Since being elected in 2016, U.S. President Donald Trump has shown himself to be more capricious than most presidents when it comes to his decision making. Indeed, President Trump gave us that exact display when on 20 June, he called off retaliatory military strikes against Iran at the last minute. In a tweet, he said he made the decision to abort the operation “against three Iranian sites” when he was told 150 people would die. The move comes after Iran shot down a U.S. drone the day before, saying it was brought down over the Strait of Hormuz. The U.S., for its part, maintained that it was flying over international waters. Tensions have steadily been escalating between Washington and Tehran in recent months, spearheaded by Trump’s National Security Adviser John Bolton. On 6 May, the U.S. deployed the USS Abraham Lincoln Carrier Strike Group and a bomber task force to the U.S. Central Command in the Middle East. Bolton, an ardent Iran hawk, said the U.S. wants to "to send a clear and unmistakable message to the Iranian regime that any attack on U.S. interests or on those of our allies will be met with unrelenting force.”

The deployment came amid claims by U.S. intelligence, believed by many to be exaggerated, that Iran is shipping short-range ballistic missiles aboard boats in the Persian Gulf to launch strikes against its targets and interests in the region. More recently the U.S. also accused Iran of attacking two Japanese oil tankers in the Gulf of Oman - something Iran denies. With this in mind, the question is begged: what is at stake with the US-Iran standoff back on the radar, coupled with fears of a looming war?

The Trump administration made its first major move when it pulled out of the international nuclear agreement with Iran (Joint Plan of Action – JCPOA) in May 2018.  For Trump, this was a way to dismantle the legacy of Barack Obama, whose administration negotiated the landmark deal. By turning his back on the JCPOA, Trump also tilted the U.S. towards Saudi Arabia and Israel, Iran’s major regional rivals, who opposed the deal as they saw it as a sign of Iran becoming an internationally recognized regional power.

Bolton has had his sights on Iran since assuming the position of national security adviser in 2018.  His animosity towards Iran is entrenched in his moral, political and ideological  beliefs: he is a firm believer in American hegemony, and coupled with his strong disdain for multilateralism, it makes Iran a convenient target for a military confrontation. Bolton has pushed for new sanctions on Iran intended to cripple the country’s economy and bring about inevitable regime change. This policy is dangerous, as there is fear that the regime will find itself cornered. If it senses that it could be target of another U.S.-led regime change, tensions with Washington could quickly erupt into a military confrontation, particularly given the proximity of the U.S. and Iranian forces on the ground.

That said, Bolton has been an avid supporter of the Mujahedin-e-Khalq (MeK), the extreme Iranian, cult-like opposition group that up to 2012 was classified as a terrorist organization by the U.S. It is still regarded as a terror group by Tehran but its opposition to Tehran’s current rulers has earned the group powerful allies in the West, particularly among Trump White House hardliners.  Bolton is a regular speaker at MeK’s political rallies and openly supports it as a political alternative to the regime in Tehran. The most radical and risky move made by the U.S. toward Iran, however, has been a decision to designate the Iranian Revolutionary Guard (IRGC) as a Foreign Terrorist Organization, in an unprecedented step. This designation is especially dangerous given the IRGC is an integral part of Iranian political structure and a key player both inside Iran and across the region. By designating it as a terrorist organization, the U.S. is sending a message that it sees the regime in Teheran as illegitimate and as a threat that should be toppled.

The anti-Iranian shift in U.S. foreign policy has the potential to spill over and affect U.S. relations with third-party states. A case in point is Turkey, whose close relationship with Iran, particularly in energy, might earn Turkey a new round of U.S. sanctions. As a response to the tough, comprehensive approach by the Trump administration, moderate Iranian President Hassan Rouhani has announced that Tehran may soon breach enrichment limits, one of the key commitments of the JCPOA, if Europe does not create mechanisms that can circumvent U.S. financial sanctions.

A war between the two countries would not only have profound implications for regional stability, but also major global economic and energy implications. The economic consequences globally would be dire, as Iran would close down the Strait of Hormuz, a vital oil shipment channel in the Gulf linking Middle East oil producers to markets in Asia, Europe, North America, and beyond. Even a temporary shutdown of the strait would backfire in the form of a major spike in oil prices, which would disrupt European and Asian economies that are heavily dependent on oil imports from the region. The entire regional environment would be marked with uncertainty, which would have an adverse impact on their economies, but also on foreign capital in the Middle East.  

The U.S. would wage a war with a geographically central country in the Middle East and Eurasia, with a population of over 81 million that is highly patriotic and nationalist. It would end up bogged down in an excruciating war, whose intensity and price would outweigh the 2003 Iraq War and be a major toll on the U.S. economy. The Iranian regime, for its part, would be a violent adversary as it would activate its proxies and use its missile capabilities across the region to target the U.S., its allies, and interests in Israel, Syria, Iraq, Saudi Arabia, Qatar, Bahrain, and Afghanistan. The terrorism threat in Europe against U.S. targets would also be heightened.

Not all is bleak, as there is still hope that the U.S. and Iran would refrain from the worst-case scenario. Despite his harder approach towards Iran, Trump is more interested in forcing Iran to concede to a new, better deal compared to the one negotiated by his predecessor. This approach is risky but it is not necessarily a warmongering approach that goes against Trump’s “America First” principle. Trump’s domestic constituency can also be a major impediment for him, which could rein in any of his war-leaning impulses and be a barrier to war with Iran. Specifically, Trump’s voters are weary of foreign wars and interventionism.  There is also a risk for Trump that a U.S. attack on Iran could further hit his voter base through augmented oil and gas prices. The domestic costs of war with Iran could deter Trump, and consequently this factor could be viewed as a source of reasonable optimism. 

The Iranian foreign policy elite have pointed to a disparity between Trump’s own position and that of his national security team. In an interview with Fox News on 28 April 2019, Foreign Minister Mohammad Javad Zarif said that while Trump does not want war with Iran, certain members of the administration, including Bolton, were “dragging the U.S. into a conflict.” With a more conciliatory tone, Zarif tried to convince Trump and his supporters of the pitfalls of a war with Iran, while at the same time trying to weaken Bolton’s influence over Trump on Iran policy. Trump has already displayed his ability to cool off the trigger-happy Bolton by parting ways with him on a failed regime change endeavor in Venezuela. He has openly expressed willingness to do the same with Iran by publicly saying: “What they  should be doing is calling me up, sitting down. We can make a deal, a fair deal, we just don’t want them to have nuclear weapons - not too much to ask. And we would help put them back into great shape… We’re not looking to hurt Iran. I want them to be strong, and great, and have a great economy.”

The idea of proposing a “grand bargain,” or at least a de-escalation of the conflict, would be a welcome solution to what has been a continuing problem since the Iranian revolution of 1979. Given the geopolitical significance of Iran, the geopolitical and economic consequences of a war with the U.S would undoubtedly have severe and far-reaching consequences.