Atop the Wall of Worry — Iran, Determined to Provoke a Crisis
Author: Greg Valliere
September 20, 2019
THIS HAS BEEN AN EXTRAORDINARY WEEK: The explosive “whistle blower” mystery; Justin Trudeau’s descent; Elizabeth Warren’s surge; the Fed’s promise to provide more liquidity; the Brexit madness; a resumption of trade talks, etc. But one story looms over all the others: an emboldened Iran, determined to provoke a crisis.
WHAT WE KNOW: First, Iran obviously planned and coordinated the attacks on Saudi Arabia, perhaps conducted by proxies. Second, even an attack of this magnitude was not enough to persuade isolationist U.S. President Donald Trump to retaliate — a troubling sign of timidity that sends a signal to the region. And third, there’s a high likelihood that Iran or its proxies will strike again. Why?
THE MOST IMPORTANT FACTOR is Iran’s desperate attempt to wiggle out of sanctions that have crippled its economy — sanctions that the radical Iranian leadership considers an act of war. Their response will be to destabilize the region, forcing global powers to eventually seek a truce via negotiations that could include an easing of the sanctions.
A SIGNAL TO ALLIES: The oil field attacks showed that billions of dollars of weapons sold by the U.S. to Saudi Arabia can’t stop drone strikes. Second, Trump reportedly is asking: “Why can’t the Saudis retaliate? Why should we do all the work?” Trump believes in America first, and he can quickly throw allies under the bus, as Benjamin Netanyahu discovered this week.
BOTTOM LINE: Eventually there will have to be a response (a Mideast expert cracked this week: “Where’s Dick Cheney when we need him?”). A belated Trump response could be military, or it could be an escalation of cyber warfare, or it could be the imposition of even more sanctions. This could prompt more aggression from Iran, which warned yesterday that war in the region is likely if the U.S. does retaliate.
THIS IS TRUMP’S WORST NIGHTMARE, not a limp impeachment attempt or Jay Powell’s monetary policy. There are two likely scenarios: the U.S. staying passive and emboldening Iran to strike the Saudis again; or U.S. air strikes that could quickly escalate this crisis. An intermediary — Emmanuel Macron, perhaps? — could help, but Iran has dismissed that option, at least for now.
WE WROTE EARLIER THIS WEEK that this crisis will get worse before it gets better, and that conclusion still seems likely. Iran wants to drag the U.S. into a major Mideast conflict; the issue may become whether the Saudis are willing and able to defend themselves, and whether sophisticated U.S. cyberattacks will be sufficient to cool this crisis.
LEST WE FORGET, Iran was largely responsible for making Jimmy Carter a one-term president, which Trump undoubtedly realizes as he faces some very unpalatable options.
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