Tiny Island: Trump’s Iran Gambit

As tensions escalate in the Middle East, a small, unassuming island off the coast of Iran has become a focal point of international attention. Kharg Island, a mere 7.7 square miles in size, sits strategically northwest of the vital Strait of Hormuz shipping lane. Despite its diminutive footprint, this island is the linchpin of Iran’s oil exports, housing approximately 94 per cent of the nation’s crude oil destined for international markets, with China being a primary recipient. It is also home to Iran’s main oil export terminal.

Recent reports indicate that US President Donald Trump stated that American strikes had “obliterated” Iranian military installations on the island, while leaving its critical oil infrastructure untouched for the time being. However, discussions within the US administration about potentially seizing this pivotal island have reportedly taken place, according to sources. The implications of such a move are significant; Kharg Island, smaller than London’s city of Westminster, could effectively cripple Iran’s economy, with repercussions that could linger for years.

The Strategic Importance of Kharg Island

Petras Katinas, a research fellow focusing on climate, energy, and defence at the Royal United Services Institute’s Europe office, highlighted the island’s critical role. He explained that seizing Kharg would sever Iran’s oil lifeline, a vital artery for the current regime. While the ongoing disruption to shipping through the Strait of Hormuz already impedes Iran’s ability to sell oil, Katinas noted that a seizure would provide the US with significant leverage in future negotiations, irrespective of the regime in power after any military operations conclude.

The Strait of Hormuz, a crucial global shipping route, has seen its traffic largely halted following the Islamic Revolutionary Guard Corps’ (IRGC) assertion of “complete control” over the waterway. This disruption has sent shockwaves through global supply chains, with experts warning of severe economic fallout worldwide if the situation persists. Oil prices initially surged past $100 a barrel before experiencing a dip, and the IRGC has threatened further escalation, suggesting prices could climb to $200 if hostilities intensify.

Potential US Strategy and its Ramifications

Michael Rubin, a former Pentagon official, writing for the American Enterprise Institute earlier this year, before the recent US strikes, offered a strategic perspective on Kharg Island. He posited that rather than destroying the island, taking control of it would serve a dual purpose. Firstly, it would prevent the Iranian regime from funding its bureaucratic and military operations. Secondly, and crucially, it would enable a future, post-regime-change Iranian government to finance its own reconstruction efforts. Rubin also cautioned that any IRGC attempt to target Kharg with ballistic missiles would be a fatal misstep, likely provoking a retaliatory response from the US and effectively ending Iranian oil exports for an extended period, thus exacerbating salary payment issues.

Other analysts have suggested that Kharg Island could serve as a potent bargaining chip in diplomatic efforts, given that oil exports constitute nearly 40 per cent of Iran’s national budget. However, such a move would also expose American and Israeli forces to potential retaliatory attacks from Iranian forces.

Tamas Varga, an oil analyst, commented to CNBC that seizing this pivotal hub would deliver a substantial blow to the Iranian regime by cutting off a critical revenue stream. He drew a parallel to the US intervention in Venezuela earlier in the year, where the US effectively gained control of the country’s oil sector.

Historical Precedents and Future Concerns

Kharg Island has a history of being a target. In 1984, during the protracted Iran-Iraq War, Saddam Hussein’s forces attacked the island, igniting what became known as the “oil tanker war.”

Interestingly, Kharg Island has previously featured in Donald Trump’s public statements. Nearly four decades ago, during an interview with The Guardian to promote his book “The Art of the Deal,” Trump made a notable remark about the island. He stated in 1988, regarding Iran’s perceived psychological warfare, “One bullet shot at one of our men or ships, and I’d do a number on Kharg Island. I’d go in and take it.”

Neil Quilliam, an energy policy and foreign affairs analyst at Chatham House, expressed to The Independent that while a full US takeover of Kharg Island is “unlikely,” any attempt to do so would “likely send the markets into a tailspin.” He also cautioned that such an action could impede any future resolution between the two nations, potentially leading to a prolonged stalemate.

Quilliam elaborated that if the US were to control the major export terminal while Iran retained control of production, a standoff would ensue. Furthermore, he noted that this scenario would be a “major cause for concern” for Gulf countries, as it could set a dangerous precedent. He described Kharg Island as Iran’s “Achilles heel” in the current conflict, but warned that a fight for and occupation of the island could inflict irreparable damage on the terminal, jeopardising the economic recovery prospects of any successor regime. Quilliam pointed out that previous US presidents have deliberately avoided targeting Kharg, recognising its profound strategic importance to global oil markets.