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Commentary: Iran retaliates against U.S., further stoking tensions

Algenon Cash

Commentary: Iran retaliates against U.S., further stoking tensions
January 16
08:59 2020

By Algenon Cash

On Jan. 3, President Donald Trump approved a controversial airstrike that killed Qassem Soleimani, an Iranian major general in the Islamic Revolutionary Guard Corps and commander of its Quds Force – Soleimani was the second most powerful official in Iran after Supreme Leader Ayatollah Ali Khameni. He was also the mastermind behind numerous rocket launches in recent months throughout Iraq and directed a militia to attack the U.S. embassy in Baghdad.

The Pentagon and intelligence agencies had reason to believe Soleimani posed an “imminent threat” to American lives and overseas interests.

Iranian leaders quickly reacted to the airstrike and vowed a “forceful” revenge against U.S. assets in the region. Iran retaliated for the killing of Soleimani only days after promising to do so by launching over a dozen ballistic missiles at two Iraqi air bases housing U.S. and coalition military forces.

The following day, President Trump addressed the nation live from the White House: “No Americans were harmed in last night’s attack by the Iranian regime. We suffered no casualties. Our great American forces are prepared for anything. Iran appears to be standing down.”

NATO had around 500 supporting personnel at the bases engaged in training operations, but they also confirmed no casualties. Advanced technology deployed at U.S. bases around the world can detect missile launches and provide an early warning to personnel and most likely this saved many lives at risk.

Originally Trump promised to strike 52 sites across Iran if they attack Americans or American interests overseas, but so far POTUS has chosen not to retaliate and escalate tensions further.

The Iranian vengeance may not have killed Americans, but in the following days we learned the Revolutionary Guard “accidentally” shot down a Ukrainian jetliner taking off from Imam Khomeini International Airport. The Boeing 737 was in route to the Ukrainian capital of Kyiv and was carrying 176 passengers – nine crew members, 82 Iranians, 57 Canadians, and 11 Ukrainians.

Initially Iran denied allegations they were behind the crash and pushed the notion U.S. officials were attempting to mislead the international community, but as evidence continued to roll out and anger grew, the Revolutionary Guard acknowledged they were responsible. Iranians were stunned and reacted negatively as they discovered the missile attack that was supposed to kill American soldiers had actually claimed the lives of civilians.

Tehran failed to clear its airspace during the missile attack and military leaders were on guard as they feared the U.S. may fire missiles right back at the country. A Revolutionary Guard officer mistook the jetliner for a cruise missile and opened fire on the plane. Early reports state Iran utilized a Russian surface-to-air missile.

It remains unclear if President Trump may once again respond to Iran’s latest provocation, but for now he seems to be at ease with continuing to punish the country through crippling sanctions that have ignited a deep economic crisis. Another U.S. led military attack could trigger further tension in an already deteriorating relationship with the Iranian regime.

An all-out war between the countries would certainly not favor Iran. Currently the U.S. spends nearly $700 billion annually to support the military; Iran spends around $18 billion. Not to mention Iran’s unstable economy makes it next to impossible for the country to win a war.

Economic sanctions have left Iran reeling and the country’s economy in total disarray. Although they did receive some relief when Obama negotiated the Joint Comprehensive Plan of Action, more commonly known as the 2015 nuclear deal with Iran, which required Iranians to cut or eliminate its stockpile of enriched uranium, reduce the number of centrifuges that could be used to further enrich uranium for nuclear weapons, and agree not to construct additional facilities. Obama lifted sanctions in exchange for their agreement to sign onto the plan.  

Trump withdrew the United States from JCPOA in May 2018. Later in the same year Trump imposed a fresh round of sanctions against Iran to further debilitate the country economically and prevent its support for militant groups in the region.

America’s robust economy is largely dependent on cheap energy and Iran is estimated to have the world’s fourth-largest supply of crude oil, so much of the country’s revenue and economic growth is tied to the sale of crude oil.  However, the imposed sanctions tightly restrict the sale of Iranian oil overseas, which is devastating trade activity and slowing the overall economy.

Heightened tensions between the countries have caused the value of Iranian currency to hit a tailspin – one dollar can be exchanged for 140,000 Iranian rials. A weak currency will set off runaway inflation and that raises the costs of living at a time when most of the Iranian public cannot find a job – inflation peaked at 52% in May 2019. The World Bank estimates the unemployment rate in Iran could be nearly 12%.

High unemployment, rising inflation, subdued trade activity, and sanctions preventing the Iranian economy from lifting off are contributing to a growing fiscal deficit. Fewer dollars in the country’s treasury makes it even more difficult to wage a war against a superpower like the U.S.

Iran certainly may consider a proxy war against the U.S. in the Middle East – utilizing allied militias in Iraq, Lebanon, Yemen, Afghanistan, and Syria.

In other news – the Iraqi government approved a resolution (170-0) to eject the U.S. military from their country. Shiite lawmakers drafted the language and led the vote with Sunni and Kurdish factions abstaining.

U.S. troops have been stationed in Iraq since 2014 upon the request of the government to assist with a variety of training operations and security, but many officials believe the mission has evolved into a U.S.-Iran proxy war.

President Trump swiftly responded, “The people of Iraq do not want to see Iran running the country,” further reiterating, “at some point we want to get out, but this isn’t the right point.”  Even going so far as to threaten that American soldiers will not depart the country until Iraq reimburses the U.S. for infrastructure costs associated with rebuilding the worn-torn country.

Defense Secretary Mark Esper added, “There are no plans for American troops to leave Iraq.”

Algenon Cash is a nationally recognized speaker and the managing director of Wharton Gladden & Company, an investment banking firm. Reach him at acash@nullalgenoncash.com.

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