Talk of missiles

Something strange is taking place within Iranian politics. It might be deliberate or otherwise, but in any case it reflects the nature of internal conflict between multiple centres of power. The latest example was the threat issued by a senior Iranian official regarding the closure of the Strait of Hormuz – through which around 40 percent of the world’s oil supply is transported – if the Western states, led by America, go ahead with plans to impose an embargo on Iran’s oil industry.

Only one day after this threat was issued, it was played down by Tehran – currently conducting launch exercises for various types of missiles – when a military official came out saying that the statement was a thing from the past. However, talk was renewed yesterday, after the launch of two new missiles, about naval exercises to shut down the Strait of Hormuz and preparing for any scenario, even though no official decision had been taken in that respect.

Meanwhile, an Iranian military commander revealed that Syrian observers would be attending the last day of the missile launch exercises. This is a significant reference to regional intertwinement and overlap, and an indication of Iran’s fear of any changes in Syria. At the current moment it would certainly not be in Iran’s interest to give signals – through its nuclear program representative – implying Tehran’s readiness to enter into negotiations with the Europeans over the nuclear issue. This would suggest that the door is still open for negotiations, and undermine the current display of missile manoeuvres and threats.

Tension is high because of these manoeuvres and statements, but in reality, and away from scenes of military ships and missiles, the actual bullets being fired are economic in nature. The most recent of those bullets was the bill signed by the US President to penalize financial institutions dealing with Iran’s central bank. As a consequence, Iran’s currency has been further devalued because such penalties mean that Iran’s oil customers face enormous difficulties in conducting financial transactions relating to such deals.

At the same time, the Europeans, considered among the most significant Iranian oil customers, are studying the possibility of ceasing their purchases. If such a decision was taken after the latest US sanctions measure, its impact would be far more severe than a missile battle, because it would stifle Iran’s economy and create intolerable pressure on the Iranian government. The Iranian regime would then be in a similar position to that of Saddam Hussein in Iraq during the last five years of his rule, as it would be forced to carry out its transactions through back door dealings, smuggling goods and engaging in black market currency activity.

All of the above provides indications of a serious escalation in a crisis that has been ongoing for years. But recently this crisis has started to take a more dangerous juncture, as certain questions are being raised in a more pressing manner; questions like will 2012 be the year of war? It goes without saying that no one wants or actively seeks this to happen, but that does not prevent the parties involved from slipping into such a pit, even through miscalculations.

This talk of missiles could be part of said miscalculations. It is clear to see that Iran is counting on the Western states – currently debating the Iranian nuclear program – being preoccupied with a stormy global economic crisis. Any act of war would surely lead to a surge in oil prices, thereby dealing a blow to any plans to stimulate the global economy, especially with Iran’s threat to close the Strait of Hormuz. The miscalculation here is that if this Iranian assumption was correct, then the European countries wouldn’t have discussed imposing sanctions on Iran’s oil industry in the first place.

We witnessed a similar situation in the 1980s, during what was called the Tanker War at the climax of the Iran-Iraq conflict. Giant tankers carrying crude oil were bombarded and oil rigs were destroyed, while oil fields remained on fire for months whilst pumping crude oil in the Arabian Gulf. In spite of all that, the oil trade did not stop and the Strait of Hormuz was not closed.