As the economic net tightens, Tehran is becoming ever more fractious

The mutual escalation between the US and Iran could evolve into a confrontation that goes beyond sanctions, designations and threats

FILE - In this Feb. 11, 2019 file photo, Iranian Revolutionary Guard members attend a ceremony celebrating the 40th anniversary of the Islamic Revolution, at the Azadi, or Freedom, Square in Tehran, Iran. The Trump administration on Wednesday granted important exemptions to new sanctions on Iran’s Revolutionary Guard, watering down the effects of the measures while also eliminating an aspect that would have complicated U.S. foreign policy efforts.  (AP Photo/Vahid Salemi)
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Iranian officials are issuing threats in response to the United States' decision to end sanctions waivers given to eight major importers of Iranian oil, coupled with threats of imposing sanctions upon them, should they continue to buy crude from Tehran.

Iran’s Supreme Leader, Ali Khamenei, vowed that the move would not go without a response and challenged Washington by saying Iran would continue to “export our oil as much as we need and we intend”. For his part, Iranian President Hassan Rouhani laid out the conditions of negotiating with Washington, saying: “Negotiations will be possible when all pressures are taken off, and they apologise for their illegal measures and when there is mutual respect.”

Mr Rouhani said the US was not ready to negotiate, and criticised Saudi Arabia and the UAE for welcoming and co-operating with Washington's measures to ensure the oil markets have sufficient supplies. Iran's Foreign Minister Mohamed Javad Zarif warned against attempts to block Iran from using the Strait of Hormuz, saying: "If the United States takes the crazy measure of trying to prevent us from doing that, then it should be prepared for the consequences." Mr Zarif said the situation was dangerous and that "accidents" were possible, and proposed possible co-operation with the United States to bring stability to Iraq and Afghanistan, countries that are a priority for both Tehran and Washington.

For its part, Iran’s Revolutionary Guard Corps has hinted it may shut the Strait of Hormuz if Iran is denied access to it, as Mr Rouhani alluded to following the US withdrawal from the nuclear pact back in July. At the time, the IRGC Quds Force commander Qassem Soleimani praised Mr Rouhani for his stance, and offered to “kiss your hands” in a letter addressed to the Iranian president. Mr Soleimani recently sat next to the new IRGC commander Hossein Salami, a man known for his hardline positions and support for the Quds Force incursions in Arab nations.

Ayatollah Khamenei's appointment of General Hossein Salami as the IRGC's new commander came a week after Washington designated the IRGC as a terror organisation. Tehran responded by according the same designation to the US Central Command, in addition to appointing Mr Salami and promoting him to Major General – a clear message to Washington that Iran is ready to retaliate on the issues of its ballistic missile program and regional expansionism, both of which are backed by Mr Salami.

The end of US oil sanction waivers will affect some major countries, namely China, India, and Turkey. The five other nations affected by the waiver – Italy, Japan, Greece, Taiwan and South Korea – have gradually reduced their oil purchases from Iran. But Washington has not threatened to shut the Strait of Hormuz to Iran. Instead, Iran has threatened to shut the strategic waterway, either in response to US measures that are not on the table, or in retaliation to Arabian Gulf countries, preventing them from exporting their oil through the Strait.

The mutual escalation between the US and Iran could evolve into a confrontation that goes beyond sanctions, designations, and threats. Most of the 12 demands set by the US Secretary of State Mike Pompeo for Iran to meet are impossible. The question here is, then, whether US pressures, designed to coerce the regime into revising its policies, will lead Iran to reform itself, or will the IRGC prevent any such adaptation and adjustment as the price would be its own head?

Nothing in Tehran indicates that the supreme leader or the IRGC are ready to bargain over the nature of the regime or to engage in reforms. So the next question is this: is Iran ready for war with the US? There are no indications to support this, which means there will be “alternative arenas” for the confrontation to play out, either to reach a deal or to battle it out militarily.

Nothing in Tehran indicates that the supreme leader or the IRGC are ready to bargain over the nature of the regime or to engage in reforms

In Yemen, the Iranian regime seems determined to continue supporting the Houthi rebels. Saudi Arabia and the UAE are ready to end the war, but Iran has so far refused to facilitate this, believing the war in Yemen is an economic drain on the two Gulf nations. The US congress and the Democratic Party are, meanwhile, using the Yemen war to undermine US President Donald Trump, while also ignoring Iran’s role in the conflict. Here, the IRGC is likely to continue to see the Yemeni arena not only as ammunition for its plans, but also as a launchpad to the Red Sea to expand Iran’s sphere of influence.

Iraq is another dangerous arena, should the IRGC decide to use it to attack US forces there. Mr Zarif proposed co-operation with Washington in Iraq, as though offering a carrot against the IRGC’s stick. The rapidly evolving political and economic relations between Gulf nations – led by Saudi Arabia – and Iraq have vexed Iran, which sees Baghdad as one of its strategic prizes. But while Iraq is indeed an open arena for coming confrontations, the prospect of a military confrontation remains unlikely in the present time, because if the IRGC decides to target US troops in Iraq, Washington will likely respond violently and on Iranian soil. The US decision is not to leave Iraq to Iran or Russia.

Syria, however, has been left to Russia, with implicit US agreement, on the condition that the Iranians do not take over, and strategic US deployments in Syria are accepted and understood. The Syrian arena however can be the place where the IRGC project for expansion into the Mediterranean comes crashing down. Yet it will not be the US that will confront this project, but Russia and Israel, which has said it will not accept a permanent military presence on its borders.

Russia and Iran, who are tactical allies on the ground in Syria, have started seeking strategic and economic concessions in Syria, launching a period of rivalry, bargaining, and pressures on Bashar Al Assad, who owes his survival to Russia, Iran, and Hezbollah. Mr Al Assad wanted to give the port in Latakia to the Iranians, but the Russians protested and demanded more concessions to guarantee its military bases in Tartus and Latakia. Israel has been bombing Iranian positions in Syria amid Russian silence, while Washington intends to keep around 1,000 soldiers in eastern Syria and will not abandon its strategic airbase in Tanf. In short, Iran’s projects in Syria are being contained through an agreement between Russia, Israel and the US.

Lebanon, home to the IRGC’s precious asset Hezbollah, is another arena. Israel has said it will not tolerate the existence of an Iranian-backed manufacturing facility for precision-guided missiles on Lebanese soil. The IRGC wants to have the final say in Lebanon, and Mr Soleimani seems to be the key person who communicates Iranian instructions to Hezbollah. However, going to war is a fateful decision that only Ayatollah Khamenei can approve. The Iranian leadership may decide that it is best to avoid an Israeli attack on its Lebanese asset, and back down on the issue of rocket production and reach some kind of deal with Israel. Or it could decide that its interests are best served through a war in Lebanon, no matter the cost.

All indications suggest Israel will not coexist with Iranian rockets in Lebanon, and that Israel's returning prime minister, Benjamin Netanyahu, is ready for war, backed by the anticipated right-wing coalition once his government is formed. Mr Netanyahu also enjoys absolute support from Mr Trump and may need a war to divert attention away from the domestic corruption scandal he faces in the coming months.

All indications also suggest that the Trump administration is ready to support Mr Netanyahu in a war with Hezbollah, if it judges there will be no other option to contain the Lebanese militia. That would mark a radical shift in US positions, away from accommodation of the Lebanese government’s inability to deal with Hezbollah. The top priority for Washington today is to subdue Iran and eliminate its expansionist projects everywhere.

It is a truly sensitive and dangerous time for the region.