Iran update.

Much has happened since the Tanker attacks (the drone shot
down, the US attack cancelled 10 minutes before opening fire). On the Tankers, I think that on balance it
probably was the Iranians. It was a calculated demonstration of what they could
do, but with no loss of life. I think a “false
flag” would have been more spectacular with some loss of life. There was a meeting of the UN Security council,
called by the US, to discuss both the Tanker attacks and the drone that Iran
shot down. Iran was excluded by the request of the US.
The US ambassador, Nikki Haley’s successor Jonathan Cohen presented the US
evidence on both counts: the Iranians were responsible for the Tanker attacks
and the US drone was in international air space when shot down. The net result
was disappointing for the US: the Security Council condemned the Tanker attacks
but did not blame Iran. The three EU permanent
members (Britain, Franc e and Germany) gave a joint press statement calling for
“maximum restraint”. The US ambassador had to stand on his own simply repeating
the US allegations. Worse still, the UAE has shifted its public statements.

In the earlier attacks on ships
in Fujairah, the UAE had agreed with the Saudi government in blaming Iran.
However, by the 26th June, it retracted the statement, saying “there
is not enough evidence to suggest Iran carried out recent attacks on oil
tankers in and around Gulf waters”.
Worse still, the UAE is quietly withdrawing from the Yemen conflict
(according to the Economist July 6th 2019). Probably their proximity
to so many Iranian missiles has focused their minds against a conflict with Iran
and the Economist reports growing dissatisfaction with the cost of the Yemen
intervention. This is bad news for the
Saudis (and their British and American backers): the UAE army is more effective
than the Saudi forces, largely because it has a strong mercenary element. If
the combined UAE-Saudi forces proved insufficient to defeat the Houthis, then the
withdrawal of the UAE forces effectively means game over for the war in Yemen. The Houthis will retain their hold on northern
Yemen and possibly recapture some territory. More importantly, if the UAE is
drawing back to a position of neutrality vis a vis Iran, then this will make
life much more difficult for the Saudi and US in the event of war with Iran. Currently Oman is “neutral”, although in the
past both Saud and UAE have accused it of allowing the smuggling of weapons to
the Houthis from Iran. It does host the US airforce as a “tenant” in a couple
of bases (which were used in both Gulf wars), but in the event of war with Iran
may not permit their use. Qatar is “neutral”,
but subject to a blockade by the Saudis for over a year now. Qatar has remained friendly with Iran and
whilst it would not side with Iran, it would certainly attempt to remain
neutral (although the Al Udeid Air Base airbase in Qatar used by the US air force would almost certainly
come under heavy attack if war broke out). Kuwait is also a friend of Iran and
has been at the forefront of trying to mediate between Iran and the other Gulf
States. Iraq has stated that the US
cannot use its bases there to attack Iran. The Island of Bahrain is the only anti-Iranian
part of the Gulf besides Saudi: it hosts a large naval base for US and Royal
Navy ships and has had problems with its majority Shia population since the
Arab spring. In the event of war with Iran,
the US has little wiggle-room in the Gulf beyond the Saudi coast (ports of Al
Jubayl, Ad Dammam and Dharan) and the island of Bahrain.

The US does of course have many
bases bordering Iran outside the gulf: in Afghanistan, Pakistan and
Turkmenistan. How useful these would be
in an Iran-US conflict is doubtful, particularly if the host governments are
not participating. Furthermore, in the
two Gulf wars, with Nato support, the US was able to transport large quantities
of men and material through Incerlik airport in Turkey and use European bases
as stepping stones to the Gulf. Without the support of Turkey and NATO this
would not be possible except perhaps on a small scale.

So, for me, if the Economist
report is correct and the UAE is dropping out of the “coalition” that leaves
just the US, the Saudis and probably Israel.
The logistics of any war with Iran are formidable without more allies in
the region and support from Nato. As an economist, I am interested because a
war with Iran would be one of the biggest economic “shocks” since the Second
World War, possibly as large as the OPEC shock in the 70s. The Iranians would be able to close the straits
of Hormuz and destroy the existing infrastructure of the oil industry in Saudi
Arabia. This would lead to a sharp reduction in the world’s oil supply and
massive increase in the oil price. The shock would last for a long time. This could trigger a world recession,
stagflation and much besides. Let’s hope it does not happen.

Sources mentioned in Blog.

Al Jazeera: “The foreign minister of the United Arab
Emirates says there is not enough evidence to suggest Iran carried out recent
attacks on oil tankers in and around Gulf waters.” June 26th.

The Economist: The UAE begins pulling out of Yemen (July 6th)

Statements after the UN Security Council meetings (24th
June 2019):