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AFP: "A showdown between Iran and the United States over Tehran's threats to close the strategic Strait of Hormuz to oil tankers worsened with warships from each side giving weight to an increasingly bellicose exchange of words. Iran's Revolutionary Guards rejected a warning that the US military would 'not tolerate' such a closure, saying they would act decisively 'to protect our vital interests.' State Department spokeswoman Victoria Nuland said Thursday that Iran had exhibited 'irrational behavior' by threatening to close the strait. 'One can only guess that the international sanctions are beginning to feel the pinch, and that the ratcheting up of pressure, particularly on their oil sector, is pinching in a way that is causing them to lash out.'" http://t.uani.com/uMSFq5
AFP: "Two American warships have crossed through the Strait of Hormuz without incident despite Iranian threats to close the strategic oil route, the US Navy said Thursday. The aircraft carrier USS John C. Stennis and the guided-missile cruiser USS Mobile Bay 'conducted a pre-planned, routine transit through the Strait of Hormuz' on Tuesday, said Fifth Fleet spokeswoman Lieutenant Rebecca Rebarich. The US military reported no friction with Iran's naval forces after Iranian leaders warned of possibly shutting down the vital strait if the West went ahead with more punitive sanctions over its suspect nuclear program. 'Our interaction with the regular Iranian Navy continues to be within the standards of maritime practice, well-known, routine and professional,' Rebarich said in an email from Fifth Fleet headquarters in Bahrain." http://t.uani.com/t8tPZj
WSJ: "Iran's central bank is preparing to file a motion in a New York federal court early next year to release nearly $2 billion of its frozen funds at Citigroup Inc.'s Citibank unit, according to attorneys for the Iranian bank. Tehran's action will mark the latest step in a widening legal struggle for control of the money. The assets were frozen in 2008 after a group of more than 1,000 victims of international terrorism sought the funds as partial payment for a $2.7 billion legal judgment made against Tehran for its alleged role in the 1983 bombing of a Marine Corps barracks in Beirut that killed 241 servicemen. A federal judge's decision to freeze the funds from the central bank, known as Bank Markazi, was the largest seizure of Iranian funds outside Iran since the 1979 Islamic revolution. The funds were deposited in Citibank by Luxembourg-based Clearstream Banking SA." http://t.uani.com/uUjPb8
Nuclear Program & Sanctions Reuters: "Italy backs sanctions against Iran provided that crude oil imports by Eni relating to existing contracts are excluded, Prime Minister Mario Monti said on Thursday. Italian oil and gas group Eni has previously said it will not make any new investments in Iran and only intends to complete activities already under way. Iran has been paying back Eni for decade-old deals in the country with oil for years but Eni CEO Paolo Scaroni has said Eni is still owed nearly $2 billion." http://t.uani.com/utmlRa
Domestic Politics
AP: "The website of former Iranian President Hashemi Rafsanjani has been blocked after an order from the government, his office confirmed Friday. Mohammad Hashemi, Rafsanjani's younger brother, told the semiofficial ISNA news agency Friday that a company providing services to the site told Rafsanjani's office that it was ordered to cut it off. 'The company providing services to Ayatollah Rafsanjani's site called and said they've been ordered to cut services to the site. Fifteen minutes later, the site was out of service,' ISNA quoted the brother as saying." http://t.uani.com/t4Toeq
Foreign Affairs
Reuters: "The United States will sell $29.4 billion in fighter jets to Saudi Arabia in a deal the White House said would support more than 50,000 jobs and help reinforce regional security in the Gulf amid mounting tensions with Iran... Gregory Gause, a Saudi Arabia expert at the University of Vermont, said the announcement of the fighter jet sale was a signal that the United States wants to contain Iran's influence in the region, but would not produce any quick power shift." http://t.uani.com/uUAmGK
Reuters: "Chinese Vice Foreign Minister Zhai Jun visited Iran for talks, the Chinese Foreign Ministry said, during growing tensions over Tehran's threat to choke off Middle Eastern oil shipments in retaliation against proposed Western sanctions. In keeping with Beijing's public sensitivity over Iran -- a major oil supplier to China -- the ministry statement gave only opaque clues about what Zhai and his hosts discussed during his two-day visit that ended on Thursday. 'Both sides exchanged views on Sino-Iranian relations and regional issues,' said the brief announcement on the Chinese Foreign Ministry's website dated Thursday." http://t.uani.com/vQPXAB
Opinion & Analysis
NYT Editorial Board: "Iran's threat to shut the Strait of Hormuz - one-fifth of the world's oil trade passes through there - if the United States and Europe press ahead with new sanctions is unacceptable. The Obama administration is right to signal, in deliberately moderated ways, that Washington will not back off if Tehran ever attempts to carry it out. A show of American naval force kept the strait open to oil tankers during the Iran-Iraq war in the 1980s. A Fifth Fleet spokeswoman usefully reminded Iran this week that the Navy always stands 'ready to counter malevolent actions to ensure freedom of navigation.' Oil markets reacted calmly, at least for now, with no price spikes. Whether or not Tehran is bluffing (or trying to drive up oil prices), Washington will not back down and Europe should not. More than five years after the United Nations Security Council ordered it to stop, Iran is still enriching uranium and mastering other technologies that would allow it to build a nuclear weapon. According to the latest report from United Nations inspectors, Iran has created computer models of nuclear explosions, conducted experiments on nuclear triggers and completed advanced research on a warhead that could be delivered by a medium-range missile... Tehran's latest threat to block global oil shipping should leave no doubt about its recklessness and its contempt for international law. This is not a government any country should want to see acquire nuclear weapons." http://t.uani.com/syxulZ
Michael Rubin in NY Daily News: "Tension between the United States and Iran reached levels not seen in more than 20 years when, on Wednesday, Iranian military officials threatened to close the Strait of Hormuz, the 34-mile wide channel through which more than one-third of the world's oil tanker traffic passes. Habibollah Sayyari, commander of Iran's navy, bragged that closing the Strait would be easier than drinking a glass of water. While the threat from a resurgent Iran is real, its bluster about closing the Strait is more diversion than danger. The waterway may be an economic chokehold, but it is also a vital passage for Iran's survival. The Islamic Republic is not only the world's third-largest exporter of oil. Because of decades of mismanagement, it is also a voracious consumer of imported gasoline: Iran must import 40% of the refined petroleum it needs not only to run its automobiles, but also to power its factories and extract oil. To close the Strait of Hormuz even for a day would do far more damage to the Iranian economy than it would to the West. The Islamic Republic's goal may still be more financial than military. Iran's economy is teetering. In the past nine months, Iran's currency has lost a third of its value against the dollar. Unemployment and inflation are both in the double digits. To keep afloat, Iran needs high oil prices. Should the price of oil fall below $80 per barrel, even the brutal Revolutionary Guards may not be able to maintain domestic stability for long. They know that by simply threatening tanker traffic, they can drive up the price of oil, adding hundreds of millions of dollars to their coffers. Should Tehran really want to strike a blow at the West, their target would not be the Strait. While Iranian small boats, mines and anti-ship missiles can harass international shipping, American firepower is overwhelming... The Iranian leadership knows that if they want to threaten international markets, the vulnerability is not by sea but rather on land. On Dec. 22, Iraq's deputy prime minister claimed that Iraq's oil exports had surpassed 3 million barrels per day. If Iranian-backed militias or saboteurs destroyed pipelines or Iraq's single Persian Gulf oil terminal, oil prices would skyrocket. Iraq's South Oil Company has taken no obvious contingencies to ward off the threat, and with the American withdrawal, Iraq's vulnerability has only increased. The crisis in the Strait may soon pass, but the real threat at the far end of the Persian Gulf remains." http://t.uani.com/si4Ggo
Anthony Cordesman in CSIS: "There is nothing new about Iran's threat to close the Gulf, but it does need to be put in context. Iran is reshaping its military forces to steadily increase the threat to Gulf shipping and shipping in the Gulf of Oman, It also is gradually increasing its ability to operate in the Indian Ocean. This increase in Iranian capability is almost certainly not designed to take the form of a major war with the US and Southern Gulf states, which could result from any Iranian effort to truly close the Gulf. It does, however, give Iran the ability to carry out a wide range of much lower level attacks which could sharply raise the risk to Gulf shipping, and either reduce tanker traffic and shipping or sharply raise the insurance cost of such ship movements and put a different kind of pressure on the other Gulf states and world oil prices. Any such Iranian actions do not have to be tied in any way to predictable attacks at or near the Strait of Hormuz. They could occur anywhere in the Gulf and in the Gulf of Oman. Iran could deny many such forms of attack, claim rogue operations or that they were provoked by US or other Gulf country actions, or keep the level of such attacks so low that it would be difficult to respond with high levels of force and Iran could keep exporting its own oil. Moreover, Iran's growing long-range missile forces, and movement towards a nuclear weapons capability will give it an increasing capability to compensate for its aging and low capability regular naval and air forces with a far more threatening level of deterrence. It is also important to note that the current flow of oil and gas exports through the Gulf is critical to the global economy, as well as that of a US that must pay rising world oil prices in a crisis. The US Department of Energy projects that this global strategic dependence on the secure and steady flow of Gulf energy exports will increase steadily through 2035 - as far in the future as the Department makes projections. Equally important, the same US Department of Energy projections make it clear that the US will not achieve any meaningful improvement in energy independence through 2025, although it will make limited reductions in total imports and increases its own conventional and unconventional liquids production." http://t.uani.com/tWN6ns |
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