Yahoo Finance How Biden miscalculated on Iran
Joe Biden hoped a nettlesome Iran might be one problem he could escape during his first presidential term. Iran showed signs of settling down, and there were plenty of more pressing issues: Russia’s invasion of Ukraine and China’s growing bellicosity, plus global energy shortfalls pushing US gasoline prices up and denting Biden’s popularity.
Biden guessed wrong. As the devastating Oct. 7 Hamas attack on Israel demonstrates, Iran remains a virulent and murderous presence in the Middle East. The level of Iran’s direct involvement in the attack remains unclear, but Iran is the Hamas group’s primary backer and strategic overlord. “It is inconceivable that Hamas undertook an attack of this magnitude and complexity without some foreknowledge and affirmative support from Iran’s leadership,” Suzanne Maloney, director of the Brookings Institution’s foreign policy program, wrote in Foreign Affairs on Oct. 10.
Iran and the escalating war between Israel, Hamas, and perhaps other Palestinian groups will now dominate the months leading up to the 2024 presidential election. Biden first has to answer critics who say he went soft on Iran and indirectly enabled the Hamas attack. There could also be new upward pressure on oil prices as the United States faces inevitable calls to reverse recent engagement efforts with Iran — the world’s seventh-largest oil producer — and apply maximum sanctions. And Iran’s willingness to ignite a new Middle East war will now draw attention away from other Biden priorities and suck more US resources into a region Biden was trying to pivot away from.
Trumpers and other Biden critics should can any schadenfreude. Iran has bedeviled nearly every US president since its Islamic Revolution in 1979, and anybody peddling simple-sounding ways to contain the so-called Islamist republic is playing video games, not practicing geopolitics. Bombing or invading Iran would produce a horrifying conflagration. Aggressive sanctions always disappoint. Trying to foment a coup would be folly.
The short history of the current standoff with Iran dates to 2002, when it became publicly known that Iran was developing a nuclear weapons program. A variety of US and international sanctions followed, many of them focused on punishing Iran by curtailing oil exports and the development of Iran’s oil deposits, which are the third largest in the world.
President Barack Obama led a 2015 US-European deal that eased some sanctions on Iran in exchange for agreements to limit its nuclear weapons development. Spoiler alert: The deal wasn’t perfect, and there were legitimate concerns Iran might cheat. Yet the Iranians did seem cowed by years of withering sanctions and willing to let international inspectors monitor their weapons development as a result.
President Trump, opposed to basically everything Obama did, revoked US involvement in the Iran nuclear deal in 2018, while reimposing many of the sanctions Obama eased. Iran adopted a "resistance economy" meant to find ways around US sanctions, and resumed work on its nuclear program. Experts now think Iran has enough bomb-grade nuclear material to assemble a nuke within a couple of weeks if it chooses to do so. Trump’s contention that tougher sanctions would disrupt Iran’s nuclear program was wrong.
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When Biden took office in 2021, he tried to restart the Obama-era nuclear deal. But the genie was out of the bottle and it didn’t work. After Russia invaded Ukraine early in 2022, the Biden team undertook some sly diplomacy with Iran. “The Biden administration has been engaged in implementing a series of understandings with Tehran to keep the Iran file off the president’s desk ahead of his campaign for reelection,” Jason Brodsky of the Middle East Institute wrote on Oct. 10.
Iran, under this arrangement, would do its part by discouraging its various proxy militias from attacking US troops in Syria and Iraq. It would also slow-roll its nuclear program, a bit. The United States, in return, would overlook some Iranian oil sales, otherwise subject to sanctions, which would have the added benefit of increasing global supplies and tamping down oil and gasoline prices.
Iran’s September release of five US hostages seemed to signal that a thaw was in place. The United States agreed to return $6 billion in Iranian oil revenue held as a sanctions enforcement mechanism, drawing criticism that the United States was merely paying ransom. Another way of looking at it: Five Americans who could have rotted in Iranian prisons for the rest of their lives came home.
The Biden administration seemed to think its rapprochement with Iran was working. On Sept. 29, national security adviser Jake Sullivan uttered these soon-to-be-infamous words: “The Middle East region is quieter today than it has been in two decades.” His examples: a truce in Yemen’s civil war, a relatively stable Iraq, a suspension of Iranian attacks on US forces in the Middle East.
The United States has also been trying to broker an unprecedented agreement to establish normal relations between Saudi Arabia and Israel for the first time ever. The US would provide new security guarantees to Saudi Arabia, as a bulwark against China’s growing interest in the region. But a better balance of power between the two former rivals would let Washington downsize the outsized portion of American resources and attention normally devoted to the Middle East. In “Foreign Affairs,” Maloney called this Biden’s Middle East “exit strategy.”
Hamas, aided by Iran, has now sealed the exits by perpetrating the worst civilian killing of Jews since the Holocaust. Israel has vowed a searing campaign to root Hamas from its home turf in the Gaza Strip, which could entail weeks or months of grueling urban combat and an incomplete solution at best. Other Iran-backed factions, such as Hezbollah in Lebanon, could attack Israel, or vice versa. And the United States is once again subverting other global priorities to a Middle East in flames.
Iran, it turns out, had no interest quieting the region. It views Israel as a mortal enemy and Saudi Arabia as a nemesis, and a tie-up between the two would have left Iran with less leverage. Whatever role it had in the Hamas attack, Iran would benefit from the delay or demise of normalization between Israel and Saudi Arabia, which now seems gravely threatened.
Iran has been building ties with China, the world’s biggest oil importer, and may feel it can sell all the oil it needs no matter how strict Western sanctions are. And its new status as an arms merchant to Russia, which is using Iranian drones to bombard Ukrainian cities, may give the ruling ayatollahs a new kind of status that replaces any old ambitions about making nice with the West.
Biden now faces a whole new geopolitical problem set. His most important priority may now be preventing the Israel-Hamas war from escalating into a wider regional conflict, especially one that might directly involve Iranian and US armed forces. Armchair generals who talk tough about bombing Iran, or worse, invading, don’t usually mention that oil prices would probably rocket to the highest levels ever, and a miserable recession would ensue.
The Iranians know how sensitive American voters are to gasoline prices and they also know that a well-timed threat to interrupt Persian Gulf oil flows through the Strait of Hormuz — like, say, next August, two months before the US election — would send oil prices soaring and be a nightmare scenario for Biden.
Biden has taken one quick step. On Oct. 12, the US moved to block Iran's access to the $6 billion in Iranian oil money provided for the five hostages in September. That could be permanent, or the US and Qatar, which is holding the money, could dole it out on a case-by-case basis for projects they can confirm to be humanitarian. Biden also will probably have no choice but to tighten up on all possible sanctions and seek others. The US will probably beseech Saudi Arabia to produce more oil as an offset to any Iranian oil that will come off the market.
Biden, who portrays himself as the most seasoned politician in Washington, might handle all of this adroitly and earn high marks for statesmanship. But the Middle East is notorious for presenting Western leaders with bad choices and lousy outcomes they can’t control.
Jake Sullivan did issue one caveat when he talked about a quieter Middle East: He said Iranian attacks against US troops have stopped “for now,” and then elaborated: “I emphasize ‘for now’ because all of that can change.” Eight days later, all of that did change, and with it, the Biden presidency.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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