The NZUS Council was pleased to host a discussion on Friday with Richard Fontaine, Chief Executive of the Center for a New American Security (CNAS) in Washington DC, on the evolving conflict with Iran. The discussion included the following points:
The Iran conflict illustrates the importance of geopolitical issues to NZ businesses. Even though it is happening far away, the conflict has significant economic impacts on NZ especially in terms of oil supplies and pricing.
America’s military objectives appear to be on track so far: to degrade Iran’s military capabilities including its navy and weapon stocks and erode its capacity to manufacture and deploy missiles and drones which are causing havoc across the Middle East.
A wider political goal of spurring regime change in Iran through airpower is unlikely to be achieved in the short term. The Iranian regime is fighting for its life and seeking to maximise the economic costs of the conflict.
With rising oil prices hurting the global economy, clearing the Strait of Hormuz for shipping to resume is a high priority. It is unclear whether this will be achieved by escalating or de-escalating the conflict.
Even if the conflict was de-escalated, the Iranian regime could carry on in a depleted and hostile position and could continue to block the Strait of Hormuz. It will be difficult to achieve a negotiated settlement of the conflict for a range of reasons, but hopefully not impossible.
For now, it seems likely the war will continue until US military objectives are met and the Strait of Hormuz is reopened. It is not clear how long all this will take.
It is possible that Iran may step back from the brink of a global energy war. There are some signs of short term easing of the global oil market, with news overnight that the US may lift sanctions on 140 million barrels of Iranian oil already on tankers, on top of the US recently lifting sanctions on 120 million barrels of Russian oil already on tankers, plus the release of international strategic oil reserves. In addition, some countries have done deals with Iran to enable their oil tankers to be allowed through the Strait of Hormuz.
It is a complex and quickly evolving situation and the outcome is far from clear. We thank Richard for his time and insights.
Watch the briefing on our YouTube Channel here.