With many countries facing trepidation because of the ongoing US-Iran conflict and the resulting disruptions in shipping through the crucial Strait of Hormuz, Anwar Gargash, a former Minister of State of Foreign Affairs of the United Arab Emirates (UAE) and currently senior diplomatic adviser to the Emirati President Sheikh Mohammed bin Zayed, provided a detailed analysis of the conflict and its impact on shipping and supply chains.
Gargash, who was in New York for the 81st UNGA session, was also hosted by the Asia Society, where he was quizzed by Kevin Rudd, former Australian Prime Minister and presently global president/CEO of Asia Society, on the Middle East situation and the Hormuz waterway, which has been used, as Gargash said, “since time immemorial” by ships to transport oil, petro-products and commodities.
Referring to the crisis following the US-Iran war and the overall regional situation, Gargash said that “… if we look at the Gulf and how central it remains … and part of it is the interconnectedness and interdependence of the global economy … the Gulf has an impact on inflation, on gas prices and various things … a large part of this is because we have gone through errors of globalization. So, every part makes a difference. If these parts do well, it impacts positively; if these parts don’t do well, it impacts negatively.” The regional crisis affected everybody in different ways.
The global response to the centrality of the Strait of Hormuz and international law governing these passages had not been as one would have expected. The ongoing crisis has two key players – the US and Iran – while Europe, China and Russia are not very active. Thus, in the Middle East, US primacy continues and acquires even greater importance. “Many countries affected by the status of the Hormuz Strait are not stepping up their role as one would expect. Nuclear proliferation is also the issue; the current crisis only elevates our concern over Iran’s nuclear program,” which he said should not get sidelined. The UAE has a civilian nuclear program, in collaboration with the United States and South Korea. It meets 25% of the UAE’s electricity needs. “The UAE buys enriched uranium but refrains from enriching the material itself.” Iran’s nuclear program was central to the crisis.
Every country, including the UAE, has an Asian strategy. He highlighted the UAE’s strategic partnership with India, with which the UAE shared historic century-old cultural, culinary, trading and other relations. “We have had a long relationship with India … but today that relationship has become very strategic since Prime Minister Modi came to power,” he said, pointing out that over 2 million Indians living in the UAE, the largest expat community anywhere in the world, contributed to the close relationship. But relations with China were also strong, as the UAE works on elevating relations with South Korea, Japan and Indonesia. The UAE’s Asia strategy is modelled on trade, technology, investments, etc.
Iran’s Negotiating Tactics
Gargash said that Iran tended to work on a zero-sum approach, making it difficult to reach a deal through negotiations, even on issues like trade, etc. “… the tendency to compromise is not part of how the Iranians negotiate.” One should not forget that after 37 years of predictability with Iran under Ayatollah Khamanei, who is no longer there, a leadership vacuum had emerged, making it even more difficult to reach a deal. Should no agreement be reached with Iran, Gargash predicted a “protracted crisis” and two “ticking clocks” in Iran – “one was the Iranian Revolutionary Guards’ economy clock, and the other was the Iranian economy clock”. Iran’s “economy clock” was urgent, also because of social pressure, after five million people lost their jobs because of the war. Factories were under-producing and goods were not coming in because of the Hormuz problem. The pressure is very high, also because of the Iranian economic crisis and the Hormuz closure by the Americans.
“… economic pressure on Iran is great, and the rational reaction would be to get to a deal. In my opinion, the Iranians don’t believe they can hold the Strait of Hormuz (for long), I think it is more of a negotiating position. I think if we accept their position, we are creating a prophecy here of (letting) Iran control the Strait,” Gargash said; the Gulf countries were also suffering because of accessibility problems. The UAE itself has established pipelines for transporting oil but, as Gargash said, “the UAE’s geography is also helping in diverting that”.
In his view, the long-term approach should be to engage in diplomacy “once you have established your deterrence capability and you are willing to fight for your sovereignty, and to protect your infrastructure and your population”.
UAE Moves Goods Through the Hormuz Strait
Gargash said that one could not assess the exact level of shipping traffic through the Hormuz Strait but “goods are coming in, though prices of goods in supermarkets and other places are higher, and the region is moving away from total dependence on Hormuz. “Goods were coming through UAE ports, Omani ports, Saudi ports and by trucks too. The UAE is still moving goods, energy, etc. through the Strait of Hormuz. But we don’t want to create a new normal where the region is without the (Hormuz) Strait,” he said. Certain Gulf economies such as those of Qatar, Bahrain, Kuwait, Iraq, etc. were very much affected, and so were incomes. While the UAE was able to transport substantial volumes of goods, he stressed that the UAE would not succumb to any threats; the waterway was important for the country. Iran, he said, was holding on to the Strait as a “negotiating position rather than as a geopolitical fait accompli”.
Iran had been avoiding a direct confrontation on its soil in the past, using proxies in Lebanon, Yemen, etc. to assert its primacy in the region, but now it faces a confrontation on its soil. This playbook of using proxies had proved costly for Iran; while other countries in the region had concentrated on economic development and built up their infrastructure, Iran had expended its resources on conflict, losing considerable time in building up regional influence instead of concentrating on its own development.
Explaining the reasons for the UAE leaving OPEC a few months back, Gargash said that its oil was not going to last forever. “Since oil is not going to last forever, we have turned to other energy forms and wanted to maximize the oil production which we wanted to export but could not within the OPEC confines. The UAE invested heavily in increasing its production from over 2 million barrels to 4 million barrels a day. It was clear to us that we could not export within OPEC, which set limits on exports. We decided to leave OPEC to achieve our export increases,” he explained.
Meanwhile, the UAE emerged as one of the world’s 10 top exporting nations in 2025, as its foreign trade rose to Dhs 6tn ($ 1.6 tn) last year, a 15% rise over the previous year. The trade surplus in goods and services touched Dhs 584 bn.
