By Peter Goodspeed
National Post

Iran’s nuclear push is rapidly turning into a game of chicken with the world’s economy. Faced with the threat of growing international sanctions and unprecedented economic uncertainty that has seen the value of its currency halved in recent weeks, Iran announced Thursday its navy will stage a 10-day exercise in the Strait of Hormuz, starting Saturday.

The move, which increases the risk of military confrontation with the United States, has the potential to temporarily choke off oil exports from the Middle East, drive up international energy prices and damage the global economy.

Admiral Habibollah Sayyari, head of Iran’s navy, said submarines, destroyers, missile-launching ships and attack boats will occupy a 2,000-kilometre stretch of sea from the Strait of Hormuz, at the mouth of the Persian Gulf, to the Gulf of Aden, near the entrance to the Red Sea.

“Iran’s military and Revolutionary Guards can close the Strait of Hormuz. But such a decision should be made by top establishment leaders,” he said.

This month, Parviz Sarvari, a member of the Iranian parliament’s National Security Committee, said Iran would close the Strait of Hormuz as part of a military exercise. “If the world wants to make the region insecure, we will make the world insecure,” he said.

In November, Iran’s energy minister told Al Jazeera television Tehran could use oil as a political tool in the event of future conflict over its nuclear program.

Dubbed Velayat-90 (Velayat is Persian for supremacy), the war games are designed to display Iran’s naval power in the face of growing international criticism of its nuclear work.

This week, Leon Panetta, the U.S. Defence Secretary, predicted Iran will be able to assemble a nuclear bomb within a year and warned the United States had not ruled out using military force to prevent that from happening.

The day before Iran announced the war games, General Martin Dempsey, chairman of the U.S. Joint Chiefs of Staff, told CNN television the U.S. was determined to prevent Iran from becoming a nuclear power.

“My biggest worry is they will miscalculate our resolve,” he said. “Any miscalculation could mean that we are drawn into conflict and that would be a tragedy for the region and the world.”

Iran said the war games would be held in international waters.

The Strait is a 50-kilometre wide passageway through which about a third of the world’s oil tanker traffic sails. Whoever controls this crucial choke-point virtually controls Middle East oil exports.

“The importance of this waterway to both American military and economic interests is difficult to overstate,” said a report by geopolitical analysts at the global intelligence firm Stratfor.

“Considering Washington’s more general — and fundamental — interest in securing freedom of the seas, the U.S. Navy would almost be forced to respond aggressively to any attempt to close the Strait of Hormuz.”

“Iran has built up a large mix of unconventional forces in the Gulf that can challenge its neighbours in a wide variety of asymmetric wars, including low-level wars of attrition,” said Anthony Cordesman of the Center for Strategic & International Studies in Washington.

This includes nearly 200 missile patrol boats, equipped with sea-skimming anti-ship missiles, which “can be used to harass civil shipping and tankers, and offshore facilities, as well as attack naval vessels,” he said.

“These light naval forces have special importance because of their potential ability to threaten oil and shipping traffic in the Gulf and the Gulf of Oman, raid key offshore facilities and conduct raids on targets on the Gulf Coast.”

Read More Here