The Tokyo Foundation for Policy Research


The Tokyo Foundation for Policy Research

A New War in the Persian Gulf?

January 18, 2012

Escalating tension in the Persian Gulf is contributing to higher oil prices and to growing talk of war. Is new conflict in the Middle East on the horizon?

Many appear concerned by rapidly-moving events. Within the last few weeks, Iran has, among other steps, captured a US reconnaissance drone, convicted and sentenced to death an Iranian-American former Marine on espionage charges, announced that an underground facility will “soon” begin uranium enrichment, and threatened to close the strategically important Strait of Hormuz.

The United States has introduced new sanctions on Iran and sent Treasury Secretary Timothy Geithner on an international tour to build support for the effort. Meanwhile, in moves receiving considerable media attention—though downplayed by the Pentagon—the US military announced that it currently has two aircraft carriers in the Arabian Sea, and Israel revealed that America’s top general, Chairman of the Joint Chiefs of Staff Martin Dempsey, will visit for consultations.

And Iran has accused Israel and the United States of responsibility for a recent Tehran car-bombing that killed a key nuclear scientist.

Events in and around Iran may well be accelerating and, on the surface, the new war worries are understandable. Nevertheless, while war remains a possibility, an American attack on Iran appears quite unlikely in the next several months. There are several reasons for this.

The Barack Obama administration has been considerably more reluctant than the George W. Bush administration to wage war. The administration has given high priority to ending the wars in Iraq—from which US armed forces have finally withdrawn—and Afghanistan.

Mr. Obama did attack Libya to oust Muammar el-Qaddafi but pursued the effort in a relatively cautious manner. His surge in Afghanistan was likewise limited. Where the Obama administration has done more than the Bush administration—in drone strikes into Pakistan—it has done so at a relatively low dollar cost without risking American soldiers (though it has inflicted substantial damage on US-Pakistan relations, which does risk the lives of US troops).

This approach to the use of force appears to rest upon the president’s determination to focus on domestic matters and upon recognition that many Americans, on both the left and the right (particularly among Republican presidential candidate Ron Paul’s supporters), are tired of war.

Mr. Obama’s ambitious domestic agenda will be expensive, both financially and politically, and he is likely seeking to limit the costs of US foreign policy in both respects as well. War with Iran would bust a defense budget that the administration is attempting to slash; it would also alienate many in the Democratic base whose support the president will need in other areas. In an election year, war would also probably turn off a number of independent voters who could otherwise support him in November.

Further, the administration sees that war with Iran could sharply drive up oil prices, something that could weaken an already struggling economy. The United States imports more than 10 million barrels of crude oil and petroleum products per day, meaning that a one dollar per barrel increase in the price of oil costs American businesses and consumers over an additional $10 million per day—just for oil imports. Some have argued that war with Iran could send oil prices to $150 per barrel; adding $40 per barrel to the price means draining $4 billion per day from the US economy for imports, which amount to only about half of consumption. Taking into account that an analysis by the US Energy Information Administration, reported in the Washington Post , suggests a price increase of $20 per barrel reduces US GDP growth by 0.4 percentage points, will the White House be willing to risk cutting growth by up to 0.8 points or possibly more? When unemployment is over 8%?

This is improbable, particularly at a time when sanctions seem increasingly to be damaging Iran’s economy and rattling its leaders. While it is not at all clear that sanctions can in fact persuade Iran to abandon its nuclear weapons program, Tehran does appear to be under real economic pressure; Iran’s central bank sharply devalued its currency late last year in the face of tightening US sanctions that Japan and America’s European allies have agreed to support to varying degrees by restricting their purchases of Iranian oil.

Although some of these actions will not take effect immediately, they are already affecting markets. As a result, in the absence of new and highly provocative conduct by Iran, the Obama administration will most probably take a wait-and-see approach, watching what happens as new sanctions are actually implemented.

Whether Israel might consider war with Iran is, of course, a separate matter and something impossible to predict. That said, given Prime Minister Benjamin Netanyahu’s poor relations with the Obama administration, Israel’s leaders could not count on US military or political support in launching an independent strike on Iran that could have similar oil-price and wider economic consequences for the United States during an election year.

Moreover, without dangerous new behavior by Tehran, American support could also impose significant diplomatic costs for Washington in the region and globally, especially in dealing with China and Russia. Israeli leaders are quite familiar with US domestic and international calculations and surely recognize this.

As far as Iran is concerned, if Tehran is in fact determined to build a nuclear weapon or, for that matter, to develop a nuclear-weapon capability without actually assembling a warhead, the most rational course is to postpone war as long as possible. Why would Iran provoke a conflict now, when its leaders would be in a much stronger position to deter their foes in as little as one to two years?

In view of the enormous risks, the only nonsuicidal reason to do so would be to forestall an even greater threat, such as an imminent attack or the imminent collapse of the current regime. From this perspective, the United States and its allies and partners face a remarkably challenging task in maintaining sufficient political, economic, and military pressure on Iran to force a change it its behavior without applying so much pressure that the country’s leaders see no way out and make desperate choices.

So long as Iran continues to pursue nuclear weapons, the Persian Gulf will remain unstable, and war will remain a possibility. Nevertheless, a war would be costly to all concerned and is not at all inevitable, despite the growing tension that often results from media reports. Unfortunately, Iran’s neighbors and others appear likely to be living with this tension, and with uncertainty, for some time to come.

    • Senior Fellow in US Foreign Policy at the Center for the National Interest / President, Energy Innovation Reform Project
    • Paul J. Saunders
    • Paul J. Saunders

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