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Consequences of war with Iran
The US grand strategy in the Middle East is driven primarily by two elements; first, the security of energy resources and the safety of sea-lanes for steady flow of oil, and second, the security of Israel. Energy resources in the region have both, security and economic significance for the US. Therefore, the security of oil supply has been a major element of the US national interest since Franklin Roosevelt (1933-1945).
Some analysts argue that today, because America’s dependence on oil from the Persian Gulf is only around 17 percent, the oil supply in this region is not a driving force behind America’s grand strategy in the Middle East. This argument is flawed, for any instability in oil supplies from the Gulf region affects oil prices throughout the global expanse, and thus, the economy of the US as a whole. The US also asserts itself and its interests under the veil of protecting the strategic importance of other regions’ access, namely the EU and Japan, to the Middle East oil supplies. For instance, roughly 87 percent of Japanese crude oil import originates from the Persian Gulf region. For the global capitalist system to operate productively, it is of utmost importance for the US to prevent any one power from gaining a hegemonic status in the Middle East region, and possibly disrupting the supply of oil.
Tensions are mounting daily between Iran and the US, and between Iran and Israel, over Iran’s nuclear program. Iran shows no sign of compromise and most likely will not in the future. Ayatollah Khamenei, Iran’s Supreme Leader, argues that the US strategy is “regime change” and strongly holds that under bullying and intimidation, the way to success is to not retreat from the enemy, “not even one step.” He was quoted as saying: “If the ofﬁcials of a country get daunted by the bullying of the arrogant powers and, as a result, begin to retreat from their own principles and make concessions to those powers, these concessions will never come to an end!...Indeed, the end to US pressure and intimidation will only come when Iranian ofﬁcials announce they are ready to compromise Islam and their popular government…”
This is a broadly shared view among the ruling hardliners in Iran, i.e., the Osoolgarayan (Principlists). They believe that the suspension of the nuclear program, “under coercion,” would open the door to more demands of concessions by the West. The Grand Ayatollah Makarem once remarked: “Even If the nuclear issue is resolved they (foreign powers) will start making claims about human rights, freedom of the press. ...We have to be careful and never accede to their demands.”
The current deadlock lies in the polemics between two divergent doctrines. Iranians do not succumb to the US-led pressures because they surmise that retreat under coercion would represent the beginning of the end for the Islamic Republic. Meanwhile, the Americans base their policies on the assumption that Iran’s government will surrender upon such time as sanctions finally threaten their survival. But what if the US assumption does not conform to reality which is most likely the case?  Then what alternative solution is there for the US to break the impasse over Iran’s nuclear program?
Israel constantly beats war drums against Iran but the US is opposed to this approach. US Chairman of the Joint Chiefs of Staff, General Martin Dempsey, remarked that he did not wish to be “complicit” in a unilateral Israeli strike on Iran. But what went almost unnoticed was that his objection merely reflected a fear of damaging the "international coalition" pressuring Iran "if it was attacked prematurely" (emphasis added). Does this mean that, the US and Israel are divided over the timing of a military operation against Iran and not the essence of one?
Even in the absence of a planned war, there exists the ever-increasing potential that rising tensions might prompt a miscalculation by either or both sides. As one international relations expert maintains, “War is most likely if you overestimate others’ hostility but underestimate their capabilities. War can occur without misperception, but rarely.”
The consequences of such a war would be devastating. On September 13, 2012, a new paper titled, “Weighing the Benefits and Costs of Military Action Against Iran” was released and it had been signed by over thirty senior security experts of the United States, from the high ranks of elected office, military, and diplomatic branches. Among the signatories were well-known names such as, Nebraska Sen. Chuck Hagel, former Deputy Secretaries of State John Whitehead and Richard Armitage, former Chairman of the Federal Reserve Paul Volcker, former Commander in Chief of United States Central Command Anthony Zinni, and William Fallon, retired United States Navy four-star admiral.
The paper provides an in-depth analysis of the consequences of an American military strike against Iran and its nuclear program, and the outcomes of such a campaign. The report concludes that a unilateral Israeli attack would set back the Iranian nuclear program by only two years and an American attack would set the program back by four years. But, if the objective is “ensuring that Iran never acquires a nuclear bomb,” the US “would need to conduct a significantly expanded air and sea war over a prolonged period of time, likely several years”(emphasis added). The signatories conclude that, “A US and/or Israeli attack on Iran could introduce destabilizing political and economic forces in a region already experiencing major transformations. In addition to costing the US economy hundreds of billions of dollars yearly, a sustained conﬂict would boost the price of oil and further disrupt an already fragile world economy.”
The report maintains that a strike will “also disrupt Iranian government control, deplete the Iranian treasury, and raise internal tensions—although we do not believe it would lead to regime change, regime collapse, or capitulation”.
It is naïve to underestimate the consequences of a war with Iran. While unemployment in the US remains high, economic growth is struggling, and the Euro zone crisis remains unresolved, a global economic recovery would become unlikely, if not impossible. Let us not forget that a war with Iran could not only disrupt the global oil and natural gas markets, but will, at a minimum, block the export of Iran’s own oil, “resulting in a large increase in petroleum prices,” according to the aforementioned report. Many American experts assert that Iran cannot close the Strait of Hormuz, through which nearly 40 percent of the world’s seaborne oil exports travel. Most likely, this is a valid assessment. However, what is ignored in this calculus is that keeping the Strait open is one thing, but keeping it safe and secure for uninterrupted flow of oil is another. Zbigniew Brzezinski, current international relations professor at John Hopkins University, in an interview in July 2012 said, “We would open it [Strait of Hurmoz] by force — and we have the power to do it, and I’m fairly confident we would do it…but let’s not be simple-minded about it. We can open it up, but you can be absolutely certain that the costs of oil will skyrocket because it will still be a dangerous passage.”
James Hamilton, an energy economist, has assessed four previous episodes in which geopolitical events led to oil supply disruptions. The four cases were the 1973 OPEC embargo, the 1978 Iranian Revolution, the 1980 Iran-Iraq War, and the 1990 first Persian Gulf War. His findings demonstrate that “each of these events was…followed by a recession in the United States.” Hamilton’s study also concludes that, “at their peak disruptions, these events took out 4-7% of net world production and were associated with oil price increases of 25-70%.” But, another major factor to excogitate is the role of speculation in the oil markets. Today, unlike days past, oil markets are not driven simply by supply and demand. According to Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, “financial speculators historically accounted for about 30 percent of oil contracts, producers and end users for about 70 percent. But today  speculators account for 64 percent of all contracts.” So it is not just the supply and demand dynamics that control the market. Upon any uncertain outlook of diminished supply, speculation dominates the market.
In conclusion, the US military forces can destroy Iran, or as an Iranian-American analyst told the author of this article, they can take that country back to the 19th century, but they will become trapped in another long, unconventional, asymmetric conflict - known as fourth generation warfare (4GW) - that has the potential to damage the US economy beyond repair. According to a 136 page paper titled, “US and Iranian Strategic competition: The Conventional and Asymmetric Dimensions,” prepared by the Center for Strategic & International Studies, apart from inflicting losses on US forces or those of US regional allies and damaging critical infrastructures in the region, Iran can “disrupt or halt Gulf commerce with little or no warning.” Whether or not the US and Europe can avoid a great recession– if not depression - is highly questionable under a prolonged period of very high oil prices. The human cost of war on Iran would be devastating. The extent of human losses as a result of air strikes against Iran merits a separate report, however, to touch on this issue, it is worthwhile to note that according to a report prepared by the Center for Strategic and International Studies, just a strike on the Bushehr Nuclear Reactor “will cause the immediate death of thousands of people living in or adjacent to the site, and thousands of subsequent cancer deaths or even up to hundreds of thousands depending on the population density along the contamination plume…”
 In a recent article I noted: “Many compare the nuclear case to Iran’s acceptance of the UN Security Council Resolution 598 which demanded a ceasefire between Iran and Iraq. They reason that once the survival of Iran’s regime hit the danger zone, Ayatollah Khomeini, Iran’s revolution leader, drank the “cup of poison” and retreated from his position of toppling Saddam. This comparison is flawed. When Ayatollah Khomeini accepted the ceasefire, Iran did not lose one centimeter of its territory. More importantly, the new revolutionary government succeeded in silencing numerous opposition groups, and monopolizing power during the eight-year war. The retreat was about permitting Saddam to survive. It was not about retreating before a strategic enemy and a great power. The Iranian leadership firmly believes that once the sanctions bear fruit, Americans will use the same tactic over new issues such as “human rights” and “terrorism” until the regime is toppled.”