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What if the Iranian-Israeli War Scenario ever materializes? Some global geo-economic implications to consider

By : Ziad K. Abdelnour| 1 July 2010
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I am frequently asked by friends how I foresee the Middle East’s near future given the rising political tensions and the alarming buildup of arsenal throughout the region.

Although I am neither a “crystal ball” reader nor “Dr. Doom” , I am afraid that “War” is inevitable; given the lining up of the (political) stars.

It is a fact that at no time in recent Middle East history have the interests of Iran, Syria, Hezbollah and now the new kid on the block; Turkey, been so aligned. And each of those 4 groups bring important assets to the table of the Middle East. Iran is an energy rich Gulf power with an important nuclear card in hand; Turkey is an emerging Euro-Asian power with NATO membership; Syria is an Arab nation with major influence in Lebanon; and Hezbollah; Iran’s proxy in the region, is the power hungry thug whose obsession is to teach Israel a lesson at any cost.

Add those 4 forces together with a common agenda (i.e.: eradication of Israel, ousting of the US presence from the Middle East and annihilation of the Gulf regimes friendly to the US) to Israel’s plans for a definitive war in Lebanon as part of a core military outlook that sees the demonstration of overwhelming military power against intransigent opponents who are resolutely against peace as the only route to security, and you have a recipe for disaster.

A recent interview in Defense News with Israel’s deputy chief-of-staff, Major-General Benjamin Gantz, offers an unusually revealing insight into this mindset. The journal paraphrases his warning “that it could take repeated rounds of high-intensity wars to remove the Iranian-trained and financed threat from the north. The aim, he said, is to prolong the periods of relative quiet between war fighting.”

Major-General Gantz is then quoted directly saying: “Israel cannot exist with protracted peaks of warfare. Therefore we have to reduce them to reasonable levels – similar to the way we drove down terror in the aftermath of Defensive Shield [the IDF's operation in the West Bank in 2002]. That way we allow our people to live reasonably under a protracted emergency situation until we fix it, and then we go back to square one.” “I doubt there will be peace afterwards, but at least we’ll be able to extend the time between peaks….he continued saying. Through strategic attrition – one round then another round – we’ll create a situation where each new round brings worse results than the last. And that, in and of itself, brings a formidable deterrent.”

Basically, the Benjamin Netanyahu government and much of Israel’s military establishment think that peace today is not anymore possible; Israel can only be secure by being a fortress that periodically strikes out at its enemies to massive effect. There are many dangers in this view. But its logic is also clear: that there is a real risk of another war before too long – and that this will be a double war, against both Iran and Hezbollah.

So God forbids and this war ever materializes:

1. What are the scenarios that could unfold after such a military action?
2. How would we respond?
3. Are we ready?
4. What about the implications for each one of the other contenders in that regional and even global war?

I personally see the War scenario likely to raise hairs on even the thickest and most savvy skins.

Although some of the contemplated outcomes wouldn’t bear the scrutiny of conspiracy theorists of the highest order, that may just be because they are all-too realistic. And if time makes some outcomes less plausible, none are impossible. They are indeed deserving of the attention of those who are paid and entrusted to keep us safe, and those who elect and fund them.

Here’s the gist:

American cost

As I have outlined in my previous blogs, America as of today is facing great challenges. A growing deficit; a struggling economy; two ongoing wars; Terrorism; high unemployment that is causing hardship for millions of American families; to name just a few. Iran if attacked will respond by bombing all oil refineries of the Gulf States. It will close the strait of Hormuz, which almost third of the world’s oil needs passes through. Consequentially, driving oil prices to astronomical prices, crippling any hope for an economic recovery for the U.S. and the world’s alike.

On the same note, I would foresee smaller attacks like the recent thwarted Times Square car bombing will become the norm for the foreseeable future. I would even see the possibility of them being laced with nuclear waste. Notwithstanding the fact that the string of recent terrorist attacks triggered by U.S. incursions into Pakistan and its government’s support of them could very well destabilize the central government, and put its nuclear arsenal and waste in the hands of people with the worst of intentions.

China in particular will not be happy about this end result. The U.S. will suffer greater backlash from the Muslim World. Iran will use this backlash against Americans and fund and facilitate greater terrorist attacks against American interest worldwide. The disruption in oil flow and the rise in prices will automatically be blamed on the American adventure, harming further America’s image and accelerating China’s ascendance to the position of a wiser world superpower.

Arab cost

Arab governments will not be spared from this war either. Opted to host some of the American military bases, the Gulf States will be at the forefront in this conflict. Damage to its oil infrastructure will be enormous. Any perceived notion that these Sunni governments are aiding on destruction of a Shiite nation, it is bound to stir the emotions of the Shiite minority within these nations, leading to what is likely be a sectarian division among the population, and possibly armed conflict. Descending further into chaos and creating an uncertainty of the final outcome of the war.

Iraq’s militias will not hesitate in exporting ethnic violence to neighboring countries. In a depressed global environment, reforms deflate or collapse due to a lack of attention to the root cause of internal issues and a tendency for governments to focus on short-term stability at the expense of long-term solutions. Caught in a shifting, violent environment, the GCC countries now blinded and unable to navigate their way out of the mess created by war will lose trillions of dollars in the process.

Iranian cost

Iran will undoubtedly be the major loser. It will suffer great infrastructure damage, great number of deaths, and surely an even bigger damage to its political and economic structure that could lead to a complete collapse of the regime, similar to what we have seen in Iraq and Afghanistan. Since the battleground will be the Iranian soil, Iranian resistance and its conduct of the war will be similar to the Iraq War (if there is a ground invasion, thus far, not a single hawk has even alluded to it). Long, Bloody, and without any concrete and achievable strategic goals that could be ensured for the future. Iranians will have to rebuild their country anew.

Israeli cost

Israel has already prepared for such a scenario. Israel has distributed tons of gas masks for its population. Israeli officials announced on many occasions that the country has an unsettled score against Hezbollah and Syria. An Attack on Iran will start another front on the northern border of Israel, regardless of who will instigate it. The result of which is unpredictable, especially after what Israel had suffered in the 2006 war against Hezbollah politically and militarily. Under normal circumstances, other Arab countries wouldn’t get involved in war to rescue Hezbollah. If it involves the entire country of Lebanon and Syria, however, the stakes will be high and the governments will be under extreme pressure from their populations. They will find themselves either crumbling, or politically or otherwise involved in the conflict.

Many more implications come to mind though I believe that this analysis would be more productive if we could rather brainstorm the more pertinent issues at stake such as.

1. How ready are we for this frightening but real scenario?
2. What are the drivers and barriers to change the aforementioned while it is not too late? …. One key issue that comes to mind in here is for example how will the religious issues develop?
3. How can Arab wealth be put to use to ensure that the GCC countries expand in affluence, while overcoming the internal and external pressures that could shift them from the path of sustainable prosperity to war?…and many more.

Your feedback as always is greatly appreciated.

Thanks much for your consideration.


By :� Ziad K Abdelnour

Ziad is also the author of the best selling book� Economic Warfare: Secrets of Wealth Creation in the Age of Welfare Politics (Wiley, 2011),

Mr. Ziad Abdelnour continues to be featured in hundreds of media channels and publications every year and is widely seen as one of the top business leaders by millions around the world.

He was also featured as one of the� 500 Most Influential CEOs in the World.