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Iran's armed forces launched a series of large-scale exercises in the country's territorial waters. The expanded naval drills, codenamed Velayat 89, started in the Strait of Hormuz and the Gulf of Oman and are slated to last eight days and cover some 250,000 square kilometers of Iranian territorial waters.

 

They will involve attack, support, logistic and electronic warfare units in interaction with warplanes as well as air-defense and missile forces.

 

Navy Commander Rear Admiral Habibollah Sayyari said the exercise would display Iran's "defensive and deterrent power," and send a message of "peace and friendship" to regional states. Last month, Iran's Revolutionary Guards conducted a wide-ranging naval exercise in the Persian Gulf and the Strait of Hormuz, codenamed Great Prophet 5.

 

The following week, Arab Gulf leaders announced that GCC security is “a red line” and welcomed a proposal by of Kuwait to update security agreements to cope with regional and international developments. He said security and military cooperation was discussed by the Gulf leaders at a consultative summit in Riyadh.

 

Al-Attiyah said the consultative summit was "exceptional" because it was held amidst special circumstances regionally and internationally, “particularly Iran's occupation of three UAE islands” and the repeated calls by the GCC to address this issue peacefully. The Arab Gulf leaders, he added, reiterated support for the unity and sovereignty of Iraq. They called on the importance for rapidly forming a government of national unity in Iraq to contribute to the stability of the country, thus paving way for Iraq to play its role in the Arab and regional arenas, added the GCC chief.

 

Bahraini King Hamad bin Issa Al-Khalifa called on fellow GCC leaders to adopt a joint and effective policy towards regional issues and developments that have effects on peoples and states of the region.

 

May 6-12, 2010

 

 

Analysis and Forecast: Increasing Risk

 

The Iranian naval activity is a strong signal by Iran on what it will do in the event of it being attacked by the West or Israel. Iran has two “easy” targets within its immediate capability. One is the blocking of the Straits of Hormuz, where over 40 percent of the world’s oil supply passes on the way from the Gulf to the world. The other target is the GCC states themselves. Blocking Hormuz is a more likely response by Iran. The greater the risk of military action against Iran, the greater the risk of the straits being blocked. The repercussions of this will be great, almost certainly leading to a soaring in oil prices. As for the GCC states, a crippling of their oil exports could have devastating consequences on their economies, particularly if the blockage is prolonged. A prolonged blockage is unlikely to happen. However, the fact that Iran has clearly identified the Straits of Hormuz as a primary means of responding to an attack poses a threat to the GCC states and their economies.

 

The “exceptional” summit in Riyadh reflects the anxiety of GCC states as the relationship between Iran and the West escalates. GCC states have mentioned the three UAE islands occupied by Iran as a reason for the escalation in concern. However, as no significant change to the islands’ situation has happened in the past several years, this is seen as an excuse to intensify the rhetoric and a response to the Iranian excursuses. The overall assessment of the past fortnight points to an increased risk to GCC states, directly correlated with the risk of Western or Israeli action against Iran.