Iran's 10-day military exercise on the Strait of Hormuz has lent credence to its threat to block oil shipments through the critical waterway if the U.S. ratchets up sanctions. Threatening the Strait, which flows north of Oman and south of Iran and moves approximately 40 percent of the world's oil, seems like a pretty great hand. But oil accounts for 80 percent of Iranian exports, and blocking the Strait would hit their economy hard. In all likelihood, Tehran is bluffing. But the administration shouldn't call it.
The newest round of sanctions (embedded in the defense bill) would penalize foreign institutions for doing business with Iran's financial sector. By leveraging the centrality of the U.S. banking system, the new sanctions would punish those countries who do business with Iran -- particularly the big consumers of Iranian oil. Iran's Navy is prepared to blockade the Strait in response stating that U.S. efforts to constrict their oil exports will be taken as an act of war. Although the sanctions passed unanimously in Congress, Obama should use his veto.
The potential efficacy of the sanctions is not worth the risk of a skirmish in the Strait. The U.S. Fifth Fleet, based in Bahrain, has made clear they will not stand idly by if Iran makes moves to block. With the force of some 20 vessels and 20,000 servicemen and women, the Fifth Fleet would pose a formidable challenge to an Iranian blockade. Going down the rabbit hole -- the U.S. military responds to Iranian muscle flexing in the Hormuz Strait in retaliation against the latest round of U.S. sanctions -- is antithetical to Washington's mainstay objective; preventing Iran from arming.
Iran's potential motivations for weaponizing are chiefly security and prestige. The buildup of U.S. troops on Iran's borders has been a reminder to the regime of its vulnerability. Iran's military never recovered after the Iran-Iraq War and Iranian inability to defend their borders with conventional means has entered into Tehran's calculus. After Libya was invaded in March 2011, Aisha Qaddafi, Muammar Qaddafi's daughter, said "every country that has weapons of mass destruction, keep them or make more so they will not meet the same fate as Libya." Her advice has not been lost on Tehran.
Were Iran to block the Strait, and the U.S. Fifth Fleet to retaliate, oil prices could spike and the skirmish would ultimately play into hands of Iranians calling for weaponization. If the sanctions targeted a domestically controversial initiative in Iran, they might spur discontent among the people. However, the Iranian population has illustrated they are willing to endure a level of austerity to pursue their nuclear program.
It is unclear which factions support weaponization now, but engagement in the Strait would strengthen, not diminish, those voices in favor. With India, Israel, Pakistan, and Russia armed and Turkey under the NATO umbrella; Iran's nuclear program provides Iranians with security, and potentially a deterrence capability. Exacerbating Iranian insecurities is not going to push them to the negotiating table. If the Fifth Fleet engages with Iran, Tehran's hardliners could consolidate power and the case for the deterrence capability a weapon could bring would gain momentum.
The other responses Tehran may opt for are no more appealing. These include encouraging Hamas and Hezbollah to fire rockets into Israel; attacking military outposts in Afghanistan; attacking supplies transported from Kuwait through southern Iraq; launching missiles at oil installations in Saudi Arabia; and inciting upheaval in Shiite-majority Bahrain. Any skirmish could set off a series of events akin to those of a U.S. airstrike against Iranian nuclear facilities.
Again, Tehran is most likely bluffing. But sanctions require balance, and those passed by Congress are a bridge too far. Secretary Geithner previously stated the administration's "strong opposition" to the new round of sanctions citing the potential for increased oil prices. If the bill is signed, spikes in oil prices may be only the beginning.