Are Iran and China priming for war in the Arabian Sea?
A fifth of the world’s oil supply passes through a 21-mile wide bottle neck at the mouth of the Persian Gulf called the Strait of Hormuz. Along the gulf’s east bank sits Iran, baring its teeth at Saudi Arabia on western shore and doing a fair job of conquest-by-internal-rot of Iraq at the northern tip of the waterway. This leaves a handful of tiny petro-states; Kuwait, Bahrain, UAE and Qatar sitting like speed-bumps should the whole situation go pear shaped.
Since it’s 1979 revolution, Iran has been threatening to close the strait to bring the West to its knees. The threat has always rung a little hollow because Iran’s own main oil terminals are located west of the strait (behind the bottleneck) which would cut off its own knee-capped oil industry. Iran’s revolutionary government has been nothing if not committed though – and they are trying hard to change that calculus.
Changing an equation like that, of course, requires money. In 2019, Iran’s economy shrunk a further 7.6% after a 5.4% contraction in 2018. Its currency – the rial – was trading at 3,800 to the dollar in 2017, but has since sunk to 29,500. The parliament recent voted a la Zimbabwe to lop four zeros off the bank notes. Now, they’re essentially dealing with Monopoly money. Which is why Iranian President Hassan Rouhani was so excited last month to declare a “major step” forward in the sought after 25 Year “Strategic Partnership” with China. The Chinese are playing with our money.
Not just in Iran, but across the Middle East China enjoys a certain trusted status – it’s eager to ‘transfer’ technology and pay for it with ready cash without the taint of colonialism. It’s a status once enjoyed by France, the UK at times in the 19th century, Germany before World War I, and the United States until World War II. Such disappointment explains the bitter resentments in the Middle East toward the West, but why they think China will be different is anyone’s guess. Especially since it’s been so perversely honest in how it’s going to screw the region in return for Chinese investment.
Iran believes it because it has ambitions of being a regional power-house, when the reality is that country’s back is on the economic mat. China is a lifeline for the Islamic Republic’s embattled government, but to China Iran is just a piece in a puzzle – and a single actor destabilizing the entire region. The government needs the investment to survive, it knows that the chatter on the street in Tehran (such as it is) is less glowing: Just one more foreign power seeking to exploit Iran’s weakness on the global stage. The Supreme Leader should take heed: Iran has had three coup d’états in the last 150 years over this precise issue.
A main component of the Iran/China strategic partnership is some $400 billion in investment being tossed about by China and a proposed commercial port in the city of Bandar-e Jask east of the Strait of Hormuz (outside the bottleneck) on the Gulf of Oman. Which would make Iran’s renewed threats to close the strait still incredibly short-sighted, just not suicidal.
To Rule the Waves
Were Iran to follow through on the threat of closure it would likely drag the U.S. into a naval war. Iran’s navy is what we’d call a Coast Guard, capable to obstructing the strait, but also likely to be scuttled but the US navy in the time it takes to have a long, lingering Sunday lunch. And Iran knows this.
China, however, is another matter. They have a new, shiny navy that has recently surpassed the United States as the world’s largest naval force. It is also, given the collapse of trade talks, primed for a theatrical stand against the US. This however, is likely not the stand they want to make. China’s navy is inexperienced and does not have the power to confidently project power far outside the Pacific Ocean. But this is 2020, and the uneasy regime change of its largest global rival might make a show of it, but that’s a tricky move.
The opening of a Sino-US front in the Arabian Sea would almost certainly trigger a wider conflict in the Pacific. Which is exactly why China won’t do it. Washington recently war-gamed the scenario of a US/Chinese Naval conflict over Taiwan and concluded that the US simply wouldn’t win a conflict within the strait of Taiwan, but that China couldn’t win should the conflict escape those confines. Beijing ran the same scenario and came to same conclusion (I didn’t ask…). Which means two enormous navies will likely circle the other’s “high” ground without engaging. The bottom line is that the situation – as it stands – gives the advantage in any wider fight to the U.S. And a naval front in the Arabian Sea would be a drastically wider fight.
Even if China were willing to expose itself so far from home base, it’s far from certain how much of a disruption closing the strait would be. Or how much the United States would even care. America is nearing energy self-sufficiency, and a spike in energy prices will put us there. Saudi Arabia moving its oil to across the desert to the Red Sea might increase cost marginally, but the infrastructure is already there. Iraq, too, has alternate routes for its oil and the two countries have recent re-opened their borders at the Asar crossing for the first time since 1990. The spike in prices would not be crippling, and those affects would largely be limited to Europe – which both Iran and China are eager to keep on the sidelines.
Make no mistake, despite the domestic naval gazing of the American news cycle over COVID and the election, Iran is still targeting the American sites across Iraq. Enough so that Secretary of State Mike Pompeo threatened to close the US Embassy in Baghdad if the Iraqi government didn’t get the matter under control. That might be a moral win for Iran, but its economy is crippled, the COVID epidemic has further destabilized the domestic situation, and the promise of Chinese money is still just that, a promise. Iran’s oil generates about 80% of government revenues – and most of that is going to China. For its part, however, only about 10% of the oil China uses comes from Iran – in short, they are not equal partners. The Islamic Republic needs a foreign distraction but not an open conflict.
Will the U.S. feel obliged to keep the Strait of Hormuz open even if it doesn’t directly affect our energy security? War exhaustion has certainly set in after a generation, and another front in an endless war to keep European energy cheap may be more than the average voter is willing to bear. Still, we might. A priority of the incoming Biden administration will be to re-engage with our allies – specifically Europe. We’ve been keeping the sea lanes open since 1945 – why stop now? Besides, it wouldn’t kill us to show the world who’s boss just one more time.
This is the time for gunboat diplomacy. For God’s sake, let’s not go occupying any place.