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Westlake Legal Group > Ships and Shipping

To Evade Sanctions on Iran, Ships Vanish in Plain Sight

A week ago, a small tanker ship approached the Persian Gulf after a 19-day voyage from China. The captain, as required by international rules, reported the ship’s position, course, speed and another key detail: It was riding high in the water, meaning it was probably empty.

Then the Chinese-owned ship, the Sino Energy 1, went silent and essentially vanished from the grid.

It reported in again on Sunday, near the spot where it had vanished six days earlier, only now it was heading east, away from the Strait of Hormuz near Iran. If past patterns hold, the captain will soon report that it is riding low in the water, meaning its tanks are likely full.

As the Trump administration’s sanctions on Iranian oil and petrochemical products have taken hold, some of the world’s shipping fleets have defied the restrictions by “going dark” when they pick up cargo in Iranian ports, according to commercial analysts who track shipping data and intelligence from authorities in Israel, a country that backs the Trump crackdown.

[Iran breached a nuclear fuel limit in what it said was a response to the reimposition of sanctions by the Trump administration.]

“They are hiding their activity,” said Samir Madani, co-founder of TankerTrackers.com, a company that uses satellite imagery to identify tankers calling on Iranian ports. “They don’t want to broadcast the fact that they have been in Iran, evading sanctions. It’s that simple.”

ImageWestlake Legal Group 02ghostships-articleLarge To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

Smaller ships like the Sino Energy 1 are harder to track than big oil tankers when they go off the grid.CreditMartin Klingsick

A maritime treaty overseen by a United Nations agency requires ships of 300 tons or more that travel international routes to have an automatic identification system. The gear helps avoid collisions and aids in search-and-rescue operations. It also allows countries to monitor shipping traffic.

It is not illegal under international law to buy and haul Iranian oil or related products. The Trump administration’s sanctions, which went into effect last November after the United States pulled out of the Iran nuclear agreement, are unilateral.

But foreign companies doing business with American companies or banks risk being punished by the United States. Actions can include banning American banks from working with them, freezing assets and barring company officials from traveling to the United States, said Richard Nephew, a research scholar at Columbia University who oversaw Iran policy on the National Security Council during the Obama administration.

“We have sanctioned dozens of Chinese state-owned enterprises for nuclear, missile, arms and other forms of proliferation,” Mr. Nephew said. “But it is not entered into lightly.”

A State Department spokeswoman said, “We do not comment on intelligence matters.”

Chinese Tankers Keep Disappearing in the Persian Gulf

Westlake Legal Group 1 To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

The SC Mercury, an oil and chemical tanker owned by Sinochem until April 2019, sails regularly from Chinese ports into the Persian Gulf.

Westlake Legal Group 2 To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

On the morning of Jan. 27, 2018, it disappeared. The Mercury’s A.I.S. transponder — a device that broadcasts a ship’s location continuously, required by an international maritime treaty — fell silent.

Several days later, the transponder came back to life, tracking the Mercury as it sailed toward ports in India. Having deposited its cargo, it turned back toward the gulf.

On Feb. 15, 2018, the ship went dark again as it navigated the Strait of Hormuz, reappearing days later to begin a weekslong journey back to Shanghai.

All ships 300 tons or greater on international journeys are required to broadcast their location, course and speed on the system, but sometimes, to hide their activities from competitors, ships “go dark,” analysts say.

Westlake Legal Group 3 To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

The Persian Gulf isn’t the only place in the world where ships go silent. It also happens in the South China Sea, but there, one analyst said, the reason may be because the sheer number of ships overwhelms the system.

Westlake Legal Group 4 To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

In the case of the Mercury, outages appeared to be more selective. In April and May 2018, the ship’s transponder stayed active as it visited ports in Saudi Arabia, Bahrain and the United Arab Emirates.

When a ship goes dark in the Persian Gulf, it may be related to dodging sanctions, not technical problems, said Samir Madani of TankerTrackers.com, which uses satellite technology to monitor ships. Countries and companies that import Iranian oil risk punishment from the United States.

Westlake Legal Group 5 To Evade Sanctions on Iran, Ships Vanish in Plain Sight United States International Relations Trump, Donald J Sinochem Ships and Shipping Oil (Petroleum) and Gasoline Nuclear Weapons Islamic Revolutionary Guards Corps Iran Hook, Brian H Gulf of Oman Incident (June 2019) Embargoes and Sanctions Defense and Military Forces China

In the past 18 months, the five ships, which regularly sail between China and the Persian Gulf, made only two port visits in Iran, according to information from their A.I.S. data. In contrast, those ships made close to 50 stops in ports in Bahrain, Oman, Saudi Arabia and the U.A.E. In another 28 instances, the ships vanished in the region for days or weeks.

By Rich Harris and Derek Watkins. Source: VesselsValue

debug 1128: waiting for message…….

Brian Hook, the United States special representative for Iran, told reporters in London on Friday that the United States would punish any country importing Iranian oil. Mr. Hook was responding to a question about reports of Iranian oil going to Asia, according to the Reuters news agency.

President Trump’s efforts to halt Iranian oil and petrochemical exports are at the heart of rising tensions between the two countries. Last month, he imposed new sanctions on Iran’s leaders after it downed an American surveillance drone and nearly precipitated a counterstrike that was called off at the last minute. The attack on the drone came a week after the United States accused Iran of being responsible for explosions that had crippled two tankers near the Strait of Hormuz.

American and Israeli intelligence agencies say the country’s Islamic Revolutionary Guard Corps is deeply entwined with its petrochemical industry, using oil revenues to swell its coffers. Mr. Trump has labeled the military group a terrorist organization.

Iran has been trying to work around the American sanctions by offering “significant reductions” in price for its oil and petrochemical products, said Gary Samore, a professor at Brandeis University who worked on weapons issues in the Obama administration.

Brian Hook, left, the United States special representative for Iran, has said the American government would punish any country importing Iranian oil.CreditYasser Al-Zayyat/Agence France-Presse — Getty Images

When shipping companies defy the sanctions, they weaken their effectiveness, especially if the companies — or the countries where they are based — see no consequences, analysts said. Some shipping companies with direct Iranian ties do not try to hide their movements, according to data collected by the commercial tracking sites.

Last month, the Salina, an Iranian-flagged oil tanker under American sanctions, docked in Jinzhou Bay, a port in northeastern China, according to data from VesselsValue, a website that analyzes global shipping information. The Salina regularly reported its position, course and speed via the automatic identification system.

Oil tankers like the Salina, which can transport as much as a million barrels of crude, or about 5 percent of the daily consumption of the United States, are so big that they can call on only a limited number of ports. They are also more easily spotted by satellites than smaller ships like the Sino Energy 1.

That vessel, and its more than 40 sister ships, are far more difficult to track when they go off the grid. They were owned until April by a subsidiary of Sinochem, a state-owned company in China that is one of the world’s biggest chemical manufacturers.

Sinochem has extensive business ties in the United States. It has an office in Houston and works with big American companies including Boeing and Exxon Mobil. In March, it signed an agreement with Citibank to “deepen the partnership” between the two companies, Sinochem said. In 2013, a United States subsidiary of Sinochem bought a 40 percent stake in a Texas shale deposit for $1.7 billion.

In April, it sold a controlling share in its shipping fleet to a private company, Inner Mongolia Junzheng Energy & Chemical Group Co., whose biggest shareholder is Du Jiangtao, a Chinese billionaire who made his fortune in medical equipment, chemicals and coal-generated power.

A person answering the phone at Junzheng’s investor relations office was not familiar with the newly acquired shipping business. For now, Junzheng owns 40 percent of Sinochem’s former shipping fleet, with the rest owned by two Beijing companies.

Frank Ning, the chairman of Sinochem, speaking in a brief interview in Dalian, China, said that shipping had not been central to the company’s business. In a statement, the company said it had “adopted strict compliance policies and governance on export control and sanctions,” though a former employee who had helped manage the shipping business, speaking on the condition of anonymity, said the company had shipped petrochemicals from Iran for years.

The tracking data also show that some of the Sinochem ships made trips to Iran before the fleet was sold, and both before and after the American sanctions went into effect.

In April 2018, for example, one of the ships, the SC Brilliant, was moored at Asalouyeh, a major Iranian petrochemical depot on the Persian Gulf, according to data from VesselsValue. The SC Brilliant’s voyage was easy to plot. Its captain made constant reports via the automatic identification system, broadcasting its course, speed and destination.

But after Mr. Trump’s announcement last August that he would reimpose sanctions on Iran’s petroleum industry, the SC Brilliant’s voyages became less transparent.

In late September and early October, shortly before the sanctions took effect, the ship went off the grid for 10 days in the same stretch of the Strait of Hormuz where the Sino Energy 1 disappeared last week. When the SC Brilliant went off the grid, it appeared empty; when it re-emerged, it appeared full.

The pattern was repeated in February, with the ship disappearing for four days, according to the tracking data.

That month, another Sinochem ship, the SC Neptune, stopped transmitting its position when it approached the Strait of Hormuz, the tracking data show. Four days later, for a brief period, it appeared back on the grid, transmitting its location from an export terminal on Iran’s Kharg Island. It then went quiet for another 24 hours, reappearing on its way out of the strait.

Iran’s Kharg Island (pictured in a screenshot from Google Maps), where a Chinese ship called SC Neptune briefly reported its position in February after going off the grid.

In some parts of the world, including the South China Sea, it is not uncommon for ships to go silent because the automatic identification system may be overloaded by the volume of vessels, said Court Smith, a former officer in the United States Coast Guard who is now an analyst at VesselsValue. Sometimes they do so for competitive reasons, he added.

But in the Persian Gulf, where traffic is lighter, Mr. Smith said, vessels generally do not turn off the system, known in the industry as A.I.S.

“If the A.I.S. signal is lost, it is almost certainly because the A.I.S. transponder has been disabled or turned off,” Mr. Smith said of ships in the Persian Gulf. “The captain has decided to turn off the A.I.S.”

Another possible clue that Iran-bound ships are disabling their reporting systems is that ships making trips to countries on the western part of the gulf are not going off the grid.

The SC Mercury, another of the Sinochem ships, disappeared for about nine days at the end of December and into January, vanishing close to where the Sino Energy 1 disappeared last week, the tracking data show. But in early April, the ship’s course through the Persian Gulf had no interruptions in its signal. The destination that time was the United Arab Emirates.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

White House Is Pressing for Additional Options, Including Cyberattacks, to Deter Iran

Westlake Legal Group 23DC-shadow-facebookJumbo White House Is Pressing for Additional Options, Including Cyberattacks, to Deter Iran United States Politics and Government Trump, Donald J Ships and Shipping Islamic Revolutionary Guards Corps Iran Drones (Pilotless Planes) Cyberwarfare and Defense central intelligence agency

WASHINGTON — American intelligence and military officers are working on additional clandestine plans to counter Iranian aggression in the Persian Gulf, pushed by the White House to develop new options that could help deter Tehran without escalating tensions into a full-out conventional war, according to current and former officials.

The goal is to develop operations similar to the cyberattacks conducted on Thursday and that echo the shadow war the United States has accused Tehran of carrying out with attacks on oil tankers in the Middle East, according to American officials briefed on the effort. Iran maintains that it was not responsible for the attacks on the tankers.

The cyberattacks were aimed at an Iranian intelligence group that American officials believe was behind a series of attacks on tankers in the Persian Gulf region. The American operation was intended to take down the computers and networks used by the intelligence group, at least temporarily. A separate online operation was aimed at taking out computers that control Iranian missile launches.

The White House has told military and intelligence officials it also now wants options in line with the kind of operations conducted by Iran’s Islamic Revolutionary Guards Corps, the officials said.

President Trump has made clear he believes that, at this point, a direct strike would be escalatory, although he has repeatedly warned Iran against further aggression.

Intelligence and military officials have told White House policymakers, including Mr. Trump, that without an additional American response, Iran will continue to destabilize the region.

Some divisions of opinion in the administration remain. A number of senior national security officials agree that further action against Iran is needed, but they are divided about how public that action needs to be.

Officials did not provide specifics about the secret operations under consideration by the White House. But they could include a wide range of activities such as additional cyberattacks, clandestine operations aimed at disabling boats used by Iranians to conduct shipping attacks, and covert operations inside Iran aimed at fomenting more unrest. The United States might also look for ways to divide or undermine the effectiveness of Iranian proxy groups, officials said. The officials spoke on condition of anonymity to discuss sensitive, confidential administration planning.

The C.I.A. has longstanding secret plans for responding to Iranian provocations. Senior officials have discussed with the White House options for expanded covert operations by the agency, as well as plans to step up existing efforts to counter Iran’s efforts, according to current and former officials.

One former American military commander said there was a range of options that the Pentagon and the C.I.A. could pursue that could keep Iran off balance but that would not have “crystal-clear attribution” to the United States. An American operation that was not publicly announced could still deter further action by Tehran, if Iran understood what United States operatives had done, the former officer said.

The types of responses the United States could undertake are broad if the United States was willing to use the same tactics that Iran has mastered, said Sean McFate, a professor at the National Defense University and the author of “The New Rules of War.”

“If we want to fight back, do it in the shadows,” he said.

Mr. McFate said the United States could put a bounty on Iran’s paramilitary and proxy forces. That would create an incentive for mercenary forces to take on Hezbollah and other Iranian proxies. American intelligence forces also could find new ways to assist existing protests against the Iranian government. Such efforts could include spreading information, either embarrassing truths or deliberate false rumors, aimed at undermining the support that Tehran’s elites have for Iran’s leaders, he said. The United States could also look at ways to make protests by Iran’s labor movement more effective at weakening the government.

Current and former officials say that Iran’s covert attacks against shipping and its downing of an American drone are an attempt to try to raise pressure on the United States. Iran, they say, hopes that by sowing chaos in the Persian Gulf it can drive up oil prices, which will put pressure on Mr. Trump and American allies dependent on Middle Eastern oil. Iran maintains that the drone it shot down had violated its airspace; American officials insist it had been over international waters.

“From the Iranian perspective, unconventional attacks, threats against Gulf shipping and air routes and bellicose rhetoric represent the best ways to pressure the international community to compel the U.S. to relieve sanctions without igniting a conventional conflict,” said Norman T. Roule, a former national intelligence manager for Iran and a C.I.A. Middle East expert.

Some officials believe the United States needs be willing to master the kind of deniable, shadowy techniques Tehran has perfected in order to halt Iran’s aggressions. Others think that, while helpful, such clandestine attacks will not be enough to reassure American allies or deter Iran.

Iran will probably pause its activities for a time, senior American officials said. But, with sanctions biting, they say Iran will once again resume attacks on shipping. That will once more force the White House to consider a direct military strike.

While so-called gray zone operations are meant to stay below the threshold of inciting open conflict, the moves always run the risk of touching off exactly what both sides are trying to avoid: a shooting war.

Moreover, some online operations are far easier than others. Knocking an intelligence agency’s computers offline, as the United States did with Russia last year during the midterm American elections, is fairly basic. But getting inside a missile launch operation is much harder; although the United States succeeded in doing so in North Korea, it took a long time and prompted the North Koreans to build an entirely different missile system.

The Iranians also now have much greater capability to strike back in the cyber realm than they did a decade ago. Their foray into American banks in 2012 and 2013 was, in retrospect, a training exercise. When the Department of Homeland Security issued a warning on Saturday about Iranian cyberthreats, it described much greater capabilities. Iran’s “cyber corps” has now had years of training in causing damaging attacks, like the one it conducted on a Las Vegas casino and other targets in the United States.

Mr. Roule also agreed the United States response needed to be public and clear. “The best U.S. options will not be covert,” he said. “Overt options send the strongest message of deterrence. Iran needs to know that the U.S. — supported by the international community — will not tolerate its behavior.”

Mr. Trump has been stung by criticism about his decision to call off the strikes after the Iranian drone attack. But the president believes a combination of covert operations by the C.I.A. and clandestine operations by the military’s Cyber Command and other military forces will demonstrate his resolve as commander in chief, a senior administration official said.

The president is eager to avoid a messy shooting war with Iran, which he believes would violate his campaign promise to keep America out of protracted conflicts in the Middle East. A shadow war would reduce the exposure of American troops and, if Iran was unsure of whether the United States or its allies were responsible, its response could be muted.

Authoritarian powers, like Iran, have an easier time with hybrid conflicts built on deceptions and falsehoods.

For example, Russian tactics in Crimea and eastern Ukraine in 2014 demonstrated the effectiveness of hybrid warfare in a post-Cold War era. Russia was able to leverage confusion, obfuscation and violence to achieve geopolitical gains.

Russian special forces without insignia, the so-called little green men, helped Moscow seize Crimea. And Russian-backed separatists, commanded by Russian military officers, have effectively cut off eastern Ukraine from the rest of the country, despite international outcry.

Iran has its own track record of using hybrid tactics, mostly through the use of its proxy forces in Iraq, Syria, Yemen and elsewhere.

After the American invasion of Iraq in 2003, Iran became adept at striking the United States without provoking a direct response. Tehran’s militia proxy forces regularly fired rockets at American bases in Iraq, and Iran flooded the battlefield with a particularly deadly form of roadside bomb that penetrated some of the best American military armor.

In past decades, though, the United States was much better at thinly veiled, shadow operations. During the Cold War, the United States regularly used unconventional tactics, proxy forces and its intelligence agency to keep adversaries off balance.

The C.I.A. began mining Nicaraguan harbors in 1984: The nominally covert, but well publicized, operations were not aimed at sinking ships. Instead, the agency’s real target was the international insurance markets.

The Reagan administration, which was backing the Contra rebels, hoped raising insurance rates would reduce shipping, raising prices on critical goods and increasing public pressure on the leftist Nicaraguan government.

Iran’s strikes on tankers in recent weeks echo that old C.I.A. operation, current and former officials said. After initial strikes on tankers last month, Lloyd’s of London, the international insurance company, announced it would effectively raise insurance rates for the entire Persian Gulf.

Reviving America’s old tactics and finding a way to copy Iran’s new ones could be the best way to try to halt Tehran’s current campaign, Mr. McFate said. The defensive measure the United States has taken, including deploying an aircraft carrier and Patriot missile batteries to the region, have not halted Iran’s activities.

“Iran is playing by the new rules, he said, “while we are using the obsolete ones, and wonder why Iran’s behavior is not changing.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

White House Is Pressing for Additional Options, Including in Cyberspace, to Deter Iranian Attacks

Westlake Legal Group 23DC-shadow-facebookJumbo White House Is Pressing for Additional Options, Including in Cyberspace, to Deter Iranian Attacks United States Politics and Government Trump, Donald J Ships and Shipping Islamic Revolutionary Guards Corps Iran Drones (Pilotless Planes) Cyberwarfare and Defense central intelligence agency

WASHINGTON — American intelligence and military officers are working on additional clandestine plans to counter Iranian aggression in the Persian Gulf, pushed by the White House to develop new options that could help deter Tehran without escalating tensions into a full-out conventional war, according to current and former officials.

The goal is to develop operations similar to the cyberattacks conducted on Thursday and that echo the shadow war the United States has accused Tehran of carrying out with attacks on oil tankers in the Middle East, according to American officials briefed on the effort. Iran maintains that it was not responsible for the attacks on the tankers.

The cyberattacks were aimed at an Iranian intelligence group that American officials believe was behind a series of attacks on tankers in the Persian Gulf region. The American operation was intended to take down the computers and networks used by the intelligence group, at least temporarily. A separate online operation was aimed at taking out computers that control Iranian missile launches.

The White House has told military and intelligence officials it wants options in line with the kind of operations conducted by Iran’s Islamic Revolutionary Guards Corps, the officials said.

President Trump has made clear he believes that, at this point, a direct strike would be escalatory, although he has repeatedly warned Iran against further aggression.

Intelligence and military officials have told White House policymakers, including Mr. Trump, that without an additional American response, Iran will continue to destabilize the region.

Officials did not provide specifics about the secret operations under consideration by the White House. But they could include a wide range of activities such as additional cyberattacks, clandestine operations aimed at disabling boats used by Iranians to conduct shipping attacks and covert operations inside Iran aimed at fomenting more unrest. The United States might also look for ways to divide or undermine the effectiveness of Iranian proxy groups.

The C.I.A. has longstanding secret plans for responding to Iranian provocations. Senior officials have discussed with the White House options for expanded covert operations by the agency, as well as plans to step up existing efforts to counter Iran’s efforts, according to current and former officials.

One former American military commander said there were a range of options that the Pentagon and the C.I.A. can pursue that could keep Iran off balance but that would not have “crystal-clear attribution” to the United States. An American operation that was not publicly announced could still deter further action by Tehran, if Iran understood what United States operatives had done, the former officer said.

The types of responses the United States could undertake are broad if the United States was willing to use the same tactics that Iran has mastered, said Sean McFate, a professor at the National Defense University and the author of “The New Rules of War.”

“If we want to fight back, do it in the shadows,” he said.

Mr. McFate said the United States could put a bounty on Iran’s paramilitary and proxy forces. That would create an incentive for mercenary forces to take on Hezbollah and other Iranian proxies. American intelligence forces also could find new ways to assist existing protests against the Iranian government. Such efforts could include spreading information, either embarrassing truths or deliberate false rumors, aimed at undermining the support that Tehran’s elites have for Iran’s leaders, he said. The United States could also look at ways to make protests by Iran’s labor movement more effective at weakening the government.

Current and former officials say that Iran’s covert attacks against shipping and its downing of an American drone are an attempt to try to raise pressure on the United States. Iran, they say, hopes that by sowing chaos in the Persian Gulf it can drive up oil prices, which will put pressure on both Mr. Trump and American allies dependent on Middle Eastern oil. Iran maintains that the drone it shot down had violated its airspace, while American officials insist it had been over international waters.

“From the Iranian perspective, unconventional attacks, threats against Gulf shipping and air routes and bellicose rhetoric represent the best ways to pressure the international community to compel the U.S. to relieve sanctions without igniting a conventional conflict,” said Norman T. Roule, a former national intelligence manager for Iran and a C.I.A. Middle East expert.

While a number of senior American national security officials agree that further action against Iran is needed, they are divided about how public that action needs to be.

Some officials believe the United States needs be willing to master the kind of deniable, shadowy techniques Tehran has perfected in order to halt Iran’s aggressions. Others think that, while helpful, such clandestine attacks will not be enough to reassure American allies or deter Iran.

Iran will most likely for a time pause its activities, said senior American officials. But, with sanctions biting, they say Iran will once again resume attacks on shipping. That will once more force the White House to consider a direct military strike.

While so-called gray zone operations are meant to stay below the threshold of inciting open conflict, the moves always run the risk of touching off exactly what both sides are trying to avoid: a shooting war.

Moreover, some online operations are far easier than others. Knocking an intelligence agency’s computers offline, as the United States did with Russia last year during the midterm American elections, is fairly basic. But getting inside a missile launch operation is much harder; while the United States succeeded in doing so in North Korea, it took a long time and prompted the North Koreans to build an entirely different missile system.

The Iranians also now have much greater capability to strike back in the cyber realm than they did a decade ago. Their foray into American banks in 2012 and 2013 was, in retrospect, a training exercise. When the Department of Homeland Security issued a warning on Saturday about Iranian cyberthreats, it described much greater capabilities. Iran’s “cyber corps” has now had years of training in causing damaging attacks, like the one it conducted on a Las Vegas casino and other targets in the United States.

Mr. Roule also agreed the United States response needs to be public and clear. “The best U.S. options will not be covert,” he said. “Overt options send the strongest message of deterrence. Iran needs to know that the U.S. — supported by the international community — will not tolerate its behavior.”

Mr. Trump has been stung by criticism about his decision to call off the strikes following the Iranian drone attack. But the president believes a combination of covert operations by the C.I.A. and clandestine operations by the military’s Cyber Command and other military forces will demonstrate his resolve as commander in chief, a senior administration official said.

The president is eager to avoid a messy shooting war with Iran, which he believes would violate his campaign promise to keep America out of protracted conflicts in the Middle East. A shadow war would reduce the exposure of American troops and, if Iran was unsure of whether the United States or its allies were responsible, its response could be muted.

Authoritarian powers, like Iran, have an easier time with hybrid conflicts built on deceptions and falsehoods.

For example, Russian tactics in Crimea and eastern Ukraine in 2014 demonstrated the effectiveness of hybrid warfare in a post-Cold War era. Russia was able to leverage confusion, obfuscation and violence to achieve geopolitical gains.

Russian special forces without insignia, the so-called little green men, helped Moscow seize Crimea. And Russian-backed separatists, commanded by Russian military officers, have effectively cut off eastern Ukraine from the rest of the country, despite international outcry.

Iran has its own track record of using hybrid tactics, mostly through the use of its proxy forces in Iraq, Syria, Yemen and elsewhere.

After the American invasion of Iraq in 2003, Iran became adept at striking the United States without provoking a direct response. Tehran’s militia proxy forces regularly fired rockets at American bases in Iraq, and Iran flooded the battlefield with a particularly deadly form of roadside bomb that penetrated some of the best American military armor.

In past decades, though, the United States was much better at thinly veiled, shadow operations. During the Cold War, the United States regularly used unconventional tactics, proxy forces and its intelligence agency to keep adversaries off balance.

The C.I.A. began mining Nicaraguan harbors in 1984: The nominally covert, but well publicized, operations were not aimed at sinking ships. Instead, the agency’s real target was the international insurance markets.

The Reagan administration, which was backing the Contra rebels, hoped raising insurance rates would reduce shipping, raising prices on critical goods and increasing public pressure on the leftist Nicaraguan government.

Iran’s strikes on tankers in recent weeks echo that old C.I.A. operation, current and former officials said. After initial strikes on tankers last month, Lloyd’s of London, the international insurance company, announced it would effectively raise insurance rates for the entire Persian Gulf.

Reviving America’s old tactics and finding a way to copy Iran’s new ones could be the best way to try to halt Tehran’s current campaign, said Mr. McFate. The defensive measure the United States has taken, including deploying an aircraft carrier and Patriot missile batteries to the region, have not halted Iran’s activities.

“Iran is playing by the new rules, he said, “while we are using the obsolete ones, and wonder why Iran’s behavior is not changing.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Distrusting Both Iran and U.S., Europe Urges ‘Maximum Restraint’

BRUSSELS — Speaking of the attacks this week on fuel tankers in the Gulf of Oman, President Trump said flatly on Friday that “Iran did do it.” European governments may also think that Iran is probably to blame, but their distrust of the Trump administration and its hawkish policy toward Tehran have led them to measure their words, and call for de-escalation and “maximum restraint.”

Mindful of Washington’s exaggerations and outright misrepresentations of intelligence leading up to the Iraq war, European leaders are asking the Trump administration for hard evidence. The last thing they want is to be asked to support another American war in the Middle East that would be highly unpopular with voters.

Europeans are no fans of the Iranian government or its policies in the Middle East, but they are concerned by what they see as the Trump administration’s policy of “maximum pressure” on Iran — thus their use of maximum restraint. Many critics believe Mr. Trump is succeeding only in creating maximum pressure among hard-line factions in Iran to respond with carefully calibrated attacks that send a message, like those against tankers in a vital passageway for global oil supplies.

Germany wants a careful investigation of the attacks, insisting that “a spiral of escalation must be avoided.” The European Union, in the words of the spokeswoman Maja Kocijancic, has “said repeatedly that the region doesn’t need further escalation, it doesn’t need further destabilization, it doesn’t need further tension.”

Ms. Kocijancic said that European foreign ministers would discuss Iran and other issues at a regular meeting on Monday.

In the absence of hard intelligence, with American agencies notably quiet, European governments — with the possible exception of Britain — are wary about blaming Iran. They are reluctant to accept the White House’s claims at face value, and do not want to provide Washington with any pretext for war.

ImageWestlake Legal Group merlin_156030510_53c441c9-bf5e-454c-a501-85d054f427c3-articleLarge Distrusting Both Iran and U.S., Europe Urges ‘Maximum Restraint’ United States International Relations Trump, Donald J Ships and Shipping Saudi Arabia Islamic Revolutionary Guards Corps Iran Gulf of Oman European Union Europe Defense and Military Forces China Bolton, John R Abe, Shinzo

President Trump and President Emmanuel Macron of France this month. Europeans are publicly unhappy with Mr. Trump’s decision to pull the United States from the 2015 nuclear deal.CreditDoug Mills/The New York Times

Europeans are publicly unhappy with Mr. Trump’s decision to withdraw the United States from the 2015 nuclear deal and to reimpose harsh economic sanctions on Iran, including shutting down most of its oil exports. They have continued to support the deal and are trying to ensure that Iran stays within its limits, to avoid tougher sanctions or an act that Israel or the United States would see as justification for war.

More broadly, they are troubled by “the sheer unpredictability of American policy toward Iran,” said Ian Lesser, a former American official who now runs the Brussels headquarters of the German Marshall Fund. “These events are against a backdrop of longstanding anxiety about U.S. policy toward Iran and its aims. When pressed, Europeans are mostly on the same page with Washington about Iran’s behavior. But the difference is over policy, and there is a basic lack of confidence in the discourse with Washington.”

These kinds of attacks are what Europeans predicted when Mr. Trump pulled out of the Iran deal, said Ellie Geranmayeh, an Iran expert with the European Council on Foreign Affairs. “Most European governments are surprised how long Iran has played the strategic patience card, especially after the increase in American sanctions in November,” she said.

Assuming Iran is behind these attacks, which is not yet certain, she said, “Europe sees this as a calculated, managed and fairly rational response to continual and increased U.S. sanctions pressure. We’ll keep seeing cycles of this escalation, designed to make everyone in the region nervous.” What worries Europeans, she said, is “the likelihood of missteps, miscalculations.”

The Iranians, having lived with American troops in Iraq and Afghanistan for years, think they understand “the red buttons,” Ms. Geranmayeh said. “But they also need to send signals that the oil embargo is unacceptable, and they need to make Trump realize this, so you do it through rising oil prices and getting his base nervous about another Mideast war in the run-up to the election. But Iranians could get it wrong.”

Nathalie Tocci, a senior adviser to the European foreign policy chief, Federica Mogherini, said, “Before we blame someone, we need credible evidence.” Iranians are deeply rational actors, she said. And for Iran to have attacked a Japanese ship when the Japanese prime minister was in Tehran “is not an especially rational thing to do.”

Ms. Tocci also said that Washington’s policy was having the predictable effect of weakening moderates in Iran and strengthening the hand of hard-liners. As the United States escalates, she said, “the people we work with in Iran are becoming weaker by the day, so we can’t expect retaliatory measures not to take place.”

A young worker in Tehran. The renewed United States sanctions have exacerbated a severe economic crisis in Iran.CreditEbrahim Noroozi/Associated Press

What Europe does not want is Iran breaking the limits of the nuclear deal, which could force Europeans to reimpose their own sanctions.

The Pentagon, United States Central Command and American intelligence agencies all predicted attacks on shipping — sparing American targets and causing no loss of life — as a response to increased American pressure, said Kori Schake, a former Pentagon official who is now deputy director of the International Institute for Strategic Studies. Iran followed a similar policy in the 1980s, in the context of the Iran-Iraq war, when Washington backed Iraq and United States and British warships escorted tankers through dangerous waters.

“There’s a lot of suspicion in Europe about American motives,” said François Heisbourg, a French defense analyst. “The maritime milieu is especially susceptible to manipulation — remember the Gulf of Tonkin,” a dubious report of naval hostilities that President Lyndon B. Johnson used to escalate the war in Vietnam. And then, he said, are the bitter memories of the Iraq war, which was based on faulty intelligence and badly split Europe.

Those suspicions only deepened Friday, when Japanese shipping executives insisted that their tanker was hit not by a mine, as American officials had said implies, but by a “flying object.”

Mr. Heisbourg said, there are several potential beneficiaries from the attacks, among them Washington hard-liners like the national security adviser, John R. Bolton; “wild ones in Saudi Arabia or in the Emirates or the Revolutionary Guards in Iran”; or anyone who wants higher oil prices.

But what worries many is that Tehran might misjudge Mr. Trump’s stated unwillingness to go to war. “This may lead Iran to miscalculate,” Mr. Heisbourg said. “It may well be that they attacked the tankers because they don’t think America will retaliate.”

That leaves Europeans wondering where the Americans are pushing them.

“As the stakes rise, public opinion will become more important,,” Mr. Heisbourg said, “And European public opinion won’t be favorable to doing anything militarily with Mr. Trump.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How Tanker Attacks in the Strait of Hormuz Could Affect Oil Prices

The Strait of Hormuz, sometimes described as the world’s most important oil choke point, is a gateway for almost a third of all crude oil and other petroleum products carried by tanker.

But it is also an increasingly dangerous place because of recent attacks on tankers, raising fears that the route is vulnerable to assaults that could threaten and destabilize oil prices.

After the apparent attack on Thursday on two tankers just outside the strait, tanker operators were quick to voice concerns.

“We have people of every nationality and vessels of every flag transiting that crucial sea lane,” said Paolo d’Amico, chairman of International Association of Independent Tanker Owners. “If the waters are becoming unsafe, the supply to the entire Western world could be at risk.”

ImageWestlake Legal Group merlin_156389934_4c7179ca-0b51-4123-bfa1-f856f46e9f2b-articleLarge How Tanker Attacks in the Strait of Hormuz Could Affect Oil Prices Strait of Hormuz Ships and Shipping Pipelines Oil (Petroleum) and Gasoline Iran Gulf of Oman Fujairah (United Arab Emirates)

An oil tanker after it was attacked at the Gulf of Oman.CreditIranian Students’ News Agency, via, Reuters

The oil-producing countries around the Persian Gulf, including Kuwait, Saudi Arabia, Iraq and Iran, are crucial for supplying the world oil market. Most of their exports, around 18 million barrels a day or about 20 percent of world demand, must travel through the Strait of Hormuz.

The strait, separating the United Arab Emirates, Oman and Iran, is 21 miles wide at its narrowest point, but the width of the shipping lane in either direction is only two miles wide, according to the United States Energy Information Administration. Dozens of ships a day move through the passage.

The bulk of this traffic heads for Asian markets like China, India and Japan. Large volumes of liquefied natural gas, an increasingly important fuel, follow the same route from the tiny emirate of Qatar.

But this area has been rocked by instability in recent weeks. In May, there were reports that four oil vessels were attacked near the Strait of Hormuz, heightening concerns over rising tensions between Iran and the United States. A day later, a drone strike on oil pipelines, claimed by Houthi rebels, forced the Saudis to suspend the flow of oil to the western side of the country.

On Thursday, two more tankers were rocked with explosion and fire near the strait. At least one vessel was set ablaze, and crews were forced to abandon ship.

The carrier Abraham Lincoln in the Gulf of Oman in May. Experts doubt that the Strait of Hormuz could be completely shut down, in part because of the United States Navy’s presence in the region.CreditMatt Herbst/US Navy, via Agence France-Presse — Getty Images

Iran’s coastline covers much of the east side of the gulf, and analysts say that, as the United States tightens sanctions on Iran, Tehran would be well placed to harass shipping with small boats, missiles, mines and other weapons. Experts doubt that the Strait of Hormuz could be shut down, in part because the United States Navy maintains a robust presence in the region.

Helima Croft, global head of commodity strategy at RBC Capital Markets, an investment bank, notes that the Iranians have been mentioned as possible suspects behind the attacks and that they may consider such tactics an appropriate response to the sanctions, which “are viewed from Tehran as economic warfare designed to elicit regime change.”

Analysts say that whoever was behind the recent attacks may be trying to make the point that there is no way around the gulf routes. The reports of attacks in May on four ships occurred in waters off Fujairah, an important port on the Gulf of Oman with facilities designed to bypass the straits.

Read more about the recent attacks
Tankers Are Attacked in Mideast, and U.S. Says Video Shows Iran Was Involved

June 13, 2019

Saudi Oil Infrastructure at Risk as Small Attacks Raise Potential for Big Disruption

May 17, 2019

Saudi Arabia does have a safety valve in case the strait became too dangerous: an East-West pipeline that could carry crude to the port of Yanbu on the Red Sea coast. But the drone attack claimed by the Houthi rebels managed to briefly shut that route down.

The other Gulf producers, including Iran, are more dependent on the strait for their exports although Abu Dhabi has an oil pipeline to Fujairah.

A port in the Gulf emirate of Fujairah.CreditKarim Sahib/Agence France-Presse — Getty Images

So far, the oil markets have largely taken the attacks in stride, although “the fact that we have had a second series of incidents has definitely heightened concern,” said Richard Mallinson, an analyst at Energy Aspects, a market research firm.

Prices for Brent crude rose about 3.5 percent on Thursday to more than $61 a barrel but remain well below their recent highs of about $72 a barrel in mid-May.

Analysts say that traders are probably betting that the smoldering tensions will not burst into a full-blown conflict. Another factor is that slowing growth in the world economy, weighed down by trade tensions between the United States and China, has weakened demand for oil.

And then there is the American resurgence in production to consider. There is a sense, Ms. Croft said, that the shale oil boom in the United States, where oil production grew an extraordinary 17 percent last year, can compensate for any jolts in world oil supply.

Ms. Croft worries that a major conflict or a cyberattack that shuts off a large portion of Gulf exports could prove a rude awakening. “There is no way the market is insulated from that because of U.S. shale,” she said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How Tanker Attacks in the Strait of Hormuz Could Affect Oil Prices

The Strait of Hormuz, sometimes described as the world’s most important oil choke point, is a gateway for almost a third of all crude oil and other petroleum products carried by tanker.

But it is also an increasingly dangerous place because of recent attacks on tankers, raising fears that the route is vulnerable to assaults that could threaten and destabilize oil prices.

After the apparent attack on Thursday on two tankers just outside the strait, tanker operators were quick to voice concerns.

“We have people of every nationality and vessels of every flag transiting that crucial sea lane,” said Paolo d’Amico, chairman of International Association of Independent Tanker Owners. “If the waters are becoming unsafe, the supply to the entire Western world could be at risk.”

ImageWestlake Legal Group merlin_156389934_4c7179ca-0b51-4123-bfa1-f856f46e9f2b-articleLarge How Tanker Attacks in the Strait of Hormuz Could Affect Oil Prices Strait of Hormuz Ships and Shipping Pipelines Oil (Petroleum) and Gasoline Iran Gulf of Oman Fujairah (United Arab Emirates)

An oil tanker after it was attacked at the Gulf of Oman.CreditIranian Students’ News Agency, via, Reuters

The oil-producing countries around the Persian Gulf, including Kuwait, Saudi Arabia, Iraq and Iran, are crucial for supplying the world oil market. Most of their exports, around 18 million barrels a day or about 20 percent of world demand, must travel through the Strait of Hormuz.

The strait, separating the United Arab Emirates, Oman and Iran, is 21 miles wide at its narrowest point, but the width of the shipping lane in either direction is only two miles wide, according to the United States Energy Information Administration. Dozens of ships a day move through the passage.

The bulk of this traffic heads for Asian markets like China, India and Japan. Large volumes of liquefied natural gas, an increasingly important fuel, follow the same route from the tiny emirate of Qatar.

But this area has been rocked by instability in recent weeks. In May, there were reports that four oil vessels were attacked near the Strait of Hormuz, heightening concerns over rising tensions between Iran and the United States. A day later, a drone strike on oil pipelines, claimed by Houthi rebels, forced the Saudis to suspend the flow of oil to the western side of the country.

On Thursday, two more tankers were rocked with explosion and fire near the strait. At least one vessel was set ablaze, and crews were forced to abandon ship.

The carrier Abraham Lincoln in the Gulf of Oman in May. Experts doubt that the Strait of Hormuz could be completely shut down, in part because of the United States Navy’s presence in the region.CreditMatt Herbst/US Navy, via Agence France-Presse — Getty Images

Iran’s coastline covers much of the east side of the gulf, and analysts say that, as the United States tightens sanctions on Iran, Tehran would be well placed to harass shipping with small boats, missiles, mines and other weapons. Experts doubt that the Strait of Hormuz could be shut down, in part because the United States Navy maintains a robust presence in the region.

Helima Croft, global head of commodity strategy at RBC Capital Markets, an investment bank, notes that the Iranians have been mentioned as possible suspects behind the attacks and that they may consider such tactics an appropriate response to the sanctions, which “are viewed from Tehran as economic warfare designed to elicit regime change.”

Analysts say that whoever was behind the recent attacks may be trying to make the point that there is no way around the gulf routes. The reports of attacks in May on four ships occurred in waters off Fujairah, an important port on the Gulf of Oman with facilities designed to bypass the straits.

Read more about the recent attacks
Tankers Are Attacked in Mideast, and U.S. Says Video Shows Iran Was Involved

June 13, 2019

Saudi Oil Infrastructure at Risk as Small Attacks Raise Potential for Big Disruption

May 17, 2019

Saudi Arabia does have a safety valve in case the strait became too dangerous: an East-West pipeline that could carry crude to the port of Yanbu on the Red Sea coast. But the drone attack claimed by the Houthi rebels managed to briefly shut that route down.

The other Gulf producers, including Iran, are more dependent on the strait for their exports although Abu Dhabi has an oil pipeline to Fujairah.

A port in the Gulf emirate of Fujairah.CreditKarim Sahib/Agence France-Presse — Getty Images

So far, the oil markets have largely taken the attacks in stride, although “the fact that we have had a second series of incidents has definitely heightened concern,” said Richard Mallinson, an analyst at Energy Aspects, a market research firm.

Prices for Brent crude rose about 3.5 percent on Thursday to more than $61 a barrel but remain well below their recent highs of about $72 a barrel in mid-May.

Analysts say that traders are probably betting that the smoldering tensions will not burst into a full-blown conflict. Another factor is that slowing growth in the world economy, weighed down by trade tensions between the United States and China, has weakened demand for oil.

And then there is the American resurgence in production to consider. There is a sense, Ms. Croft said, that the shale oil boom in the United States, where oil production grew an extraordinary 17 percent last year, can compensate for any jolts in world oil supply.

Ms. Croft worries that a major conflict or a cyberattack that shuts off a large portion of Gulf exports could prove a rude awakening. “There is no way the market is insulated from that because of U.S. shale,” she said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How Tanker Attacks on a Skinny Waterway Could Affect Oil Prices

The Strait of Hormuz, sometimes described as the world’s most important oil choke point, is a gateway for almost a third of all crude oil and other petroleum products carried by tanker.

But it is also an increasingly dangerous place because of recent attacks on tankers, raising fears that the route is vulnerable to assaults that could threaten and destabilize oil prices.

After the apparent attack on Thursday on two tankers just outside the strait, tanker operators were quick to voice concerns.

“We have people of every nationality and vessels of every flag transiting that crucial sea lane,” said Paolo d’Amico, chairman of International Association of Independent Tanker Owners. “If the waters are becoming unsafe, the supply to the entire Western world could be at risk.”

ImageWestlake Legal Group merlin_156389934_4c7179ca-0b51-4123-bfa1-f856f46e9f2b-articleLarge How Tanker Attacks on a Skinny Waterway Could Affect Oil Prices Strait of Hormuz Ships and Shipping Pipelines Oil (Petroleum) and Gasoline Iran Gulf of Oman Fujairah (United Arab Emirates)

An oil tanker after it was attacked at the Gulf of Oman.CreditIranian Students’ News Agency, via, Reuters

The oil-producing countries around the Persian Gulf, including Kuwait, Saudi Arabia, Iraq and Iran, are crucial for supplying the world oil market. Most of their exports, around 18 million barrels a day or about 20 percent of world demand, must travel through the Strait of Hormuz.

The strait, separating the United Arab Emirates, Oman and Iran, is 21 miles wide at its narrowest point, but the width of the shipping lane in either direction is only two miles wide, according to the United States Energy Information Administration. Dozens of ships a day move through the passage.

The bulk of this traffic heads for Asian markets like China, India and Japan. Large volumes of liquefied natural gas, an increasingly important fuel, follow the same route from the tiny emirate of Qatar.

But this area has been rocked by instability in recent weeks. In May, there were reports that four oil vessels were attacked near the Strait of Hormuz, heightening concerns over rising tensions between Iran and the United States. A day later, a drone strike on oil pipelines, claimed by Houthi rebels, forced the Saudis to suspend the flow of oil to the western side of the country.

On Thursday, two more tankers were rocked with explosion and fire near the strait. At least one vessel was set ablaze, and crews were forced to abandon ship.

The carrier Abraham Lincoln in the Gulf of Oman in May. Experts doubt that the Strait of Hormuz could be completely shut down, in part because of the United States Navy’s presence in the region.CreditMatt Herbst/US Navy, via Agence France-Presse — Getty Images

Iran’s coastline covers much of the east side of the gulf, and analysts say that, as the United States tightens sanctions on Iran, Tehran would be well placed to harass shipping with small boats, missiles, mines and other weapons. Experts doubt that the Strait of Hormuz could be shut down, in part because the United States Navy maintains a robust presence in the region.

Helima Croft, global head of commodity strategy at RBC Capital Markets, an investment bank, notes that the Iranians have been mentioned as possible suspects behind the attacks and that they may consider such tactics an appropriate response to the sanctions, which “are viewed from Tehran as economic warfare designed to elicit regime change.”

Analysts say that whoever was behind the recent attacks may be trying to make the point that there is no way around the gulf routes. The reports of attacks in May on four ships occurred in waters off Fujairah, an important port on the Gulf of Oman with facilities designed to bypass the straits.

Read more about the recent attacks
In Gulf of Oman, Tankers Are Struck Again, Raising Fears of Wider Conflict

June 13, 2019

Saudi Oil Infrastructure at Risk as Small Attacks Raise Potential for Big Disruption

May 17, 2019

Saudi Arabia does have a safety valve in case the strait became too dangerous: an East-West pipeline that could carry crude to the port of Yanbu on the Red Sea coast. But the drone attack claimed by the Houthi rebels managed to briefly shut that route down.

The other Gulf producers, including Iran, are more dependent on the strait for their exports although Abu Dhabi has an oil pipeline to Fujairah.

A port in the Gulf emirate of Fujairah.CreditKarim Sahib/Agence France-Presse — Getty Images

So far, the oil markets have largely taken the attacks in stride, although “the fact that we have had a second series of incidents has definitely heightened concern,” said Richard Mallinson, an analyst at Energy Aspects, a market research firm.

Prices for Brent crude rose about 3.5 percent on Thursday to more than $61 a barrel but remain well below their recent highs of about $72 a barrel in mid-May.

Analysts say that traders are probably betting that the smoldering tensions will not burst into a full-blown conflict. Another factor is that slowing growth in the world economy, weighed down by trade tensions between the United States and China, has weakened demand for oil.

And then there is the American resurgence in production to consider. There is a sense, Ms. Croft said, that the shale oil boom in the United States, where oil production grew an extraordinary 17 percent last year, can compensate for any jolts in world oil supply.

Ms. Croft worries that a major conflict or a cyberattack that shuts off a large portion of Gulf exports could prove a rude awakening. “There is no way the market is insulated from that because of U.S. shale,” she said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tanker Attacks Are Threatening the World’s Most Important Oil Route

The Strait of Hormuz, sometimes described as the world’s most important oil choke point, is a gateway for almost a third of all crude oil and other petroleum products carried by tanker.

But it is also an increasingly dangerous place because of recent attacks on tankers, raising fears that the route is vulnerable to assaults that could threaten and destabilize oil prices.

After the apparent attack on Thursday on two tankers just outside the strait, tanker operators were quick to voice concerns.

“We have people of every nationality and vessels of every flag transiting that crucial sea lane,” said Paolo d’Amico, chairman of International Association of Independent Tanker Owners. “If the waters are becoming unsafe, the supply to the entire Western world could be at risk.”

ImageWestlake Legal Group merlin_156389934_4c7179ca-0b51-4123-bfa1-f856f46e9f2b-articleLarge Tanker Attacks Are Threatening the World’s Most Important Oil Route Strait of Hormuz Ships and Shipping Pipelines Oil (Petroleum) and Gasoline Iran Gulf of Oman Fujairah (United Arab Emirates)

An oil tanker after it was attacked at the Gulf of Oman.CreditIranian Students’ News Agency, via, Reuters

The oil-producing countries around the Persian Gulf, including Kuwait, Saudi Arabia, Iraq and Iran, are crucial for supplying the world oil market. Most of their exports, around 18 million barrels a day or about 20 percent of world demand, must travel through the Strait of Hormuz.

The strait, separating the United Arab Emirates, Oman and Iran, is 21 miles wide at its narrowest point, but the width of the shipping lane in either direction is only two miles wide, according to the United States Energy Information Administration. Hundreds of ships a day move through the passage.

The bulk of this traffic heads for Asian markets like China, India and Japan. Large volumes of liquefied natural gas, an increasingly important fuel, follow the same route from the tiny emirate of Qatar.

But this area has been rocked by instability in recent weeks. In May, there were reports that four oil vessels were attacked near the Strait of Hormuz, heightening concerns over rising tensions between Iran and the United States. A day later, a drone strike on oil pipelines, claimed by Houthi rebels, forced the Saudis to suspend the flow of oil to the western side of the country.

On Thursday, two more tankers were rocked with explosion and fire near the strait. At least one vessel was set ablaze, and crews were forced to abandon ship.

The carrier Abraham Lincoln in the Gulf of Oman in May. Experts doubt that the Strait of Hormuz could be completely shut down, in part because of the United States Navy’s presence in the region.CreditMatt Herbst/US Navy, via Agence France-Presse — Getty Images

Iran’s coastline covers much of the east side of the gulf, and analysts say that, as the United States tightens sanctions on Iran, Tehran would be well placed to harass shipping with small boats, missiles, mines and other weapons. Experts doubt that the Strait of Hormuz could be shut down, in part because the United States Navy maintains a robust presence in the region.

Helima Croft, global head of commodity strategy at RBC Capital Markets, an investment bank, notes that the Iranians have been mentioned as possible suspects behind the attacks and that they may consider such tactics an appropriate response to the sanctions, which “are viewed from Tehran as economic warfare designed to elicit regime change.”

Analysts say that whoever was behind the recent attacks may be trying to make the point that there is no way around the gulf routes. The reports of attacks in May on four ships occurred in waters off Fujairah, an important port on the Gulf of Oman with facilities designed to bypass the straits.

Read more about the recent attacks
In Gulf of Oman, Tankers Are Struck Again, Raising Fears of Wider Conflict

June 13, 2019

Saudi Oil Infrastructure at Risk as Small Attacks Raise Potential for Big Disruption

May 17, 2019

Saudi Arabia does have a safety valve in case the strait became too dangerous: an East-West pipeline that could carry crude to the port of Yanbu on the Red Sea coast. But the drone attack claimed by the Houthi rebels managed to briefly shut that route down.

The other Gulf producers, including Iran, are more dependent on the strait for their exports although Abu Dhabi has an oil pipeline to Fujairah.

A port in the Gulf emirate of Fujairah.CreditKarim Sahib/Agence France-Presse — Getty Images

So far, the oil markets have largely taken the attacks in stride, although “the fact that we have had a second series of incidents has definitely heightened concern,” said Richard Mallinson, an analyst at Energy Aspects, a market research firm.

Prices for Brent crude rose about 3.5 percent on Thursday to more than $61 a barrel but remain well below their recent highs of about $72 a barrel in mid-May.

Analysts say that traders are probably betting that the smoldering tensions will not burst into a full-blown conflict. Another factor is that slowing growth in the world economy, weighed down by trade tensions between the United States and China, has weakened demand for oil.

And then there is the American resurgence in production to consider. There is a sense, Ms. Croft said, that the shale oil boom in the United States, where oil production grew an extraordinary 17 percent last year, can compensate for any jolts in world oil supply.

Ms. Croft worries that a major conflict or a cyberattack that shuts off a large portion of Gulf exports could prove a rude awakening. “There is no way the market is insulated from that because of U.S. shale,” she said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Paralysis on America’s Rivers: There’s Too Much Water

VAN BUREN, Ark. — Marty Shell just wanted the lights back on.

Nineteen barges bound for nowhere were tied up along the swollen riverbank. Dark warehouses full of flooded fertilizer reeked with a sulfuric stench that made it painful to inhale. The river system, which for decades provided Mr. Shell a livelihood, now spreads only gelatinous mud and pungent debris and uncomfortable questions about the future.

The devastating flooding that has submerged large parts of the Midwest and South this spring has also brought barge traffic on many of the regions’ rivers to a near standstill. The water is too high and too fast to navigate. Shipments of grains, fertilizers and construction supplies are stranded. And riverfront ports, including the ones Mr. Shell oversees in Van Buren and Fort Smith, Ark., have been overtaken by the floods and severely damaged.

As Mr. Shell surveyed the wreckage last week, anything approaching normalcy remained months, or even a year, away. To start, he would be happy just to get the power restored.

“Before this happened, my mind-set was, ‘What am I doing in the next month or two?’ — trying to stay ahead,” said Mr. Shell, the president of Five Rivers Distribution, which sends products up and down rivers on barges. “Nowadays, I wake up with, ‘What am I going to do for today?’”

ImageWestlake Legal Group merlin_156057402_216a2ebd-9d4e-4aad-85bd-b2316c7a4e25-articleLarge Paralysis on America’s Rivers: There’s Too Much Water Van Buren (Ark) Ships and Shipping Shell, Marty Rivers Mississippi River Midwestern States (US) Fort Smith (Ark) Floods Arkansas River Arkansas Agriculture and Farming

Marty Shell, president of Five Rivers Distribution, talks to Wesley Daniel, a terminal manager, in a flood-damaged warehouse at a port the company manages.CreditJoseph Rushmore for The New York Times

Across the country’s flood-battered midsection, the farms, towns and homes consumed by the bloated waters have drawn much of the attention. But flooding has had another, less intuitive effect — crippling the nation’s essential river commerce. Water, the very thing that makes barge shipping possible in normal times, has been present in such alarming overabundance this spring that it has rendered river transportation impossible in much of the United States.

The Arkansas River has been closed to commercial traffic. So has the Illinois River, a key connection to Chicago and the Great Lakes. And so has part of the Mississippi River near St. Louis, where it crested on Sunday at its second-highest point on record, cutting off the river’s northern section from shippers to the south.

As a result, farmers already grappling with flooded fields and worries about the trade war with China have struggled to obtain fertilizer for their crops. Customers have seen their deliveries of construction materials and road salt get stuck midway to their destinations. And shippers have made drastic cuts to their operations with work at a standstill.

“It’s like when you’re driving on an interstate and there’s an accident in front of you and there’s nowhere to go,” said Jeff Webb, president of Cargill Marine and Terminal, which operates more than 1,400 barges, hundreds of which are now stuck in the Gulf of Mexico or lower Mississippi River because of closures to the north.

Barges are slower and less conspicuous than trains, planes and trucks, but they can be a much more economical way to move bulk goods, as they have done around this country for generations. One barge can haul as much as 70 semi-trucks’ worth of dry cargo. They are especially useful for farmers, who use them to send harvested grain to export markets and to receive fertilizer for their next crop. A majority of the country’s exported grain is shipped on the Mississippi and its tributaries.

“We’re feeding the world, basically,” said Deidre Smith, director of the Arkansas Waterways Commission, a state agency. “It’s going to impact that a lot. The farmers right now are going to be hurting.”

The breakdown in river transportation is just one more burden for farmers, who are also facing low commodity prices. Some held on to last year’s crop, hoping that tariff-depressed prices would bounce back this year; now they cannot even get their produce to market.

Outside Conway, Ark., Chris Schaefers’s corn sprouted last month and grew past his knees. It is all gone now, dead beneath several feet of swift-moving, latte-colored river water. A few days ago, Mr. Schaefers drove a motorboat through one of his hay barns.

Chris Schaefers, left, and his neighbor and fellow farmer, Jill Edwards, passed an irrigation system nearly covered by flood water in a swamped Arkansas crop field.CreditJoseph Rushmore for The New York Times

Facing the possibility of thousands of swamped acres with nothing planted, Mr. Schaefers said he would like to sell what he has left from last year’s rice and soybean harvest, but it is stuck in grain bins. The same river that killed this year’s crop is so swollen that barges cannot take last year’s to market.

Even farmers whose fields have remained dry have faced troubles. The halts in river traffic have been a constant headache this planting season for Mike Christenson, agronomy division manager at Countryside Cooperative, a grain elevator and storage facility in Wisconsin. When the barges that haul imported fertilizer up the Mississippi could not get through, Mr. Christenson scrambled for alternatives.

“It’s been ugly all spring,” said Mr. Christenson, who said that for the first time in a decade, he was going to the extra expense of getting fertilizer shipments delivered by truck and rail.

“It’s just going to cost more to put in the crop than normal,” said Travis Justice, the Arkansas Farm Bureau’s chief economist.

An idled barge in Van Buren, Ark. It may be weeks before the flooded Arkansas River is back within its banks and running slowly and predictably enough for barges to navigate it safely.CreditJoseph Rushmore for The New York Times

Even if the rivers reopen to barges in the next few weeks — and that is uncertain, with water levels still near record heights in some places — the effects on the economy could linger. Never has so much of the river system been closed for so long at such an important time of year.

“We thought it was as bad as it was going to get” weeks ago, said Debra Calhoun, a senior vice president at the Waterways Council, an industry group. “The forecast just continues to be horrid.”

With supply chains disrupted, warehouses overflowing and shippers turning to more expensive ways to move goods, consumers could see higher prices and shortages of some products in the summer and fall.

“I think most people take the river for granted — they just assume that the grain is going to get to market, the steel coils are going to show up to make the pipe, and peanuts are going to get here,” said Bryan Day, the executive director of the Little Rock Port Authority in Arkansas, where dozens of barges have been waiting in the harbor for the water to subside and the river to reopen.

Bryan Day, executive director of the Little Rock Port Authority, worked with barge captains to store their loaded barges in the port’s slack-water harbor to await safer river conditions.CreditHouston Cofield for The New York Times

Barges need water to operate, but not this much of it. Shippers depend on predictable channels and a steady pace of river flow. The huge amounts of water that have rushed through the system in recent months have sent rivers bursting from their banks and made them hazardous for travel.

As the climate changes, scientists warn that the Midwest and South will experience more periods of intense rain, which can contribute to floods. May was the second-wettest month on record in the 48 contiguous states, federal officials said.

The risks of overwhelmed rivers have already been seen. Two barges broke loose in Oklahoma last month and careened down the flooded Arkansas River, raising fears that they would smash into a dam and cause it to fail, with devastating consequences downstream. The barges did eventually strike a dam, but it was only slightly damaged. A few days earlier in St. Louis, water levels were so high that a towboat struck a bridge.

In Arkansas, Mr. Shell has been spending his days waiting for the water to finish receding at the ports he runs. Instead of loading barges and trucks, his employees have been cleaning off the mud, surveying the damage and hoping for federal help to rebuild. It could still be weeks before barges are moving on the rivers, and his company’s losses have already reached into the hundreds of thousands of dollars.

But on a recent morning, as Mr. Shell idled his pickup truck in a cavernous warehouse still caked with river mud, there was one sign of a fresh start: The overhead lights came back on.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet

The email arrived in Washington before dawn. An official at the American Embassy in Beijing was urgently seeking advice from the State Department about an “ethics question.”

“I am writing you because Mission China is in the midst of preparing for a visit from Department of Transportation Secretary Elaine Chao,” the official wrote in October 2017.

Ms. Chao’s office had made a series of unorthodox requests related to her first scheduled visit to China as a Trump cabinet member, according to people with knowledge of the email. Among them: asking federal officials to help coordinate travel arrangements for at least one family member and include relatives in meetings with government officials.

ImageWestlake Legal Group eb33b13807a64f008b2bdab18bad99ce-articleLarge A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

A redacted email about a trip Ms. Chao was planning to take to China. A request to include family members at events raised ethical concerns.

In China, the Chaos are no ordinary family. They run an American shipping company with deep ties to the economic and political elite in China, where most of the company’s business is centered. The trip was abruptly canceled by Ms. Chao after the ethics question was referred to officials in the State and Transportation Departments and, separately, after The New York Times and others made inquiries about her itinerary and companions.

“She had these relatives who were fairly wealthy and connected to the shipping industry,” said a State Department official who was involved in deliberations over the visit. “Their business interests were potentially affected by meetings.”

The move to notify Washington was unusual and a sign of how concerned members of the State Department were, said the official, who was not authorized to speak on behalf of the agency.

David H. Rank, another State Department official, learned of the matter after he stepped down as deputy chief of mission in Beijing earlier in 2017. “This was alarmingly inappropriate,” he said of the requests.

The Transportation Department did not provide a reason for the trip’s cancellation, though a spokesman later cited a cabinet meeting President Trump had called at the time. The spokesman said that there was no link between Ms. Chao’s actions as secretary and her family’s business interests in China.

Ms. Chao has no formal affiliation or stake in her family’s shipping business, Foremost Group. But she and her husband, Senator Mitch McConnell of Kentucky, have received millions of dollars in gifts from her father, James, who ran the company until last year. And Mr. McConnell’s political campaigns have received more than $1 million in contributions from Ms. Chao’s extended family, including from her father and her sister Angela, now Foremost’s chief executive, who were both subjects of the State Department’s ethics question.

Ms. Chao with her husband, Mitch McConnell, the Senate majority leader; her father, James, a founder of Foremost; and her sister Angela, its chief executive.CreditStephen Crowley/The New York Times

Over the years, Ms. Chao has repeatedly used her connections and celebrity status in China to boost the profile of the company, which benefits handsomely from the expansive industrial policies in Beijing that are at the heart of diplomatic tensions with the United States, according to interviews, industry filings and government documents from both countries.

Now, Ms. Chao is the top Trump official overseeing the American shipping industry, which is in steep decline and overshadowed by its Chinese competitors.

Her efforts on behalf of the family business — appearing at promotional events, joining her father in interviews with Chinese-language media — have come as Foremost has interacted with the Chinese state to a remarkable degree for an American company.

Foremost has received hundreds of millions of dollars in loan commitments from a bank run by the Chinese government, whose policies have been labeled by the Trump administration as threats to American security. The company’s primary business — delivering China’s iron ore and coal — is intertwined with industries caught up in a trade war with the United States. That dispute stems in part from the White House’s complaints that China is flooding the world with subsidized steel, undermining American producers.

Foremost, though a relatively small company in its sector, is responsible for a large portion of orders at one of China’s biggest state-funded shipyards, and has secured long-term charters with a Chinese state-owned steel maker as well as global commodity companies that guarantee it steady revenues.

In a rarity for foreigners, Angela and James Chao have served on the board of the holding company for China State Shipbuilding, a state-owned enterprise that makes ships for the Chinese military, along with Foremost and other customers. Angela Chao is also on the board at the Bank of China, a top lender to the shipbuilder, and a former vice chairman of the Council of China’s Foreign Trade, a promotional group created by the Chinese government.

Angela Chao, speaking in an interview in New York on Friday, said that her board positions were unremarkable, emphasizing that Foremost did business around the world. She denied that the company had a “China focus” beyond what most dry bulk carriers have in a world dominated by Chinese manufacturing. “We are an international shipping company, and I’m an American,” she said, adding, “I don’t think that, if I didn’t have a Chinese face, there would be any of this focus on China.”

James Chao was not made available for an interview; a representative of the company received written questions from The Times two weeks ago, and the company responded with a fact sheet on Friday.

Though Foremost worked in the late 1960s on American government contracts to ship rice to Vietnam, according to James Chao’s biography, it has almost no footprint left in the United States, save for a modest corporate headquarters in Midtown Manhattan. It registers its ships in Liberia and Hong Kong and owns them through companies in the Marshall Islands.

Since Elaine Chao became transportation secretary, records show, the agency budget has repeatedly called to cut programs intended to stabilize the financially troubled maritime industry in the United States, moving to cut new funding for federal grants to small commercial shipyards and federal loan guarantees to domestic shipbuilders.

Her agency’s budget has also tried to slash spending for a grant program that helps keep 60 American-flagged ships in service, and has tried to scale back plans to buy new ships that would train Americans as crew members. (In China, Ms. Chao’s family has paid for scholarships and a ship simulator to train Chinese seamen.)

The Chao family has provided funding for a ship simulator at Shanghai Maritime University and backed scholarships for training programs.CreditGiulia Marchi for The New York Times

Congress, in bipartisan votes, has rejected the budget cuts, some of which have been offered up again for next year. One opponent of the cuts has been Representative Alan Lowenthal, a California Democrat whose district includes one of the nation’s largest cargo ports.

“The Chinese government is massively engaged in maritime expansion as we have walked away from it,” he said in an interview. “There is going to come a crisis, and we are going to call upon the U.S. maritime industry, and it is not going to be around.”

Elaine Chao declined to be interviewed, but the Transportation agency provided a written statement from her.

“My parents and I came to America armed only with deep faith in the basic kindness and goodness of this country and the opportunities it offers,” Ms. Chao said. “My family are patriotic Americans who have led purpose-driven lives and contributed much to this country. They embody the American dream, and my parents inspired all their daughters to give back to this country we love.”

The department spokesman said The Times’s reporting wove “together a web of innuendos and baseless inferences” in linking Ms. Chao’s work at Transportation to her family’s business operations.

Agency officials said the department under Ms. Chao had been a champion of the American maritime industry, adding that several proposed cuts had been made by previous administrations and that the Trump administration had since moved to bolster funding.

Ms. Chao, 66, was born in Taiwan to parents who had fled mainland China in the late 1940s and later settled in the United States when she was a schoolgirl. She worked at Foremost in the 1970s but has had no formal role there in decades.

As her political stature has grown — she has served in the cabinet twice and has been married to Mr. McConnell for 26 years — Beijing has sought to flatter her family. A government-owned publisher recently printed authorized biographies of her parents, releasing them at ceremonies attended by high-ranking members of the Communist Party. On a visit last year to Beijing, Ms. Chao was presented with hand-drawn portraits of her parents from her counterpart in the transportation ministry.

On an official trip to Beijing last year, Ms. Chao received portraits of her parents from the Chinese transport minister, Li Xiaopeng, center left.CreditPool photo by Jason Lee

The Chao family’s ties to China have drawn some attention over the years. In 2001, The New Republic examined them in the context of the Republican Party’s softening tone toward the country. When Ms. Chao was nominated as transportation secretary, ProPublica and others highlighted the intersection of her new responsibilities with her family’s business. And in a book published last year, the conservative author Peter Schweizer suggested the Chaos gave Beijing undue influence.

The Times found that the Chaos had an extraordinary proximity to power in China for an American family, marked not only by board memberships in state companies, but also by multiple meetings with the country’s former top leader, including one at his villa. That makes the Chaos stand out on both sides of the Pacific, with sterling political connections going to the pinnacle of power in the world’s two biggest economies.

Ms. Chao’s father, a founder of Foremost in 1964, has for decades cultivated a close relationship with Jiang Zemin, a schoolmate from Shanghai who rose to become China’s president. As the schoolmates crossed paths again in the 1980s, the Chaos reaped dividends from a radar company linked to Mr. Jiang that targeted sales to the Chinese military, documents filed with the Chinese government show.

Though Ms. Chao’s financial disclosure statements indicate she receives no income from Foremost, she made at least four trips to China with the company in the eight years between her job as labor secretary during the George W. Bush administration and her confirmation as transportation secretary in January 2017. And her father accompanied her on at least one trip that she took as labor secretary, in 2008, sitting in on meetings, including with China’s premier, one of the country’s top officials.

Public records show that she has benefited from the company’s success. The gift to Ms. Chao and Mr. McConnell from her father in 2008 helped make Mr. McConnell, the Republican majority leader, one of the richest members of the Senate. And three decades worth of political donations have made the extended family a top contributor to the Republican Party of Kentucky, a wellspring of Mr. McConnell’s power.

“This is a family with financial ties to a government that is a strategic rival,” said Kathleen Clark, an anti-corruption expert at Washington University in St. Louis. “It raises a question about whether those familial and financial ties affect Chao when she exercises judgment or gives advice on foreign and national security policy matters that involve China.”

Westlake Legal Group 1 A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

Elaine Chao, the transportation secretary, has been a steadfast booster of her family’s shipping business, which transports raw materials to fuel China’s heavy industries. In January 2017, as the Senate voted to confirm Ms. Chao, a bulk carrier ship sailed from Canada with a shipment of iron ore.

Westlake Legal Group baomay A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

Westlake Legal Group 2 A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

The ship, the Bao May, is owned by her family’s business, Foremost Group. Its destination: an iron ore transfer terminal on Liangtan Island, south of Shanghai.

Two weeks later, after unloading its cargo in China, the Bao May set sail for Brazil to collect another shipment of iron ore, weaving through the Strait of Malacca and crossing the Indian Ocean.

The size of three football fields, the Bao May is too big to pass through the Suez or Panama Canals, so it must sail around the southern tip of Africa on its voyages to Atlantic Ocean destinations. For the last two years, the Bao May has repeatedly made the round-tip journey between China and ports in Brazil and Canada.

Westlake Legal Group 3 A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

On this trip, it arrived in Brazil in May 2017, docking at the Ponta da Madeira Maritime Terminal in São Luís, where ships load up with iron ore from Brazil’s interior.

The Bao May was built in a Chinese shipyard and financed with loans from the Export-Import Bank of China, owned by the Chinese government. At the launch ceremony in Shanghai in 2010, the guest of honor was Ms. Chao. For years, the ship has been chartered by a state-owned Chinese steelmaker, giving Foremost a steady supply of revenue.

It is one of 19 ships owned by Foremost, which was founded by Ms. Chao’s father, James S.C. Chao, and is now run by her sister Angela.

Data source: VesselsValue

Westlake Legal Group 4 A ‘Bridge’ to China, and Her Family’s Business, in the Trump Cabinet Wuhan (China) United States Politics and Government United States International Relations United States Transportation Department (US) Ships and Shipping McConnell, Mitch Manhattan (NYC) Jiang Zemin International Trade and World Market Freight (Cargo) Federal Budget (US) Export-Import Bank of China Communist Party of China Chinese-Americans China Chao, Elaine L Beijing (China) Bank of China

While Foremost has its headquarters in Midtown Manhattan, its fleet is overwhelmingly focused on China. About 72 percent of the raw materials it has shipped since the beginning of 2018 has gone to China, according to figures from VesselsValue, a London-based firm that analyzes global shipping data.

Each year, Foremost ships transport hundreds of millions of tons of iron ore, coal and bauxite to China from ports around the globe. The shipments feed China’s industrial engine, especially its steel mills, whose products are part of an escalating trade dispute between China and the United States.

Rich Harris/The New York Times. Source: VesselsValue. Bao May image: Tropic maritime images. Satellite imagery: Google Earth

Four enormous gantry cranes rise on the banks of the Yangtze River near the East China Sea. In their shadow thousands of workers assemble cargo ships, each about as long as three football fields.

It is here, at the Shanghai Waigaoqiao shipyard, that Foremost Group’s newest ship, the Xin May, was built. Six similar ships are set to be built in the next several years, all part of an order by Foremost announced in December 2017 at the Harvard Club in New York.

Foremost first placed an order with the state-owned company in 1988 and over the decades has been its biggest North American customer, according to the shipbuilder. The relationship is so tight that Foremost’s offices in Shanghai are in the shipbuilder’s 25-story tower.

“We are committed to continuing to build ships in China,” Angela Chao said at the Harvard Club announcement, which was attended by the top official in China’s New York consulate. “My father was a pioneer in internationalizing the Chinese shipbuilding market, and it has been over 30 years that he has continuously ordered ships in China.”

The newest addition to the Foremost fleet, the Xin May, is one of multiple ships the company has ordered from the Shanghai Waigaoqiao shipyard.CreditGiulia Marchi for The New York Times

Foremost has relied on the Export-Import Bank of China, or China EximBank, to finance at least four ships in the past decade. Its loans often come with lower interest rates and more generous repayment schedules than those made through some commercial lenders. As of 2015, the bank had made at least $300 million available to Foremost, it said at the time.

Angela Chao, in the interview with The Times, said that 2015 was the last year the company borrowed from the lender, describing its terms as less attractive than those of non-Chinese banks. She said the company never borrowed — “not even close” — $300 million, a figure she had not previously heard. “They are not a big part of our financing,” she said.

The Chao family’s connections run deep with the Chinese leadership, documents in China show.

As civil war raged across the country in the 1940s, Mr. Chao attended Jiao Tong University in Shanghai. A schoolmate was Mr. Jiang, who stayed in China after the Communist victory and ultimately became president. Mr. Chao went with the defeated Nationalists to Taiwan, where he became the youngest person to qualify as a ship’s captain, according to his biography.

Mr. Chao left for the United States in 1958, but a thaw in relations sparked by President Richard M. Nixon drew him back to his homeland in 1972, the first of a flurry of trips that established him as a successful member of the Chinese diaspora.

Mr. Chao got exceptional access. In 1984 he was invited to Beijing to celebrate the 35th anniversary of the People’s Republic and meet with the country’s top leader, Deng Xiaoping, according to materials at a museum in Shanghai dedicated to Mr. Chao’s wife, Ruth Mulan Chu Chao, who died in 2007.

Also in 1984, as China emerged from decades of political and economic turmoil, Ruth Chao bought a stake in a Chinese company that manufactured marine equipment, including radars, in partnership with Raytheon, the American defense contractor, according to Chinese corporate documents.

In 1984, the Chao family took a stake in a marine electronic equipment company that targeted the Chinese military for sales. The venture was linked to Jiang Zemin, James Chao’s former schoolmate and a future president of China.

The investment, not previously reported, was held by a Panamanian company. The Chinese company, documents show, praised the “support for the construction of the nation” shown by Ruth Chao, identifying her as James’s wife and both of them as American citizens.

The now-defunct company targeted the Chinese military for sales of some of its gear, and a principal partner was a state-owned factory under the Ministry of Electronics Industry, which was led at the time by Mr. Jiang, according to corporate documents and a former employee. The employee, Zheng Chaoman, recalled the involvement of “the father of Elaine Chao.”

Within months, it generated enough revenue for Mr. Chao to donate profits to a foundation he had established in Shanghai, according to an announcement by the local government. The foundation sponsors training scholarships for merchant seamen, his wife’s biography said.

In the aftermath of the deadly suppression of pro-democracy demonstrations on Tiananmen Square in June 1989, the Chaos asked to divest their 25 percent stake in the company. Two months earlier, Elaine Chao had been confirmed by the Senate to a senior political appointment, as deputy transportation secretary under President George H. W. Bush.

The Transportation Department spokesman said Ms. Chao did not know anything about the venture. Angela Chao, in the interview, said her father did not “remember any ownership, and we can’t find anything on it.”

The family’s other business ties in China remained, including work that year by China State Shipbuilding on two new cargo ships for Foremost.

Ms. Chao in 1989, when she was deputy transportation secretary under George H.W. Bush. She would also serve in the cabinet of George W. Bush, as labor secretary.CreditDoug Mills/Associated Press

That August, Mr. Chao met with Mr. Jiang, who had been named general secretary of the Chinese Communist Party, the country’s most powerful position. Their hourlong meeting inside the leadership compound adjacent to the Forbidden City, together with the head of the state shipbuilding company, was described as “friendly” in the official People’s Daily newspaper.

The two former schoolmates would meet at least five more times during Mr. Jiang’s tenure as general secretary, according to a review of publicly available documents.

As the first Chinese-American to serve as a cabinet secretary — eight years as labor secretary — Elaine Chao became an instant celebrity in China during the George W. Bush administration. Her family was a beneficiary of her newfound fame.

During a trip to China in August 2008 to represent the United States at the closing of the Olympic Games, Ms. Chao took her father to several official meetings with Chinese leaders, including one with the country’s premier, Wen Jiabao, according to diplomatic cables released by WikiLeaks. At the time, Mr. Chao was chairman of Foremost and a board member of China State Shipbuilding.

When she left government during the Obama years, she continued to put her celebrity status to use on behalf of the family business.

Ms. Chao at a 2009 interview in Wuhan, where she was appointed an international adviser.CreditWang He/Getty Images

In 2010, she traveled to Shanghai with her father for the delivery ceremony of a cargo ship, the Bao May. The ship soon became a workhorse for Foremost, hauling raw materials to China from around the world under a seven-year charter with a subsidiary of a state-owned steel maker. Foremost paid for the Bao May and another ship with up to $89.6 million in loans from China EximBank, corporate records in Hong Kong show.

The next year, Ms. Chao was back in Shanghai for the launch of another ship, and in 2013, she traveled to Beijing with her father and her sister Angela for a meeting with the chairman of China State Shipbuilding, according to a company announcement.

Ms. Chao joined her family two years later at the signing of a loan for Foremost at China EximBank’s grand hall in Beijing. The loan, for $75 million, was made jointly with a Taiwanese lender to build two cargo ships.

China EximBank’s website celebrates a 2015 loan signing with Foremost. The event was attended by Ms. Chao and members of her family.CreditGzerchina.Com

The Transportation Department spokesman said it was “entirely appropriate” for Ms. Chao to take her father to meetings in 2008 as her “plus-one,” and said her visits between her government posts were done as a private citizen.

Angela Chao said her sister attended Foremost events “as a family member.”

“Foremost was founded in 1964; the company is 55 years old,” she added. “We were around and we were well respected well before Elaine was in anything. We predate her; she doesn’t predate us.”

The flurry of visits coincided with Foremost’s growing contributions to China’s globalized steel and shipping industries.

Today, Foremost’s fleet, like many, primarily serves the Chinese market, hauling bulk cargo such as iron ore, coal and bauxite. Of the 152 voyages made by its ships between Jan. 1, 2018, and April 12, 2019, 91 have been to or from China, accounting for 72 percent of Foremost’s total tonnage during that period, according to figures compiled by VesselsValue, a company that tracks shipping data.

Angela Chao said that its ships were chartered to commodity companies such as Cargill, and that Foremost did not “control where the ships go, so we’re like a taxicab.”

During her eight years out of government, Elaine Chao extended her connections in China, according to a review of Chinese websites and other public materials.

For example, she was appointed in 2009 to an advisory group in Wuhan, where the steel maker with the Foremost charter is based. Such appointments are largely ceremonial, but they can be sought after for the access they sometimes provide to local leaders.

That same year, she was granted an honorary professorship at Fudan University, and in 2010, she was awarded an honorary doctorate from Jiao Tong University.

With Mr. Trump’s election, Ms. Chao was asked to join the administration. During her confirmation hearing she did not discuss her family’s extensive ties to the Chinese maritime industry, and she did not disclose the various Chinese accolades she had received. The Senate’s written questionnaire requires nominees to list all honorary positions.

“It was an oversight,” the Transportation Department spokesman said.

Ms. Chao has spoken repeatedly about her commitment to the American maritime industry, including during her confirmation hearing in 2017.

“I’m of an age where I have seen two wars in pivotal areas of the world,” she told the Senate Commerce Committee, with her father seated behind her. “If we did not have the merchant marine assets to assist the gray hulls on these campaigns, the military naval campaigns, our country would not have been able to supply our troops, bring the necessary equipment.”

But without Congress putting up roadblocks, some of the Trump administration’s budgetary actions proposed during her tenure would have reduced federal funding for programs that support the shipbuilding industry and ships that operate under American flags.

Ms. Chao at the White House after President Trump signed an executive order on the transition of service members into the Merchant Marine.CreditSarah Silbiger/The New York Times

Plans drafted during the Obama administration had called for building up to five new, state-of-the-art ships big enough to train 600 cadets each to help the American military move equipment and supplies worldwide, especially during wartime.

But after Ms. Chao became secretary, the agency’s budget proposed buying old cargo ships instead and renovating them. Congress balked at the cost-cutting measure — one Democratic lawmaker mocked the agency’s plan to “buy a bunch of rusty old hulks” — and restored the funding.

More recently, the agency budget pushed to shrink the size of one of the new ships, again provoking bipartisan protests from Congress.

“Given the administration’s strong commitment to American manufacturing and to being sure that we can adequately control the seas, the targeting of programs that help the maritime industry remain strong doesn’t make sense to me,” said Senator Susan Collins of Maine, the Republican who leads the panel overseeing the Transportation Department budget. “It seems inconsistent with the administration’s overall goals.”

Ms. Collins added that the driving force behind these cuts had been the White House, not Ms. Chao, whom the senator called a “strong advocate” for the maritime program.

The agency budget in 2017 and 2018 also proposed reducing annual grants for the Maritime Security Program, which help American ships pay crews and cover the cost of meeting safety and training requirements.

It also moved in the last three years to eliminate new funding for a grant program that helps small shipyards stay in business, as well as a program that provides loan guarantees for the construction or reconstruction of American-flagged vessels.

Agency officials noted that many of the cuts were forced on the department by the White House, and that some of the same programs had been previously targeted, only to see the money restored by Congress, as happened with the Trump cuts.

Ms. Chao has supporters in the industry, citing her work to defend a federal program that allows only American-flagged ships to make deliveries between American ports, as well as the effort to replace training vessels, which has boosted the maritime unit’s overall budget.

“We have a secretary who comes from the maritime industry — and that has translated into an understanding of the importance of the maritime academies,” said Jerry Achenbach, superintendent of the Great Lakes Maritime Academy in Michigan.

But objections continue, including questions about why, despite repeated promises, Ms. Chao has not issued a detailed strategic plan for stabilizing the United States’ shrinking fleet.

Fair Kim, a retired Coast Guard deputy commander who works at an association that promotes the American shipping industry, said Ms. Chao and the Trump administration had a disappointing maritime record.

“If you preach America first, why not promote the U.S.-flagged fleet at the expense of foreign-flagged ships?” he asked. “This administration should be very friendly to us.”

The Trump administration has made the rivalry with China a core tenet of American foreign policy, concluding that decades of accommodation has reinforced the country’s authoritarian rule and undermined the interests of the United States.

“Beijing is employing a whole-of-government approach, using political, economic and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States,” Vice President Mike Pence said during a speech in October.

None of that, however, has kept Ms. Chao from maintaining China-friendly relations, including engaging with the Chinese media about her family’s shipping business and multiple other subjects. During a televised interview, one prominent Chinese reporter, Tian Wei, described Ms. Chao as “a bridge” between Beijing and the Trump administration.

Ms. Chao’s official calendar, obtained by The Times through a public records request, shows at least 21 interviews or meetings with Chinese-language news organizations in her first year as transportation secretary.

In November 2017, she met for lunch at her office with Ma Jing, then the top official in the United States for CGTN, the China state television network.

The network has been under growing pressure from the Justice Department to detail its ties to the Chinese state as part of a stepped-up enforcement of foreign influence laws, and in March, Ms. Ma and a dozen other CGTN employees in Washington were recalled to China.

In an interview in April 2017, Ms. Chao was photographed with her father next to a Transportation Department flag. Her father told the reporter how he had traveled on Air Force One and discussed “business” with the president.

He also took the opportunity to talk up his daughter’s new role in the administration. “It’s not just an honor for us Chinese,” Mr. Chao said to The China Press, a publication in the United States. “It’s an honor for Americans.”

The interview was first highlighted by Politico, which noted that Ms. Chao had made multiple media appearances with her father.

Ms. Chao’s schedule also shows that she attended an August 2017 event in New York celebrating the signing of a Foremost deal with Sumitomo Group, a Japanese company with mass transit projects in the United States, including California and Illinois, that fall under her oversight. The spokesman said she attended in a personal capacity and did not discuss agency business.

Marilyn L. Glynn, a former general counsel at the Office of Government Ethics, questioned Ms. Chao’s proximity to Foremost, saying she should recuse herself from decisions that broadly impacted the shipping industry.

“She might be tempted to make sure her family company is not adversely affected in any policy choices, or it might even just appear that way,” Ms. Glynn said.

The agency spokesman said that was not necessary because there was no conflict. “The family business is not in U.S.-flag shipping,” he said. “The trade routes are completely different; the ships are completely different.”

Ms. Chao’s first trip to China as transportation secretary was made last April amid an escalating trade war, six months later than originally planned.

Ms. Chao meeting with Mr. Li, the Chinese transport minister, in Beijing last year.CreditJason Lee/Agence France-Presse — Getty Images

The original trip had been described by the department as a “bilateral meeting” with Ms. Chao’s Chinese counterpart to discuss disaster response, infrastructure and related subjects.

Eight days before the planned start of the October 2017 trip, when contacted by The Times, Ms. Chao’s office said it could not provide a list of who would accompany her.

But the embassy in Beijing had received requests to accommodate Ms. Chao’s family members, according to interviews with State Department officials involved in the planning, as well as a redacted email obtained by The Times through a public records lawsuit.

Angela Chao said in the interview that she was already planning to be in Beijing to attend a Bank of China board meeting, and that her husband, the investor Jim Breyer, also had business in the Chinese capital. But she said she was unaware of her sister’s travel plans. Angela Chao was among the family members mentioned in the State Department discussions about the visit, according to a United States official.

The email, with the subject “ethics question,” had come from Evan T. Felsing, a senior economic officer for the State Department in Shanghai. Mr. Felsing, now based in India, declined to comment.

Other correspondence also signaled unease among American diplomats over whom Elaine Chao intended to take on the trip and the topics they would discuss with Chinese officials. Emails indicate that ethics lawyers in both the State and Transportation Departments weighed in.

“They would not have raised a question like this about a cabinet secretary unless it was something really serious,” said Mr. Rank, the former deputy chief of mission in Beijing, who resigned in protest over the Trump administration’s environmental policy.

The agency spokesman confirmed a request on behalf of Ms. Chao’s relatives, but did not say in his written response to questions whether they were scheduled to attend official government events.

When Ms. Chao finally traveled to China last April, no relatives were present.

She met with top leaders, including the premier, Li Keqiang. While there, she sought to soothe hard feelings between China and the Trump administration in an interview with a government-run broadcaster. She suggested some of the tensions resulted from cultural differences.

“America is a very young country — it’s very dynamic — it doesn’t have a long period of history,” she said in an interview with CGTN. “So there are not so many rules and regulations in terms of behavior, whereas some other countries that have long histories, it may be a little bit more different. We have to understand the Chinese and how they see things, and I think the Chinese need to understand how America sees things.”

Even this trip did not proceed entirely by the book. Ms. Chao broke with the standard practice for government employees and flew on a Chinese state airline instead of an American carrier.

Ms. Chao’s economy-class round-trip ticket with Air China cost $6,784, according to information obtained through a public records request. The flight was booked through a code-share arrangement with United Airlines. A less expensive ticket was available on a nonstop United flight, according to an airline official.

The agency spokesman would not say what class Ms. Chao flew in, only that the ticket was booked in economy. The flight, he said, complied with federal law.

When a delegation of local Chinese Communist Party leaders visited Washington in 2017, Ms. Chao’s office arranged for them to be photographed with Ms. Chao and her father.

Her aides pulled another string.

“U.S. Capitol Tour for VIP Guests,” read the subject line of an email sent by Ms. Chao’s aides to the staff of her husband, Mr. McConnell.

The senator’s staff obliged, arranging an “off limits” tour for Ms. Chao’s guests, who were visiting from the home region of her mother.

“The delegation was thrilled to get the VIP treatment by your office and were particularly excited to hear that the leader’s office was normally off limits to normal guests,” an aide to Ms. Chao later wrote to Mr. McConnell’s staff.

It was a small favor, but one that reflected the political partnership at the center of the marriage between Ms. Chao and Mr. McConnell.

The extended Chao family has been a wellspring of support for Mr. McConnell over the years, contributing over $1 million to him and to political action committees associated with him.CreditTodd Heisler/The New York Times

In 1989, shortly after their first date (at the Saudi ambassador’s home near Washington), Mr. McConnell was preparing for a re-election campaign. Greetings from Ms. Chao came in classic Washington fashion: a string of campaign donations, totaling $10,000, from Ms. Chao, her father, her mother, her sister May and May’s husband, Jeffrey Hwang, according to Federal Election Commission records.

Over the next 30 years, the extended Chao family would be an important source of political cash for Mr. McConnell, himself one of the most formidable Republican fund-raisers in American politics.

The extended Chao family is among the top donors to the Republican Party of Kentucky, giving a combined $525,000 over two decades.

One of Ms. Chao’s sisters, Christine, the general counsel at Foremost, was the second-biggest contributor to the super PAC Kentuckians for Strong Leadership in 2014. She gave $400,000 to the organization, which identified Mr. McConnell’s re-election as its highest priority that year.

In all, from 1989 through 2018, 13 members of the extended Chao family gave a combined $1.66 million to Republican candidates and committees, including $1.1 million to Mr. McConnell and political action committees tied to him, according to F.E.C. records.

“I’m proud to have had the support of my family over the years,” Mr. McConnell said in a statement.

Ms. Chao and Mr. McConnell in 2014 at the Harvard Club in New York, where Foremost celebrated its 50th anniversary and signed a contract with a Japanese shipbuilder.CreditThe China Press

The family’s wealth has also benefited Mr. McConnell personally. In 2008, Ms. Chao’s father gave the couple a gift valued between $5 million and $25 million, according to federal disclosures. Mr. McConnell, never a wealthy man, vaulted up the moneyed rankings in the Senate; as of 2018 he was the 10th wealthiest senator, according to Roll Call, the Capitol Hill newspaper. David Popp, a spokesman for Mr. McConnell, said the gift from Mr. Chao was in honor of Elaine Chao’s mother.

Over the years, Mr. McConnell has also participated in Chao family events and trips related to the family’s business and charitable giving.

In 1993, he and Ms. Chao traveled with her father to Beijing at the invitation of China State Shipbuilding and met top officials.

He celebrated Foremost’s 50th anniversary in 2014 at the Harvard Club in Manhattan, witnessing the signing of a contract with a Japanese shipbuilder.

Pillows with the seal of the United States Senate at Foremost’s headquarters in Manhattan.

And he attended the dedication in 2016 of a building at the Harvard Business School named after Ms. Chao’s mother. Ms. Chao and three of her sisters had attended the school.

Mr. McConnell’s connection to the family was hard to miss when a reporter recently visited the Foremost headquarters in Manhattan. There, in the reception area, were two gray pillows emblazoned with the seal of the United States Senate.

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