What Happens Next After the Expiration of the Hormuz MoU?
The maritime community, as it has had to for much of the last six months, is having to work out for itself what is happening in the Strait of Hormuz now that the Memorandum of Understanding between Iran and the United States has expired.
Contradictory signals abound: messaging from the US administration tends to flip-flop, and the Iranian regime is still split between the pragmatists (led by President Masoud Pezeshkian and Foreign Minister Abbas Araghchi) and the Paydari-IRGC hardliners (led by Ahmad Vahidi, Mohsen Rezaei and Hossein Taeb), who have gained ascendancy in recent weeks. Disputes between the pragmatists and hardliners within Iran’s political establishment used to be moderated by the Supreme Leader; now the two ruling political factions squabble and contradict each other in public. Nor does it help that Iranian political leaders practice the concepts of taqiyya and tawriya – using lies and deception to hoodwink and confuse an enemy.
Complicating matters further, some of the activity in the Strait is not being shared publicly by governments – for example, exactly how the US government is aiding the passage of ships along the Omani Coastal route, and the military methods being employed to safeguard ships in transit.
For now, neither side apparently wants to resume full-scale warfare. The United States would rather conserve scarce munitions, and in any case (for the moment) has run out of targets that could be hit for decisive effect. Although it will never admit it, Iran cannot afford more destruction of its infrastructure if it provokes more attacks. Iran also knows that while the United States may want to focus on military targets, Gulf states are itching to retaliate and destroy civilian infrastructure. So while both sides will engage in limited pre-emptive and retaliatory strikes, they will be limited in character so as to prevent an escalatory spiral.
The United States has finally pivoted to economic warfare, now appreciating that Iran has a tremendous capacity for absorbing military attacks without this impacting political resolve. The weakness of the Iranian regime lies in its financial and economic fragility. In the past, this vulnerability was alleviated by the willingness of many to trade and deal with Iran discreetly – but that license is going to disappear under tighter US sanctions.
For the Iranian leadership, the number one war objective is regime survival – otherwise the ruling elite will be stripped of their privileges and unseated by the Iranian public. The greatest threat to regime survival is a lack of funds to pay off the security apparatus and to underwrite essential services and food subsidies to keep people off the streets. Hence the immediate objectives of Iranian negotiators are to get their hands on frozen funds and to see a resumption of oil and gas exports, now at a complete stand-still.
The Iranians may have thought that blocking the Strait of Hormuz would be their most effective weapon in getting sanctions and the blockade lifted. But the United States is not directly impacted by a closure of the Strait, and the knock-on effects have been less than predicted. The Gulf states, which are directly impacted, are putting more and more volume through alternative trade routes every day. Moreover, while the U.S. blockade is 100% effective and can remain so indefinitely, Central Command is still getting appreciable tonnage through the Strait by providing some protection for traffic using the Omani coastal route, notwithstanding the toll on seafarers. The disparity between the tonnage getting through the Strait under American protection, and the complete block on Iranian traffic, will agitate the Iranians greatly – and will be the most active catalyst for disrupting the current status quo in the weeks to come. Iran may seek to fight back by intensifying its attacks on shipping, and by engaging targets further afield – for example, US and British bases in South East Europe and Cyprus.
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In the meantime, as the economic impact of sanctions and blockade intensifies in the weeks ahead, the side with greater stamina, staying power and resilience will win. The Iranian side will try to weaken US resolve by engaging in negotiations and drawing out concessions, adopting the ‘Talking to Anyone for the Good of Everyone’ approach. This can be countered by ‘actions speak louder than words’ stonewalling that will neutralize the deliberate ambiguity between pragmatists and hardliners which the Iranians will table. At a minimum, Iran should observe legal and practical frameworks which others nations all have, most noticeably the United Nations Convention on Law of the Seas (UNCLOS), the 1968 UN Non-Nuclear Proliferation Treaty, and the IMO’s 1968 Traffic Separation Scheme covering the Strait of Hormuz.
The economic impact on Iran will not produce rapid effects, and may indeed take many months to bring about political changes. The decisive battle will be between the administration’s patience and ability to keep the battle going in low profile versus the Iranian leadership’s assessment of how long the nation can suffer economic impacts before the pressure cooker of Iranian popular discontent bursts back into nationwide street protests. The Iranian regime will try to characterize this economic pressure as interference in the internal affairs of Iran, although nobody doubts that the fate of Iran rests solely in the hands of the Iranian people. Expect a lot of disagreement between experts on how long the edifice will take to crumble. It is likely to take a while, but in the meantime the regime will be hobbled.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
