Sabre-rattling in the Middle East

Are America and Iran on the path to war? Matthew Partridge reports.


Tensions "spiked" in the Gulf when an Iran-backed group attacked Saudi oil facilities and the US accused Tehran of being behind a series of "unexplained sabotage attacks" on commercial vessels heading for the Strait of Hormuz, says Ladane Nasseri on Bloomberg.

In response, America has sent an aircraft carrier to the Gulf and has threatened military action if there are any further attacks on shipping. The latest events come in the wake of Iran's threat earlier this month to restart its nuclear programme, which it suspended four years ago, and have "increased concerns of a military confrontation, whether deliberate or otherwise".

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Many people are blaming the US for the "rising tensions", says The Economist. Last year President Donald Trump pulled out of a deal that curbed Iran's nuclear programme in return for economic relief and has recently begun "imposing crippling sanctions on Iran".

There are concerns about the growing influence of John Bolton, Trump's national security adviser, who has repeatedly argued that "America should bomb Iran to set back its nuclear programme". Indeed, the quickness with which the US blamed Iran for the attacks on Gulf shipping has led to speculation that Trump and Bolton "may be trying to provoke Iran into striking first".

Advertisement - Article continues below

New deal still possible

The Americans have repeatedly said they are open to another nuclear agreement, provided it focuses on "all aspects of Iran's attempts to acquire nuclear weapons". So responsibility for this crisis lies with the ayatollahs who have attempted to "divert the attention" of the "restless" Iranian people by "raising the prospect of a fresh confrontation with the West".

The US is right to be concerned about Iran's "malign regional influence", and there are "legitimate" questions about its wider missile programme, says the FT. But a "comprehensive deal" that resolves all questions about Iran's nuclear ambitions and involvement in regional terror is "not achievable" at the moment. For all its faults, the previous accord "at least succeeded in its main goal suspending Iran's atomic programme and easing an international crisis that threatened to spark a regional arms race". Given time, it could have "laid the foundation" for negotiations on a wider deal.

The risk of an escalation is now "worryingly high", with the US drawing up contingency plans to send 120,000 troops in the event of conflict, though there are still hopes that "cooler heads will prevail", says The Times. Trump "was elected on a promise to put an end to America's foreign adventures" and up until now he has "proved reluctant to commit to deploy US forces". So Trump "urgently needs a foreign policy success". He told Iran's leaders last week to "call me and make a deal". Tehran should refrain from further provocations and instead "pick up the phone".




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Why Wall Street has got the US economy wrong again

The hiring slowdown does not signal recession for the US economy. Growth is just moving down a gear, says Brian Pellegrini.
25 Oct 2019

Brace yourself – the global economy might be healthier than it looks

Investors have been worried about a global recession since the start of the year. But the latest indicators suggest things might not be so bad. John S…
2 Apr 2019

The US economic downturn: it’s only a matter of time

With the US economy facing headwinds from trade wars to slowing global growth, talk of a recession is picking up.
22 Feb 2019

Most Popular

Personal finance

How much the state pension will rise by this year

While Boris Johnson promised to hold a full budget within 100 days of his election victory, many of the details of next year’s state pension increases…
10 Jan 2020

Currency Corner: how high can the pound go against the euro in 2020?

In the month in which we should finally leave the European Union, Dominic Frisby takes a look at the pound vs the euro and asks just how high sterling…
13 Jan 2020
Investment strategy

Running with the crowd is bad for your finances – here’s how to resist it

To be a good contrarian investor, you have to avoid being swayed by the crowd. John Stepek explains how to go about it.
3 Jan 2020

Money Minute Monday 13 January: a busy week for UK data

Today's Money Minute looks forward to a busy week in the UK, with the latest figures for both inflation and retail sales.
13 Jan 2020