Trump dealt a huge blow to Iran by trashing the deal -- and it could lead to war

  • President Donald Trump dealt Tehran a huge blow by withdrawing the US from the Iran nuclear deal, and now Iran’s troubled regime has few face-saving options besides a full-on confrontation.
  • The US’s sanctions on Iran will make countries choose whether to do business with the US, an economic giant, or Iran, which is having a currency crisis. Experts say the choice is clear and looks bad for Iran.
  • Iran has little diplomatic influence and is simultaneously suffering a string of alleged Israeli airstrikes, and with the hardline regime backed into a corner, war may be the only option left.

President Donald Trump dealt Tehran a huge blow by withdrawing the US from the Iran nuclear deal, and now Iran’s troubled regime has few face-saving options besides a full-on confrontation.

Between the US withdrawal from the nuclear deal and Israeli airstrikes on Iranian targets in Syria, Iran is being backed into a corner.

Iran is not yet free to pursue nuclear weapons. It’s still in the deal with the remaining members that did not withdraw. But Trump’s secondary sanctions on anyone doing business with Iran, and Iran’s failing economy, make the prospects for the survival of the deal dim.

“I think the key question we are now facing is what impact the American announcement will have on continuing European and Asian engagement with Iran,” Malcolm Chalmers, the Royal United Services Institute’s deputy director general, told Business Insider.

Iran gave up its nuclear ambitions to get sanctions relief in the form of the deal, but that relief has now been blocked. Trump’s constant down talking of the deal led investors to hesitate before investing in Iran. Combined with an “unfriendly” investment climate in the country, the cash influx never really materialised, Chalmers said.

The one thing that worked well for Iran under the deal was an increase in oil sales, and now that’s come under threat too.

“Secondary sanctions will penalise any foreign companies that do business with Iran,” Chalmers said. Effectively, the US has ruined the deal for Iran with sanctions and threats of sanctions, so Iran will probably pull out sooner or later, Chalmers added.

The Trump administration, as David Sanger and David Kirkpatrick wrote in The New York Times, is betting that Iran lacks the economic strength to confront the US, Israel, and Saudi Arabia. But, as they said, America’s allies warn that is a dangerous miscalculation that could lead to war.

Israel is beating up Iran quietly; the US is beating it up loudly

Iran’s problems don’t start and end with the deal. The US and Israel assess that Iran is trying to import a great number of fighters and missiles to Syria and Lebanon to surround and eventually attack the Jewish state.

Israel refuses to accept this, and it has allegedly undertaken a series of airstrikes that increasingly target Iranian military officials. Some of the airstrikes have been nothing short of spectacular, with hundreds of Iranian rockets and dozens of fighters reportedly dying.

But Israel has kept quiet and not confirmed any specific strikes so far.

“There has been almost no gloating by Israel for the [recent] attack … despite indications that the attack has succeeded in one respect by hitting quite serious targets,” Jonathan Schanzer, vice president of the Foundation for Defence of Democracies, told Business Insider.

Iran has vowed to retaliate, but it has few options.

“The highest priority of Iranians is how to take revenge,” former Mossad director and retired Maj. Gen. Danny Yatom told Business Insider. “On those attacks that are related [to Israel] they will not send us flowers – they will try to send something else.”

Iran can “either fire missiles from where they’re deployed now,” within Syria and Lebanon, or “they can use Hezbollah to ambush our forces over the border,” Yatom said, referring to the Shia group prominent in Lebanese politics and designated by the US and Israel as a terror group.

Further, the US has announced its intentions to support Israel in pushing back Iran and said it would come to Israel’s defence. So short of attacking Israel outright in a way that could easily cause an all-out war that would see many Iranians die, Tehran has few options.

No diplomatic or economic recourse – only missiles

“It’s a no-brainer for almost all European companies” on whether to do business with the US or with Iran, according to Chalmers. The US is the world’s most powerful military and economy. Iran’s rial recently tanked in value, to about 60,000 to the US dollar. Meanwhile, Iran cracked down on the financial liberties of its citizens, barring them from holding more than $US10,000 in foreign currency.

Now with the US moving to freeze Iran’s Central Bank, the country’s economy, already savaged by sanctions, looks particularly weak.

Iran has powerful influence within the Shia Islamic world, but that’s a small world already being pushed by Iran to pressure Israel.

In Iran, the clerical regime frequently engages in chants of “Death to America” and “Death to Israel,” but it has no practical means of achieving such goals. With a hard line staked out by the leaders of the Islamic Republic, and their backs against the wall, some form of warfare may be their only option.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.