SPY EYES

Iran and the United States are once again locked in a war of words over Iran’s alleged secret nuclear military program. Tehran has threatened to close the Strait of Hormuz – a narrow passage through which some 80 per cent of the Gulf region’s oil is exported to the outside world – should the US and its allies impose more sanctions affecting the export of Iranian oil.

It has also just tested a medium-range missile and announced that it has produced its first nuclear rod.

Washington has vowed to keep Hormuz open and prevent Iran from building nuclear weapons. This raises the spectre of yet another military confrontation in the region.

Despite all its domestic problems and foreign policy complications, Iran is a difficult target to contain politically and economically, and subdue militarily.

Its hardline Islamic regime has much in geopolitical assets to enable it to circumvent US-led containment efforts and make a military assault on Iran costly.

Labouring under US and UN sanctions and Israel’s threat of military action, Tehran has vigorously sought to achieve a degree of domestic self-sufficiency and diversity in its economic and trade relations to enable it to survive further pressure from the West.

It has shifted away from the financially and economically troubled European Union towards the economically booming Asian countries.

Iranian-Chinese economic relations have reached new heights. In 2010, China became Iran’s largest trading partner, with a trade volume of $US30 billion.

China imports 11 per cent of its oil needs from Iran, and has signed many deals with Tehran for investment in Iran’s construction, and oil and gas sectors.

Similarly, Iranian-Japanese, Iranian-Indian and Iranian-South Korean trade ties now exceed Iran’s economic relations with its traditional European trading partners, France, Germany and Italy.

The main item of transaction is Iranian oil. Although by comparison the Iranian-Russian volume of trade has been smaller – $US4 billion in 2010 – Russia is the largest exporter of arms to Iran and is involved in building its nuclear reactors.

While backing the UN’s non-oil sanctions against Iran, none of these actors find it in their interests to bow to US pressure, if it means high oil prices and oil shortages in the event of a reduction or a halt in Iran’s oil production of some 3 million barrels per day.

When president Bill Clinton adopted an extra-territorial measure in the mid-1990s to punish those third parties that invested more than $US40 million in the Iranian oil and gas industry, many countries, including Australia, objected to it and simply ignored it.

Given the Iranian regime’s current annual oil income of $US75 billion and trade diversification, more sanctions are unlikely to bring the regime to its knees. They can only make life more difficult for ordinary Iranians, just as was the case in Iraq under Saddam Hussein.

By the same token, there is no military option that can work effectively either.

In the wake of its bitter Iraqi and Afghan experiences, the US has no appetite and Israel lacks the capacity for a ground invasion of Iran.

The only option left is surgical air strikes against Iranian nuclear and military installations.

However, this could also prove to be ineffective and very costly. Most Iranian nuclear installations are buried deep underground and scattered across the country, where neither bunker busters nor massive bombardments could produce anything more than a delay in the country’s nuclear program.

Iranian retaliation with its soft and hard power could easily turn the whole region into an inferno.

Apart from blocking the Strait of Hormuz by sinking a few ships at its narrowest point, Tehran could curtail its own oil production, with serious global effects.

It could also activate its sub-national allies across the region – from Afghanistan to Iraq and Lebanon – and unleash hundreds of its suicide bombers to hit US or US-allied targets.

The Iranian-backed Lebanese Hezbollah has the capacity to fire thousands of rockets into Israel.

Meanwhile, Iran’s hard power includes a sophisticated rocket system. Its Shahab-1, 2 and 3 missiles could be devastating in terrorising the region, with Shahab-3 capable of hitting Israel.

The US and Israel indeed face a dilemma. They know that neither sanctions nor military operations can really work.

Meanwhile, there is so far no concrete evidence to prove that Iran has a military nuclear program. Tehran claims its nuclear aims are for peaceful purposes.

The production of a nuclear rod in itself does not constitute proof.

Under the circumstances, the best course of policy action may be to promote a region-wide regime of arms control to include nuclear-armed Israel, which Tehran views as a real threat.

The hawks in the US and Israel are well advised not to edge the Gulf towards another war based on conjectures. The consequences of the invasion of Iraq based on false information should not be lost on anyone.