Iran Shows Trump That It’s Too Big to Be Crushed or Marginalized

Marc Champion and Zainab Fattah

(Bloomberg) -- Earlier this year, President Donald Trump warned that “it’s going to be a bad problem for Iran if something happens.” Something big has happened with an attack on Saudi oil infrastructure, and yet the administration in Washington looks like the one with the problem.

After leading voices in the Trump administration laid the blame squarely on Iran, it isn’t obvious how the U.S. can effectively retaliate against a country that is already under maximum economic sanctions. Iran is too big for the U.S. to invade even if there were appetite among U.S. voters for another Gulf war, and has demonstrated its ability to strike back hard should the U.S. decide to escalate.

U.S. sanctions have cratered the Iranian economy. Yet administration hopes that this would lead to a popular backlash against the government in Tehran, forcing it to cave to American demands, have yet to bear fruit.

Instead, the regime has relied on responses honed over 40 years of international isolation, upping the ante to show that if the U.S. continues forcing Iranian oil exports to zero in an attempt to bankrupt its government, Iran has the power to halt the oil exports of U.S. ally Saudi Arabia, too.

“We are caught in this vicious circle,” said Ali Vaez, Iran Project Director at the Brussels-based International Crisis Group. “The U.S. has to realize that Iran is part of this region. Iran cannot be excised.”

Revolutionary Guard

Rather than retreat in the face of withering revenues, which was a part of the logic that informed U.S. withdrawal from the 2015 nuclear deal that had lifted sanctions, the elite Islamic Revolutionary Guard Corps is increasingly active in Iraq, Lebanon, Syria, Yemen and even Afghanistan.

For the Guard -- which has long defined itself as the Middle East’s ultimate bulwark against U.S. military power -- sanctions are almost seen as a call to arms.

“Saudi Arabia’s Backbone is Broken; The U.S. and al Saud are in Mourning!” crowed the front page headline in Monday’s edition of Kayhan newspaper, whose chief editor is directly appointed by Iran’s Supreme Leader Ayatollah Ali Khamenei.

On social media, too, the mood among Iranians has been more jingoistic than fearful.

A 2017 clip of Saudi Crown Prince Mohammad bin Salman saying “we won’t wait for the war to come to Saudi Arabia, we’ll take the war to Iran,” has been widely recirculated and mocked in recent days. “Well Bin Salman my brother, tell me how’s Aramco doing?” said one Twitter user’s caption for the clip, referring to Saudi Arabia’s leviathan oil company.

Regional Influence

That bravado is ultimately misplaced, because nothing Iran has done to date has brought the lifting of sanctions -- the central problem for the country of 82 million as a whole -- any closer, according to Michael Knights, senior fellow at the Washington Institute for Near East Policy. At the same time, Iran’s capacity to make its interests felt across the region has been on full display.

“We have a sequence of events since about May 12, where the Iranians have pushed on one red line and relationship after another,” said Knights. “From a military perspective it has really been superbly executed, from tanker attacks that didn’t spill a drop of oil into the Gulf, to these now, which were of the same quality that the U.S. would have displayed in the mid-90s, using the cruise missiles it had then.”

Each tactical success has further raised Iran’s prestige in the region, a higher priority for regime conservatives and the IRGC than restoring the economy, according to Knights.

That forward-leaning approach is part of a longer term game plan, as Iran seeks to benefit from a gradual U.S. withdrawal from the region that’s likely to continue regardless of who is elected president in 2020.

“The U.S. has been looking for years for a re-posturing in the Middle East that would entail a lighter commitment on their end,” said Cinzia Bianco, Arabian Peninsula research fellow at the European Council on Foreign Relations in Berlin, a think tank. “This is crucial to what happened with Aramco, because the IRGC is fully aware of this context and is trying to test its new limitations.”

Balance of Power

The attack could have a lasting impact on the balance of power in the region, because it cruelly exposed the scale of an ongoing change in the U.S.-Saudi relationship, according to Pierre Noel, senior fellow for economic and energy security at the International Institute for Security studies, in London. “The Saudis lost in 30 minutes the war they had been preparing for for 50 years,” Noel said in a briefing on Tuesday. “They lost 50 percent of their national oil output, to Iran, and without the U.S. being immediately able or willing to offer cover.”

That has rendered empty, or at least severely limited, the absolute U.S. security guarantee for Saudi Arabia and its oil fields that Saudi and other countries in the region have long assumed.

Much of what happens next will depend on how hard the U.S. and Saudi decide to push their case that Iran, rather than its Houthi proxies in Yemen, was responsible for Saturday’s bombing of Saudi Arabia’s oil infrastructure at Abqaiq. If the U.S. decides to force the issue and produce hard evidence in public, the pressure to be seen to retaliate will be high, according to Knights and others.

Iran has denied responsibility for the attack, which the Houthis have claimed for themselves. It won’t negotiate with the U.S. at any level, Khamenei said on Tuesday. That would appear to rule out a meeting of Trump and President Hassan Rouhani at the UN General Assembly in New York this month.

Missiles and Drones

The European signatories to the Iran nuclear deal that Trump abandoned unilaterally last year in a precursor to re-imposing sanctions are content to stay on the fence for now. The governments of France and Germany, both of which were instrumental in establishing a special purpose vehicle meant to aid Iran over U.S. opposition, condemned the attacks without laying blame.

Iran’s military, at least, appears to be calculating that Trump will prefer to leave the case inconclusive and stick with less risky, costly and unpopular alternatives to an act of war.

“It’s necessary for everyone to know that all U.S. bases and their vessels are within a 2,000 kilometer (1,240 mile) reach of our missiles,” the IRGC’s aerospace forces commander, Brig. Gen. Amirali Hajizadeh said in an interview with the Iranian news agency, Tasnim, on Sunday.

Iran has about 50 medium range ballistic missiles deployed and others in development, as well as about 130 drones, according to the International Institute for Strategic Studies in London. “Neither we nor the Americans have any intention of going to war,” the brigadier general said.

--With assistance from Lin Noueihed.

To contact the reporters on this story: Marc Champion in London at mchampion7@bloomberg.net;Zainab Fattah in Dubai at zfattah@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Alan Crawford, Mark Williams

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