US oil futures spiked following suspected Iranian attacks on two oil tankers in the Gulf of Oman earlier today. The alleged strikes occurred during a meeting between Iranian supreme leader Khamenei and Japanese prime minister Abe, who purportedly delivered a message from US president Trump. Iranian state media later reported that Khamenei told the premier, “I do not see Trump as worthy of any message exchange, and I do not have any reply for him, now or in the future.” One of the stricken tankers was Japanese-owned and both were destined for Asian consumers. The circumstantial evidence of Iran’s responsibility for the attacks is significant.
This latest incident follows a series of provocations against US partners in the region that American officials have linked to the Islamic Republic of Iran and its Houthi proxies in Yemen. Although no attacks against US forces have occurred, on May 19 rockets were fired at the Baghdad Green Zone, and Washington took the unprecedented step of withdrawing personnel from its embassy. Iran reportedly then employed explosives to attack four oil tankers south of Fujairah and encouraged Houthi drone attacks against oil-pumping stations and pipelines at Yanbu in western Saudi Arabia, the target of an earlier, frustrated Houthi attack. These attacks and today’s violence appear to message Iran’s capacity to attack global energy markets. The attacks also likely indicate that the absence of a robust international response may have encouraged Iran to continue such operations.
This spike in tensions between the United States and Iran has long been anticipated. The Trump administration and Iran’s neighbors repeatedly warned Iran of tougher sanctions if Tehran continued its regional aggression and belligerence. Washington’s pressure on Iran has increased almost weekly since the Trump administration withdrew from the nuclear deal in May. While direct US-Iranian tensions had recently declined in favor of diplomacy and public messaging, the threat of escalation remains high, especially if Iran continues targeting America’s Saudi and Emirati allies.
The strategic drivers behind Iran’s actions make its use of proxies or cyberoperations highly likely. Escalation would not necessarily mean war. But the damage wrought by an Iranian attack and the response by its targets will eventually invite an automaticity that could lead to the conventional conflict all parties seek to avoid. Current conditions do, however, suggest several steps that could constrain Iran and avoid escalation:
- US political leaders should work to develop bipartisan consensus on Iran, including how best to support Gulf partners with weapons and intelligence to deter Iranian attacks. Doing so would not only prevent escalation but also better protect those who live in the region (including thousands of Americans) from the threat of Iranian-enabled missiles and drones.
- Washington would be well served by greater cooperation with Europe, but Brussels needs to take meaningful steps against Iran’s regional and missile activity to demonstrate its relevance. Iran’s presence in Yemen should be the first target for this cooperation. An end to Iranian-enabled missile and drone attacks on Saudi Arabia would help reduce tensions.
- The United States and Europe should quickly develop a transparent United Nations–managed mechanism by which Iran can import medicines and medical equipment. This would show that the West stands with the Iranian people and undercut Iranian propaganda. Any obstacles or malfeasance by Tehran to block this process should be widely publicized.
- Potential international donor nations should inform Russia that no reconstruction funds will reach Syria as long as Assad remains in power, Iran continues to expand its presence in Syria, and Moscow blocks action against Iran at the United Nations Security Council.
- Western and regional pressure on Iran’s Revolutionary Guard Corps (IRGC) should continue with targeted sanctions and a diplomatic effort to deny the IRGC the ability to assign personnel abroad where they can conduct terrorism. The Gulf Arab states should agree to deny visas to IRGC officers and anyone involved in supporting Iran’s offensive cyberprograms
- The international community should press Iran to accept US offers to establish a military-to-military hotline between American and Iranian officials to respond to any crisis between their forces operating in the Gulf.
- Iran claims it is nearing completion of a closed internet system. The West should do what it can to push as much information as possible to the Iranian people.
- Washington should be willing to pause additional sanctions in exchange for direct talks, but sanctions relief should not be considered until Iran shows that it is ready for engagement.
After months of warnings, and spurred by Iran’s regional aggression, Washington announced that its policy of “maximum pressure” would mean the termination of oil sanction waivers on May 2, ending Iran’s ability to export the oil that provides the country with 40% of its revenue. The US also imposed sanctions against Iran’s iron, steel, aluminum, and copper sectors, which together comprise 10% of Iran’s export economy.
Iran’s response aimed for three goals: posture defiance and protect domestic unity using rhetoric; demonstrate strength and deterrence against the United States and regional adversaries through proxy operations; and employ diplomacy to influence sympathetic international partners while simultaneously threatening to undermine global security and economies.
For Tehran, the results were disappointing. World energy prices have, until just now, remained stable, and neither the United Nations, the European Union, Russia, nor China gave the crisis the attention Iran sought. This reflects a general trend of Iranian diplomatic failure. Europe’s efforts to undermine US sanctions have failed. China looks ready to sacrifice Iran for better relations with the Gulf and perhaps as a lever in US trade talks. Russia has proven to be a reliable partner on Syria and in fending off action against Tehran by the United Nations Security Council. But Moscow is a weak economic partner and also looks to the richer markets of the Arab Gulf states.
Rhetoric aside, the Trump administration’s reactions to the Iranian threat were measured and thus effective, responding to the threat of Iranian proxy and missile attacks with an intensive diplomatic campaign and the deployment of military forces to demonstrate resolve. Despite wild rumors of a massive troop deployment to the region, the Trump administration deployed only nine hundred additional personnel to augment force protection. The administration also infuriated Congress by approving a major arms sale to Riyadh and Abu Dhabi. Together, these actions reportedly compelled Iran to “step back and recalculate.”
Despite its reputation for eschewing diplomacy, the administration’s diplomatic engagement on Iran involved multiple partners. Prior to the expiration of the oil waivers, Washington coordinated with Riyadh and Abu Dhabi to ensure that sufficient oil would be produced to satisfy Iran’s former clients. In response to proxy threats, US officials issued multiple statements to dissuade Iran and to alert the international community of the impending crisis. Secretary of State Pompeo then met with European partners, Iraq’s president, and Russian foreign minister Lavrov in Sochi to discuss the threat. These meetings spurred Germany, Kuwait, Japan, Iraq, Oman, and Switzerland to engage Iran. It is likely that their message to Tehran was that while the US does not seek a military conflict, it will respond forcefully to any Iranian attack. Washington’s decision to conduct B-52 exercises in the region while keeping the aircraft carrier outside the Gulf reinforced this message.
The Saudis and Emiratis quickly organized three consecutive summits in Mecca with the leadership of the Gulf Cooperation Council (GCC), the Arab League, and the Organization of Islamic Cooperation in Mecca to build regional and international pressure against Iran. Unusually, Doha attended the conferences, although their foreign minister’s postconference statement shows that Qatar remains unenthusiastic about any anti-Iran coalition. Riyadh, which has accelerated its ballistic missile program, and Abu Dhabi, which has rapidly expanded its military capabilities, appear done with enduring Iranian proxy and unconventional attacks while Iran escapes unscathed and the United Nations and Europe ignore what has become a one-sided missile conflict. The West may well wish to prevent missile buildup in the region, but Iran’s actions may make this inevitable if Riyadh decides it must count on its own forces for deterrence and protection.
Iran’s diplomacy during this period covered an array of themes that included an offer to engage in prisoner exchanges with the US and Britain, a nonaggression pact with the GCC states, and bizarre threats to use “top secret weapons” to sink US warships “with everything and everyone on board.” Yet in response to the Trump administration’s willingness to engage in talks, Tehran claimed it would not negotiate until Washington “showed respect” and lifted sanctions. Iran’s supreme leader—and ultimate decision maker—rejected talks with Washington “because negotiation has no benefit and carries harm.” Iran’s Revolutionary Guard directly ruled out negotiations on Iran’s missile program. Iran’s peripatetic foreign minister and other officials traveled to foreign capitals where they denied Tehran’s involvement in terrorism but also threatened to withdraw from the nuclear deal unless more was done to oppose US sanctions.
The political divisions within the United States offer Tehran another weapon. The hyperpartisan nature of the US policy debate on Iran and US friction with Europe have challenged the development of the bipartisan approach demanded by this issue. Members of Congress instead publicly argue over the interpretation of alleged intelligence on Iran’s actions. Elsewhere, some pundits claim that the current approach to Iran mirrors that undertaken against Iraq before the 2003 conflict. However, and in stark contrast to 2003, the evidence of Iran’s support for terrorism, role in the deaths of hundreds of Americans, responsibility for missile and drone attacks against Israel and Saudi Arabia, and past nuclear weaponization program is extensive and a matter of public record. Nonetheless, concerns that tensions could erupt into another costly Middle Eastern war guarantee that this debate will continue.
Tehran follows our politics closely, and Iran’s foreign minister Zarif will continue to use our media and sympathetic interlocutors to broadcast Iran’s narrative. Zarif also knows that some in the West believe that engagement with pragmatic conservatives is a worthy cause and respond well to his complaints that pressure empowers hard-liners. Iran has also copied Moscow’s social media information operations to twist our debate.
In coming weeks, Washington’s challenge will be to maintain a robust diplomatic and sanctions campaign to keep Iran on the defensive without provoking Iran to action. Iran has no choice but to strike while it retains the economic and political strength to do so. Iran’s extraterritorial actions continue to be useful tools of pressure and retaliation, albeit with less impact than in past years. Domestic unrest remains muted, and sanctions-induced economic problems have yet to destabilize the regime to the point where Tehran would feel compelled to compromise on the regional, missile, or nuclear issues. But time is not on Iran’s side, although Iran no doubt still hopes it can outlast the Trump administration and find relief—and perhaps even compensation—from a successor administration prepared to return to the nuclear deal.
For the average Iranian, sanctions and decades of mismanagement mean a hard life. Annual inflation is approaching 40%. Poultry prices have risen 57%, vegetables by 47% and milk, cheese, and eggs by 37%. Medicine is costly and sometimes unavailable. Iran’s overall unemployment rate exceeds 12%, and youth unemployment is far higher. Iran’s economy is likely to contract by as much as 6% in 2019 after falling almost 4% in 2018. At a time when Iran’s leadership needs political stability, Iran’s economy will be at its worst since 1989, guaranteeing unrest.
Budget problems have allegedly forced Tehran to cut its offensive cyber unit’s budget. Even the Revolutionary Guard’s Quds Force has reportedly lost 17% of its funding. Sanctions have reportedly required cuts in Iranian aid to Lebanese Hezbollah to the point where the group is begging Yemeni supporters for cash. It is likely that other proxies are enduring similar budget blues. The reported decision by Iran’s leaders to consider a US-approved “oil for goods” program to obtain foodstuffs and medicine is good news for Iran’s people but a blow against the supreme leader’s longtime assertion that Iran could survive through a resistance economy.
For all the talk of diplomacy, a successful process would require significant concessions from either Washington or Tehran (more likely both). The US will need to offer Iran concessions on its regional adventurism and missile program. Tehran must relinquish regional gains, accept international limitations on its missiles and offer new concessions on its nuclear program. The former would require that the US abandon its regional allies, and the latter would upend long-held positions by the supreme leader and Revolutionary Guard.
Importantly, diplomacy also requires Iran to negotiate core security programs directly with the United States. The supreme leader has routinely rejected such a concept, the only exceptions being the nuclear and detainee talks under the Obama administration. However, these talks occurred after years of biting sanctions and the release of a large number of Iranians who had engaged in sanctions-busting activities on behalf of Iran’s military and security forces, amid a sense that the US was prepared to acknowledge Iran’s right to a domestic enrichment program.
Iran has repeatedly denied proposals to establish a hotline between US and Iranian naval forces in the Gulf as well as any suggestion that its regional presence or domestic missile programs are up for discussion with the US. Further, Iran’s supreme leader is of an age where he is unlikely to agree that Tehran needs to alter the foundation of its relationship with the Great Satan he has so ardently opposed over several decades. Those in Tehran who wish to replace him—and this will require the support of the hard-line Revolutionary Guard—would commit political suicide by advocating such negotiations with Washington.
Washington’s diplomacy has produced a raft of intermediaries willing to engage Iran, which represents a positive step. However, the countries allegedly acting as intermediaries can convey messages and possibly even act as a host for US-Iran diplomatic discussions, but absent an ability to press Tehran to restrain its regional and missile programs, their utility will be limited. Iraqi engagement, for example, will be complicated. Iran’s proxies are deeply embedded in Iraq’s polity, and the Iranian ambassador is reported to be a former Quds Force officer. Iraqi officials can message a spectrum of Iranian actors, doing so as a fragile party unable ever to bring pressure on Iran. Russia’s regional stature and relationship with Iran actually benefits from increased tensions.
Looking forward, a conventional conflict remains unlikely. Washington has no interest in entering another costly and unpopular Middle East war. Iran seeks to avoid a conflict that might initially foster some degree of national unity but inevitably risks domestic pressures at a time when it is challenged by multiple domestic fissures. Regional countries similarly wish to avoid a conflict that would bring punishing missile and cyberattacks.
In this environment, the US and Iran will each seek to maintain the initiative while testing the other for weaknesses. Washington is likely to rely on sanctions pressure, diplomacy, and regional allies. Tehran’s response options will draw from unconventional tools and diplomacy in which it postures belligerence and victimization. It remains unlikely that Iran will resume its nuclear weapons program, but further expansion of Tehran’s civilian nuclear program should be expected. Iran is likely to focus on how to exploit political rifts within and between its adversaries, perhaps through hints of concessions on detainees.
Accordingly, there is little doubt that the likelihood of confrontation between Iran and its neighbors and the United States is growing even if the chance for open war remains distant for now. The latest attacks show that we may have entered a period where this is a new “normal” for the region. Now is the time for the international community to work together to prevent a new conflict from breaking out in the Middle East.