GULF DIGITAL NEWS
7th APRIL 2015 - Vol.XXXVIII No.018
Local News

Energy crisis is threatened

THEY are the arteries of the world, the waterways that keep our global economy alive.

Two-thirds of all seaborne trade passes through these six narrow choke points, and half of the world's daily diet of oil.

Close just one down, for just one day, and the heartbeat of the industrial world would falter.

Block it for a month, and entire economies could collapse.

It takes a dramatic event to remind us of the importance of these vital thoroughfares.

When Egyptian leader Gamal Abdel Nasser nationalised the Suez Canal in 1956, Britain and France panicked.

They had good reason. Almost all the traffic between Europe and Asia then passed through the waterway, which cut 4,400 nautical miles off the old sea route from London to Bombay.

The very idea of the canal falling into local hands appalled the former colonial powers.

Yet even this channel, one of the engineering wonders of the modern world, pales in importance besides the Strait of Hormuz.

Like the manmade Panama Canal that cuts through the Americas, the way through Suez is a passage of convenience - there are alternative ocean routes. By comparison, the natural waterway of Hormuz is the only viable path today for most of the oil that flows out of the Gulf.

As much as a fifth of the world's daily consumption of crude oil would be choked off if anything blocked the Strait of Hormuz.

And that is precisely what Iran is threatening to do.

Iranian Revolutionary Guard commander Mohammed Ali Jafari is known for his bombastic statements.

So when, on August 4, he claimed Iran had tested a "unique and completely Iranian-built" weapon that could close the Strait of Hormuz "easily and on an unlimited basis", military experts did not start ripping up their manuals.

The best guess of Jane's defence analyst Doug Richardson is that Iran has just taken delivery of a new consignment of Russian anti-ship missiles.

Still, Tehran knows how to provoke a reaction. Ever since the tanker wars of the 1980s, the Iranian regime has periodically threatened to close the strait in response to outside pressure.

In reality, nothing of the sort has ever happened.

But this does not stop the Western Press and think tanks from indulging in a little Suez-style hysteria.

And, as in the 1950s, they do have good reason. As Henry Pokolski, executive director of the right-leaning Nonproliferation Policy Education Centre points out, closing the strait "could reduce US gross domestic product by seven per cent after 30 days, which would be an extraordinary blow".

There is no doubting the importance of this narrow waterway in world affairs.

A horseshoe-shaped body of water that stretches between Iran and the northern tip of Oman, the Strait of Hormuz is the only way in and out of the Gulf. On a typical day, around 50 tankers carrying between 14 million and 17m barrels of oil and oil products pass through the 180km-long strait - roughly 40 per cent of the world's internationally traded supplies.

Dozens of freighters ply the same route, carrying food and consumer goods into the ports and free zones of Saudi Arabia, Bahrain, the UAE, Qatar, Kuwait - and Iran.

Jebel Ali alone is now the largest port between Rotterdam and Singapore, handling some 9.9m 20-foot container units last year - equivalent to half the maritime traffic between Europe and Asia.

"About half of what goes into the Gulf is for transshipment and another half is local imports - although a lot of that goes into free zones and is exported again in another guise," says Neil Davidson, of Drewry Shipping Consultants.

In other words, not only do Gulf economies depend on this regular cargo traffic through the Strait of Hormuz, but the outside world does too.

Then, too, there is the indirect traffic between the Gulf and the global economy. According to Jane's Intelligence Review of London: "If this chokepoint was closed for an extended period, the economies of the Middle East would suffer significantly and this would generate severe economic dislocation around the world.

"Millions of guest workers in Gulf states from developing countries could also be left unemployed, leading to greater poverty in South Asia and East Asia."

All of which begs the question, just how vulnerable is the Strait of Hormuz ? Talk of sinking ships to block the waterway is probably fanciful.

At its narrowest point, the waterway is 55km wide. But the two deep-water channels for incoming and outgoing vessels are much slimmer, each 3.2km wide with a 3.2-km median between them.

While this makes for an easier target, military analysts say the Iranians would need to sink several large supertankers to effectively block the channels, an extremely difficult task.

The maximum depth of the strait is about 90 metres, while most oil tankers have a beam of 20-40 metres and only a handful in the world exceed 400 metres in length.

There is no doubt, however, that Iran could make the strait unnavigable, at least for a short period.

Over the last 18 months or so, Tehran's naval forces have conducted repeated exercises simulating the takeover of the strait, which is patrolled by the US Fifth Fleet and allied warships from a dozen nations deployed in the Gulf and the northern Arabian Sea.

In doing so, they have given us some idea of what tactics they might employ.

Iran has large numbers of Chinese-made C-801 and C-802 anti-ship missiles deployed in coastal batteries along the eastern shore of the waterway, aboard warships and on islands in the strait.

These would likely play a key role in any effort to block, or control, the waterway.

The narrowness of the shipping lanes makes it an ideal arena to use anti-ship missiles, because naval or civilian vessels would have little room for evasive action.

The missiles' short range minimises the prospect of US or coalition warships being able to shoot them down before they reach their targets.

Then there is the Iranian navy. Over the last year or so, coalition naval forces in the Gulf and the Arabian Sea have conducted a series of exercises designed to counter possible Iranian attempts to close the strait.

These include attacks by large swarms of small, high-speed armed craft or maritime suicide attacks similar to the Al Qaeda operations that crippled the USS Cole, a missile destroyer, in Aden harbour in October 2000 and blew a hole in the French supertanker Limburg a year later, as it sailed off the Hadramaut coast.

In recent months, small swarms of Iranian craft have harassed US warships in the waterway at least twice in what could have been practice runs for such hit-and-run operations, a component of Iran's strategy of "asymmetric warfare" against the superior coalition forces.

Iran claimed last October that it had amassed a fleet of 1,000 low-tech speedboats to counter the Fifth Fleet's armada of 30-40 hi-tech warships.

The damage such vessels could inflict using rockets and machine-guns is limited.

Broadsides of cruise missiles would be more dangerous. Iran has three frigates and 20 fast-attack craft - French-built Kaman-class vessels and Chinese-supplied Huodong boats - capable of mounting such attacks.

These vessels would be highly vulnerable to advanced US naval and airborne weapons systems if they mounted such operations.

But this does not leave much room for complacency. In the opening phase of the Hizbollah-Israeli war in 2006, the Lebanese fighters sank a Cambodian freighter and crippled an Israel missile corvette, the Hanit, off the Lebanese coast, using Chinese-made C-802 missiles, supplied by Iran.

Admittedly, the Israeli ship was hit because it had foolishly not engaged its anti-missile defences, but the attacks give some idea of what a larger and co-ordinated Iranian operation might achieve.

Mining the waterway is considered the most likely method Tehran would employ - a tactic that was used to some effect during the Tanker War between Iran and Iraq in their eight-year conflict in the 1980s.

The US Navy has a mine warfare flotilla based at Fifth Fleet headquarters in Bahrain, but analysts say it would takes weeks, possibly months, for them to clear safe passages in the strait if Iran was able to sow as few as 200-300 mines.

"Tehran has amassed an arsenal of naval mines and mining would be one of the most lasting and time-consuming tactics to counter," says a recent report by US security consultancy Strategic Forecasting.

"Iranian forces would use both surface and submarine assets - some more surreptitious, some less so - to attempt to saturate the Gulf."

Any such operation would send insurance rates through the roof and certainly curtail the volume of tankers using the strait if it remained navigable.

It would also present Gulf states with the quandary of how to divert normal traffic.

If the Strait of Hormuz were closed, only about 3m barrels of oil per day could realistically be redirected by pipeline to the Red Sea.

While some transshipment traffic could move to ports such as Salalah or Aden, neither are a match for the fast-growing hubs of the Gulf coast.

"Jebel Ali has the advantage of critical mass," says Drewry's Davidson.

"In comparison with Salalah, which primarily works for one shipping line - Maersk - it has extensive services, a big market on its doorstep and even bigger markets nearby, such as Kuwait and Saudi Arabia.

"So if the ships can't get through the strait, the only real alternative is overland, and most road and rail routes are pretty undeveloped.

"This is probably why the Saudis are building new railways and new terminals to the west."

Ironically, the emergence of the Gulf as a safe harbour and transit point for international shipping owes much to the Suez crisis.

Back in the 1950s, Saudi Arabia exported most of its oil through the Trans-Arabian pipeline, or Tapline, that ran through Jordan, Syria and Lebanon to Sidon on the Mediterranean coast.

While the pipeline was not directly affected by the fighting, Riyadh felt it was vulnerable to the Egyptian-allied regime in Syria.

It was from this point onwards that long-range oil tankers began to dominate the world energy market and the Strait of Hormuz acquired its significance.

The old route west still exists, of course. A new 1,400-long rail route linking Saudi Arabia's east and west coasts will certainly help reduce dependence on the strait for basic cargo traffic.

Similarly, the repair of old pipelines could provide Gulf producers - and their customers - some emergency relief in the event of a blockade.

But these are not ideal measures. These days, the economies of the Gulf look east to the emerging markets of Asia and the Strait of Hormuz is their primary gateway.

More importantly, Iran is one of those economies.

It depends on the waterway not only to export its oil, but to import the refined products it is unable to produce itself.

Denied those vital fuel imports, Iranian society would grind to a halt. So while Iran could scupper the world economy with a few well-placed mines, it would be scuttling its own ship in the process.






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