The World Today: Chaos, Confusion, and Uncertainty

The crisis with Russia and Iran became thornier this week due to nuclear and oil-related complications, with Iran entering the Western-Russian fray.

Iran’s nuclear ambitions have overtaken economic recovery on its list of priorities, despite its need to contain popular unrest, and thus it moved to obstruct progress at the talks seeking to revive the nuclear deal known as the Joint Comprehensive Plan of Action or JCPOA for short. Meanwhile, it has become impossible to conclude any deal before the US mid-term elections in November, while Israel’s elections have become an additional factor influencing the tug of war between Iran and the Western countries participating in the talks – the United States, Britain, Germany, and France.

Russia is priming itself for retaliation against what it considers a provocative Western war against Moscow. President Vladimir Putin has issued a new round of his infamous ultimatums, hoping to destabilize European solidarity and even topple European governments. Mr Putin threatened to immediately halt oil and gas supplies to Europe, in response to a proposed Western decision to impose a price cap on Russian energy exports.

Clearly, peace in Ukraine is off the table for Russia, especially after Mr Putin’s fiery speech at the Vladivostok conference. Regarding the nuclear talks with Iran, new developments are tempering Mr Putin’s enthusiasm to ensure the success of a nuclear and oil deal between the West and Iran, as the energy war with the West has escalated their confrontation to a new, unprecedented level.

President Putin is expected to meet with his Iranian counterpart Ebrahim Raisi during the Shanghai Cooperation Organization summit in mid-September, where they could strike a mutually beneficial deal: Tehran wants to join the SCO primarily for security reasons and Moscow believes it can make it happen. In return, Moscow believes it can shape Iran’s oil policies if an agreement is reached with the West and sanctions are lifted on Iran’s oil exports. To be precise, the Russian leadership would like Iran to sell only a tiny proportion of its exports to Europe, while expanding oil sales to China, India, and others.

Diplomatically and politically, Mr Putin would like to benefit from facilitating a nuclear deal with Iran, to appear as an influential actor in the international space, one who can still broker major deals. Practically, Mr Putin hopes to guarantee at the SCO summit (15-16 September, Samarkand) that Iran would not sell its oil to Europe.

Europe really believed that the Islamic Republic of Iran would choose it over Russia in the era of energy wars. European capitals were very keen to strike a deal even if it meant making major concessions, until nuclear complications forced them to stop dead in their tracks. In reality, Iran will never choose Europe over Russia and their troika of autocracies with China, a long-term profound strategic alliance indeed.

Some European states are starting to realize their Iran calculus will crash at the rock of Iran’s nuclear ambitions. Iran’s behavior has made it clear the nuclear priority trumps its cash flow problems. Tehran compromised tactically on the issue of its regime’s doctrine, when it agreed to relax its insistence on the de-listing of the IRGC as a terror group as a precondition for a nuclear deal. However, it obtained concessions from the Biden administration that would mean the IRGC is not excluded from benefiting from sanctions relief. Indeed, the Biden administration agreed to lift sanctions on Iranian companies that deal with the designated IRGC, a move that endangered the entire deal after it antagonized many in Congress who saw it as collusion with the regime to circumvent the designation of the IRGC.

The other dangerous issue that could endanger a deal is Iran’s refusal to commit to additional inspections by the IAEA of its nuclear activities just as last week, the IAEA announced it could not guarantee the peaceful nature of Iran’s nuclear program. The IAEA said no progress had been made in the issue of undeclared sites suspected of pursuing clandestine nuclear activities.

Europe has stepped back from its optimism regarding a deal with Iran, which would have helped plug the gap in its oil and gas needs. Iran appears alone able to easily come to Europe’s rescue, as its oil reserves would allow it to readily deliver oil to Europe and compensate the immediate loss of Russian supplies, which Europe had calculated would be phased out gradually, not suddenly. The Russian president’s escalation could harm Europe’s economies and unleash political and social unrest across the continent in the cold months of winter and could trigger further tensions between NATO and Russia.

Some believe that a deal with Iran is inevitable despite all the obstacles, Europe’s dire need for Iranian oil would lead to decisive pressure on the US president to do the impossible to guarantee a deal at any cost. They also believe that Iranian threats of retaliation will put further pressure on Mr Biden and the IAEA to overcome the obstacle of nuclear inspection.

But, “no so fast”, say the naysayers who oppose US nuclear concessions to Iran and European pressures on the Biden administration. The view of this camp is that the Biden administration must never bend to Iran and Europe given what’s at stake, not just in terms of Iran’s nuclear capabilities but also the fate of the Democratic Party at the mid-terms. Then there is Israel, which wants to claim credit for thwarting a ‘bad deal’ with Iran.

What could happen then if a deal fails, or succeeds, despite the tensions and hindrances?

War between Iran and Israel remains possible if the deal fails. Iran would be extremely riled by the collapse of its aspiration for economic recovery and may find the moment opportune to demonstrate its new military capabilities to Israel and the world, underlining its emerging regional role.

Iran has so far remained silent as Israel bombed its vital sites in Syria recently. First because it has been very keen on safeguarding the nuclear negotiations and the deal to get sanctions lifted. Second because Russia has asked Iran not to respond to Israeli provocations in Syria. Third, because talks behind the scenes of the nuclear negotiations were tackling covert accords between Iran and Israel.

Today, it is not out of the question that Iran would retaliate against the collapse of a deal through attacks on Israel across the Syrian and Lebanese borders, as well as attacks in the Arabian Gulf. Some even believe Iran is primed for a direct military confrontation with Israel – and this is not far-fetched. However, some believe the cost of such an adventure means it is very unlikely.

Israel in turn would find war with Iran prohibitively costly and instead limit itself to proxy skirmishes in Syria and Lebanon, and surgical operations against Iranian nuclear sites. Israel wants the United States to provide air cover for its operations inside Iran, but failing to secure it, it may focus on covert operations there.

Lebanon, however, could host a hot front if Iran orders Hezbollah to disrupt the effort to demarcate the maritime border between Lebanon and Israel, and prevent Israel from oil and gas exploration off their coasts. In that scenario, in the absence of any de-escalation accords between Iran and Israel, Israel will not continue to turn a blind eye to Iranian rockets in Hezbollah’s hands and the transformation of Lebanon into an Iranian military base. One of the challenges Israel faces is that these missiles are stored in civilian Muslim and Christian areas in Lebanon, but this would be less of a problem if a confrontation erupts between Israel and Iran or Hezbollah. Israel’s repeated threats to Lebanon and the Lebanese should not be underestimated here.

Nevertheless, a decision to go to war will not be a walk in the park for either Iran or Israel. The continuation of the geopolitical status quo could therefore be the best scenario for both.

Iran continues to sell its oil to China, India, and others at a time of high oil prices, allowing it to compensate the absence of US sanctions relief. Iran may even decide that not disrupting Lebanese-Israeli border talks would benefit it economically, because oil and gas revenues from Lebanon may reduce the bill of supporting Hezbollah.

Israel would also prefer to securely extract oil and gas to the prospect of a costly war. For this reason, Israel is taking steps to maintain the historic truce that avoids direct war with Iran. The continuation of the status quo may also be acceptable to Israel, if it can carry out covert operations to prevent the development of Iran’s nuclear program. Ultimately, Iranian-Israeli nuclear deterrence has become the equation. At any rate, the IAEA’s warnings against Iran’s nuclear program means the nuclear crisis with Iran is an international, not Israeli problem.

Europe is the least comfortable with the status quo given that it is at the heart of the Ukraine crisis. Europe may not get Iranian oil supplies whether it signs a deal or not. Europe fears that Mr Putin could drive a wedge between the European states and destroy Western solidarity. It fears unrest in the winter that could topple governments – Moscow would very much love to help remove ‘anti-Russian’ leaders in Europe, led by Germany’s leaders.

The US president is not at ease these days either. The situation has grown more complicated and failure looms over the nuclear talks with Iran for which Mr Biden has dedicated a lot of effort. However, this does not mean that the continuation of the status quo is the end of the road or that it is the worst-case scenario for Mr Biden and his team. The continuation of sanctions on Iran is a choice and a decision that Mr Biden can use to his advantage, to avoid slipping into a military confrontation and allow Israel freedom of action if needed.