, because they are in danger of having their oil stolen.

    Iran needs nuclear power because the US has been trying to steal its oil since 1980. Got it?

  13. Xerxes Aria

    @Anifa:
    Good writing. But please check your facts:
    How in the world do the Atlas mountains which are situated in Morocco end up along the shores of the Persian gulf?
    If you meant “Zagros mountains”, then you may have a point….
    Also, it would be a good idea if people got out and tried and asked actual Persians/Iranians about their opinions and their experiences and how in fact everything is connected together over there from their perspective…
    After all, we are all sitting here in our cozy living rooms in the west and making somewhat pointless discussions about deciding what to do with Iran! As if anyone of those politicians/bankers/oil magnates are going to listen to us!
    Thank you.

  14. ZA

    A blockade is something you have to maintain every day. I think Iran has proven itself too shrewd to attempt to go toe-to-toe with the US Navy.

    Objectively, I would think in terms of getting off a massive first strike at the Saudi oil terminals at Ras Tanura, Ras al-Ju’aymah and Yanbu’. There goes 90% of Saudi export capacity, and the Western world changes overnight.

    Ras Tanura looks like maybe 250mi from the Iranian base at Bushehr. That’s not a lot of flight time.

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