US Sanctions On Iran Are Right But Wrongly Sequenced

Iran never needed to strike American forces in the Gulf directly. Instead, Arab governments provided bases and intelligence but were barred from revealing them. When the war opened on February 28, and Operation Epic Fury followed the next day, those governments became Iran's targets.

Iran hit energy facilities and airports in the Emirates and Saudi Arabia, drone-struck American support sites in Jordan and Kuwait, and in August fired ballistic missiles toward Emirati waters. Each of those countries was hosting, in one form or another, a campaign planned in Washington and Jerusalem.

The Strait of Hormuz itself became a checkpoint. Tehran set up an authority for the Gulf Straits, began charging transit tolls and now claims through the Islamic Revolutionary Guard Corps that the whole waterway, including Omani waters, will remain under Iranian military control until the US returns to the memorandum signed under Pakistani mediation in June.

War-risk insurance ran at about a quarter of 1% of hull value before the war. It moved into the 1% to 3% range within a week of the opening strikes and reached 7.5% to 10% by late July, which, on an unchanged ship carrying unchanged cargo, comes to millions of dollars per transit. Crossings are down roughly 90%, and some 6,000 seafarers remain stranded aboard ships in the Gulf.

Abu Dhabi, for one, has begun paying the price. On August 19, the UAE suspended all trade and financial dealings with Iran indefinitely, five days before the US Treasury announcement and without being asked.

The Emirates had supplied more than 30% of Iranian imports, amounting to some $21 billion a year. That outweighs the first tranche of American designations, and it came without consultation or published rules.

One cost has gone unpriced. For five months Iran had every commercial reason to keep Hormuz open because two million barrels of its own crude went out through it every day. The blockade has taken those exports to nearly nothing. A country with no cargo of its own loses very little by shutting a waterway that carries everyone else's.

Last weekend, Iran's new security chief said no oil would leave the Gulf if the economic war continues. He was describing where his country already is. The pressure came first and the guarantee for keeping the Strait open never did, which is how Washington talked itself out of the one thing that had kept Tehran cautious. The campaign was right; the order was not.

An Arab NATO alone cannot fix this by itself, and an American withdrawal under the disguise of regional ownership might make matters worse. Tehran's idea - a Gulf order excluding outside military forces - essentially removes the police and gives the arsonist the fire safety rules.

Some believe that a paid strait is better than a contested one and think Washington should allow Iran to charge fees. However, the concern remains: fees could turn a temporary closure into a permanent right, encouraging other chokepoint nations to adopt similar strategies.