OPINION:
One of the key strategic lessons coming out of the U.S. and Israeli conflict with Iran concerns the politico-economic impact of shipping insurance rates.
The Iranian drone, mine, missile and fast-attack boat threat to shipping throughout the Persian Gulf — but especially the Strait of Hormuz — has driven insurance rates to prohibitive levels.
The resulting expense has deterred shipping companies from departing or entering the Persian Gulf. More than 1,000 ships are frozen in place on both sides of the Strait of Hormuz, even though Iran’s ability to mount a powerful attack has been significantly reduced.
The threat to shipping is less than it was during the Iran-Iraq War of 40 years ago, but Lloyds of London — which insures more than 85% of all mercantile shipping — reportedly has applied rates tenfold over the past two weeks, more than double those of that earlier conflict.
The result is that not even high-profit margin cargoes such as oil can be transported economically through those waters.
Beijing is not the only nation suffering from the impact, but it should not be the only one learning from it.
For the ongoing conflict, Iran has embarked on a strategy of inflicting regional chaos and causing rising energy costs in hopes of gaining a ceasefire that will enable it to focus on destroying its opposition. Tehran believes Western politicians and populations, particularly in the United States, are unwilling to make any personal sacrifices or suffer any economic discomfort for very long unless a threat is staring them in the face.
The Israelis, on the other hand, are willing to endure such hardship because the Oct. 7, 2023, Hamas attacks and recent Iran-Hezbollah attacks threaten that nation’s very existence. But America hasn’t even raised taxes to fund any of the wars it’s fought since 1968.
So the clerics believe they need only stop the oil flow for a few more weeks — then America’s allies, public and some political elites will force a ceasefire. The regime is betting its survival on that. It remains to be seen if the clerics are correct in their thinking.
However, Tehran is not the only capital city examining this conflict for lessons to apply to their own strategic objectives. Beijing and Taipei are doing the same.
The tactical and operational lessons about the use of unmanned systems, air power and missiles are all very apparent. Iran has yet to employ anti-ship ballistic missiles against shipping, but its use of unmanned underwater and surface vessels has been on a much larger scale than that seen in the Russia-Ukraine conflict. There are even reports of the first use of directed weapons against drones and missiles.
Virtually every countries’ leaders have noted these developments. But for maritime trading nations, particularly those reliant on mercantile shipping for their economic and political survival, the bigger lesson is this conflict’s impact on insurance rates and shipping.
For Taipei to resist a Beijing-imposed maritime quarantine (another name for a blockade imposed around nationally claimed territory), mercantile shipping must be willing to deliver critical supplies through it.
In today’s broad surveillance age, running a blockade involves more than evading the aircraft and ships enforcing it. The blockade runners must also be willing to risk passage through declared closure areas for missile firings.
Beijing has a larger inventory of anti-ship ballistic missiles than Iran and the threat of their use may be enough to deter shipping. It may also drive insurance rates to present levels and possibly beyond.
This is an issue worth studying now if leaders want to have a solution ready if (or when) that contingency arises.
Everything with a beginning has an end, and the ongoing Middle East conflict will be no different. But its impact will reach far beyond its outcome, and prudent leaders should study how its lessons may affect other global security concerns.
• Carl O. Schuster is a retired U.S. Navy captain.
Please read our comment policy before commenting.