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POLICY BRIEF GLOBAL POLITICAL TRENDS CENTER (GPoT)

HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT

JOHN BOWLUS

January 2012 | GPoT PB no. 29

ABSTRACT On December 26, 2011, in response to US, European, and potential Asian sanctions on Iranian oil exports, the government in Tehran issued a threat to “cut off the Strait of Hormuz.” The US Defense Department responded that any blockade of the strait would be met with force. On first read, it is easy to dismiss such saber rattling as another chapter in the new Cold War in the Middle East between Iran and its allies – including , Hamas, and Hezbollah – and the US, , and the Sunni Gulf States, mostly notably . Iran has since backed away from its threat, but the event still carries importance because it is unclear how both the US and Iran will continue to respond, particularly as the diplomatic and economic pressures grow more acute while Iran’s controversial nuclear program advances. Could such a verbal threat by Iran to cut off the Strait of Hormuz ignite a military conflagration in the region? The relationship between military conflict and oil supply disruptions is well established; however, policymakers and analysts tend to focus on the incidents in which military conflict causes disruptions in oil supplies and sharp increases in prices. The first and most obvious example of this dynamic was the Arab-Israeli War of 1973. The subsequent oil embargo by the Arab members of the Organization for Petroleum Exporting Countries (OPEC) against the United States and the Netherlands for their support of Israel caused prices to soar as oil-consuming nations endured supply shortages. The Iranian Revolution from 1978 to 1979 was another event that curtailed Western nations’ access to oil and caused prices to spike. When thinking about the relationship between military conflict and oil supply disruptions, however, policymakers and analysts should also recognize that the competition over oil – and even verbal threats to disrupt oil supplies by closing oil transit chokepoints – have either led directly to military conflict or have provided a useful cover under which countries have initiated military conflict. By examining past episodes when countries issued threats to close oil transit chokepoints, this Policy Brief helps illuminate the dangers associated with the current crisis over the Strait of Hormuz.

GLOBAL POLITICAL TRENDS CENTER (GPoT)

2 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS

The Importance of Oil Transit Chokepoints in the Middle East Since the signing of the Montreux Convention in 1936, the Turkish Straits The Western powers became interested in have operated without interruption, Middle East oil at the turn of the except for accidental shipwrecks. (In the twentieth century and, by the beginning of late 1940s, the Soviet Union pressured the Second World War, the US, British, Turkey to allow Russian bases in the and Dutch oil companies controlled access Straits, but, with American backing, Turkey to the reserves in the major oil-producing resisted Russian advances.) On the other states: Iran, Iraq, Kuwait, and Saudi hand, the and its environs, Arabia. During the postwar period, the US including the , were and Britain sought to safeguard their oil theaters of two major conflicts in 1956 interests in the Persian Gulf area, which and 1967 and will be discussed in greater had become the new center of gravity for detail below. The most proximate cause of world oil production. Middle East oil these conflicts was verbal threats by would rebuild the war battered economies to block oil transit chokepoints. And while of Europe as well as Japan and would the Mandab Strait, which marks the power the American military during the entrance to the from the Arabian Cold War. Controlling the supply of oil, Sea, is currently vulnerable to hijackings however, was only important if the oil by Somali pirates, some of whose most could be transported to viable markets, valuable scores have been oil tankers, specifically to the Mediterranean and then these hijackings have only impacted oil on to Western Europe, which got ninety prices to a small extent and have not percent of its oil from the Persian Gulf. For disrupted supplies. Indeed, the Mandab Persian Gulf oil to reach the Medi- terranean, it had to pass through a series of oil-transit states, including Israel, , Lebanon, Syria, Turkey, and Egypt, which had the Suez Canal. Instability within or conflict between these oil-transit states therefore became a serious concern of American and Western European policymakers beginning in the 1950s.

Four maritime chokepoints have been critical to the transit of oil to Europe: the Turkish Straits; the Suez Canal and its environs, which includes the Straits of Tiran; the Mandab Strait; and the Strait of Hormuz. 1

Straits being blocked; however, a closure, if 1 A fifth chokepoint concerning Middle East oil, prolonged, would have serious repercussions the Strait of Malacca, is of key strategic for the world economy. The Panama Canal and importance to China, Korea, and Japan. Since the Danish Straits are two other chokepoints, the American and Chinese navies dominate but they do not involve the transportation of GLOBAL POLITICAL TRENDS CENTER (GPoT) these waters it is difficult to envision the Middle Eastern oil.

3 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS

Strait has historically remained immune harness oil as a political weapon. Iran was from the oil transit crises connected with the first Middle Eastern country to the Arab-Israeli conflict. attempt to nationalize its assets. In 1951, following months of unrest and strikes by Of the four straits, the Strait of Hormuz is oil workers, the popular leader, the most important chokepoint for oil Mohammad Mossadegh, emerged and led transportation, since the Iranian Parliament supertankers transpor- Egypt was a crucial transit route to nationalize the British ting Persian Gulf oil for Asian-European trade and Petroleum (BP) Com- have no other outlet to particularly for British rule in India pany’s holdings in the the seas and forward even before the building of the country. The British markets. In the postwar Suez Canal in 1869. By the late could not countenance era, military conflict has nineteenth century, however, the loss, and, with the not disrupted this British trade had grown help of the American chokepoint, although dependent on the quicker route CIA, ousted Mossadegh there were light, small- through Suez, and with the advent and reinstalled the Shah. scale clashes between of Persian Gulf oil the canal Oil production was turn- the Americans and became even more critical to the ed over to an American, Iranians at the end of Western powers. British, French, and the Iran-Iraq war in Dutch Consortium, 1988. The current which controlled production until 1979. American-Iranian standoff bears some Although the Iranian supply was cut off for resemblance, but the stakes now are almost three years from 1951 to 1954, the much higher in light of Iran’s nuclear disruption did not materially affect oil- program. As a result, the US has ratcheted consuming nations. Nonetheless, the brief up sanctions and brought along its episode of Iranian nationalization set the European and Asian allies to bring precedent for a more brazen challenge to economic pressure on Iran. The US holds Western control of oil by Egypt in 1956. the military balance of power and Iran would lose massive amounts of revenues Egypt was a crucial transit route for Asian- in oil exports – not to mention the European trade and particularly for British blockage of imports – if the Strait was rule in India even before the building of shut, but the regime could decide that the Suez Canal in 1869. By the late blocking the Strait is its only option in an nineteenth century, however, British trade act of desperation. Moreover, the US or had grown dependent on the quicker Israel could use such an act as an excuse route through Suez, and with the advent to launch a military strike against Iran. of Persian Gulf oil the canal became even more critical to the Western powers. In 1952, , a colonel in the , overthrew the Egyptian The of 1956 and Arab- monarchy and entered office determined Israeli War of 1967 to throw off the yoke of British and French imperialism. By 1955, Nasser was playing Since the early 1950s, oil-producing the Soviet Union and the United States off countries in the Middle East have one another in order to increase his own recognized the importance of oil to the prestige and power. He purchased arms GLOBAL POLITICAL TRENDS CENTER (GPoT) Western powers and have sought to from Czechoslovakia in September 1955,

4 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS but received Anglo-American aid in canal. The US supported a diplomatic December 1955 to build a new dam at solution and indeed the Western powers Aswan. When Nasser recognized the could have worked out a modus operandi People’s Republic of China in May 1956, whereby oil transportation was not the West decided to check Nasser and disrupted and military conflict was withdrew the funds for the Aswan dam in avoided; after all, Nasser needed the toll July 1956. Nasser, claiming that he needed revenues to fund the dam project among revenue to build the dam, took the other aspirations. The British and French, extraordinary step of nationalizing the nonetheless, could not absorb the British and French owned Suez Canal attendant loss of prestige and erosion of Company on July 26, 1956. He also their positions in the Middle East. announced the closure of the canal as well Consequently, the two governments as the Straits of Tiran to Israeli shipping. contacted Israel about launching a joint Nasser’s moves directly threatened British attack. Israel saw the opportunity to grab and French financial interests in the control of the Gaza Strip and Sinai company. More importantly, the US, Peninsula, and, on October 29, 1956, Britain, and all worried that Nasser Israeli forces quickly took the Sinai and the intended to hold them Straits of Tiran. The three hostage to further From 1957 to 1967, oil transit countries had hidden the demands by cutting off routes continued to cause plans from the US, and, Europe’s most important tensions between Middle when President Eisen- oil transit route for Eastern states. From 1957 to hower learned of the Persian Gulf crude. In 1961, British Petroleum, out of attack, he denounced the fact, Nasser invoked the concern for its interests actions of his allies. Since possibility of using oil elsewhere in the Arab world, Britain, France, and Israel transportation as a ended its direct relationship in devised their plans in weapon when he called supplying oil to the Israelis via secret and believed that on Syria in a speech in the . an alternative transit August 1956 to sabotage route for oil could not be the pipelines running from Iraq, a British found, diplomatic tension boiled over into ally, in the event of Western action against military conflict. Egypt. For Israel, the blockade of the Gulf of would deny it access to oil from In response to the attack, Nasser blocked the Persian Gulf, but at this time Israel the Suez Canal, and the Syrians, in received the majority of its oil imports solidarity with Nasser, cut off the flow of from BP via the Western Hemisphere, oil from Iraq to the Mediterranean. With which were unloaded at Mediterranean both the Suez Canal and oil pipeline Sea ports. Moreover, the Egyptian closed, the West’s oil supplies were blockade of the was bluster curtailed, although it was able to make up since the Egyptians did not stop a single for the shortfall by increasing Western ship destined for Israel. Hemisphere production. Western govern- ments and oil companies also devised It is unclear to what extent the threat of numerous schemes to transport oil from cutting off oil supplies either genuinely the Persian Gulf without passing through frightened Britain, France, and Israel into the Suez Canal or Syria. The primary

action or served as an excuse for them to strategy was to accelerate the building of GLOBAL POLITICAL TRENDS CENTER (GPoT) launch an attack and regain control of the massive oil tankers, which could transport

5 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS oil around the Cape of Good Hope in by a number of border clashes between Africa and then north to Rotterdam and Israel and Syria. In April 1967, Israel other European ports. Western nations downed six Syrian jets in a major air battle and oil companies also began drawing up above the Golan Heights. In mid-May plans to build an anti-Nasser pipeline from Nasser, sensing the moment to reassert Iraq to Turkey, which would bypass Syria himself – his prestige in the Arab world altogether. This scheme was dropped in had slowly declined during the 1960s, in spring 1958 because Iraq did not want to part due to the disastrous war in Yemen – anger its Arab neighbor, Syria, by asked the United Nations to remove its transporting oil through non-Arab Turkey. forces stationed in the Sinai since 1957. He then positioned his own troops in the Sinai By March 1957, the US had compelled all on the border with Israel and announced British, French, and Israeli forces out of on May 23, 1967 that he was closing the Egypt, and oil transit through the Suez Straits of Tiran to all Israeli shipping. Canal was restarted. The peace, however, would barely last ten years before another According to the archival record of the US major military conflict erupted. From 1957 State Department, Israel decided to use to 1967, oil transit routes continued to Nasser’s verbal threat to block off the cause tensions between Middle Eastern Straits as a in order to strike a states. From 1957 to 1961, BP, out of devastating blow to Nasser and capture concern for its interests elsewhere in the the Sinai: “the decision was made to fight Arab world, ended its direct relationship in rather than to surrender to a blockade in supplying oil to the Israelis via the Aqaba; Israel would not try to live on one Mediterranean Sea. During that same lung. It had delayed thus far in striking period, Iran became Israel’s sole supplier because of President Johnson’s urgings.” of oil, which made the Straits of Tiran an When the Johnson Administration oil transit chokepoint of existential rejected this rationale for war, Israel importance to Israel. 2 shifted its argument, claiming that Nasser’s troops in the Sinai represented an existential threat and that an Egyptian attack was imminent. Historians have The Arab-Israeli War of 1967 since demonstrated that Nasser’s moves were bluster. The blockade was never Much like the Suez Crisis, the Arab-Israeli enforced, and the US military and War of 1967 resulted from a verbal threat intelligence agencies had assessed the from Egypt to cut off the free tran- Egyptian forces and found them to be sportation of oil, but whereas Britain and undermanned, lacking in military France were involved in the Suez Crisis, hardware, and without intention to attack. the 1967 conflict was strictly an Arab- An Israeli strike, therefore, was Israeli affair. By 1967, relations between unjustified; moreover, if it were to occur, Israel and its neighbors had grown there was no question about the outcome. increasingly bleak and were characterized Given the changing rationales for a strike offered by the Israeli leadership to the US, 2 Israel’s lack of indigenous oil supplies along one can conclude that Israel sought to find with Arab antipathy towards Israel made the a reason to initiate war with Egypt, and country’s oil policy a highly secretive matter

Nasser’s brinkmanship provided it. Due to GLOBAL POLITICAL TRENDS CENTER (GPoT) and one of grave importance to its national the lack of diplomacy between Egypt and security.

6 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS

Israel and Israel’s lack of an additional impacted Turkish foreign policy planners, transit route by which it could receive oil complicating its alliance with Israel within supplies, military conflict erupted. the Western orbit and bringing it closer to Iraq in the subsequent years. In fact, only On June 5, 1967, Israel launched a surprise one month into the embargo, Iraq and attack, overwhelmed Egyptian forces Syria made specific arrangements for only within six days, and occupied the Sinai two countries – Turkey and France – to lift Peninsula, the Suez Canal, and the waters oil from the port at Banias, Syria. France in the . Thereafter, the Suez went even further than Turkey in openly Canal was shutdown from 1967 to 1975, severing its relations with Israel over the forcing Western oil companies to sail war and built trading relations with Iraq around the Cape of Good Hope with and other Arab oil-producing countries supertankers. The Arab-Israeli War of whereby France sold weapons in exchange 1967 not only enhanced Israel’s position in for oil. terms of oil transportation by giving it control over the Suez Canal and the Straits of Tiran but it also greatly increased its supplies. In the 1960s, oil and gas had Recommendations for Turkey been discovered in the Gulf of Suez and the . Israel now controlled In the Suez Crisis of 1956 and Arab-Israeli these supplies and during the 1970s War of 1967, verbal threats to oil security became both energy independent and a combined with intense diplomatic net exporter of oil for the first time in its pressures to create untenable situations. history. When Egypt and Israel signed the This combination resembles today’s Sinai II agreement in 1975, the Suez Canal standoff between the US and Iran in the reopened, Egypt no longer posed a threat Persian Gulf. If the Strait of Hormuz was to block the passage of oil, and regional closed, the world economy would suffer conflict over oil transit significantly from disruptions in supply and increases in abated. prices, and Turkey’s economy would not escape the damage. Turkey should have Turkey and France suffered the most from contingency plans on hand in case such a the closure of the Suez Canal in 1967, scenario emerges and should be aware which brought each country closer to oil- that saber rattling and verbal threats to rich states in the Middle block oil transit routes East, most notably Iraq. If the Strait of Hormuz was should be taken seriously. When the conflict erupted, closed, the world economy Historically, Turkey has a grouping of Arab oil- would suffer from played a unique and producing and oil-transit disruptions in supply and important role in helping to states launched a three- increases in prices, and avoid conflict in the Middle month oil embargo against Turkey’s economy would East through diplomacy. In the United States and not escape the damage. the current standoff Britain. In fact, Iraq was the between the US and Iran, first to limit its supply and, Turkey has already along with Syria, blocked the mitigated tensions and it should continue Mediterranean pipeline. This denial of oil to consider this role a high priority. GLOBAL POLITICAL TRENDS CENTER (GPoT)

7 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS

Another way Turkey can work to avoid were three routes through the Suez Canal regional conflict over oil transportation is environs by which Persian Gulf oil could to continue to seek to diversify its transit transit onward to Europe. In 1978, Egypt routes for energy supplies. One reason for and Israel signed the , Turkey’s strong economic performance and the two countries have since be- during the 1980s was that the price of oil nefitted from peaceful relations. While oil plummeted by the middle of the decade, transportation was only one of many and Turkey had gained direct access to factors influencing Egyptian-Israeli rela- Iraqi crude via the Kirkuk-Ceyhan pipeline. tions, it is clear that the expansion of oil The political and economic challenges transit options helped reduce diplomatic facing Turkey and Iraq in the 1970s were tensions. immense. Turkey suffered from low levels of foreign currency, the bulk of which Finally, international agreements are went towards purchasing oil. The invest- essential in maintaining the security of oil ment made by both Turkey and Iraq in the transit chokepoints, including the Strait of pipeline in the 1970s was rewarded in the Hormuz. In 1982, the United Nations 1980s, when a second, parallel line produced a series of conventions regard- between Kirkuk and Ceyhan was ing the transit of vessels through strategic constructed. Such pipeline schemes can maritime chokepoints. Iran and the United seem financially daun- Arab Emirates have ting and even unsound Each country has important signed the Convention in the planning stages, national reasons for withholding on the Law of the Sea but can pay extremely full support [of the Convention but have not ratified it, large dividends, parti- on the Law of the Sea], but all whereas Turkey, Syria, cularly in how they countries should pursue some and Israel have not provide diversification type of UN-sponsored, signed it. Each country for a country’s supply. international agreement has important national regarding the regulation of reasons for withholding In fact, the creation of maritime chokepoints because it full support, but all more alternatives for oil would reduce the potential for countries should pursue transportation helped military conflict. some type of UN- reduce military conflict sponsored, international between Egypt and agreement regarding the Israel. After the closure of the Suez Canal regulation of maritime chokepoints in 1967, Israel built a pipeline in 1970 that because it would reduce the potential for collected Iranian crude at on the Gulf military conflict. of Aqaba and pumped it to Ashkelon on the Mediterranean coast, from where it An examination of the history of could be reloaded on tankers and shipped international agreements concerning oil to Europe. In 1977, Egypt completed the transit chokepoints, along with an analysis Suez-Mediterranean pipeline, which re- of the role played by oil pipelines as viable ceived Arab Persian Gulf crude at Ain alternatives for oil transportation, are Sukhna on the Gulf of Suez and pumped it both topics that can further inform to Alexandria on the Mediterranean coast, discussions about the current crisis over from where it was also loaded on to the Strait of Hormuz.

tankers and shipped to Europe. The Suez GLOBAL POLITICAL TRENDS CENTER (GPoT) Canal reopened in 1975 and by 1977 there

8 HOW VERBAL THREATS TO CLOSE OIL TRANSIT CHOKEPOINTS LEAD TO MILITARY CONFLICT JOHN BOWLUS

Sources JOHN BOWLUS

1. Bialer, Uri. Oil and the Arab-Israeli John Bowlus is a doctoral candidate in conflict, 1948-63 . New York: St. Mar- history at Georgetown University. His tin’s Press, 1999. research interests include the history of oil 2. Popp, Roland. “Stumbling Decidedly and energy, Middle East diplomatic into the Six-Day War,” Middle East history, and US diplomatic history. His Journal , Volume 60, No. 2 (Spring dissertation seeks to explain the history of 2006), 281-309. the crude oil pipeline built from Kirkuk, 3. US Department of State, Foreign Iraq to Ceyhan, Turkey in the 1970s and Relations of the United States , 1955- the role of oil transportation in the 1957, Volume XVI, Suez Crisis, July 26- diplomatic history of the Middle East from December 31, 1956 . Washington: 1957 to 1977. He holds a Masters of Arts Government Printing Office, 1992. (M.A.) from The University of Chicago and 4. US Department of State, Foreign a Bachelor of Arts (B.A.) from Brown Relations of the United States , 1964- University. He worked at the National 1968, Volume XIX, Arab-Israeli Crisis Democratic Institute for International and War, 1967 . Washington: Govern- Affairs both in Washington, DC and in ment Printing Office, 2004. Beirut, Lebanon and served in the United 5. Yergin, Daniel. The Prize: The Epic Quest States Peace Corps in Senegal for two for Oil, Money, and Power . New York: years. He lives in Istanbul, Turkey.

Simon & Schuster, 1991. The opinions and conclusion expressed herein are those of the individual author(s) and do not necessarily reflect the views of GPoT Center or Istanbul Kültür University.

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