Tensions between US and Iran are moving from the high seas to summits

All efforts are focusing on the G7 summit later this month in France, when Instex will be the main topic of discussion

REFILE - REMOVING AND ADDING INFORMATION A U.S. Marines UH-1Y Venom helicopter takes off from the flight deck of the U.S. Navy amphibious assault ship USS Boxer, near a Light Marine Air Defense Integrated System (LMADIS) counter-unmanned aircraft system mounted on a vehicle parked at the bow, during its transit through Strait of Hormuz in Gulf of Oman, Arabian Sea, July 18, 2019. Picture taken July 18, 2019. Dalton Swanbeck/U.S. Navy/Handout via REUTERS ATTENTION EDITORS- THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY.
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The rift between Iran and European countries is intensifying amid threats and warnings from Tehran. The Europeans, however, are refusing to cave in, even as they lobby the US to take a softer stance on the Instex special purpose vehicle intended to skirt around sanctions.

Iran is threatening to withdraw from the nuclear deal, with a view to causing panic in Europe. Indeed, European powers are obsessed with salvaging the deal and do not want to see Iran resuming uranium enrichment and other activities that could help it expedite its quest to develop nuclear weapons. This is also a red line for US President Donald Trump, who has threatened to take measures should Iran resume high-level uranium enrichment, which could include strikes on Iranian nuclear reactors.

At present, all efforts are focusing on the G7 summit later this month in France, when Instex will be the main topic of discussion. Tehran has already issued an ultimatum to Europe to activate the special purpose vehicle for oil revenues by mid-August or it will scale back its nuclear commitments. French President Emmanuel Macron, who is walking a tightrope between the financial mechanism and mediation efforts between the US and Iran, was snubbed by Mr Trump this week, who told him not to speak to regime leaders on behalf of the US.

At the same time, the idea of forming a US-led naval taskforce to secure navigation in the Gulf has taken practical steps with Britain announcing it would join and Israel expressing interest as well. Iran has warned against "disastrous consequences" if Israel participates and said the conference scheduled to take place in Bahrain on August 31 to discuss the mission was a "provocation". Iranian President Hassan Rouhani addressed the US in threatening language, saying there can be no security in the Gulf without Iran's consent and that no country will be able to export its oil if Iran is prevented from resuming its exports. His declaration has clearly drawn the lines of Tehran's negotiating position, coupled with allegations of jamming GPS systems to lure ships into Iranian waters.

All this means the possibility of military escalation, either as a result of an accident in the Gulf or following strikes on Iranian nuclear facilities. On the surface, things appear calm but some say it is the calm before the storm. Other sources suggest it reflects the managed escalation strategies of both the US and Iran, although there is always a risk of miscalculation.

Russia is trying to play the role of influencer in Tehran. Moscow could send a special envoy to Tehran next week seeking de-escalation through two measures: freezing the level of uranium enrichment and refraining from attacking tankers in the Gulf.

President Vladimir Putin is also trying to work with his French counterpart. Mr Macron is set to meet German Chancellor Angela Merkel in a bid to co-ordinate positions prior to the August 20 ultimatum for Instex and the three-day G7 summit from August 24, which will be attended by Mr Trump.

In the meantime, Mr Rouhani is inching closer to adopting the line of the Islamic Revolutionary Guard Corps and Supreme Leader Ayatollah Ali Khamenei. Foreign Minister Mohammad Javad Zarif could resign and pave the way for a tougher successor who will pursue less flexible positions in negotiations with the West, which could further increase tensions.

Iran is tired of waiting on the Europeans but it was a mistake to assume they could be pushed into panic and prompted into coercing Mr Trump into a compromise. Now Tehran is making another mistake by issuing an ultimatum ahead of the G7 summit.

It is hard to predict the outcome of the summit. However, the US stance on various Middle Eastern and Gulf issues does not indicate Washington is worried. Rather, the US position seems coherent in its bid to use sanctions to force a new deal and expand the scope of alliances and security partnerships to share cost and responsibility. Mr Trump does not want to be the region's policeman but he will not baulk in the face of threats or fall into the trap of being lured into military confrontation. In fact, he has successfully copied Iran's "strategic patience", because the US can afford to wait without having to be dragged into a military scenario. It is Iran that has lost patience as it finds itself bowing under crippling sanctions and forced to adopt strategic recklessness.

Iran’s proxies in Iraq, Yemen, Syria and Lebanon are flexing their muscles to compensate for its structural weakness caused by sanctions. The IRGC has also chosen to put on a display of force in the Strait of Hormuz and Bab Al Mandeb. The force now exerts influence on the civilian component of the regime in Tehran through Mr Rouhani’s newfound belligerence and is determined to escalate further, from the Gulf to the Mediterranean, via Iraq and Yemen.

It is perhaps for this reason that Tehran last week pushed back against a bid by the Iraqi government to merge the Popular Mobilisation Forces into the regular armed forces, with a view to ensure the grouping’s command is repatriated from Tehran to Baghdad. Iran wants to maintain its regional expansionist agenda, which it pursues by creating proxies outside its borders. Another purpose is to maintain pro-Iranian armed groups close to US forces if Tehran decides to raise the stakes in the confrontation. But Washington is aware of Iran’s plans and has recently reinforced its forces in Iraq and even at the Tanf airbase in Syria, a departure from its earlier pledges to withdraw troops from the war-torn nation.

In Lebanon, the US has intervened after a war of words in the wake of a fatal shooting, in what is effectively a warning to president Michel Aoun and his son-in-law Gebran Bassil, as well as to their allies in Hezbollah, which was sanctioned by the US in July. Hezbollah's allies reacted violently to the statement from the US embassy in Beirut affirming Washington's support for "fair and transparent" judicial review without any political interference into the Qabr El Shamoun incident. US retaliation through sanctions will not be restricted to Hezbollah and could affect its wider circle, including the president and his son-in-law. The US is well aware of the methods used by Hezbollah to evade sanctions and is also working to take action against such attempts to do so.

The battle between the Trump administration and the IRGC-led administration in Iran is multifaceted, from the seas and high oceans to the corridors of power in the region’s capitals. It is likely now that in the coming days, the Iranian regime will move from smiles and embraces to vengeance and anger.