Iran update - Bye bye Bolton

Will John Bolton's resignation bring the US and Iran down from the path to escalation?

Friday, September 13, 2019

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Iran Risk Update

↓ Decreased risk of escalation

Risk: Relations between the US and Iran remain tense, but the possibility for another approach to Teheran has increased now the President’s hawkish National Security Advisor has left the administration and President Trump seems more willing to facilitate a summit meeting with Rouhani. Small escalatory steps by both parties (or by Israel) can still get them in an accidental conflict.

Potential disruptive impact: An escalation of the conflict would actively disrupt maritime traffic in the Gulf and will have an impact on political stability in the wider Middle East. It would also impact oil prices even in this weak oil market.

Bye-bye Bolton

(now) former US National Security Advisor John Bolton. (Source: Kremlin)

Resigned (or fired?) This week US National Security Advisor John Bolton resigned or was fired by the President (depending on whose account of the story you belief, hint, Bolton’s story seems more legit than the President’s). Bolton resigned probably because of a range of disagreements over policy with the President. Bolton was uncomfortable with the US approach of North Korea, withdrawing pressure without getting anything in return. On this issue he was already sideline as during the last Trump-Kim meeting he was touring in Mongolia at the moment Trump made his historic step on North-Korean soil. He also disagreed with Trump’s planned meeting with the Taliban in Camp David (just days before the 9/11 commemorations).

Uberhawk. John Bolton was quite a hawk. He was one of the architects of the Iraq war. He never learned the lesson that regime change is not as easy as it looked before the Iraq and Afghanistan invasions. He was the most aggressive proponent of regime-change in Iran.

Thaw in US-Iranian relations? While Bolton’s departure will certainly not hurt the prospects for de-escalation of tensions with Iran, more will be needed to convince Teheran that the US really wants to talk. Iranian officials have reacted mildly positive to Bolton’s resignation and even made jokes. Iran’s minister of information, Mohammad Javad Azari Jahromi, tweeted:

“Need a mustache fashion Designer? @AmbJohnBolton is free right now,”

With a little help from a friend? To alleviate sanction pain, and try to keep Iran in the deal, France has proposed a $15 billion credit line. Washington has only recently intensified its pressure campaign and declared that they were not dealing with Iran through Macron. In a reaction Iran has said it would (in violation of the deal) start developing centrifuges that could enrich uranium more quickly.

Some hope? But Bolton’s departure seems to have changed something. President Trump declared that he would be willing to ease some of the sanctions if this could bring the Iranians to the table.

In addition, the fact that Trump allowed Iranian Foreign Minister, Zarif, to visit the G8 summit in Biarritz shows the start of a milder approach to Iran. Finally, Rouhani states everytime that Teheran further violates the agreement, that this steps are reversible.

But then there’s Bibi. In Israel there’s a high level of concern about the prospect of a Trump-Rouhani summit. Moreover, during the G7 summit, Israeli Prime Minister Benjamin Netanyahu told Macron that "It is precisely the wrong time to talk with Iran". On September 9, Netayahu claimed to have exposed a “nuclear weapons development site” near Abadeh.

Where will it go from here?

There are four possible scenarios:

Further escalation

In the first scenario, mutual provocation continues, and there is a good chance that the conflict will eventually get out of hand and that both countries will end up in a military conflict. The US will not be able to win a "quick" victory in Iran, and Tehran will use all its influence through its allies in Syria, Yemen, Lebanon, and Iraq to have the entire Middle East share in the chaos.

The risk of such a scenario has increased because of Israel’s shadow war in the Middle East. It is allegedly hitting Iranian (or allied) targets in Iraq and Lebanon. Recently it hit a weapons factory in Iraq that according to Israel worked for Iran and conducted a drone strike in Beirut (Lebanon).

Not very long ago, President Trump had planned a rocket attack on targets in Iran. The fact that an attack was planned shows that the conflict could escalate quickly. Iran's actions against ships in the Gulf also run the risk of getting out of control and forcing the US to take harder action. While at this moment both Washington and Teheran are holding back further escalation, the highest risk of an escalation is through a conflict incited by Israel that no matter what wants to avoid a Trump-Rouhani summit meeting.

Miscalculation

In June, several misinterpreted actions by the US and Iran almost led to further escalation. Iran thought that some American activities, including reducing the American presence in the embassy in Iraq, were a preparation for an American attack. In response, it began to move troops itself. This movement of troops was seen in Washington as Iranian aggression.

The risk of miscalculation is high because both countries do not have official channels of communication to speak with each other quickly in the event of an incident. Even in full Cold War, the US and the Soviet Union had a hotline to avoid misunderstandings in the event of a crisis.

North Korea model

In this scenario, the regime in Iran uses the ‘dealmaking’ ambition of the American President to organize a grand summit between Trump and the Iranian leaders. North Korea used such a summit, without making any real concessions, to get rid of its pariah status and got rid of the strict application of economic sanctions. A problem here is that unlike Kim Jong-un, Iranian leaders are not eager for a summit meeting with the President of a country that they have described for years as the Great Satan. However while a summit with Trump would be a step too far for Ayatollah Khamenei, it may not be for President Rouhani.

NAFTA bis model

An alternative could be to renegotiate the nuclear agreement. Similarly, the NAFTA agreement was replaced by a new deal that did not entail any significant changes. A recent leaked diplomatic communication from the (former) ambassador of the UK to the US indicated that one of the main problems Trump had with the Iran deal was that it was Obama's agreement. A new Trump-Iran agreement could offer a solution.

The way to an agreement

The US has already indicated that it wants to sit together with Iran to reach an agreement. Iran has already stated that it intends to consider this. However, Tehran will only want to talk when some of the sanctions disappear. This is a difficult step for Washington. A solution can be to maintain American sanctions, but at the same time to weaken their extraterritorial application. By granting exemptions to countries such as India and China and possibly Europe, these countries could buy Iranian oil again. This would give the Iranian economy some breathing room. At this moment President Trump seems to be considering such a scheme.

Once Tehran and Washington start talking again, they could include other issues that the US (and the EU) are concerned about, such as Iran's role in the wider region and its ballistic missile program.

Prospects

While Israel’s shadow war is pushing up the risk of an escalation, the departure of Bolton and Trump’s increasing willingness to consider sanctions relief to get a Trump-Rouhani summit pushes the risk down. Overall we expect that the prospects for de-escalation are increasing but a risk of miscalculation or Israeli agressiveness that could draw the US in a conflict persists.