Take a minute – and maybe a deep breath too – and imagine the markets at opening bell on a hypothetical morning when live video shows burning oil tankers in the Strait of Hormuz (through which 40% of the world's seaborne oil passes). Couple that with the already shaky state of the current global economy and you get ... well, what does chaos in a mosh pit look like?
Iran is back in the headlines, and once again behaving in a less-than-cooperative fashion regarding its nuclear enrichment program. After they've failed to deliver on promise after promise, it does not appear that Iran will come clean anytime soon, and definitely not in time for the IAEA (International Atomic Energy Agency) inspection report due out any day now.
So what are our options? This week I came across a report from my friends over at STRATFOR, a geopolitical intelligence company, that fully analyzes the situation. They were nice enough to let me share the full article with Outside the Box readers, so I don't want to give too much away here. All I'll say is that there are three factors deterring any form of action against Tehran, and one of them relates to the scenario I described above.
And if you'd like more than just the occasional report from STRATFOR via yours truly, I've finagled a nice discount on a STRATFOR subscription for my readers, plus a free copy of their book on Iran. >>Click here to find out more.<<
Your still grieving Rangers fan,
John Mauldin, Editor
Outside the Box
Iran's Nuclear Program and its Nuclear Option
November 8, 2011
Details and specifics of the forthcoming International Atomic Energy Agency (IAEA) report on the Iranian nuclear program continued to leak out over the weekend, with the formal report expected later this week. The growing rhetoric about Iran — including talk from certain Israeli and American corners about an air campaign against Iran — had already begun to intensify in anticipation of the report, which will say more explicitly than previous IAEA assessments that Iran is indeed actively pursuing a nuclear weaponization program.
There is a cyclical nature to this rhetoric, and the correlation with the most harsh IAEA report on Iran to date is hard to get past. But while the latest IAEA report is certainly set to contain new, specific information about Iran’s program, there has been little serious doubt in recent years that Iran has continued to actively pursue nuclear weapons. The impending IAEA report’s overarching tenor is not news to anyone — though it provides plenty of opportunity to talk about Iran’s program, point fingers at Tehran and once again raise the specter of war — something even those mostly looking to mount pressure for more aggressive sanctions may do.
Nuclear weaponization programs by their nature require large, fixed infrastructure that must be connected to significant sources of power. The development of such programs — particularly in countries operating without access to key, export-controlled materiel — demands considerable investment over many years. Any serious movement down this path is vulnerable to detection, which is likely to lead to an attack in short order as Iraq found out in 1981 and Syria found out in 2007. Essentially, if a country desires a nuclear deterrent because it lacks any deterrent at all, then it is unlikely to be allowed the uninterrupted space and time to develop one.
The counterexamples are countries — specifically, North Korea and Iran — that already have a compelling, non-nuclear deterrent. That existent, non-nuclear deterrent discourages pre-emptive attacks against the country while its nuclear development efforts are in their most vulnerable stages. In the case of North Korea, Pyongyang has demonstrated a very sophisticated ability to escalate and de-escalate crises year after year, keeping itself at the center of the international agenda but not inviting physical attack. One element of this is Pyongyang’s deliberate cultivation of a perception of unpredictability — the idea the North Korean dictator may not behave rationally — which convinces international actors to give the regime a wide berth. The other is continued ambiguity. North Korea has made a career out of crossing international “red lines” and has helped soften the blow of crossing those lines by doing so ambiguously, particularly with nuclear tests that are not overtly, demonstrably successful. Yet North Korea has a large but unknown number of conventional artillery and artillery rocket batteries within range of Seoul. North Korea’s real “nuclear” option is opening fire with those batteries before they can possibly all be destroyed. And that is what ultimately keeps the international response to North Korea’s nuclear program in check: the unwillingness to trade a difficult and uncertain military attempt to address a crude, nascent nuclear program in exchange for Seoul.
Tehran has three key deterrents. First, for years, the American troop presence in Iraq, particularly after post-surge quelling of violence, remained vulnerable to Iranian-instigated attack by Tehran’s proxies and with weapons provided by Tehran (something Iran demonstrated quite unambiguously that it had the capacity to do in the form of the explosively formed penetrator, a particularly deadly form of improvised explosive device). That dynamic will remain, after American troops depart, in the form of American diplomats and contractors, who will be protected by a small army of private security contractors. Second, Iran’s ballistic missile arsenal can target both American and Israeli targets across the region – and many missiles will likely be loosed before all their mobile launchers can be pinpointed and destroyed.
guerrilla warfare in the Persian Gulf and the Strait of Hormuz. This is Iran’s real “nuclear” option. There are inherent vulnerabilities in such tight waters, in which Iran can bring to bear not just naval mines, but shore-based anti-ship missiles and small boat swarms. This threat might be manageable tactically (particularly if a massive U.S.-led air campaign surprised Iran), but even in the best-case scenario, no one can manage the markets’ reaction to even the hint of disruption to 40 percent of the world’s sea-borne crude.
This is the heart of the problem. Whether there are six key nuclear sites in Iran or 60 (and Iran presents a significant intelligence challenge in this regard), any attacker has to neutralize not just the nuclear targets and associated air defenses, but Iran’s dispersed and camouflaged military capabilities all along the Persian Gulf and Strait of Hormuz. U.S. participation was decisive in a far less sophisticated air campaign against Libya. In an Iran scenario where so much must be hit so quickly, the United States is the only country capable of even attempting to bring the necessary military strike capacity against Iran.
But even the optimistic scenario must anticipate the potential for an outcome reminiscent of the 1980s Tanker Wars. While the United States and Europe are focused on the global economic crisis (and particularly the euro crisis in Europe), they will want to avoid at all costs video of burning oil tankers in the Strait of Hormuz, which could panic already skittish markets. As long as that is the case, the prospect of a military strike on Iran is dim. And in any event, surprise is a key element for a successful strike on Iran. The moment Iran should feel the most secure is when Israeli rhetoric about war is at its peak.