Hormuz, a strategic waterway key to talks

Hopes faded of ending the US-Israel war with Iran as talks in Islamabad were cancelled, leaving the region and the world in limbo and oil and gas traffic halted through the Strait of Hormuz, threatening global recession. Despite this risk, neither side has been prepared to make the concessions needed for a deal.

The strategic Strait of Hormuz has become Iran's non-nuclear, "nuclear option." Granted to Iran by geography's accidents, Hormuz is 167 km long and 97 km to 39 km wide. One of the globe's choke points, the strait is the sole sea passage from the Arabian Gulf to the open ocean for the UAE, Qatar, Bahrain, Kuwait, and Iraq. Interference in traffic can cause severe disruptions, notably in the flow to the world of 25 per cent of its supplies of oil and 20 per cent of its liquified natural gas. The strait is critical to the security of both Asia and Europe.

While regional conflicts have never closed Hormuz for any length of time, Iran has closed it now, has threatened prolonged closure, and has sown mines in the strait to halt traffic. Neither ships nor companies that ensure them are prepared to risk mines. This week the US has begun to deploy minesweepers while Italy, Germany, and Britain are prepared to send additional vessels to secure the waterway.

Until Tehran submits a peace proposal and it is considered by Washington, President Donald Trump has unilaterally imposed a ceasefire in the war the US and Israel launched attacks on Iran on February 28th. Israeli Prime Minister Binyamin Netanyahu, who longed for war with Iran for 40 years, is not best pleased but has had no choice but to agree. Israel violates daily the three-week ceasefire on the Lebanon front. As its troops continue to occupy a wide band of territory in the south of the country, Hizbollah has mounted attacks on these forces.

The stands taken by both sides are not promising. On one hand, Trump – who is ignorant of the Iranian mindset – has escalated the conflict by blockading Iranian ports in the Arabian Gulf to exert pressure on Tehran to bow to his demands. While Iran’s petroleum exports through Hormuz account for about 80 per cent of its total oil exports, Iran also exports petrochemicals, plastics, and agricultural products via this route. This trade will also be affected.

On the other hand, Iran has said it would not take part in peace talks with the US because of Trump's blockade of its ports. Iran's Revolutionary Guard Corps (IRGC) has responded to the blockade by firing on and seized several oil tankers and cargo vessels near Hormuz.

For the present it is not clear who speaks for Iran. After the February 28th assassination by the US and Israel of supreme leader Ayatollah Ali Khamenei, his son Mojtaba became his successor, with the backing of the IRGC. However, he was seriously wounded and has not appeared in public. He apparently communicates through IRGC commander brigadier general Ahmad Vahidi who has emerged as his confidant and spokesman.

As it is not answerable to the public as are civilian politicians, the IRGC has adopted a hardline approach to the ceasefire and potential negotiations with the US. Vahidi and President Masoud Pezeshkian have political differences, especially on the conduct of the war and peace making. Pezeshkian has said Tehran wants “dialogue and agreement” but argued that the US “breach of commitments, blockade and threats are the main obstacles to genuine negotiations.” Although Hormuz has for decades been regarded as an "international waterway" which should be open to all traffic, Iran has asserted its control and declared co-ownership of the strait along with Oman which lies along the opposite bank. Since asserting control, Iran has decided which ships from which countries can pass through the strait, and the IRGC has accompanied the few which have received permission. Ships from “enemy” countries are banned.

Foreign currency strapped Iran has also begun to collect tolls from the few ships daring to cross Hormuz. Although the US has cried foul, substantial fees are charged for passage through the Panama Canal which connects the Caribbean Sea with the Pacific Ocean. It was built by the US 112 years ago and renovated since then. The US formally turned over the canal to Panama in 1999 under a treaty signed in 1977 which provided for the US to gradually relinquish the canal to Panama.

Mines in the Strait of Hormuz could deepen what the International Energy Agency has already called the largest oil supply disruption in the history of the global market — bigger than the 1970s oil shocks. Since the war began 279 ships have passed through the strait and 22 have been attacked. Traffic has collapsed to single digits on most days, down from 100-plus ships daily. This is the second time Iran has mined the strait since the war began and it is not known whether all the mines from the first distribution have been found and cleared.

As well as oil and gas, the flow of 26 per cent of fertilizer bound for Asia and Africa has halted, threatening to decrease crop yields and drag 32 million people into poverty.