By the Rivers of Babylon

A take on the US-Iran latest developments

(opinions expressed here are those of the writer and not LFC)

For millenaries, Mesopotamia (meaning "between two rivers", referring to the Tigris and Euphrates) has been the ground for many of humanities inventions, historical events and defining moments shaping the world as we know it today.

The story goes as far back as the Code of Hammurabi which represents the oldest written set of societal laws and rules (circa 1750 BC) and the conquest of Babylon by Cyrus the Great of Persia (539 BC) who freed the Jews and allowed their return to Jerusalem to build the second temple, to the battle of Karbala (680 AC) which marked the schism among Muslims resulting in two streams of Sunism and Shiism, and follows through the Golden Age (800-1250 AC) where Damascus and Baghdad were the glorious centers of science and culture, and brings us to the modern age wars and competition for oil and regional dominance which culminated in successive Gulf Wars (1991 and 2003).

The assassination of Gen. Qassem Soleimani on January 3rd, on the shores of the Tigris river, in our view marks another turning point in the history of the region. One which brings about much uncertainty on what the future holds and could reshape and define the balance of power in the region for decades to come with global ramifications.

Since this event, both mainstream media and social media have been inundated by opinions and analysis of pundits. In the age of sensationalism and immediacy of social media, with a chronic lack of deep thinking and reflection, most of the analysis is put forward by experts whose opinions are often based on second-hand material provided by a limited number of outlets and whose knowledge base lacks depth. The below tweet sums up well the tragedy of lack of intellectual rigor and data in coverage of these latest events. As @raydalio puts it: "Opinions are a dime a dozen and nearly everyone will share theirs with you. Many will state them as if they are facts. Don’t mistake opinions for facts."

In what follows, I intend to provide a sober review of events and facts before I put forward the various outcomes that might be ahead.

How we got here?

Recall that Pres. Trump unilaterally withdrew from the JCPOA (aka Iran Nuclear Deal) in May 2018. My article "The Ides of May" published one day before this withdrawal provides more details about the context at that time and what I expected to follow: a continuous deterioration of the situation and escalation of tensions. Two important take away from that episode that are very important for what has followed since and what is happening today are: 1) Pres. Trump withdrew despite insistent advice to the contrary from US allies (and other countries) to remain in the deal, 2) the withdrawal could be interpreted as unlawful under international law but it also did away with all the dispute resolutions mechanisms that were embedded in the agreement. Why this is important? Because it is a characteristic that has been common in Mr Trump's dealing with various international files, and a pattern that we should consider as "normal" going forward. For instance, NAFTA also contains dispute resolution mechanisms but the President simply did away with them. The rule of law (at least that of international law) seems to be nearly irrelevant in the decision-making process. Second, the post World War II implicit and explicit alliances in particular with European partners were severely downgraded. The interactions of Mr Trump with fellow G7 leaders at successive meetings and his positions and declarations on NATO also confirm this point. In fact, none of US' European allies, nor the Gulf country allies where neither informed or consulted about the assassination of Gen Qassem Soleimeni. A courtesy call was made only to Mr Netanhayu before the action was carried on. These elements are important considerations in projecting potential outcomes.

Who was Gen. Qassem Soleimani?

A veteran of the Iran-Iraq war (1980-88) he rose through the ranks. Foes and friends alike saw him as an astute strategist and strong military mind. He was the only recipient of the highest military order of Iran which counts only 5 recipients since its creation in 1856 (4 of them during imperial Iran of pre-1979).

As most military men, he had many foes and many friends. Loved by many and hated by others. Readers can watch the BBC documentary "Shadow Commander: Iran's military Mastermind" (featuring US and UK top military brass including the commander of US forces in Iraq at that time and future CIA Director Gen. Petraeus) for more information on the man but also his actions along and against as well as his interactions with allied forces in Iraq and his important role in containing the advance of ISIS towards Erbil and Mosul in 2014 by providing strategic support to the Kurds.

Much is being said about the expressions of joy by his haters and the pouring of sympathy and mourning by those who saw him as a beloved commander following his dead. Whether he was popular or not or how popular he was, are key elements for what might follow, and should have been taken into consideration by any advisor in their analysis and recommendation for any action against him. From the US perspective if he was only a strong man of shadows, little known or little liked, his assassination - even on very shaky legal grounds - might have taken a toll on Iran's military moral and attempt to send some sort of message of deterrence, thus considered by some as an acceptable risk. On the other hand, if he was liked, admired and popular he could become a national symbol and at a time of tension bring about cohesion and unity in a population that the US has already tried to pressure via successive sanctions on its leadership and economy. Few polls are available on Iran and Iran related issues, yet the Center for International and Security Studies at the University Maryland conducts regular polls on Iran related issues. The latest such study in October 2019, found that Qassem Soleimani was the most popular public figure in Iran with over 80% viewing him favorably. The processions at his funeral in the last two days all but confirm this, with up to 2 million mourners’ reported in attendance in Tehran. (below video of procession a city bordering with Iraq of 1.5million inhabitants highlights the extent of participation)

Today, the questions of the popularity of Gen. Soleimani has found a clear and definite answer. He is a national symbol. One that advisors and analysts might not have understood or expected.

Where things stand?

The developments following this event are fast and dynamic. While visibility is low on what can be next, let us start by recaping some important information and facts:

1) The US allies in the Gulf are calling for de-escalation. Ironically, according to Iraq's Prime Minister, Gen Soleimani was in Iraq to meet with him bringing back Iran's secret message in response to a message sent by Iran's regional competitor (Saudi Arabia) to engage into some level of normalization.

2) Iraq wants to avoid being instrumentalized in this confrontation. The Iraqi leadership has repeatedly expressed their discontent with continued unapproved use of their air space in recent weeks by US forces culminating in the assassination of Gen. Soleimani. The Iraqi parliament has also made a point to open the door to officially asking a withdrawal of US troops from its territory. A legislative process that might be challenging or stretched, given that Iraq has presently a caretaker government.

Ironically, the assassination perceived as a lack of regard for Iraq's sovereignty has revived Iraqi nationalism and some or much of the animosity towards Iran with regards to their interventionism in Iraq is suddenly redirected towards the US.

3) Iran has explicitly declared that retaliation is in order. However, its military leadership has stated and clarified that the nature of this action will be military only. Lebanon's Hezbollah leadership has also gone to great lengths to emphasize that civilian US interests should not be targeted.

4) Pres. Trump yesterday tweeted the US counter position. There will be escalation: any type of Iranian retaliation would be met with strong military action. In particular, his reference to the destruction of Iranian cultural sites rose eyebrows in the international community.

5) While Iran is still in JCPOA it has declared that it will scale back its commitments to the uranium enrichment levels.

6) The EU3 issued a communique which is does not refer to the US action and asks Iran to stop any intent of proliferation.

Where to next?

In essence and from a game theory perspective, Iranian leadership is in a difficult spot. Given the importance of the damage inflicted, the manner in which it was carried out and the public outcry and the effervescence of nationalism, it "needs" to retaliate. But the nature of this retaliation will define what is to come.

To make matters worse, the aggressive posture taken by Pres. Trump with regards to any Iranian action, limits both his options and those of the Iranian leadership going forward, akin to a prisoner's dilemma.

While originally it was reported that the US sought to deescalate the situation by sending a message via the Swiss Embassy (which represents US interest in Iran) by suggesting that any Iranian retaliation be of corresponding proportion, it seems that a realization of what Gen. Soleimani represented to Iran, made any proportionate answer unacceptable to the US.

One can consider that the administration has decided it will either have Iran accept a new threshold of engagement (higher tolerance for US assertion) or should it not, the US is ready to go "all the way". This would be an extremely alarming path.

 Another major risk going f0rward is a renegade retaliation by peripheral militias without the approval of Tehran, putting both sides in a very difficult position.

A benign development, though probably not very likely, would be a strong signal from the US of a progressive yet total withdrawal of US troops from Iraq, should the Iraqi parliament master a resolution to this end. This would be a face-saving exit for both parties: Pres. Trump would fulfill a campaign promise and present lack of military retaliation by Iran as a win, while the Iranian regime could present this as a retaliatory victory and the legacy of Gen. Soleimani. Interestingly, top brass Iranian military has hinted at this exit strategy, as two of them have explicitly characterized the US leaving Iraq as "would be our retaliation".

Another possible "safer" route for Iran is that of a cyber attack or retaliation of some form. This would take away the risks associated with any direct attack on US personnel while it can fulfill the definition of retaliation, so as long it remains somewhat spectacular in its results.

This might not be seen as sufficient by many elements within the Iranian ranks.

Finally, while Iranians historically in many cases have shown patience in their counteractions, it is likely that this time around any potential retaliation will be in the short term.

In fact, it is our view that the riskier the retaliation consequences are perceived to be by Tehran, the sooner it would be undertaken to benefit from the existing wave of popular support and outrage.

Long-term effects and balance?

The targeted killing of Jan 3rd fundamentally altered the way sovereign states will perceive what is allowable or not. It is the first time in modern history that a high ranking official of a sovereign state is assassinated "officially" by another sovereign state with which it is not in war. One can only imagine the ramifications when Russia, North Korea or other states would engage in similar action based on the US precedent. This point is best highlighted by the words of

Russian spokesperson Zakharova: "We have encountered a new reality—the murder of a representative of the government of a sovereign state."

To conclude it is our view that if the situation deteriorates and tensions escalate, military direct or indirect confrontation will become a near certainty. In such a scenario, the position of Russia and its appetite to flex its muscles as well as showing an interest to act as a potential mediator along with Iran's neighbors on the one hand, and that of China in leveraging any US involvement in a crisis to its advantage will be vital in determining the long-term outcomes.

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