Killing Iran’s key oil-export market is certainly imposing a great deal of pain on its economy. Real gross domestic product will fall by 6% this year and consumer price inflation will hit 37%, according to the International Monetary Fund. Yet that's unlikely to bend Tehran to Washington’s will, and in the meantime it’s actually increased the risks around Hormuz. With barely any Iranian oil flowing anyway, the further economic pain Tehran would suffer from disrupting traffic through the Strait would be trivial.
At this point, the key factor preventing Tehran from striking back harder is primarily its desire to win the game of public perception. Currently, the rogue regime in the Gulf is the U.S., which blew up the Joint Comprehensive Plan of Action on Iran’s nuclear program when the Trump administration pulled out of it a year ago. Iran’s behavior to date has been carefully calibrated: just aggressive enough to keep a tit-for-tat game going with the U.S., but not so combative that it loses the support of Russia, China and Europe.
“Up until the point they pull out of JCPOA they have moral authority in their favor,” said Rodger Shanahan, a research fellow on Middle East issues at the Lowy Institute in Sydney. “If they threaten to close the Strait and increase their attacks, that goes away.”
The more likely outcome is further attempts by Tehran to push the boundaries of the JCPOA, said Shanahan, such as Iran’s announcement last week that it would exceed a cap on its stockpiles of low-grade uranium. Such actions can create new facts on the ground that can be traded away in any future negotiation with Washington, so as to ensure the resulting agreement is substantially the same as the one the Trump administration pulled out of.
That's hardly comforting. Indeed, it more or less guarantees that the current game of provocation and counter-provocation will continue until both parties reach a stalemate. With the safety nets preventing this from deteriorating into a crisis growing so threadbare, the risks of a miscalculation will only increase.
This story provided by Bloomberg.