A dangerous game in the Mid East

This Perspective column was first published in today’s edition of Fund Strategy.

This year could go down as the time when the British media missed the emergence of by far the most important global news story. Leave aside the obvious trivia of a prince going nude in a Las Vegas hotel. This could be a much bigger event than the Olympics and potentially far more damaging than the eurozone crisis.

This could be the year when Israel finally carries out its threat to attack Iran. If it does so, there will almost certainly be severe retaliation by the Iranian regime and by its allies such as Hizbullah in Lebanon. No doubt the western powers, most notably America, will get involved too.

Before examining this scenario in more detail, it is vital to take on board an intellectual health warning. The familiar habit of viewing the region as locked in relatively straightforward battles between good and evil should be avoided.

The real Middle East does not consist of dashing heroes donned in white and fanatical villains wearing black headdress. It consists of a mass of different social, ethnic and religious groups each with its own interests, anxieties and complexities. There are far more than 50 shades of grey.

It is also necessary to distinguish between what the different sides are saying and what is going on behind the scenes. Given the extent of secrecy and bluffing, it is impossible to be certain what is going on behind the scenes. It is therefore best to start with what leaders have said publically, which it is possible to be sure about, before trying to discern what is really happening.

The official Iranian position is that it is trying to develop nuclear energy, in line with a decades-old policy, but not nuclear weapons. Despite being oil-rich, it says it needs atomic power to help promote economic development and to meet the needs of its growing population.

Top Iranian leaders have also said publically that they reject Israel’s right to exist. The most charitable explanation of such statements is that they are designed for domestic consumption, to bolster the flagging support of the clerical regime, as well as a reaction to external threats. From an Iranian perspective it has faced western sanctions and the threat of external attack for many years.

In any case, it is not disputed that the Iranian regime is a supporter of the Hizbullah party and militia in Lebanon. The Shiite Muslim organisation became part of the Lebanese government last year.

Under such circumstances, it is hardly surprising that Iran is viewed with hostility by Israel. Indeed, Iran has come to be seen as Israel’s main existential threat since the peace accords with the Palestinians in the 1990s.

Israeli threats to attack Iran are not new but they have been cranked up to extreme levels this summer. There appears to be a heated internal debate over whether Israel should be prepared to launch a unilateral air attack on Iran’s nuclear facilities. This also overlaps with a discussion of the appropriate timing of any assault.

The most prominent supporters of unilateral action are Binyamin Netanyahu, the Israeli prime minister, and Ehud Barak, the defence minister. No doubt they would prefer to work jointly with the Americans but they argue Israel should be prepared to act alone.

Opponents of this position include Shimon Peres, Israel’s 89-year-old president, as well as many former members of the military elite. Such figures are not against an attack on Iran in principle. Their point is that it should be a last resort and should preferably be done with America.

It is certainly possible that Israeli leaders have choreographed the public spat to put further pressure on Iran. Uri Saguy, a former head of military intelligence, was quoted in the Haaretz newspaper as criticising an: “orchestrated and purposely timed hysteria that puts the country into a state of anxiety, artificial or not.”

In any case, most analysts make the mistake of examining the Israel-Iran clash it narrow terms. To understand it properly, it is necessary to put it into a broader context.

Although Israel’s public rhetoric is focused on Iran it is deeply unnerved by other developments in the region. From an Israeli perspective, the advent of an Islamic government in Egypt is a threat to its fragile peace with its neighbour. Attacks launched by radical Salafi Muslim militants in the Sinai peninsular, which borders on to Israel, have only increased this anxiety. The potential for the disintegration of Syria on Israel’s northern border is another source of acute concern.

Most important, though, is America’s role in the drive towards all-out conflict. It is all too common for the US to be viewed as a benign umpire in the region rather than as an active player. Indeed, it is only possible to understand recent developments if America’s role is properly considered.

For a start, America is immensely more powerful by economic, military and demographic measures than Iran or Israel. Translated into English footballing terms, America is at the top of the Premier League while Israel and Iran are in the middle of the First Division (that is the third tier).

America has imposed sanctions against Iran for many years and has also explicitly threatened it with military force. For example, in an interview in the Atlantic magazine in March, the president stated that that “all options are on the table,” and that the final one was the “military component”. He also emphasised the sanctions were causing Iran severe economic pain.

Whether intended or not, it is likely that such talk has encouraged Israel to engage in its dangerous word of words over Iran. From an Israeli perspective, it is desirable to entice a much bigger power to squeeze its main enemy still further.

It is highly unlikely that any of the players in this hazardous game desire an outright conflict. The consequences for the Middle East and for the world more generally would be extremely damaging. But the possibility of events getting out of hand should not be ruled out.