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Iran’s Retaliation Could Cause A Middle East Oil Shock


ronscarpa
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:twothumbs: This is a long but very excellent article that lays out quite a bit of historical background of Iran's influence and meddling in Iraq.:salute:Ron

Iran’s Retaliation Could Cause A Middle East Oil Shock.

By Gregory R. Copley ... January 6, 2020  

Link: http://iraqieconomists.net/en/2020/01/06/irans-retaliation-could-cause-a-middle-east-oil-shock-by-gregory-r-copley/

Gregory-image-2.jpg

Iran’s clerical leadership, under “Supreme Leader” Ayatollah Ali HoseiniKhamene‘i, is expected to make rapid, significant, and symbolic responses to the targeted killing in Baghdad on January 3, 2019, of Iranian Revolutionary Guard Corps Quds Force commander Maj.-Gen. Qasem Soleimani.

 

It seems unlikely that the Iranian response would initially be to launch a military assault on Israel, which it has been planning, but, rather, something which could target the oil production and exports of the US’ key allies in the region: Saudi Arabia, the United Arab Emirates, and Bahrain, in particular (but not exclusively). The event was not only decisive for the US-Iranian dynamic, but it will also have long-term structural effects on the supply of oil and gas.

 

This will particularly impact (negatively) the People’s Republic of China (PRC) and, positively in the short-term, Russia. This comes at a time when the PRC economy is already suffering severe degradation, so the net effect of a significant rise in oil prices would be to accelerate the PRC recession, which would, in turn, significantly impact the global economy as 2020 progressed.

 

This could, then, have an impact on the US November 2020 Presidential and Congressional elections, although the decline in the PRC economy was always going to have an impact on the US during the year in any event. The pivotal event of the killing of Soleimani seems likely, therefore, to ensure that the US and the PRC will now work to cement a trade resolution as quickly as possible.

 

Certainly, in the short-term, there is likely to be a significant uptick in the ongoing Iranian-directed attacks by Shi’a militia units against US military facilities in Iraq, as well as the mobilization of terrorist and subversive actions against US bases and facilities in the Persian Gulf and elsewhere.

 

It is increasingly evident that the Iranian clerical leadership under the ailing Ayatollah Khamene‘i had, until the shock of the decisive US attack which killed Soleimani and several other key officials, completely misread the resolve and intent of its two major nemeses, the US and Israel, and had been preparing to act on those faulty perceptions.

 

Misreadings of the situation have contributed to the belief within the Khamene‘i circle that it was now possible to militarily confront and destroy Israel, as Yossef Bodansky described in a report on October 21, 2019. Some Iranian clerical leaders have stated that it was also possible to see the removal of the US from the Persian Gulf and wider Middle Eastern region, even as a precursor to minimizing the engagement in the region of Russia, the People’s Republic of China (PRC), and current Iranian ally Turkey.

 

Khamene‘i appeared at the beginning of 2020 to believe that he could resolve his dramatically worsening domestic problems by a major political-military demarche which would somehow overturn Iran’s strategic fortunes. Lt.-Gen. Leopoldo Galtieri similarly sought — and failed — to reverse his Argentine military government’s fortunes by invading the Falkland Islands in 1982, as an eleventh-hour bid to cling to power.

 

It has become clear that the formal Government of Iran, under Pres. Hojjat olEslam Hasan Fereidun Rouhani, had, probably by mid-2019, become completely sidelined in terms of actual policymaking.

 

“Supreme Leader” Khamene‘i, supported by key leadership elements of the Iranian Revolutionary Guard Corps (IRGC: Pasdaran) has, since around mid-2019, been increasingly contemplating some form of unprecedented foreign adventurism, based on a misreading of the regional and global strategic situation, as a means of compensating for a declining internal security situation. Perceptions of Iranian military successes in Yemen, which were, in reality, failures of the Saudi-led coalition fighting there, created in Tehran the belief that Iranian forces could sweep all before them.

 

In basic terms, clerical Tehran seems unwilling to take the necessary measures to satisfy domestic political-economic problems — which are, admittedly, difficult — while at the same time allowing itself to believe that the doorway is open to it to successfully undertake great military successes outside of Iran’s borders. It thinks the domestic challenges are too hard (and, anyway, it fears to show weakness to a domestic audience), and the foreign opportunities are too easy

 

The Iranian Government-orchestrated attack — using combatants of the Hashd alShaabi (Popular Mobilization Forces) — on the US Embassy compound in Baghdad, Iraq, on December 31, 2019-January 1, 2020, seemed to have been an attempt by the Tehran leadership to probe the strength and willpower of the US Government in the region; or, conversely, it may have been a reflection of a growing lack of realism in Iranian strategic decision making. The Iranian government denied involvement in the attack on the US Embassy, but the clear linkage between the Hashd al-Shaabi leadership and Gen. Soleimani was evident in the airport strike on January 3, 2019.

 

Either way, the US response to the attack on its embassy was not the one Tehran was hoping to see. Whether or not it was a probe of US response or a lack of realism in Tehran, the attack highlighted a growing tendency by the clerical Administration under “Supreme Leader” Khamene‘i to seek an external distraction from the growing domestic unrest in Iran. As French statesman Charles-Maurice de Talleyrand-Périgord was reputed to have said (on an entirely different matter) to Napoleon I: “It was worse than a crime; it was a blunder.” But, realistically, what options did Tehran have to break out of the strategic straight jacket the US had placed on it?

 

Clearly, the Iranian domestic situation would not have become so pressing had the increasingly-isolated clerical leadership of the country undertaken more effective economic and political management, but, in the short-term, Tehran opted to “break out” where it could, and that was in the soft-target areas among US allies in the region. And, indeed, the clerical leadership had, by January 3, 2020, predictably begun to attempt to exploit the killing of Gen. Soleimani as a full US war against Iran.

 

The Baghdad Embassy attack did not, of course, lead to a US backdown, but rather to an increase in US force commitment to the region, albeit a response which had been as carefully as possible measured to avoid allowing the Iranian clerical leadership to lure the US into a direct confrontation with Iranian forces.

 

There is persuasive evidence that Ayatollah Khamene‘i would welcome a direct US-Iranian military confrontation, given the precedent set in 1980 when Khamene‘i’s predecessor, Ayatollah Ruhollah Khomeini, was facing overthrow by a discontented Iranian populace only a year or so after he seized power.

 

The September 22, 1980, Iraqi attack on the Iranian city of Khorramshahr, across the Shatt al-Arab river began the eight-year Iran-Iraq War which cost Iran as many as 500,000 dead and another 400,000 wounded, and a cost to the treasury of Tehran of some $561-billion in direct terms (and much more in long-term damage to the Iranian economy). But, for Khomeini, it was worth the price: his clerical leadership was saved because the Iraqi attack diverted domestic attention toward the patriotic endeavor of saving Iran from outside forces.

 

Moreover, the Iran-Iraq war made it clear that the ultimate defeat of Iran by purely military means was a difficult objective for any power, whether Iraq or the US. It remains so. Terrain issues (size and topography), coupled with a deeply-rooted sense of Persian national pride, mean that any military adventure against Iran could only succeed as a cost-effective measure if it was aided by internal collapse or weakness.

 

Even the 19th Century loss of Persia’s northern lands of Daghestan, eastern Georgia, much of Azerbaijan, and northern Armenia to Russia (under the Treaty of Gulistan) was not merely the result of the Russo-Persian War of 1804 to 1813, but also because of the reality that the then-ruling Qajar dynasty in Persia was in decline. Even Russia did not contemplate a full-scale invasion and occupation of the core of Iran where geography and the tenacity of the local tribes would have made such a conquest difficult.

 

Persian collapse or defeat, historically, has (as with most countries) been the result of internal failure rather than military action from abroad, and, in the case of Persia or Iran only when its core strengths have been sidelined. Those core strengths are the identity given to the populace by Zoroaster (core religion or ethical values, prevailing since pre Islamic times), Cyrus the Great (sense of martial prowess and national identity), and Ferdowsi, the poet (culture, and the creation of Persian epic greatness with Shahnameh, the Book of Kings).

 

What is significant is that the Khamene‘i clique — very much including his son, Mojtaba Hosseini Khamene‘i, who led the Basij militia to suppress Iranian voters in the 2009 election — have built their hopes on “strategic distractions” which have not appealed to these core Persian tenets, but, rather, have opposed them.

 

So what was evident by late 2019 and the beginning of 2020 was pressure by the Iranian clerical leadership (and therefore also the Iranian Revolutionary Guard Corps: Pasdaran) to actually seek military confrontation with the US and/or Israel on terms which could be portrayed to the Iranian population as an external aggression on the Iranian motherland. Equally, US Pres. Donald Trump is at pains to deny the clerics this opportunity. And the Israeli national security community is equally at pains to avoid a strategic first strike to avert the prospect of an Iranian strategic strike.

 

The attack on the Baghdad US embassy compound by militia groups associated with the Popular Mobilization Forces (PMF) appeared to be aimed at accelerating a US withdrawal from Iraq and the Persian Gulf, and was clearly modeled on the November 4, 1979, attack by Iranian “students” on the US Embassy in Tehran. How then-US Pres. Jimmy Carter responded — or failed to decisively respond — to that event gave the Khomeini Administration its license to proceed further against its domestic opponents.

 

The Baghdad Embassy event was well-orchestrated but was clearly not generating the response which the Iranian Embassy in Baghdad was seeking. The Iranian Ambassador to Iraq is the former Deputy Commander of the Quds Brigade of the IRGC, Brig.-Gen. Iraj Masjedi, who continued to work closely with Quds Brigade Commander Maj.-Gen. Qasem Soleimani. Maj.-Gen. Soleimani was known to be close with Ayatollah Khamene‘i, so the Baghdad Embassy operation was clearly orchestrated from the top of the clerical administration.

 

There is, then, little ambiguity in the Iranian ruling clerics’ position. Khamene‘i pointedly stood down Pres. Rouhani and Foreign Minister Javad Zarif on May 14, 2019, from any negotiations with the US, a week after US Secretary of State Mike Pompeo had visited Baghdad and reportedly met with “a senior Iranian official”.

 

The only question is whether Khamene‘i will “pull the trigger” on a major confrontation, possibly with Israel, before domestic Iranian security concerns deteriorate to the point of no return. What is significant is that, as with the Argentine gamble to invade the Falkland Islands in 1982, little thought has been given to the second- and third-tier effects of launching a major conflict against Israel.

 

There is no question that the IRGC, and possibly the Iranian Armed Forces, are basing their hope of “destroying Israel” on their ability to saturate the Israeli Rafael/Israel Aircraft Industries Iron Dome national air defense system. And, indeed, Iran has done much to upgrade its available technology toward this end. Firstly, it has dramatically increased the numbers of short- and medium-range ballistic missiles based in Lebanon’s Beqa’a Valley and in Iraq hard up against the Syrian border.

 

Secondly, it has increased the quality and lethality of those missiles. As Yossef Bodansky has described in reports by this Service (see, particularly, the report of October 21, 2019), precision guidance modification kits have been provided to many of the ballistic missiles and rockets being used by Iranian-controlled HizbAllah forces in Lebanon and HAMAS forces in Gaza.

 

HAMAS forces fired some 450 rockets from Gaza into Israel during November 2019, and Iron Dome intercepted some 86 percent of them. Clearly, as the HAMAS and HizbAllah forces add precision guidance to their systems, an 86 percent kill rate — assuming that could be sustained through a protracted saturation strategy — would be insufficient to protect Israel. The Israeli Defense Forces are aware of that. Moreover, the reality is that Iran is now ready for another attempt at overwhelming Iron Dome. The system became operational on March 27, 2011, and by late October 2014 had intercepted more than 1,200 rockets.

 

The new approach by Iran would depend on more than just ballistic missiles and rockets, and would certainly include the unmanned aerial vehicles (UAVs) which Iran successfully employed against Saudi air defenses, particularly in the September 14, 2019, strike against the oil facilities in Abqaiq and Khurais in eastern Saudi Arabia. Moreover, the movement of heavier Iranian ballistic systems onto the Iraq-Syria border holds the implication that Iran is considering deployment — or has already deployed — strategic (nuclear) warheads, with the option that a saturation of Iron Dome could provide an opening for the use of counter-city weapons against Israel.

 

What this thinking ignores is that any use of strategic weapons by Iran or Iranian proxies against Israel would be countered by an Israeli second-strike capability, quite apart from Israel’s own first-strike weapons. Iran does not have a material second-strike capability and would suffer significantly if it escalated to a nuclear exchange. So the only option being considered by Iran is that an Iranian first strike against Israel would be sufficient to destroy all Israeli combat capabilities.

 

This would be a true gamble for Tehran, and, as tensions built, it would be likely that the US would bolster Israeli air defense capabilities through the deployment of offshore-based Aegis assets and associated anti-ballistic missile capabilities. Iran has probably already attempted to deploy some of its Russian-built S-300 air defense missile systems to protect Iran’s forward-deployed offensive ballistic systems against pre-emptive Israeli strikes. [Israel launched targeted missile strikes on December 22, 2019, against Iranian targets in Syria, allegedly killing the Commander of the IRGC’s Aerospace Force, AmirAli Hajizadeh. Iranian reports said that Syrian air defense batteries intercepted Israeli missiles, but clearly not all.]

 

What is known is that Iran had, by late 2019, deployed its Bavar-373 to T-4 (Tiyas Military Air Base; The Syrian Arab Air Force’s largest base) in Homs Governorate, in Central/Western Syria, to protect its forward deployment. Some key components of the batteries are positioned far too close to Russian facilities for Israel to attempt to destroy them. The Russians are not happy. The Bavar-373, tested initially in August 2016, is claimed by Iran to be comparable to the Russian S-300 air defense system. It was only formally unveiled on August 22, 2019.

So a big question mark is held over the question of where Russia would stand in all of this. Or the People’s Republic of China (PRC).

 

Almost certainly, Moscow would not support such Iranian adventurism, and is already aware that Iran is escalating regional tensions to a degree unacceptable to Russia. The bottom line is that Russia cannot afford to lose any of its “allies” in the region: Iran, Turkey, or Syria. Neither, however, can Moscow realistically control Iran; it has in some respects more leverage over Turkey and Syria, although Turkey is anything but an easy management task.

 

Turkish Pres. Reçep Tayyip Erdo?an keeps ignoring Russian Pres. Vladimir Putin’s “advice” mainly on the matter of Libya, Syria, Central Asia/Xinjiang/Afghanistan, and the Caucasus/Crimea. And while Russia has some means of pressuring Erdo?an, the reality is that the economically-embattled Pres. Erdo?an knows that Moscow cannot afford to break with Ankara at this time. Similarly, the matter of “who needs who the most” impacts Russian relations with Iran, as well as Beijing’s relations with both Iran and Turkey.

 

But a severe degradation of Israel would be as detrimental for Russia as for the US, giving dominance in the Eastern Mediterranean to Turkey and Iran. Russia has already expressed its concern over Turkish plans expressed by the Turkish-Libyan maritime agreements concluded on November 27, 2019, with the rump pseudo-government — the “Government of National Accord” — of Libya under Prime Minister Fayez al-Sarraj. Russia supports (as does Egypt) the essentially anti-Turkish and far more nationally representative Administration of Tobruk-based Gen. Khalifa Haftar.

 

Another scenario is possible: Iran’s slide into domestic chaos may preclude an opportunity for the Khamene‘i team to launch a diversionary conflict with Israel. It could call for all forces to focus on the maintenance of domestic stability, possibly invoking a martial law edict. This, as we have noted before, could possibly have seen the rise of Quds Force Commander, Maj.-Gen. Qasem Soleimani, entering Iran — crossing the Rubicon, in a sense — to act as martial law administrator.

 

That, in itself, could start to see the end of the clerical era in Iranian governance. Soleimani is now gone. Is there another military leader who could emerge to galvanize a transition from the clerics?

 

GIS/Defense & Foreign Affairs Senior Editor Yossef Bodansky noted in the hours just before the target-killing of Maj.-Gen. Soleimani:

 

“The key recent decision in Tehran was regarding the latest attacks against the US airbases in Iraq, and these few attacks were driven by domestic developments in the Shi’ite community of Iraq.”

 

“Oversimplified: There is a growing schism among the Shi’ites over their identity as part of the Iran-led Shiite World (the Fatah movement, the Hashd al-Shaabi, etc.) or a distinct leading part of the Shi’ite World on the basis of the erstwhile glory of Najaf and Karbala (Muqtada Sadr leads this trend).”

 

“The imminent death of Iraqi Shi’a leader Ayatollah Ali Husseini Sistani, 89, escalates the struggle between these factions over who will succeed him. In September 2019, Soleimani brought Sadr to Khameine‘i in Tehran to discuss a ‘deal’ whereupon Tehran would accept the ascent of Shi’ite Arabism in return for greater control over Iraq’s strategic/energy. Sadr accepted but then sent his minions to riot in the streets in order to gain more concessions from Tehran, but lost control over them. Hence, Tehran ordered the provoking of a crisis with the US in order to mobilize and unify the Shi’ite community against the ‘Great Satan’ (starting with the siege on the US Embassy over the December 31, 2019-January 1, 2020 timeframe).”

 

“While Tehran did not expect, and does not relish, the extent of the US response, and while both Beijing and Moscow criticize the anti-US crisis while they improve strategic cooperation with Iran (such as the four-day naval exercise held between Russia, the PRC, and Iran, beginning on December 27, 2019, in the Indian Ocean and Gulf of Oman), Tehran cannot project weakness and cannot lose dominance over Shi’ite Iraq.”

 

“Hence, the anti-US/anti-Israel incidents will keep coming and escalating. How far..? Who knows…?”

 

Clearly, Iran can be expected to lash out significantly and relatively quickly. Tehran needs to sustain the momentum of the perception that the US represents an existential threat to the Iranian state, and not just to the clerical Administration. And what the clerics fear most is that the West may well turn to appealing to the “tribal” interests of various Iranian populations, who persist in seeing the clerics as their main adversary.

GREGORY R. COPLEY

Historian, author and strategic analyst — and onetime industrialist — Gregory R. Copley, 70, has for four decades worked at the highest levels with various governments around the world, advising on national security, intelligence, and national management issues. He has authored more than 30 books, including “The Art of Victory” (2006) and “UnCivilization: Urban Geopolitics in a Time of Chaos” (2012). An Australian, he is President of the International Strategic Studies Association, based in Washington, DC, and Editor-in-Chief of the “Defense & Foreign Affairs” group of publications, including the government-only intelligence service, the Global Information System. Among his international recognitions, he was, in 2007, made a Member of the Order of Australia in the Queen’s Birthday Honours.


Source: Oil Price com. January 06, 2020,

https://oilprice.com/Energy/Energy-General/Irans-Retaliation-Could-Cause-A-Middle-East-Oil-Shock.html?utm_source=browser&utm_medium=push_notification&utm_campaign=vwo_notification_1578348628&_p_c=1

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U.S. Warns Iraq It Risks Losing Access to Key Bank Account if Troops Told to Leave

LINK>>>>https://www.wsj.com/articles/u-s-warns-iraq-it-risks-losing-access-to-key-bank-account-if-troops-told-to-leave-11578759629

The Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials.

The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said.

Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical lubricant for the economy.

The prospect of U.S. sanctions against Iraq arose after the Jan. 3 U.S. airstrike that killed Iranian Maj. Gen. Qassem Soleimani at Baghdad International Airport. The Iraqi parliament voted Sunday to urge Prime Minister Adel Abdul-Mahdi to work toward the expulsion of the approximately 5,300 U.S. troops.

In response to the nonbinding resolution, which was backed by the prime minister, President Trump threatened to impose sanctions against Iraq if the U.S. was forced to withdraw its troops.

Iraqi Parliament Votes to Expel U.S. Troops
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Iraqi Parliament Votes to Expel U.S. Troops
Iraqi Parliament Votes to Expel U.S. Troops
Iraq’s parliament voted to expel U.S. troops, after a U.S. airstrike killed Iranian Maj. Gen. Qassem Soleimani Friday. Photo: Reuters
Edited by psdon
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