Philipp Trösser
Last updated: 16 May, 2012

Analysis: Confining the conflict with Iran to the economic realm

Car owners are indignant about sky-high petrol prices and Israeli leaders paint a grim picture of a nuclear-armed Iran. But what is actually the likelihood of a disruption of world oil supply or even military action involving Iran?

While the past year has witnessed much tough rhetoric on all sides, none of the principal actors (the U.S., Israel, and Iran) at any moment during the crisis was in a position where military action would have been an unreservedly attractive solution. However, while reason always ruled out the military option, the possibility of irrational behaviour or human error always needed to be considered. Thus, the current renewed talks between Iran and the P5+1 are to be understood as the much needed valve to release pressure and guard against a violent escalation.

Possible scenarios of such an escalation are:
• a unilateral Israeli airstrike on Iranian nuclear facilities
• a joint U.S.-Israeli airstrike also targeting military installations putting at risk oil transit in the Persian Gulf
• an Iranian move to strike at either Israel or U.S. assets in the region or to shut the Strait of Hormuz to oil transit

Israel’s rising insecurity

Underlying the conflict is mainly the threat Iranian resurgence poses to Israeli and U.S. security and energy security interests in the larger Middle East region; a threat that is further underscored against the backdrop of its changing security environment.

Since the end of the Cold War, the U.S. and Israel have held a hegemonic position in the Middle East. This was ensured over a strong U.S. military presence, a U.S. commitment to guarantee Israel’s military edge over all other countries in the region, and both U.S. and Israeli nuclear weapons as an ultimate deterrent to any existential threat.

Starting with the 2009 Mavi Marmara disaster, however, Israel’s security environment has radically changed for the worse and the situation was further exacerbated by the Arab uprisings beginning in early 2011. Today, in short, a lack of social justice and coherence endangers Israel from inside, on virtually all of its borders it faces more hostile or instable regimes than two years ago, its handling of the Palestinian issue is steadily costing it the support of the international community, and in a more and more volatile region Israel is left with hardly any allies. The resulting feeling of insecurity is illustrated by renewed fortification efforts on all of Israel’s borders.

This and the Jewish holocaust trauma put into context Prime Minister Netanyahu’s talk of airstrikes to prevent an Iranian nuclear weapons capability. But just as one needs to look behind Teheran’s Israel-must-be-wiped-off-the-map rhetoric and acknowledge the geopolitical reality, one must also recognize the reality of the current predicament.

Weighing military options

The costs of a unilateral Israeli attack on Iranian nuclear facilities massively outweigh the gains. It is very doubtful that the Israeli air-force could inflict significant damage to Iran’s hardened nuclear facilities. Most experts agree that even airstrikes conducted by the U.S. would set back the Iranian nuclear programme by a few years at best. Israel cannot hope for as much, but in return would face increasing international isolation, boost hostility against itself in the Arab world, and possibly cause a reappraisal of U.S. support. Most importantly, such an attack would provide Iran with a pretext for retaliatory attacks on oil infrastructure and traffic in the Gulf region. While it is questionable how much of a security threat Teheran can pose to the group of countries which are at the origin of the stranglehold on its economy, it certainly has the capability to escalate their economic woes. Being seen as the cause for a newly invigorated world economic crisis certainly will isolate Israel internationally; possibly to the point of making it a pariah state. Thus, Israel cannot afford to strike Iranian nuclear facilities unilaterally. At the very least it would need U.S. support in order to first eliminate any Iranian military assets putting at risk oil transit in the Persian Gulf.

The U.S., however, have made it clear that they do not want to engage in military action against Iran. In June 2011, President Obama changed tack from his 2009 decision to increase troop levels in Afghanistan and declared that now was the time to “focus on nation-building at home”. The American public is war-weary and President Obama cannot ignore this as he is running for re-election in the U.S. presidential elections in November 2012. And while Obama maintains solid U.S. security guarantees to Israel, the bad chemistry between him and Israeli Prime minister Netanyahu is no secret. He declaredly leaves all options on the table, but clearly refuses to be dragged into another war in the Middle East and wishes to focus on economic sanctions.

Iran is in a very tight spot. As sanctions are already biting and the Iranian population is scared, the main issue for Iran’s clerical leadership must be how to contain dissent and retain legitimacy. And two things must be clear: The current sanctions regime makes Iran’s anyway unhealthy economy very unsustainable in the long run; and hunger and suffering will test peoples’ support to their government. The issue therefore is how to end the sanctions. Of interest here are Iran’s military capabilities and strategy, all geared for the deterrence of a much stronger adversary. This power to hurt is ensured over asymmetrical capabilities threatening to disrupt the flow of oil through the Straits of Hormuz; thus holding the global economy hostage. In comparison, Iran’s conventional military capabilities are insignificant compared to those which must be unleashed in case Iran might give them a pretext to do so.

What it all boils down to is that, at least in the short run, the conflict is likely to remain confined to the economic realm (and covert operations), as it is in the interest of none of the three actors to trigger an escalation.


In this economic struggle, the Western aim is to deny Iran several levels of nuclear technology and, if possible, induce regime change. As long as the price the West has to pay for this sanctions regime does not become unsustainable, it is certain to remain in place. The Iranian objective must therefore be to escalate the global oil prices. It cannot simply give up on its nuclear programme. Peaceful nuclear technology is not only Iran’s NPT-given right, but moreover the brightest symbol of Iran’s proud and defying stance towards Western imperialism and a symbol of national pride shared by large parts of the population. Giving in to Western demands for dismantling big parts of its nuclear programme would seriously undermine the legitimacy of the Iranian theocracy and exhibit weakness. The ensuing societal upheavals would likely be more difficult to contain than those following the rigged 2009 presidential elections.

In this context, the nuclear talks between the P5+1 are unlikely to settle the issue in the coming months; they merely ensure that the struggle remains confined to the economic realm. This does give a near-time outlook of consistently high oil prices and economic hardship in the West as in Iran, but one must conclude that there is, for now, no immediate threat of overt military action or an actual disruption of the world oil supply. We must, however, be vigilant about developments allowing or pushing for more hawkish approaches. Already the Israeli government is being streamlined, and other game changers may be the upcoming US presidential elections or an escalation of economic hardships on one side. Many countries have the technology today, but Iran certainly will not be allowed a nuclear threshold capability without a struggle.

The views expressed in this article are the author’s and do not necessarily reflect those of Your Middle East.