5th Fleet in Bahrain and the U.S.

5TH FLEET IN BAHRAIN AND THE U.S. AND EU OIL EMBARGO IN IRAN

ROLE OF THE U.S. 5TH FLEET IN BAHRAIN AND THE U.S. AND EU OIL EMBARGO IN IRAN

Role of the U.S. 5th fleet" in Bahrain

Role of the U.S. 5th fleet" in Bahrain

foreign aid to Bahrain, where the U.S. Fifth Fleet is centered, constitutes directly to the U.S. Government's aims to maintain safety in the Persian Gulf. Bahrain is the only Arab state that has led one of the Coalition Task Forces that move around the Gulf, and has issued to move its flagship in support of the formation counter-piracy mission. As suggested by Edward & Marolda (1998) U.S. aids assists Bahrain, which have no oil wealth of its neighbors, get the training and equipment it requirement to operate alongside U.S. air and naval forces. U.S. military access to Bahrain also uplifts the operations in Iraq, and this access has compelled Bahrain a primary choice for relocating operational support in Afghanistan. U.S. aids will also aim at counterterrorism and other safety cooperation with Bahrain, which is a key Non-NATO Ally (Michael & Palmer, 1992).

Since attaining independence in 1971, Bahrain has gone for a policy of close consultation with nearby states. Bahrain has been a member of the United Nations and the Arab League since 1971. In 1981 it became one among the five neighbors -- Saudi Arabia, Oman, Kuwait, the U.A.E. And Qatar to form the stable Gulf Cooperation Council (GCC) (Michael & Palmer, 1992). Bahrain has united with GCC efforts steps to coordinate economic advancement and defense and security planning. For example, in December 1994, Bahrain concurred with the GCC option to drop secondary and primary boycotts against Israel. Bahrain as well as responded positively to Kuwait's request to deploy the GCC collective defense force, "Peninsula Shield," during the development and execution of Operation Iraqi Freedom (OIF) in 2003.

In addition to maintaining strong connection with its biggest financial backers, Saudi Arabia, Kuwait and the U.A.E., Bahrain has struggled to improve its relations with Qatar and has good, but not warm, links with Iran. Bahrain-Iran relations have been burdened since the discovery in 1981 of an Iran-sponsored rebellion plot in Bahrain. Bahraini guiltiness on the Iranian agenda in local unrest in the mid-1990s remains. On March 16, 2001, the International Court of Justice (ICJ) came up with its judgment on the strong maritime delimitation and territorial issues between Bahrain and Qatar. The connecting judgment awarded strength over the Hawar Islands and Qit'at Jaradah to Bahrain and strength over Zubarah (found in the Qatar Peninsula), Janan Island and Fasht ad Dibal to Qatar. The peaceful settlement of this issue has enabled for renewed co-operation, which includes plans to construct a causeway that existed between the two countries.

Bahrain's strong partnership with the United States has so robust since 1991. Bahraini jets flew strikes in Iraq in the course of 1991 Gulf War, and the nation was used as a base for military operations in the Gulf. Bahrain also offered logistical and basing aid to international Maritime Interdiction aim to enforce UN sanctions and avoid illegal smuggling of oil from Iraq in the 1990s. Bahrain also offered huge basing and over flight clearances for a most of U.S. aircraft operating in uplifting the Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF). Bahrain deployed the army in support of Coalition operations during both OEF and OIF as well.

Bahrain has gave humanitarian assistance and technical training to assist the reconstruction of the Iraqi banking sector, and has provided support for every stage of Iraq's political change. Bahrain has also joined hands effectively on criminal investigation disputes in support of the campaign on attacks; the Bahrain Monetary Agency (which became the Central Bank of Bahrain in September 2006) shifted quickly to restrict attacks' ability to move funds through Bahrain's financial system. In October 2006, Bahrain supported the U.S. And 23 other nations in a Proliferation Security Initiative interdiction exercise in the Persian Gulf.

The American Mission Hospital, affiliated together with the National Evangelical Church, has operated tirelessly in Bahrain for more than a century. Bahrain has also been a base for U.S. naval activity in the Gulf since 1947. When Bahrain became independent, the U.S.-Bahrain relationship was made official with the establishment of political relations. The embassy of the United States to Manama was opened September 21, 1971, and a resident ambassador was sent in 1974. The Bahraini embassy in Washington, DC, also opened in 1977. In October 1991, Amir Isa bin Salman Al Khalifa made a state visit to Washington. In 2001, Amir Hamad bin Isa Al-Khalifa made his first visit to the U.S. after succeeding his father in 1999. He came back to Washington on a formal visit in January 2003.

King Hamad had a formal visit to Washington in November 2004 to talk with President Bush and cabinet level officials. In January 2008, President Bush also had the first visit by a sitting President to Bahrain. King Hamad visited Washington in March 2008.

United States and Bahrain signed a Defense Cooperation Agreement in October 1991 granting U.S. army access to Bahraini arms and ensuring the right to pre-position resources for future crises. Bahrain is the center of the U.S. Navy's Fifth Fleet. The U.S. allocated Bahrain a Major Non-NATO Ally in October 2001. Bahrain and the United States signed a Free Trade Agreement in 2004. Peace and Security: Assistance to Bahrain will keep on sustaining U.S.-origin tools that Bahrain's army used in coalition process and assisted Bahrain's effort to upgrade its F-16 fleet and sustain its flagship in mission-ready status. Bahrain's capability to fulfill its offer to move its flagship in aid of counter-piracy processes is directly connected to financial aid for its Navy.

Military training attempts would enhance good relationship with U.S. forces, keeping Bahrain's F-16s strongly updated to work effectively together with U.S. warplanes.

Training will also uplift the military professionalism, and reinforce the effectiveness of a strong, cooperative military and political relationship with the United States among the Bahraini forces. Also, U.S.-based courses will give orders in the democratic principles of civilian regulation of the military and assist to guide the political reforms that are already underway in Bahrain. This training gives military personnel with the knowledge required to maintain the stocks of U.S.-furnished tools, and enhance Bahrain's importance as a coalition and training partner. Finally, counter-attacks training programs will keep on sustaining Bahrain's abilities and promote multilateral cooperation by conducting local training programs.

On January 3, Tehran wanted to block off the world's leading strategic and important crude oil export route, the Strait of Hormuz. However, this channel to oil importing countries no longer has the strategic importance that most observers attribute to it, as only one-fourth or even one-fifth of the world's crude export currently go through the strait, which means that Iran's threats are not seen as so intimidating as would once have been the case. As suggested by Edward & Marolda (1998) finding itself under siege following the narrowing of the United Nations sanctions, the Mullahs' regime is still trying to forge ahead with its nuclear programme. To gain its own way, it is hanging over the entire world the specter of a blockade of the Strait of Hormuz. It is claimed that if the Iranians take action the world oil price will rise by a staggering 50%, reaching $150 a barrel.

These oil price hikes would cause confusion in the oil market and wreak havoc on an already stressed global financial situation. The threats have already produced a strong response. "We made very peculiar that the United States will not admit the blocking of the Strait of Hormuz. That's another red line for us and we will get back to them," thundered Leon Panetta, U.S. Secretary of Defense, on January 8. However, when looking keenly at the current situation in the Persian Gulf, it promptly becomes apparent that Iran's threats, and the reaction of those being threatened, are grossly not good to what can feasibly be brought about. Does Iran have the capability to make such bravado before the opposition from the international community? The Iranian Navy has various Russian Kilo Class submarines, fast corvettes and frigates, which are all able to prevent supertanker movement in the Hormuz Strait.

The Iranian Navy is armed with Russian-designed torpedoes which can severely damage oil tankers. However, in the event of a first strike by Iran, the American response would be so quick and devastating. The U.S. Fifth Fleet has been positioned for years in Manama, Bahrain, not far from the Strait of Hormuz. If the Iranians send their arms and ships to sea and launch missiles against commercial or allied ships in a tanker war, they would be exposed within a few hours to the rapid deformation of their fleet and military system. All response scenarios indicates that, at the very start of an offensive, the U.S. And its allied Air Forces would demolish ports and shipping terminals of Bandar Abbas and Kish Island (part of the Hormozgan Province of Iran), tearing off the Iranian Navy from its rear operating bases. Ultimately, Tehran's only credible choice is to disrupt activity in this major Gulf trade route. Is the Strait of Hormuz really vital to the world's oil market? The answer is: Much less than it used to be.

US and EU Oil Embargo & Iranian Nuclear Program

The decision on an EU embargo on oil exports from Iran was expected on 30 January but as yet no information has emerged. This paper considers the potential outcomes of such an embargo, assuming it is imposed. The initial impact is that the EU countries will have to get alternative supplies to replace their imports of heavy, sour crude from Iran. The right numbers are uncertain. According to OPEC, in 2010 Iran exported 890,000 barrels per day (b/d) to Europe, while the more information figures for 2008 proposes that Italy, Spain, Greece and France brought 500,000 b/d. Also the precise terms of the embargo have not yet been made up and this could be very significant in terms of levels of effective compliance.

This hunt for alternative inputs will make transitional friction on the prices of oil. Thus prices for heavy source crude in the Atlantic basin markets would go up and in Asia-Pacific they would reduce as Iran tried to find alternative outlets for the crude initially destined for European markets. In overall such transitional friction is more likely to lead to higher than to lower oil prices, at least for a few months. How important this transitional friction will be depends upon how promptly the embargo takes effect and whether there are exceptions. It seems likely that the embargo would have to permit existing contracts to expire. Most such contracts are for at least one month, if not longer. Some EU members will also find exceptions. For example, Italy has wanted that any embargo should exclude oil being lifted to cover Iran's $2 billion debt to ENI. Given that Greece depends for over one-third of the oil imported from Iran on very favorable financial terms, they too will need wriggle room.

So far the analysis has assumed that Iran simply gets the EU embargo without retaliation. This is very unlikely and it is required to consider what options Iran might have. Recently there has been much speculation, encouraged by some but not all elements in the Iranian power structure that its response would be to inhibit the flow of oil through the Strait of Hormuz.

But any attempt to get along with transit through Hormuz would in its turn provoke a response that would finally be sufficient to keep the Strait free. This response, if transit were seriously threatened, would highly degenerate into a shooting war between Iran and the United States, the latter supported by many of its allies. This period of transitional friction over prices will also depend upon who else is willing to supply. Libya is coming back on-stream much faster than most expected. By early December, the BBC reported that the National Oil Company had claimed production had reached 840,000 b/d and was expected to be back to pre-war levels by the end of 2012, although many regard this as very optimistic. However, Libyan crude is light and sweet while the current Iranian imports to Europe are heavy and sour, and this may create a temporary differentials impact. This will be aggravated by the Syrian embargo that also involved heavy sour crude.

The obvious source of replacement will be the main Gulf Cooperation Council (GCC) countries, which have significant amounts of spare capacity to produce heavy sour crude: at the end of 2011 this amounted to 2.29 million b/d from Saudi Arabia; 220,000 b/d from the UAE and 200,000 b/d from Kuwait. While these states have the ability to replace Iranian crude in Europe, allowing for logistical delays, their willingness may not be all that obvious.

Officially, Saudi Arabia has publicly stated it will stand ready to replace Iranian crude. However, if it did take some of Iran's market share, this would be viewed by Tehran as an extremely hostile act. On 12 December, two days before the OPEC meeting in Vienna, Crown Prince Naif (who is also Minister of the Interior responsible for security) and the Iranian Minister of Intelligence and Security, Haydar Moslehi, met in Riyadh. The outcome of this meeting between the effective intelligence chiefs of the two countries is not known. The Saudi Press Agency, reporting the meeting, simply stated that they 'reviewed a number of issues of common concern'. However, at the OPEC meeting on 14 December, two days later, agreement was reached very quickly and with little acrimony on maintaining OPEC output at 30 million b/d. Observers noted that the Iranian delegation seemed 'somewhat subdued'. This could imply some sort of back-room deal whereby Saudi Arabia would not rush to fill the gap in return for Iranian support in OPEC.

There are two reasons why a serious attempt by Iran the close the Strait is unlikely. First, any closure would equally damage Iran's ability to export the oil on which its economy is so dependent. Second, serious and credible attempts to close the Strait are in effect Iran's 'big guns' on the issue of whether or not the United States (or Israel) would launch a military attack on Iran. The threat to close Hormuz does act as a major deterrent against a military strike. This is not necessarily because Iran could close the Strait: a military confrontation with the United States could have only one outcome, which is that the oil would eventually continue to flow. Limiting the flow of oil through Hormuz would be an existential threat to the global economy and quite simply could not be allowed (Michael & Palmer, 1992). This was clearly demonstrated by the Tanker War after 1984 during the Iraq -- Iran war. However, the announcement by Iran of a clear and unequivocal intention to close the Strait, backed up by some form of credible action, would cause the oil price to spike to very high levels.

This would have serious global economic consequences, especially given the current very uncertain prospects for the euro zone and global economic recovery. As such, this is a very powerful card that Iran is unlikely to play early in the game. However, Iran has other retaliation options. It could begin to aggravate upward pressures on oil prices by contributing to the growing instability in Iraq that has emerged since the U.S. completed its troop withdrawal and the Shi'a ruling clique has begun a de facto war of attrition against the Sunnis.