The Daily View: We break it, you buy it

US Secretary of State Colin Powell applied the “Pottery Barn Rule” to the second war with Iraq: you break it, you buy it. A quarter-century later, the rule of America’s war of choice with Iran seems to be: we break it, you buy it.

Ships had freedom of navigation through the Strait of Hormuz until the US and Israel attacked Iran on February 28. Iran effectively closed the waterway in retaliation — an entirely predictable response.

Iran has struck 23 commercial ships so far. Eleven crew members have been killed. There are more than 600 large merchant vessels still inside the strait, including six cruiseships, with an estimated 19,000 crew on board.

America’s Operation Epic Fury is on track to complete all of its objectives “very, very shortly”, said US President Donald Trump in a televised address on Wednesday night. Reopening the Strait of Hormuz was not on the list.

“We don’t need it,” said Trump. “The countries of the world that do receive oil through the Hormuz Strait must grab it and cherish it.” The US will help but other countries must “take the lead” and “go to the strait and just take it, protect it, use it for yourselves”.

The US stance increases the likelihood that Iran could maintain effective control over navigation of the strait.

If so, future traffic through Hormuz would increase, but on Iran’s terms.

The strait would transition from effectively closed to partially and conditionally reopened for those favoured by Iran. Bloomberg reported that the Islamic Revolutionary Guard Corps’ transit system ranks nations on a friendliness scale from one to five.

Most of the initial non-Iranian traffic involves ships that had been stuck inside the strait when the conflict began, which are negotiating deals to get out. This traffic is now increasing.

Higher transits will no doubt be cited as evidence that the situation is improving. But these eastbound movements are one-way tickets out of a conflict zone, not a recovery of trade.

The longer-term test for the strait — and the world economy — is how Iran treats future exports of crude, products, natural gas, fertilisers, helium and other commodities from other Middle East Gulf nations.

The strait is not truly reopened until vessels in ballast can pass through the strait westbound, load in non-Iranian ports, and transit back eastbound to their destinations — and do so at a significant scale.

Greg Miller
Senior maritime reporter, Lloyd’s List