How U.S.-Iran Tensions Heated Up, Then Boiled Over: QuickTake

LAGOS (Capital Markets in Africa) – The U.S. and Iran have lived in a state of hostility for decades, but relations grew tenser over the last year, finally boiling over at the start of 2020 with a U.S. attack that killed Iran’s most prominent military leader. The U.S. has been trying to deprive Iran of oil revenue, the lifeblood of its economy; Iran has responded by exceeding limits it agreed to on its nuclear program, and it’s been accused of making mischief in the Persian Gulf region. The two nations could be headed for a war that neither says it wants.

How long have the U.S. and Iran been at odds?
Their discord is rooted in U.S. backing for the 1953 coup ousting Iran’s nationalist prime minister and re-installing the monarch, Shah Mohammad Reza Pahlavi, who was sympathetic to the West. When Islamic revolutionaries took over Iran in 1979, forcing the shah to flee to the U.S., militants seized the U.S. embassy in Tehran and held 52 Americans hostage for more than a year, demanding the shah’s return. The U.S. severed relations and began to impose sanctions, which grew over the years. The U.S. has listed Iran as a state sponsor of terrorism since 1984. In April, it named the Revolutionary Guard Corps, Iran’s premier military force, a terrorist organization, the first time it has applied that designation to a state institution.

When did things boil over?
The latest spiral of violence started with a Dec. 27 rocket assault on an Iraqi base that hosts U.S. personnel. It killed an American contractor and wounded several U.S. personnel. Such attacks had occurred since the fall. The U.S. put the blame on Kataib Hezbollah, an Iraqi militia closely associated with Iran; President Donald Trump said in a tweet that Iran “will be held fully responsible.” On Dec. 29, the U.S. conducted air strikes on five bases in Iraq and Syria used by Kataib Hezbollah. On Dec. 31, dozens of Iraqi militiamen and their supporters stormed the U.S. embassy complex in Baghdad. On Jan. 2, a targeted U.S. strike on vehicles near Baghdad’s airport killed Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps’ elite Quds force, who the U.S. said was plotting attacks against Americans.

What caused the U.S.-Iran conflict to escalate?
In May 2018, President Donald Trump withdrew the U.S. from a 2015 international agreement in which Iran agreed to limits its nuclear work in exchange for relief from economic sanctions imposed by countries worried it was trying to develop a nuclear bomb. Trump argued he could get a better deal from Iran and began reimposing old sanctions and adding new ones. In May 2019, the U.S. stepped up the pressure by letting waivers expire that had permitted eight governments to buy Iranian oil. The Trump administration’s aim is to drive Iran’s oil exports, which account for almost half the country’s sales abroad, to zero.

Why does Trump oppose the nuclear deal?
He objects that its constraints are due to expire over time and says he wants to ensure Iran is prevented from having a nuclear weapon “forever.” He also complains that the accord does not address what he sees as Iran’s malign behavior in the Middle East, its support for terrorism or its ballistic missile program.

What’s been the impact on Iran?
Iran is producing oil at the slowest clip since 1986, making the sanctions one of the biggest challenges confronting its economy since the 1979 revolution overthrowing the monarchy and installing clerical rule. The sanctions have fuelled inflation and undermined domestic support for President Hassan Rouhani’s government, which negotiated the nuclear deal. A surge in gasoline prices sparked protests in late 2019 that authorities put down with a force that may have resulted in more than 1,000 deaths, according to U.S. officials. Iranians feel duped. The nuclear deal was supposed to yield economic advantages for Iran, but renewed U.S. sanctions have shattered that expectation.

What has Iran done in response?
It’s confirmed that it surpassed agreed caps on its stockpiles of enriched uranium and exceeded the allowable level of purity. The U.S. and Saudi officials have asserted that Iran was behind Sept. 14 attacks on two Saudi crude oil production plants that created the single biggest disruption in supply on record. Iran denies it. (The attacks were claimed by Yemen’s Iran-backed Houthi rebels, who are battling the government of President Abdurabuh Mansur Hadi, which is backed by the Saudis.) The U.S. blames Iran for a spate of vessel attacks in the Persian Gulf, which Iran also denies. Iran seized a British oil tanker in July and held it for two months after a ship loaded with Iranian crude was impounded for a time off Gibraltar on suspicion it was carrying oil to Syria in violation of European Union sanctions.

Source: Bloomberg Business News