On June 15, 2019 in our America vs. Iran II article, we had written:
- ” … Iran has built up a degree of asymmetric naval warfare capabilities. So the Revolutionary Guards or a faction within the Guards might want to send a physical message about their capabilities to America & their neighbors.”
- “There is no question that Iran is in trouble and there is no question that the Supreme Leader & the Government know that. We also believe they understand that President Trump is unlikely to launch military strikes against Iran unless he is virtually forced to do so by Iran or one of its crazy factions by a direct attack on American facilities or ships.”
Both of these proved true this past week.
1. Iran’s message
First, Iran certainly sent a very powerful physical message about their capabilities with a highly precise missile & drone attack on critical Saudi oil infrastructure. The message said Iran can destroy the oil infrastructure of Saudi Arabia AND other GCC countries like the UAE & Kuwait. This message clearly backs up the old Iranian promise that if Iran can’t export oil then no body in the Persian Gulf can.
Understand that this would have been deemed as Act of War against America in the pre-shale days. That America was critically dependent on Middle Eastern Oil and any attack on that oil infrastructure by that Iran would have resulted in war between America & Iran, a war that would have destroyed Iran.
But today’s America is one of the largest oil producers in the World, if not the largest. So Iran understands & America concurs that this week’s attack on Saudi infrastructure is not a direct attack on America or its physical infrastructure like ships or bases. That reduces America’s freedom as well as desire of military action against Iran.
However, that makes the missile attack a very potent & frightening message to Saudi Arabia and the UAE. The message is America is not likely to directly protect you from Iran. You are going to fight with Iran physically at the risk of casualties & great damage to your countries. Iran lost almost a million men fighting Saddam’s Iraq for 8 years. So the Iranian leadership has demonstrated they can take massive casualties.
Saudi Arabia, on the other hand, is a fat society that has lived under US Security & they have no stomach for Saudi casualties. Furthermore, there is a brewing insurrection against Crown Prince MBS and his highhandedness. There is no doubt in our minds that Iranians are talking to the anti-MBS faction within the Saudi elite. So the big question is whether the Saudis unite against Iran or will they try to bargain in fear of Saudi society rising against the MBS regime.
Finally, the message to America is if you attack us, then we will not only attack your bases in the Middle East but we will devastate Saudi Arabia & the UAE. Guess what will happen to the World Economy then?
This is similar to the threat that has kept Kim Jong Un in power – that North Korea will wipe out South Korea if America attacks North Korea. Simply put, Saudi Arabia is Iran’s South Korea threat. But Kim backed away from building the capacity to hit America directly. Also North Korea was a localized problem because Kim had no ambitions to build a North Korean sphere.
Iran does. Iran is in the process of building a crescent of power from Tehran to Beirut, from the Persian Gulf to the Mediterranean across Iraq, Syria into Lebanon. That is directly anti-America. America simply cannot allow that if America wants to remain a credible power in the Middle East.
2. Iran’s choices
As Stratfor wrote this week,
- “Ultimately, Iran is striking while the iron is hot because the status quo is simply unsustainable. The country’s economy is dependent on oil exports, which have collapsed under the weight of U.S. sanctions. As a result, inflation has risen above 40 percent, reserves of hard cash have dwindled and basic necessities like food and medicine have become scarce. This does not mean that Iran’s economy is on the brink of collapse, but it does mean that Tehran has almost certainly determined that negotiations with the United States are inevitable; the only questions for Iran are when and on whose terms.”
The American pressure on Iran is inexorable and it is going to get worse. As Steve Bannon said at CNBC’s Delivering Alpha Conference this week, the Trump Administration is going to hermetically seal Iran from the rest of the World.
But Iran cannot withstand this pressure for a long time. So unless Iran totally capitulates to US demands or Iran has to keep escalating the pressure on America to force America to the bargaining table. So the next escalation could be against UAE and on a bigger scale.
3. America’s choices
First & foremost, America has no choice but to respond. Failure to act would be tantamount to giving up America’s role in the Middle East. But it would be counterproductive to respond with limited retaliatory strikes that Iran has undoubtedly prepared for.
America’s choices are also constrained by the weakness of Saudi Arabia & the UAE. Iran would never have attacked Saudi oil infrastructure had it expected Saudis to retaliate against Iranian infrastructure by firing their own missiles.
America’s more potent retaliatory choices are now constrained by the results of the Israeli election. A convincing win by Netanyahu would have meant greater willingness on his part to attack Iranian assets in Lebanon besides Syria.
Finally, the American people are simply not ready for a war against Iran, even a series of air strikes. Iran’s missile strikes against a couple of large oil fields inside Saudi Arabia is not something that is worth a limited war against Iran.
So President Trump is doing the right thing. He is reportedly determined to bring Iran to heal but, as Steve Bannon said, he doesn’t feel the need to be John Wayne. The way we see it, he will act as FDR did against Japan in the 1930s by remorselessly squeezing Iran economically & politically.
President Trump has already benefited from this week’s Iranian attack. Europe is now moving towards the US position, slowly for sure but surely. So a coalition against Iran could solidify if Iran continues its escalations. And, at some point, the American public opinion would also solidify against Iran. That may take months but time is on America’s side not Iran’s.
And when that coalition forms & US public opinion hardens against Iran, the Iranian leaders would find out that they are now the new Saddam Hussein of the Middle East. Or worse, Iran would end up like Sishupaal of the Mahaa-Bhaarat, the brazenly stupid king who kept acting against God until one day he crossed over 100 acts of brinkmanship & literally lost his head after his 101st act.
Send your feedback to email@example.com Or @MacroViewpoints on Twitter