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As 2011 comes to a close, all eyes are on Iran, whose military is saber-rattling over the Straits of Hormuz, a vital lifeline for Middle East oil on which the global economy depends.

Image by George Cassutto
Copyright 2011
Used with permission

While President Obama spends his winter vacation with his family in Hawaii, a fight is brewing on the other side of the Indian Ocean. The United States is about to intensify sanctions against the Islamic Republic of Iran as way of preventing the acceleration of its nuclear weapons development program. The European Union is joining its American ally in implementing restrictions on trade and financial dealings with Iran. As a response, officials in the Iranian military and government have threatened to close the Straits of Hormuz, at the mouth of the Persian Gulf. 20% of the world’s oil, or fully one-third of all oil carried by ocean-born tankers, passes through the Straits of Hormuz. 

The impact of a military showdown over navigation rights through this vital waterway will have wide-ranging consequences politically and economically for the United States and the world as a whole. The US Fifth Fleet, stationed in the Indian Ocean and on its way to support troops in Afghanistan, has warned Iranian officials that any interference with shipping in the Straits of Hormuz “will not be tolerated.”  If Iranian oil or supplies coming from Kuwait, Saudi Arabia, or Qatar are reduced, gasoline prices in the United States could spike to $5.00 a gallon, putting the fragile US recovery at risk of a double dip recession. As much as $218 billion in disposable income could be diverted to energy costs during the coming months, according to ABC News.  The negative ripple effect on the economy could cause potential employers to keep from hiring or even to let workers go, causing the unemployment rate in the US to return to 10% or higher.

President Obama has a lot at stake regarding the Iranian question. The Obama Administration has kept up a loud drumbeat against the Iranian government and its nuclear program. He can’t afford to appear to be soft on the Iranians or he may lose foreign policy hawks who support military action against the totalitarian regime of Mahmoud Ahmadinejad, the vocal president of Iran who has called for the destruction of Israel and who continues to support terrorists in Lebanon and Syria in the form of the radical militant group called Hezbollah. The Obama Administration played a behind the scenes role in the destruction of the Kaddafi regime in Libya. In contrast, it may be forced to launch a more direct yet limited military strike against Iranian naval forces in the Persian Gulf if the Iranians react militarily to the implementation of wide-ranging and potentially crippling sanctions, some of which include economic isolation for nations that do business with the Central Bank of Iran.

There are those among the Republican Party leadership in Congress and among GOP candidates running for president who have called for a full scale military invasion of Iran in the hopes of overthrowing the Iranian Islamic government, in the same style as the Bush Administration’s overthrow of Iraq’s Saddam Hussein in 2003. Such an attack has been all but ruled out by the Obama team given the strength of the Iranian military and given the depleted state of the US military after a decade of fighting two wars in that region. The Obama Administration, rather, is hoping for an extension of what has been called “The Arab Spring” into Persian Iran, where a grassroots movement such as the one seen in Egypt’s Tahrir Square organically emerges and removes the dictatorship without outside interference.  The odds of such an occurrence are remote since the Iranian state has a much firmer grip on information, access to the outside world, and on the levers of power such as the military and the police force than what the world witnessed in Cairo and Tunis. 

2012 may bring a final showdown between Tehran and the West if tensions over the Straits of Hormuz and sanctions continue. If the West can bring about a vice-like squeeze on the Iranian government, with military action from above and a popular uprising from below, relief from higher energy prices, and the removal of Iran’s nuclear threat could bring a one-two punch in favor of Western interests. Such events would bring about a sigh of relief in both Jerusalem and in Washington. On the other hand, anything resembling military confrontation could spell trouble for President Obama’s re-election bid.  His campaign can’t afford anything like an October surprise that would threaten the fragile economic recovery or that would drain precious military resources from the ten-year war in Afghanistan. The bluster from the mullahs of Iran may present President Obama with his greatest foreign policy challenge yet.