Iran has transformed the Strait of Hormuz into a geopolitical weapon to gain new relevance, not just as a tool of war.
As noted in his newsletter Iran Analytica by Hamidreza Azizi, “after a month of war Iran no longer seems to consider the Strait of Hormuz as a temporary leverage to influence the conflict and obtain short-term concessions, but rather treats it as an asset that can be managed even post-war and thus condition its developments.”
The Iranian Parliament is passing a law that consolidates this geopolitical use of Hormuz. The text of that law well summarizes how the war is changing Iran’s worldview, which seems to discover a new strength and a certain ambition precisely at what was supposed to be the moment of greatest difficulty.
Article 4 of the law on the strait provides that the government may collect tolls from ships passing through Hormuz in such a way that “the route through the Strait of Hormuz remains less expensive than other transit routes. The amounts provided for navigation assistance services will be established in the implementing regulation of this law.”
It is a very formal way to specify that the Islamic Republic wants to squeeze its main geopolitical resource as if it were a monopoly rent. But there is more.
Article 5 of the law establishes that Iran will create a “platform for the registration of the offer and sale of goods in transit through the Strait of Hormuz” and also that “payment of costs and transactions on the aforementioned platform will be possible exclusively through digital currencies developed with the participation of Iranian companies.”
In one stroke, Iran wants to bypass the barrier of sanctions and embargoes that since 1979, the year of the Islamic revolution, have sought to isolate the country from world trade: the geopolitical vision behind this law sees Iran as a new economic and diplomatic hub of global relevance.
No country will be able to afford isolating the Islamic Republic anymore, in whatever form it emerges from the war, because it will have to deal with the transit of its goods on an Iranian platform.
And Western economic sanctions will cease to have great effectiveness if all Iran’s trading partners who must transit the Strait of Hormuz pay tolls and transit taxes in cryptocurrencies instead of dollars or euros.
The coffers of the ayatollahs and the Revolutionary Guards will greatly benefit, while the so-called West’s ability to impose its own world order based on rules will be further diminished.
Article 8 of the draft law on the Strait of Hormuz reveals Iran’s regional ambition: the regime is not only aiming to survive but to redesign relations with many of the countries in the area it has bombed in recent weeks, as true or alleged allies of the United States.
The law states that “in order to strengthen solidarity among the countries of the Persian Gulf area and promote peace and sustainable regional development, the Ministry of Economic Affairs and Finance is required, within a maximum of ten days from the entry into force of this law, to establish, in collaboration with the Ministry of Foreign Affairs, a Fund for the reconstruction and development of the Persian Gulf.”
“Non-hostile countries of the Persian Gulf area” may join this fund. A note to Article 8 contains a provocation towards the United States: “The Fund’s resources will be constituted by war reparations paid to Iran and other member countries, as well as investments from other countries or all enterprises.”
With a few articles of a draft law, therefore, the surviving leaders of the Iranian regime not only want to present themselves as confident of resisting but even convinced that they will emerge victorious from the conflict with the two great historical enemies, Israel and the United States, to the point that these will pay for the damages of the war they started.
This is certainly the use of a legislative instrument for propaganda purposes, but the formalized plans of Tehran’s regime on the Strait of Hormuz make the idea of a quick return to the pre-war status quo seem somewhat fanciful.
In an article in the Financial Times, UAE diplomat Badr Jafar writes: “However the current crisis is resolved, no government will return to a situation of strategic dependence on a narrow strait controlled by an unpredictable neighbor. Pipelines will be expanded. The necessary port capacity will be built. Electrical grids, water systems, and trade corridors linking the region’s economies will be formalized.”
The Emirates’ perspective is necessarily optimistic: the message is that the Gulf’s business and prosperity model is not compromised by the war, there will be a difficult transition but oil and gas will continue to flow to Western and Asian markets. Perhaps no longer through Hormuz, but they will find their way.
Even in this scenario, however, the world will be different. With what costs and implications today is difficult to say.
The only certainty is that we are not facing problems with quick solutions. The Australian government, with Labor Prime Minister Anthony Albanese, was among the first to speak clearly to citizens: “The reality is that the economic shocks caused by this war will be felt for months.”
In the immediate term, the Albanese government acted like Giorgia Meloni’s Italian government: fuel tax cuts that had effects for only a few days. Australia imports most of its fuel from Singapore, and these are refined petroleum products that pass right through the Strait of Hormuz.
The momentary effect can be mitigated at the expense of general taxation, with temporary tax reductions, but if oil tankers do not move, there is little to be done. Some countries crucial to Australia’s supplies, such as Malaysia, are limiting exports to prioritize domestic consumption.
On the other side of the world, Italy finds itself in a similar situation. Cutting excise duties has two unpleasant consequences: it is very costly for public coffers and does not reduce demand at a time when supply is lower. Therefore, the tax relief worsens the problem it tries to solve, because it widens the gap between fuel demand and supply, thus increasing price pressure.
Slovenia, already on March 20, introduced rationing at service stations: at MOL chain stations, private individuals cannot refuel more than 30 liters, while heavy vehicles have a limit of 200 liters. Shell also soon began cutting, first with a 200-liter limit, then 100 liters.
In Italy, this scenario is evoked as if it were the worst catastrophe, because any impact of the war on our lifestyle is considered unacceptable.
(Excerpt from Appunti)
