Iran Starts Uranium Enrichment at Fordo; Joint Chiefs of Staff says Iran Has Ability to Block Strait of Hormuz; United Arab Emirates Bypass Oil Pipeline Delayed

Roughly 17 million barrels of crude a day flow through the Strait of Hormuz and Iran has threatened to block the strait if Europe imposes economic sanctions. How credible is that threat?

Joint Chiefs of Staff says Iran Has Ability to Block Strait of Hormuz

Please consider Iran Has Ability to Block Strait of Hormuz, U.S. General Dempsey Tells CBS

Iran has the ability to block the Strait of Hormuz �for a period of time,� and the U.S. would take action to reopen it, Joint Chiefs of Staff chairman General Martin Dempsey said.

�They�ve invested in capabilities that could, in fact, for a period of time block the Strait of Hormuz,� Dempsey said in an interview airing today on the CBS �Face the Nation� program. �We�ve invested in capabilities to ensure that if that happens, we can defeat that.�

Should Iran try to close Hormuz, the U.S. �would take action and reopen� the waterway, said Dempsey, President Barack Obama�s top military adviser.

Republican presidential candidate Rick Santorum said Jan. 1 on NBC�s �Meet the Press� that he would use air strikes against Iran unless the country dismantled its nuclear program or allowed inspectors to verify that the work isn�t aimed at making a weapon.

Dempsey suggested that curbing Iran�s nuclear work by bombing its facilities would be difficult.

�I�d rather not discuss the degree of difficulty and in any way encourage them to read anything into that,� Dempsey said. �My responsibility is to encourage the right degree of planning, to understand the risks associated with any kind of military option.�

Iran Starts Uranium Enrichment at Fordo Mountain Facility

Bloomberg reports Iran Starts Uranium Enrichment at Fordo Mountain Facility

Iran has started to enrich uranium at its Fordo production facility, the official Kayhan newspaper reported without saying where it got the information.

Iran will soon have a ceremony to open the site officially, the newspaper reported, citing the head of the Iranian Atomic Energy Organization, Fereydoun Abbasi. The Iranian nuclear chief was cited yesterday by Mehr News as saying that the underground facility �will start operating in the near future.�

The existence of the Fordo plant, built into the side of a mountain near the Muslim holy city of Qom, south of Tehran, was disclosed in September 2009, heightening concern among the U.S. and its allies who say Iran�s activities may be a cover for the development of atomic weapons. The Persian Gulf country has rejected the allegation, saying it needs nuclear technology to secure energy for its growing population.

Iran has pressed ahead with its nuclear program even as international pressure increases to prevent the Islamic republic from building an atomic weapon.

The U.S. tightened economic sanctions against Iran over its nuclear program on Dec. 31, and the European Union is weighing a ban later this month on purchases of Iranian crude.

Iran threatened last month to shut the Strait of Hormuz, a transit point for a fifth of oil traded worldwide, if sanctions are imposed on its crude exports in response to its nuclear program.

Hormuz Bypass Oil Pipeline Delayed

United Arab Emirates has been working on an oil pipeline so that its oil will not have to flow through the Strait of Hormuz. Bloomberg reports the Hormuz Bypass Oil Pipeline Delayed as Iranian Tensions Mount

A pipeline that would allow oil from the United Arab Emirates to bypass the Strait of Hormuz separating it from Iran has been delayed because of construction difficulties, two people with knowledge of the matter said.

As many as 270 construction issues have pushed back the completion date, said the two people, declining to be identified because they�re not allowed to speak publicly on the matter. The $3.3 billion project won�t be ready until at least April, one of them said. Abu Dhabi, holder of most of the U.A.E.�s oil reserves, had planned to start exports in January 2011 through the pipeline to a port outside the strait, Dieter Blauberg, the project�s former director, said in May 2009.

The 1.5 million barrel-a-day link would ensure the U.A.E. can export crude without risking a blockade at Hormuz, where fully laden tankers exit the Persian Gulf with one-fifth of the world�s traded oil. The chance that Iran might try to close the waterway has intensified as Europe prepares to follow tougher U.S. sanctions on the country.

�That pipeline would carry pretty much all of Abu Dhabi�s oil,� Robin Mills, an analyst at Manaar Energy Consulting in Dubai, said Jan. 5. �It�s a critical bit of infrastructure, and it is remarkable it hasn�t been completed.�

Weeks of Iran tension has added about $10 a barrel to Brent crude prices, said al-Harami, who was head of crude and products marketing at state-run Kuwait Petroleum Corp. during the 1980s �Tanker War,� when Iran and Iraq attacked each other�s ships.

Still, a closure of the strait by Iran, in response to opposition to the nation�s nuclear program, is not a �high- likelihood event,� David Fyfe, head of the International Energy Agency�s oil market and industry division, said in a Jan. 4 phone interview from Paris.

War posturing by Iran and the US, as well as economic sanctions by Europe are counterproductive and have undoubtedly increased the price of oil. The simple solution to this mess would be for Iran to admit inspectors to check their facilities and for the US to go along with those inspections.

However, the US has demanded Iran stop all enrichment. The US has no fundamental right to demand that Iran stop enrichment for non-weapons usage.

Addendum: Atoms for Peace

Inquiring minds might be interested in the origins of Iran's nuclear program.

The nuclear program of Iran was launched in the 1950s with the help of the United States as part of the Atoms for Peace program. The support, encouragement and participation of the United States and Western European governments in Iran's nuclear program continued until the 1979 Iranian Revolution that toppled the Shah of Iran.

After the 1979 revolution, the Iranian government temporarily disbanded elements of the program, and then revived it with less Western assistance than during the pre-revolution era. Iran's nuclear program has included several research sites, two uranium mines, a research reactor, and uranium processing facilities that include three known uranium enrichment plants.

After delays, Iran's first nuclear power plant, Bushehr I reactor was complete with major assistance of Russian government agency RosAtom and was officially opened in a ceremony on 12 September 2011. Iran has announced that it is working on a new 360 MW nuclear power plant to be located in Darkhovin. Iran has also indicated that it will seek more medium-sized nuclear power plants and uranium mines in the future. ....

On the question of whether Iran had a hidden nuclear weapons program, the IAEA's November 2003 report states that it found "no evidence" that the previously undeclared activities were related to a nuclear weapons program, but also that it was unable to conclude that Iran's nuclear program was exclusively peaceful.

In August 2005, with the assistance of Pakistan a group of US government experts and international scientists concluded that traces of bomb-grade uranium found in Iran came from contaminated Pakistani equipment and were not evidence of a clandestine nuclear weapons program in Iran. In September 2005, IAEA Director General Mohammad ElBaradei reported that "most" highly enriched uranium traces found in Iran by agency inspectors came from imported centrifuge components, validating Iran's claim that the traces were due to contamination. Sources in Vienna and the State Department reportedly stated that, for all practical purposes, the HEU issue has been resolved.

In late February 2006, IAEA Director Mohammad El-Baradei raised the suggestion of a deal, whereby Iran would give up industrial-scale enrichment and instead limit its program to a small-scale pilot facility, and agree to import its nuclear fuel from Russia. The Iranians indicated that while they would not be willing to give up their right to enrichment in principle, they were willing to consider the compromise solution. However in March 2006, the Bush Administration made it clear that they would not accept any enrichment at all in Iran.

In Resolution 1696 July 31, 2006, the United Nations Security Council demanded that Iran suspend all enrichment and reprocessing related activities.

In February 2007, anonymous diplomats at the atomic energy agency reportedly complained that most U.S. intelligence shared with the IAEA had proved inaccurate, and none had led to significant discoveries inside Iran.

In late October 2007, according to the International Herald Tribune, the head of the IAEA, Mohamed ElBaradei, stated that he had seen "no evidence" of Iran developing nuclear weapons. The IHT quoted ElBaradei as saying "We have information that there has been maybe some studies about possible weaponization. That's why we have said that we cannot give Iran a pass right now, because there is still a lot of question marks ... . But have we seen Iran having the nuclear material that can readily be used into a weapon? No. Have we seen an active weaponization program? No." The IHT report went on to say that "ElBaradei said he was worried about the growing rhetoric from the U.S., which he noted focused on Iran's alleged intentions to build a nuclear weapon rather than evidence the country was actively doing so. If there is actual evidence, ElBaradei said he would welcome seeing it."

In a February 2009 press interview, IAEA Director Mohamed ElBaradei said Iran has low enriched uranium, but "that doesn't mean that they are going tomorrow to have nuclear weapons, because as long as they are under IAEA verification, as long as they are not weaponizing, you know." ElBaradei continued that there is a confidence deficit with Iran, but that the concern should not be hyped and that "many other countries are enriching uranium without the world making any fuss about it".

In explaining why it had left its enrichment program undeclared to the IAEA, Iran said that for the past twenty-four years it has "been subject to the most severe series of sanctions and export restrictions on material and technology for peaceful nuclear technology," so that some elements of its program had to be done discreetly. Iran said the U.S. intention "is nothing but to make this deprivation" of Iran's inalienable right to enrichment technology "final and eternal," and that the United States is completely silent on Israel's nuclear enrichment and weapons program.

The Iranian government has repeatedly made compromise offers to place strict limits on its nuclear program beyond what the Non-Proliferation Treaty and the Additional Protocol legally require of Iran, in order to ensure that the program cannot be secretly diverted to the manufacture of weapons. These offers include operating Iran's nuclear program as an international consortium, with the full participation of foreign governments. This offer by the Iranians matched a proposed solution put forth by an IAEA expert committee that was investigating the risk that civilian nuclear technologies could be used to make bombs. Iran has also offered to renounce plutonium extraction technology, thus ensuring that its heavy water reactor at Arak cannot be used to make bombs either. More recently, the Iranians have reportedly also offered to operate uranium centrifuges that automatically self-destruct if they are used to enrich uranium beyond what is required for civilian purposes.

On 26 July 2009, Secretary of State Hillary Rodham Clinton explicitly ruled out the possibility that the Obama administration would allow Iran to produce its own nuclear fuel, even under intense international inspection.

If anyone is being unreasonable here, it is the US, UN, and Europe. Not Iran.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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