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Growing tensions between Washington and Tehran appeared to reach a head last week, following suspected attacks against two oil tankers in the Gulf of Oman on Thursday 13th June, the blame for which US Secretary of State Mike Pompeo has placed squarely with Iran.

The suspected attacks come amidst rising geopolitical tensions as the US seeks to strangle Iranian oil exports in a bid to pressurise Iran to desist from uranium enrichment and curb Tehran’s regional ambitions across the Middle East. Iran, for its part appears to be playing with fire, aiming to foment instability in global oil markets in order to pressurise Trump to ease the sanctions crippling the Iranian economy at risk of provoking a wider conflagration.

This latest crisis comes after President Trump’s withdrawal from the JCPOA agreement on Iran’s nuclear programme in May 2018, a move followed by the Administration’s designation of Iran’s Revolutionary Guard Corps as a proscribed terrorist organisation this April. In response to Washington’s ‘maximum pressure’ strategy, Tehran stands accused of sponsoring a series of attacks against tankers near the Emirati port of Fujairah last month, creating a situation which may be likened to that of a tinderbox awaiting a spark.

Despite ominous comparisons to the 2003 Iraq War amidst bellicose rhetoric from both sides, the hard fact remains that a violent conflagration would almost certainly serve neither sides’ strategic interests. In recognition of this, recent statements from both Trump and Rouhani shy away from the prospect of open hostilities. Whether conflict can be averted though fundamentally hinges on whether both leaders can resist pressure from hardliners in Washington and Tehran as well as each side avoiding dangerous misperceptions of the others’ intentions which could inadvertently drag the US and Iran into unwanted confrontation.

Washington’s Dilemma

America’s posture towards the Iran has been extensively criticised as being wildly inconsistent, with Washington blowing hot and cold towards Tehran. Despite President Trump’s decision to tear up the 2015 Iran nuclear deal, arguably a knee jerk response driven by his pressing need to undo any legacy of the Obama Administration, the executive has vacillated between aggressive posturing and appeasement. One might argue Trump is seeking to repeat his successful rapprochement with North Korea in 2017, taking a carrot-and-stick approach to bring Tehran to the negotiating table on his terms.

But Iran is not North Korea. Tehran is a formidable foe with a large, highly motivated military, difficult terrain and no shortage of allies on the international stage. Given the immense military, political and economic strains the ‘forever wars’ in Iraq and Afghanistan have placed on the US with little to show for the effort, it is highly unlikely Washington desires a rinse and repeat against a far more implacable foe.

This is not to mention the profound ramifications even a limited conflict would have on global markets, with conservative estimates suggesting oil prices could shoot to $250 per barrel in such an event, as well as the increased geopolitical instability across the region such a showdown would likely precipitate.

Though Trump may not want war, the hawkish advisors he’s surrounded himself with have less reservations. In the White House Secretary of State Mike Pompeo as National Security Advisor John Bolton have adopted a ‘maximum pressure’ strategy towards Iran centred on a sanctions regime aimed to bring Iranian oil revenues ‘to zero’. Both individuals have a long history of supporting regime change in the Middle East, with Bolton in particular playing a key role in the decision to invade Iraq in 2003. Simultaneously, both see a hardline on Iran as crucial to discredit the Democrats, who argue Obama’s olive branch to Tehran was paying dividends, in the run-up to the 2020 elections.

Tehran’s Dilemma

For Iran, of course, outright confrontation would likely be disastrous, and Tehran knows it. This, however, does not remove the immense internal and external pressures driving the regime towards open conflict.

On one level, the Iranian economy is clearly buckling under the weight of sanctions, especially after Trump announced the suspension of sanction exemptions to major importers of Iranian oil, such as China, India and Japan in April. Simultaneously, Saudi Arabia has increased its oil output to sell to former buyers of Iranian oil, thus increasing resentment against Tehran’s major regional rival. Subjected to such pressures, it is perhaps no surprise that Iran has opted its confrontational stance, judging that it has nothing to lose when economic warfare is as damaging to Iran as actual warfare.

In fact, Iran’s latest actions in the Persian Gulf – if it was indeed Tehran that carried out the attacks, are highly calculated, seeking to demonstrate the vulnerability of one of the world’s most important strategic choke points to Iranian pressure. Moreover, the regime may seek to drive a wedge between the US and its allies, pressurising the Europeans and Japanese to encourage Washington to ease sanctions.

Tehran, however, is playing a dangerous game. Much as in Washington, hardliners aligned with the IRGC seek to bolster their appeal ahead of next year’s parliamentary elections, pressurising previously moderate politicians such as President Rouhani and Foreign Minister Zarif who agreed to unilaterally stand by the JCPOA despite Trump’s withdrawal to demonstrate their anti-American credentials for domestic purposes. This suggests that Iran is at a crossroads, raising fears of a fundamental power shift from the moderates to the hardliners in Tehran – a power shift that may just tip the ongoing proxy conflict towards open confrontation.

The idea that America and Iran are set on a collision course is a fallacy. Open conflict in the Persian Gulf can be averted – whether it is or not depends whether prudence or hot headedness prevails – both in Washington and Tehran.

-Written by William Marshall for Pegasus Strategic Advisory Ltd.