ABU MUSA

Island Dispute Between Iran and the UAE

CASE NUMBER: 369

CASE MNEMONIC: ABUMUSA

CASE NAME: Abu Musa and Oil

I. Identification

1. The Issue

Abu Musa, an island in the Persian Gulf, is claimed by both Iran and the United Arab Emirates (UAE). The island is valued by these two countries for economic, security, and environmental reasons. One significant feature about this island is that it is potentially full of oil reserves. Currently, oil is being extracted from a field close to the shores of Abu Musa. The dispute over the island is unresolved and could ignite an international crisis at some point in the future. In addition to the conflict, there are also environmental concerns that are associated with Abu Musa. If there were to be an oil spill on or around this island it could have grave consequences on the environment and the nearby animal life. Therefore, the dispute over Abu Musa will be examined for its importance in trade, environmental, and security issues.




UAE Flag Iran Flag




2. Description

This case study will first explore the background of Abu Musa. The history of the dispute will help to determine its relevance toward trade, environmental, and security issues. The following description will give a general background of the dispute over the island, and then the case study will further examine these issues.

Abu Musa, which is only a few miles square, lies in the Persian Gulf about halfway between Iran and the UAE. For most of this century, it did not have more than a few dozen permanent residents. However, both Iran and the UAE desire control of the island. Abu Musa is full of oil reserves, which fuel the economies of both Iran and the UAE. In addition, the island is located in the Strait of Hormuz, the mouth of the Persian Gulf. This strategic position could allow a country to influence the Gulf's valuable shipping lane, or even to close off the Gulf all together.

In January 1968, Britain announced that it would withdraw all of its forces from east of Suez by the end of 1971. At that time the sheikdom of Sharjah (later part of the UAE) controlled Abu Musa. However, the Shah of Iran was very interested in the island. The Shah claimed that Abu Musa had been taken from Iran at a time when there had been no central government and that his father had tried unsuccessfully to recover the island, but the British had assured him that the ownership of the islands would be settled. Furthermore, the Shah is reported to have stated, "[Abu Musa is] of strategic importance to us as much as to the Persian Gulf states and to the peace and security of our region."(1) The Shah dropped Iran's claim on Bahrain in January 1969, in an effort to show accommodation and stave off strong condemnations of his military takeover of Abu Musa.(2)

By the end of November 1971, the conflict over the island reached a pitch. On November 29, Iran and Sharjah announced an agreement calling for Sharjah to maintain sovereignty over Abu Musa and Iran to station military forces on the island. Oil revenues from the oil fields surrounding the island would be shared.(3) On November 30, Iran sent military forces to Abu Musa, in accordance with its agreement with Sharjah, but then took control of the two nearby Tunb islands. Iran's seizure of these three islands caused a reaction in the Arab world. Iraq built up it port and naval facilities at Umm Qasr, and the UAE was formed as a federation of five trucial sheikdoms. However, the Arab states did not take any military action, and the US did not insist on an immediate withdrawal. American non-interference can be attributed to Iran's strategic importance to the US at that time.(4)

The UAE


The dispute became a relatively dormant issue following the establishment of diplomatic relations between Iran and the UAE in October 1972.(5) In 1980, however, the UAE submitted its claim on the island to the United Nations and joined with five other nations Gulf states to form the Gulf Cooperation Council (GCC). Throughout the rest of the 1980s, the dispute over the island was overshadowed by the Iran-Iraq war, until March 1992, when Iran expelled the foreigners from Abu Musa. The foreigners ran the UAE-sponsored school, medical clinic, and power-generating station. Then in April, Iran took full control of the island.(6) After the UAE brought the issue up to the GCC in September of 1992, Iran declared full sovereignty over the three islands. However, the dispute was temporarily resolved again when Iran and Sharjah agreed to abide by the 1971 agreement. The reason behind Iran's takeover in 1992 are still unclear; Youssef Ibrahim, of the New York Times, reports that "There have long been suspicions that the agreement between Iran and the Emirates included a secret annex that gave Iran control of the island in 1992."(7)

When Iraq made threatening moves toward Kuwait in October 1994, Iran increased its military presence on Abu Musa. Although, when the crisis subsided, Iranian troops remained on the island. Then in 1995, Iran increased its troops to 4,000 from 700 in just five months and deployed SA-6 surface-to-air missiles, 155- millimeter artillery, and "Seersucker" anti-ship missiles. In addition, Secretary of Defense Perry noted that Iran had deployed chemical weapons in the Gulf.(8) Iran opened an airport on Abu Musa in March 1996 and there are reports that it also plans to build a port.(9)

The UAE has been careful to maintain some contact with Iran because of the large number of Iranian expatriates in the UAE and because of Iran's proximity. The UAE has urged Iran to agree to taking the dispute to the International Court of Justice in The Hague. Iran has responded by stating that its sovereignty over the islands is not negotiable, although it has called for bilateral talks with the UAE to clear up any "misunderstandings."(10)




OIL

One reason that Iran is interested in the Abu Musa is oil. In April 1993, the Iranian Parliament passed a law extending the limits of the country's territorial waters to 12 miles. A limit of 12 miles is significant considering the size of the Persian Gulf and the close proximity of the Gulf states. The Parliament also reasserted Iran's claims to the island; this could be explained by the fact that there have been reports of large oil deposits under Abu Musa.(11) Moreover, Iran has expressed displeasure over the amount of oil that it receives from the small, offshore oil field. The agreement between Iran and the UAE stated that the two countries were to share the income from the oil field equally.

Sharjah is interested in the island because its economy depends heavily on its oil income. All of the sheikdoms in the UAE are attempting to acquire as many reserves as possible because it has been estimated that their current reserves may dry up within the next 30-50 years. Presently, the only oil that Sharjah has any claim to is located off Abu Musa.(12) The Mubarak offshore oilfield, 8x5 km, is about 20 km east of Abu Musa and is shared by Sharjah and Iran. Recently, the UK's Enterprise Oil has entered into a joint venture with the UAE's Crescent Petroleum to increase production from the Mubarak oilfield.(13)

Neither the UAE or the GCC has contemplated an attack on Abu Musa because Iranian fortification would make it too difficult to invade or to hold the island. Not only would an invasion fail, but Iran could respond by closing the Strait of Hormuz to all commerce, including the oil trade. In addition, the UAE does not want to disrupt its billion-dollar annual export trade with Iran.


SECURITY

Control of Abu Musa could also directly affect shipping. All of Iran's oil tanker traffic must pass through this area; making the security of the area very important. Former Iranian Foreign Minister Abbas Ali Khalatbar stated that his country occupied the islands so that another country could not "threaten navigation in the Strait of Hormuz to the detriment of all littoral states."(14)

Abu Musa lies at the mouth of the narrow Strait of Hormuz, through which passes a fifth of the world's oil supplies. About 15 million barrels per day (bpd) -- equivalent to Europe's daily consumption -- pass through the mouth of the Gulf in tankers which must slow down to navigate a hairpin turn in waters 35 miles wide at the Strait's narrowest point.(15) Any blockade of this strategic Strait would restrict supplies to consumers in Asia, Europe, and the US. Japan, which gets more than 70 percent of its oil from the Gulf, and the US, which takes 1.6 million bpd from Middle East states, would be the most sensitive to a blockade.(16)

Iranian military deployments on the island could easily be used to threaten this shipping lane. During the Tanker War in the Gulf in the 1980s, Iran made considerable use of Abu Musa. Small craft and helicopters were stationed there in order to harass tankers, and several Silkworm anti-ship missile sites were built on the island.(17) Iran has recently purchased three Russian Kilo- class submarines, and two of these have been delivered. In addition, Iran has also purchased five Chinese-made fast-attack patrol boats of the "Huodong" class. According to Secretary of Defense Perry, these constitute "a deployment that is far beyond any reasonable defense requirements that Iran has....This can only be regarded...as a potential threat to shipping."(18) Iran has reportedly also intensified naval exercises over the past two to three years that included several scenarios focusing on closing the Strait, sabotaging ports and storming oil platforms and coastal targets.(19)

Iran's recent actions may not demonstrate a desire to take control of the Strait. Harold Hough, of Jane's Intelligence Review, states that "the military build-up [is] part of a greater move by Iran to spread its influence in the Persian Gulf rather than an attempt to solidify its hold on the Strait."(20) Abu Musa gives Iran a base for projecting its power and influence south toward the GCC. Control of Abu Musa also gives extra protection to Bandar Abbas, an Iranian port important for its oil industry and military base. According to Hough, "If Iran wanted to deny the waterway to the US Navy, missile sites near Bandar Abbas would be more valuable since they are on the Iranian mainland and the US would be less willing to attack them for both political and military reasons."(21)


ENVIRONMENT

With oil production, the chance of environmental damage is always present, especially if the region which contains the oil resources is in dispute. At this point there is no oil production on the island of Abu Musa, although the parties are hoping that this will change in the future. Damage to the surrounding environment and animal species could be associated with oil production or an oil spill. Furthermore, any future conflict over the island could inadvertently damage the oil production or resources, which would have additional devastating effects on the environment. The specific damage to the environment will be discussed in latter portions of this case study.

The dispute over Abu Musa is important to many countries for several reasons. The potential oil resources on the island and in the surrounding area are valuable to the economies of both the UAE and Iran. Furthermore, the island's location could strategically be used to disrupt the world's access to oil. Currently, Iranian intentions over control of the island are unclear. This uncertainty makes the dispute unstable and it could give rise to conflict in the future.

3. Related Cases

Keywords

(1): Domain =Persian Gulf

(2): Issue =Security

(3): Product =Oil

4. Draft Author:

W. Corbett Dabbs (December 1996)

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II. Legal Clusters

5. Discourse and Status:

DISagreement and INPROGress

This case is in disagreement because both Iran and the UAE still claim Abu Musa. Iran has held the island since 1971, although the issue is unresolved. The UAE did agree to allow Iran to maintain troops on the island and to share in half of the oil revenue; however, the UAE will probably reassert its claim at some point in the future.

6. Forum and Scope:

BILATeral

7. Decision Breadth:

2(Iran and the UAE)

Only Iran and the UAE claim the island. However, many other countries throughout the region and the world are interested in the case. Other countries are interested because the outcome of the dispute could have ramifications on access to the Persian Gulf and on the flow of oil.

8. Legal Standing:

Agreement

Iran and the UAE did agree to share the island and the oil resources it has. However, Iran took the island by force in 1971.

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III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Middle East

b. Geographic Site: Persian Gulf

c. Geographic Impact: Iran and the UAE

10. Sub-National Factors:

No

11. Type of Habitat:

OCEAN


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IV. Trade Clusters

12. Type of Measure:

Orderly Marketing Agreement (OMA)

The two countries have agreed to split the oil revenues 50-50.

13. Direct v. Indirect Impacts:

DIRect

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES OIL

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES POLS (Pollution Sea)

15. Trade Product Identification:

OIL

The UAE is similar to the other Persian Gulf countries in that the oil trade has become vital to its economy. The Jebel Ali Free Zone Authority (JAFZA) in the UAE has emerged as an important trade center with the rest of the industrial world, including the oil trade. More than 21 million tons of cargo bound for Japan, the US, and Europe pass through the UAE.

Although there is an embargo on Iran, it still manages to export 2.5 million barrels per day (b/d) of oil. In several cases, it is US companies that are violating the embargo; US oil companies can by and sell Iranian crude oil through overseas subsidiaries. Revenues from these subsidiaries exceed $4 billion per year. Exxon is Iran's single biggest customer; it buys 250,000-300,000 b/d.

Twenty percent of the world's oil passes through the Strait of Hormuz. Japan gets more than 70 percent of its oil from the Gulf and the US takes 1.6 million barrels per day from Middle East states. Within 10 years, Asia will rely on the Middle East for 90 percent of its imports. Furthermore, Iran uses the Gulf for most of its oil exports of 2.6 million barrels per day. If the Strait was to be closed it would have serious ramifications on world economies.

16. Economic Data

Independent estimates put the combined reserves of crude oil in the UAE at about 50,000 million barrels. However, UAE officials claim the actual amount may be twice this level. The individual sheikdoms have varying amounts of reserves. Dubai is thought to have enough oil to last for another 30 years, while Abu Dhabi has more than 100 years of oil reserves.

In 1994, the UAE's production was 2.3 million b/d. Development plans include increasing the production to 3 million b/d after the year 2000. The UAE has spent an average of $1 billion per year on oil expansion since 1990. Iran's production at this time was 3.8 million b/d, and had plans to reach 4.5 million b/d by 2000. By 2010, Iran is estimated to be producing 5 million b/d, and the UAE could be producing 4 million b/d.

OIL PRODUCTION (barrels per day)

Country199420002010
UAE
2.3 million
3 million
4 million
Iran
3.8 million
4.5 million
5 million

17. Importance to the Economies

HIGH

For the UAE, the greatest contribution to the GDP both in absolute and percentage terms has come from the crude oil sector. In the past, oil revenues have accounted for 40-50 percent of the UAE's GDP, although they now account for roughly one-third. Throughout the 1970s and 1980s, petroleum export revenues accounted for 85.72 percent of total exports.

Oil has given the citizens of the UAE one of the highest per capita incomes of the world. However, an economy that relies to heavily on one product is vulnerable to any swings in the international market value.

18. Industry Sector:

OILGAS

19. Exporters and Importers:

Iran, the UAE, and many

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V. Environment Clusters

20. Environmental Problem Type:

POLS

There is always the potential for an oil spill. An oil spill in this case would cause extremely detrimental sea and land pollution. There will also be environmental concerns associated with the production of oil if that is undertaken in the future.

Although pollutants, such as an oil spill, should be of the upmost concern, there has been a shift of emphasis to the effect on climate change. Climate change includes increases in the global temperature and sea level changes.

21. Species Information

Sea, land, and air species

The animals and plants most at risk are those that could come into contact with a contaminated sea surface: marine animals and reptiles; birds that feed by diving or form flocks on the sea; marine life on shorelines; and animals and plants in mariculture facilities. Marine life may also be affected by clean-up operations or indirectly through physical damage to the habitats in which plants and animals live. Birds which congregate in large numbers on the sea or shorelines to breed, feed, or moult are particularly vulnerable to oil pollution.

Marsh vegetation shows greater sensitivity to fresh light crude or light refined products whilst weathered oil cause relatively little damage. Oiling the lower portion of plants and their root systems can be lethal whereas even a severe coating on leaves may be of little consequence especially if it occurs outside the growing season.

22. Resource Impact and Effect: HIGH and SCALE

23. Urgency of Problem:

NAPP

24. Substitutes:

ALTernative

There are two problems with the world reliance on oil: it causes pollution and the reserves will one day run out. The first problem has been discussed above, while the second problem has yet to be seriously considered by the international community. The countries of the world should begin to find other means of energy for these two reasons. Eventually, oil wells will run dry so the world should start using other resources now. Likewise, switching to other sources of energy now could prevent damaging effects to the environment. Renewable sources of energy could solve the problems of environmental damage and finite resources.

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VI. Other Factors

25. Culture:

NO

26. Trans-Boundary Issues:

YES

There is a trans-boundary problem because the national boundary is still unresolved. Both Iran and the UAE claim Abu Musa. Therefore, if large oil resources are discovered on the island in the future there will be a problem over deciding which country owns it.

27. Human Rights:

NO

28. Relevant Literature

Endnotes:

1. Dan Caldwell, "Flashpoints in the Gulf: Abu Musa and the Tunb Islands." Middle East Policy, March 1, 1996, v4 n3, p.52

2. Hooshang Amirahmadi and Nader Entessar, eds. Iran and the Arab World, St. Martin's Press: New York, 1993, p.70

3. Caldwell, p.52

4. Amirahmadi and Entessar, p.127

5. Caryle Murphy, "Iran Claims Sovereignty Over Small, Oil- Producing Gulf Island." The Washington Post, September 25, 1992, p.A31

6. Caldwell, p.53

7. Youssef M. Ibrahim, "Iran Is Said to Expel Arabs From Gulf Island." The New York Times, April 16, 1992, p.A7

8. Caldwell, p.54-55(paragraph)

9. "Iran to Build Port on Abu Musa," Arab Press Service Organisation, APS Diplomat Recorder, May 25, 1996, n21 v44

10. "UAE protests Iran power plant on contested island," Reuter World Service, April 18, 1996

11. Caldwell, p.56

12. Shelly Deane Gould Alexander, "Factors in the Settlement of the Dispute Over Abu Musa and the Tombs," M.A. Thesis, The American University: 1979, p.25

13. "Enterprise In UAE Project," Platt's Oilgram News, v74 n132, July 10, 1996, p.3

14. Alexander, p.12

15. Barry May, "Hormuz choke-point for half world's oil exports," Reuters North American Wire, August 7, 1996

16. Ibid.

17. Harold Hough, "Iranian Intentions-The Strait of Hormuz or Beyond?" Jane's Intelligence Review, October 1, 1995, v7 n10, p.454

18. Caldwell, p.55

19. May

20. Hough, p.454

21. Ibid., p.454

Bibliography:

Alexander, Shelley Deane Gould, "Factors in the Settlement of the Dispute Over Abu Musa and the Tombs," M.A. Thesis, The American University, 1979

Amirahmadi, Hooshang, and Entessar, Nader, Eds. Iran and the Arab World, St Martin's Press: New York, 1993

Borrus, Amy, "How Big Oil Defies the Great Satan." Business Week, February 13, 1995, p.6

Caldwell, Dan, "Flashpoints in the Gulf: Abu Musa and the Tunb Islands." Middle East Policy, March 1, 1996, v4 n3, p.50-57

"Effects of Marine Oil Spills," December 11, 1996, http://www.itopf.com/effects.html

"Enterprise in UAE Project." Platt's Oilgram News, July 10, 1996, v74 n132, p.3

Hough, Harold, "Iranian Intentions-The Strait of Hormuz or Beyond?" Jane's Intelligence Review, October 1, 1995, v7 n10, p.454

Ibrahim, Youssef M., "Iran Is Said to Expel Arabs From Gulf Island." The New York Times, April 16, 1992, p.A7

"Iran, Emirates in Dispute Over Gulf Island." The Washington Post, April 17, 1992, p.A18

"Iran to Build Port on Abu Musa." Arab Press Service Organisation, May 25, 1996, n21 v44

Ismail, Ibrahim A.H., "Capital limitations, environmental movements may interfere with expansion plans." Oil & Gas Journal, May 9, 1994, p.60-68

May, Barry, "Hormuz choke-point for half world's oil exports." Reuters North American Wire, August 7, 1996

Murphy, Caryle, "Iran Claims Sovereignty Over Small, Oil- Producing Gulf Island." The Washington Post, September 25, 1992, p.A31

Murphy, Kim, "Iran Re-Emerges as Troubling Question Mark in the Gulf." The Los Angeles Times, September 18, 1992, p.A5

Rizvi, S.N. Asad, "From Tents to High Rise: Economic Development of the United Arab Emirate." Middle Eastern Studies, October 1993, p.664-678

"Sharjah." APS Review Oil Market Trends, December 4, 1995, n22 v45

"UAE Operations Step Up Oil, Gas Production." Oil & Gas Journal, August 14, 1995, p.18

"UAE protests Iran power plant on contested island." Reuters World Service, April 18, 1996

Weinberger, Caspar W., "Lands of Opportunity." Forbes, June 20, 1994, p.33


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