Eye on Iran: US to Iran: American Warships to Remain in Gulf

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AP: „The Obama administration on Tuesday brushed aside Iran’s warning to keep U.S. aircraft carriers out of the Gulf, dismissing its threats as a consequence of hard-hitting American sanctions on the Iranian economy. Provoking a hostile start to what could prove a pivotal year for Iran, the country’s army chief said American vessels were unwelcome in the Gulf, the strategic waterway that carries to market much of the oil pumped in the Middle East… Just Iranian saber-rattling, with no effect on U.S. plans or military movements, spokesmen in Washington said. ‚It’s the latest round of Iranian threats and is confirmation that Tehran is under increasing pressure for its continued failure to live up to its international obligations,‘ White House press secretary Jay Carney said.“ http://t.uani.com/As4Sy3 

CSM: „Iran’s currency, the rial, has plummeted to its lowest value against the dollar in more than two decades after President Obama signed legislation Saturday targeting Iran’s Central Bank. The rial dropped almost 30 percent in two days, hitting exchange rates as low as 17,800 rials per dollar on Monday as Iranians rushed to sell their local currency holdings in favor of havens such as the euro, the United Arab Emirates dirham, the US dollar, and gold… The psychological impact on ordinary Iranians, who see a strong rial as a sign of national strength amid the Islamic Republic’s growing international isolation, has been huge.  ‚Mr. Obama’s decision was a spark. There is an air of panic and people are worried,‘ says George Washington University economist Hossein Askari, who is an expert on Iran’s macroeconomic policies. ‚If Iran’s Central Bank or entities that deal with the Central Bank are going to be sanctioned, it means Iran’s ability to import goods and finance imports will be more costly and pressure its foreign exchange reserves.'“ http://t.uani.com/AnR49K

Reuters: „A Republican senator on Tuesday questioned President Barack Obama’s commitment to new sanctions on Iran’s central bank, noting the president had claimed the right to sidestep some of the requirements when he signed them into law last week… Senator Mark Kirk, one of the authors of the new sanctions on Iran, said on Tuesday that Obama was challenging the entire U.S. Senate if he did not implement the new sanctions, because senators approved them unanimously before they were appended to the defense bill. ‚With the Senate voting 100-0 to cripple the Central Bank of Iran, the president’s signing statement hinting he will ignore parts of this law risks overwhelming opposition in the Congress,‘ Kirk, a Republican, said through a spokesman.“http://t.uani.com/zxd82W

Nuclear Program & Sanctions

Reuters: „Greece, increasingly dependent on imports of Iranian oil, will not break ranks with its European Union partners should they impose an oil embargo on the Islamic Republic at a meeting this month, Greek government sources said on Tuesday. The EU is considering an embargo on Iran’s oil exports, backing those long in place in the United States, and the bloc’s foreign ministers are due to hold a meeting on Jan. 30. ‚If the European Union decides to impose the sanctions, Greece will join them,‘ one official told Reuters… In the second quarter of 2011, Greece met 35 percent of its oil import needs from Iran, buying 111,000 barrels per day (bpd).“ http://t.uani.com/weY6us

Reuters: „South Korea will buy around 10 percent of its crude from Iran in 2012, up slightly from last year, as the country seeks a waiver from toughened U.S. sanctions that could disrupt Iranian oil shipments. Refiners in the world’s fifth-largest oil importer have struck annual deals to buy 200,000 barrels per day (bpd) of Iranian crude, a little more than the 190,000 bpd in 2011, but are also keeping an eye out for potential replacements… South Korea will meet with U.S. officials this quarter to lobby for an exemption to U.S. sanctions to enable it to continue buying and paying for Iran’s oil, government sources said.“ http://t.uani.com/wGDcaJ

Bloomberg: „Six U.S. lawmakers urged the State Department to investigate whether Huawei Technologies Co. violated U.S. law by supplying sensitive technology to Iran. Huawei, China’s largest maker of phone equipment, said Dec. 9 it would voluntarily restrict business in Iran because of that country’s ‚increasingly complex situation.‘ The Shenzhen, China-based company said it wouldn’t seek new customers in Iran and will limit the scope of business with existing clients. While calling Huawei’s decision on Iran a ‚positive step,‘ the lawmakers in a Dec. 22 letter to U.S. Secretary of State Hillary Clinton said the company’s ‚previous actions and continuing service of existing contracts with Iranian clients may violate‘ an Iran sanctions law passed in 2010.“http://t.uani.com/xrNd0N

Reuters: „The Massachusetts public employees pension fund has divested all of its stakes in companies with major ties to Iran’s energy industry, joining a campaign to pressure the country to stop developing nuclear weapons, state Treasurer Steve Grossman said on Tuesday. The decision by the nearly $50 billion Massachusetts fund, called Pension Reserves Investment Management, follows similar divestitures by other states including New York, Florida and Georgia, Grossman said by telephone… The six companies that were divested, in accordance with a new state law are: L’Air Liquide, Daelim Industrial Co., Gazprom Hyundai Heavy Industries Ltd, Sasol and Siemens Ltd.. The shares had a total value of about $100 million, Grossman said.“http://t.uani.com/x4Scr2

Domestic Politics

AFP: „Iran’s currency market was in turmoil Wednesday as the central bank imposed draconian measures to try to shore up its beleaguered rial in the face of existing and looming Western sanctions. The bank was imposing a fixed low rate of 14,000 rials to the dollar on the open market, traders said. Some had shuttered their shops in the centre of Tehran, refusing to make transactions at that artificial level. The central bank also halved the amount of dollars Iranians flying abroad could buy at a slightly lower preferential rate, to $1,000 instead of the $2,000 previously allowed, according to an official statement relayed by media.“ http://t.uani.com/wmHXR

Foreign Affairs

WT: „A leader of Syria’s Muslim Brotherhood says Iran has sought to coax the Islamist group’s support for President Bashar Assad in exchange for four high-ranking positions in the Syrian government. Mohammed Farouk Tayfour, the top political leader in Syria’s Muslim Brotherhood, told The Washington Times on Tuesday that Iran’s supreme leader – Ayatollah Ali Khamenei – sent three emissaries to Istanbul in late October to try to broker the deal. ‚We refused to meet with them,‘ said Mr. Tayfour, one of nine members of the Syrian National Council’s executive committee, which is leading opposition to the Assad regime. ‚We told them [through a Turkish mediator] that Iran has been taking sides against the Syrian people.'“ http://t.uani.com/wgsRKt

Reuters: „Kuwait protested on Tuesday against Iran’s intention to unilaterally develop a disputed offshore gas field in the Gulf unless an agreement is reached, Kuwait’s state news agency KUNA reported. Iran said on Sunday it would launch full-scale unilateral development of the field if Kuwait does not respond to its offer of joint development. Kuwait’s Foreign Ministry summoned Iran’s charge d’affaires and handed him a letter saying that negotiations were still ongoing between the two countries and development could not take place before an agreement is reached, KUNA said.“http://t.uani.com/wgu7sB

AP: „Officials say Turkish Foreign Minister Ahmet Davutoglu will visit Iran for talks on the country’s nuclear program and developments in Iraq and Syria. The Turkish Foreign Ministry says Davutoglu will pay a two-day visit to Tehran, starting on Wednesday. It says the talks are part of regular meetings between the two countries‘ foreign ministers held twice a year. The visit, however, comes amid increased friction between the two neighboring nations over Turkey’s decision to host a NATO missile system designed to counter Iranian missile threats, and also over their opposing views on the Syrian uprising against the regime of President Bashar Assad.“ http://t.uani.com/wcNoHA

Opinion & Analysis

WSJ Editorial Board: „If there were a diagnostic list for the symptoms of a regime gone rogue, Iran would tick off every box. Taking hostages? Check. Sponsoring terrorism? Check. Covertly pursuing nuclear weapons? Check. Under international sanctions? Check. Repressing its own people? Another check. Then there is Iran’s threat to the freedom of the seas. ‚We recommend to the American warship that passed through the Strait of Hormuz and went to the Gulf of Oman not to return to the Persian Gulf,‘ Iranian army chief Ataollah Salehi said Tuesday, adding darkly that ‚The Islamic Republic of Iran will not repeat its warning.‘ The Iranians have also been conducting naval exercises and test-firing ballistic and cruise missiles. As Bradley S. Russell and Max Boot write nearby, the last time Tehran interfered with shipping in the Persian Gulf, during the so-called Tanker War of the 1980s, it didn’t exactly come out the winner. The ‚American warship‘ that Tehran is now threatening, the USS John C. Stennis, is a Nimitz-class carrier whose air wing alone is more capable than the entire Iranian air force. If the mullahs are serious about carrying out their threats, they’re dumber than we thought. All this bluster is almost certainly a reaction to new U.S. sanctions that target Iran’s oil trade-60% of the economy-via its central bank. These, finally, are sanctions with real bite, assuming President Obama doesn’t use the waiver written into the law to dull their impact.“http://t.uani.com/zPIUt9

Bradley Russell & Max Boot in WSJ: „Iran threatened to close the Strait of Hormuz last week, in response to U.S. and European Union moves to apply sanctions on its oil industry. Only 21 miles wide at its narrowest point, the strait sees the passage of roughly 28 tanker ships a day, half loaded, half empty. Some 17 million barrels of oil-20% of oil traded in the world-go through this chokepoint. If Iran really could close the strait, it would do great damage to the world economy. But it would also damage its own already shaky economy because Iran relies on the strait to deliver oil exports to China and other customers. In any case, closing the strait is not nearly as easy as Adm. Habibollah Sayari, commander of the Iranian Navy, would have it. He said that closing the strait is ‚as easy as drinking a glass of water.‘ Actually it would be about as easy as drinking an entire bucket of water in one gulp. Iran tried this trick before and failed miserably. In 1984, during the Iran-Iraq War, Saddam Hussein attacked Iranian oil tankers and the Iranian oil-processing facility at Kharq Island. Iran struck back by attacking Kuwaiti tankers carrying Iraqi crude and then other tankers in the Persian Gulf. In 1987, after years of growing disruptions in this vital waterway, President Ronald Reagan responded by offering to reflag Kuwaiti tankers with the U.S. flag and provide U.S. naval escort. Iran shied away from direct attacks on U.S. warships but continued sowing mines, staging attacks with small patrol boats, and firing a variety of missiles at tankers. On April 14, 1988, the guided-missile frigate USS Samuel B. Roberts struck an Iranian mine; no sailors were killed but several were injured and the ship nearly sank. The U.S. Navy responded by launching Operation Praying Mantis, its biggest surface combat action since World War II. Half a dozen U.S. warships in two separate Surface Action Groups moved in to destroy two Iranian oil platforms. The Iranians responded by sending armed speedboats, frigates and F-4 aircraft to fire at the U.S. warships. In defending themselves, the American vessels sank at least three Iranian speedboats, one gunboat and one frigate; other Iranian ships and aircraft were damaged. The only major U.S. loss occurred when a Marine Corps Sea Cobra helicopter crashed, apparently by accident, killing two crewmen… The Iranians must realize that the balance of forces does not lie in their favor. By initiating hostilities they risk American retaliation against their most prized assets-their covert nuclear-weapons program. The odds are good, then, that the Iranians will not follow through on their saber-rattling threats. But this heated rhetoric does suggest how worried the Iranians are about the potential impact of fresh sanctions on their oil industry. All the more reason for the Europeans to proceed with those sanctions.“http://t.uani.com/xpmT57

Michael Singh in FP: „Iran’s bellicose rhetoric and Gulf wargames in recent days have given rise to the question of whether Tehran could close the Strait of Hormuz. As many analysts have observed, the answer is no — not for a meaningful period of time. Less frequently addressed, however, is whether Iran would even try. The answer to that question is also ’no‘ — even the attempt would have devastating strategic consequences for Iran. The presumable target of an Iranian effort to close the Strait would be the United States. However, while we would of course be affected by any resulting rise in global oil prices, the U.S. gets little of our petroleum from the Gulf. The U.S. imports only about 49 percent of the petroleum we consume, and over half of those imports come from the Western Hemisphere. Less than 25 percent of U.S. imports came from all the Gulf countries combined in October 2011 — far less than is available in the U.S. Strategic Petroleum Reserve, were Gulf supplies to be interrupted. China, on the other hand, would find its oil supplies significantly threatened by an Iranian move against the Strait. China’s most significant oil supplier is Saudi Arabia. China also happens, however, to be Iran’s primary oil customer and perhaps its most important ally: Beijing provides Iran with its most sophisticated weaponry and with diplomatic cover at the United Nations. Thus a move to close the Strait would backfire strategically by harming the interests of — and likely alienating — Iran’s most important patron and cutting off Iran’s own economic lifeline, while doing little to imperil U.S. supplies of crude. It is perhaps no coincidence, then, that China quickly dispatched Vice Foreign Minister Zhai Jun to Tehran in the wake of Iran’s bellicose statements. In typically opaque fashion, the Chinese Foreign Ministry said only that ‚China hopes that peace and stability can be maintained in the Strait;‘ this is essentially diplo-speak for ‚Cool it.‘ Even if Iran ignored these considerations and proceeded with an effort to close the Strait, the U.S. and others would move to keep it open, and would be unlikely to stop there. As Iran has crept closer to a nuclear weapons capability, the possibility of military action against Iran has also become more imminent. President Obama has been reluctant to threaten Iran militarily, and any U.S. president would think long and hard before engaging in another armed conflict in the Middle East.  An effort by Iran to shut down the oil trade in the Gulf, however, would make such a decision straightforward. The U.S. would react with force, and once engaged in hostilities with Iran, would likely take the opportunity to target Iran’s nuclear facilities and other military targets. It is difficult to envision any scenario beginning with an Iranian effort to close the Strait of Hormuz that does not end in a serious strategic setback for the Iranian regime. Recognizing that Iran is neither able nor likely to try to close the Strait, the U.S. could simply sit back, confident in our superior firepower. This would be a mistake. The real danger in the Gulf is lower-level activity by Iran to harass shipping and confront the U.S. Navy. Iranian commanders in the area are increasingly brazen. If not deterred, Iran’s sense of impunity — rather than its nuclear progress — may be the spark that ignites a conflict in the region.“ http://t.uani.com/yasAK8