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Monday, February 6th, 2023

Australia has an especially acute problem if US and Iran go to war

“We are 90 per cent dependent on imported fuel for petrol, diesel and aviation fuel, and we only have around 23 days’ supply available in Australia,” points out former Australian army major general Jim Molan. This compares with the international norm of a minimum stockpile of 90 days. Molan, who has just lost his bid to be returned as a Liberal party senator for NSW, spent his year and a half in the Senate trying to galvanise the government into improving Australia’s fuel resilience. To no avail.

“Until 1989, we had confidence that the US could open any sea line of communication in the world within a couple of weeks,” Molan says. So a minimal fuel stockpile wouldn’t be a problem.
“Now that’s no longer the case – the US has half the number of ships it had at the end of the Cold War. We have an intimate interest in the Gulf yet we haven’t realised the diminution of US military power.”  The US itself is far less vulnerable – it now imports only a tenth of its oil needs – and could much better withstand disruption to its supply.

Illustration: Andrew DysonCredit:

Australia has other interests at stake, too. A former Australian diplomat and Lowy Institute expert on the Middle East, Anthony Bubalo, says: “We are not just vulnerable in oil, we are vulnerable in Iraq. We still have a military training mission in Iraq.”

What’s the connection? The Iranian regime has proxy forces in Iraq. They could be capable of deadly attacks on Australian or other Western assets on Iraqi soil. The Americans have some 5000 troops there, for instance. “Australia is more vulnerable through the lives of its soldiers in Iraq,” says Bubalo, now at the consultancy Nous.

Surely it could just pull them out in event of a crisis? “The reason we are there is because we have a strong interest in training Iraqi forces to be capable of preventing a re-emergence of Islamic State. We are still focussed on Islamic State – so why go prodding Iran?”


Indeed. Why ignite a new crisis? When Trump took office, he inherited a pact with Iran. The Tehran regime had agreed to tough limits on its nuclear development program, subject to regular international inspections. The inspectors said that Iran was keeping its promises. In return, the US, the European Union plus another five countries – Britain, China, France, Germany, Russia – agreed to lift the economic sanctions under which Iran had suffered. Iran’s economy started to flourish.
But the pact – the Joint Comprehensive Plan of Action – negotiated under Barack Obama did not survive Trump.

The new US President pulled out of the deal. He was persuaded by the urgings of US hardliners and by the governments of Iran’s biggest foes – its neighbours Israel and Saudi Arabia. These two countries want Iran crushed, and they want the Americans to do the crushing for them.

Trump reimposed sanctions. They’ve been brutally effective. Iran’s unemployment rate is around 30 per cent, inflation around 40. Its economy shrank by about 4 per cent last year and will shrink by a further 6 per cent this, according to the International Monetary Fund.

The new crisis is well under way. Iran is accused of attacking oil tankers exporting Gulf oil as it seeks to deliver on its threat, though it denied responsibility. And last week it shot down a sophisticated US military drone. Donald Trump says he ordered a missile strike on Iran last week in retaliation, but called it off at the last moment to prevent about 150 Iranian deaths.

This would appear to be an opportunity to break the year-long cycle of escalation in the crisis. An ANU expert on Iran, Amin Saikal, says that the opportunity is real, yet is about to evaporate overnight: “Three good things – Trump says he isn’t looking for regime change in Iran, he’s said he doesn’t want to kill people, and he’s said he’s open to discussion with Iran. This could begin a positive narrative and open the way to dialogue and possible negotiations.

An oil tanker is on fire in the Sea of Oman. A series of attacks on oil tankers near the Persian Gulf has ratcheted up tensions between the US and Iran .

“But Trump has said he will announce further sanctions on Iran tonight. If he does, the opportunity will disappear,” says Saikal, author of a new book, Iran Rising: The Survival and Future of the Islamic Republic. The Iranians will not enter any negotiation in such circumstances, he says.

So is this building inevitably to a shooting war? Anthony Bubalo says it is: “The US is trying to squeeze Iran with more sanctions, and Iran is trying to raise the cost to the US of those sanctions,” by, for instance, destroying the $US130 million American drone it shot down. “Short of negotiations, Iran doesn’t have a lot of options. So they will keep poking and prodding the US and eventually the US – even Trump – will have to respond,” Bubalo posits.


One big Iranian prod is expected in the next few days. Tehran says it is about to break the agreed limit on its uranium enrichment. This is provocative because it suggests that it will resume it nuclear program. “We are still on that trajectory to some kind of military action,” Bubalo concludes.
Among others, Australia has to hope that a full-blown crisis is avoided. In the meantime, Canberra should take the opportunity to wake up and start addressing Australia’s vulnerabilities.

Peter Hartcher is international editor.

Peter Hartcher is political editor and international editor of The Sydney Morning Herald.