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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.


  1. LinaLina

    Hi all, I have read most of the posted comments. Some of them made me laugh, some just yawn. Almost none of the debating people is Israeli. Funny don’t you think? Dear people, you don’t know the Israeli spirit… When we are attacked we unite, help each other and support the weakest sectors in our population. We the Israelis, have shown during hundreds of years of persecution (religious, national, economic, etc.) that we can survive. Our military achievements are not questionable, our economy was one of the stablest ones during the crisis of 2009, our R&D achievements are second only to US, while we are 2% of their population. Dear Ziad, your scenario doesn’t take into account the countermeasures developed and in place against Iran/Syria/ Hezbolah bombs, missiles and planes. Don’t you think US will be able to prevent Iranian bombing of the Gulf states? Don’t you think that Israel will react and destroy Syria much faster than Syria can destroy Israel? Why do you think they feed the Hezbolah? The only way they can actiually fight Israel is by using the local population as shield knowing our problem with morality issue. In short, I don’t share your pessimistic view but who knows? Maybe I am the naive here…

  2. Lior SchwartzLior Schwartz

    The main problem will accrue if this scenario will not take place soon enough. While enabling Iran to have a nuclear weapon it will change the whole middle east, not to say will influence the whole world. Iran’s leadership is based on an extreme Islamic regime that does not accept the existence of non Islamic thinking / behavior. Enabling this regime control a nuclear weapon will impact all the middle east and more. Not because they will use it. As the result for them is well known. But because it will enable Iran to continue with more power, pushing the extreme Islamic in a terror way to change the regimes in countries like gulf countries, Egypt, Saudi Arabia and more. Not fighting it today, will cause a worth crisis on the coming years. While having the line Iran-Syria-Turkey-North Korea. The red flag has been already there. Ignoring it or waiting the situation to disappear will just raise the price that the world will pay. Sometimes it’s better to take action which is not so popular, while not doing so is raising the price dramatically. Just to think what could have been taking place if Israel wouldn’t destroy the Iraqi Nuclear reactor at 1981. The game could have been totally different when Iraq invaded Kuwait. Not having the ability to stop there, Saddam could have taken more. In a perspective of the history, it was the right action to do so. On that time the whole world was shouting. There are times that non popular action MUST take place, in order to enable the next generation the peace and quiet that is needed. All over the history, from time to time a crazy leader is rising up, challenging the world leadership. Not taking the action at the right time, costs much more than just money as you can look at the 2 world wars we had on the last century. Till now, no diplomatic action has ever solved fanatic crisis. The reason is that you can’t solve emotional situation with logic explanations. These are two parallel plains that can’t meet. While having this understanding, it’s better to pay the high price today, than pay it later with interest.

  3. AKL RogerAKL Roger

    Subject: re: What if the Iranian-Israeli War Scenario ever materializes? Some global geoeconomic implications to consider Good Morning Ziad, I liked very much your analysis. I am answering you intuitively because I would like you to think about it a little more. What will the Israeli population’s reaction be to a rain of missiles that are likely to be launched on all cities, airports and military barracks in Israel? The Israelis, like the Lebanese Christians, are used to a rich and secure way of life; they won’t like to put their children’s lives on jepopardy and they have, in their majority, double nationalities. If these wars and fightings last, we will witness an intense Jewish emigration from Israel, while the Palestinians, like all impoverished populations will go on making a lot of children and while the Lebanese Shiites will have nowhere else to go and will fight to the end because they have nothing to lose. They will fight dearly and, in wars, morals are more powerful than armaments. I do not think that this Israeli general is telling the truth, but menacing. If he were telling what he thinks really, he would be wrong, like our American generals were and are about Afghanistan. As for the Sunni Arab populations, they are much more with the Hezbollah, Turkey and Iran than with their governments, because they feel a lot about the Palestinian plight and love those who seem fighting for the Palestinians. I think the “moderate” Arab governments will be at risk, then, when the fighting starts. Let’s not forget that Turkey is Sunni and was the siege of the Sunni Califate. What will be it’s reaction? It has an interest of taking advantage of these wars, because, now, it has become strong and is a rival to Iran and Israel for the leaderrship of the region. To beat Iran, it has to do it in the hearts of the population, but to beat Israel, it will help the Syrians, Hamas and the Hezbollah with all possible means. This explains why Russia is not giving Iran The S300 missiles, because it doesn’t like this “unholy” alliance between Turkey, its historic enemy, and Iran. You see how the consequences of this war can be much more complicated. As for a land war against Iran, it will be much more difficult than the ones against Saddam and the Taliban. First, because the US is still engaged in these two wars and has been weakened morally, militarily and financially. Where do the US find the soldiers needed to attack a country 10 times stronger than Irak? Second, because Iran is not comparable to Irak, it is, as said before, much stronger and its governement is much more popular than was Saddam’s. Third, China would love to see America loosing more and more power For that, I don’t think that someone with a reasonnable mind will start this war. I hope that Israel and the US won’t think about it, but, in the contrary, they should agree with the Arab League’s conditions and make peace at once. With this kind of peace, Iran will lose its power to incite the Arabs against Israel and the latter will be able to sell its products all over the Arab world. I think that this is what President Obama is trying to do, but he has a lot of people to fight at home. Does it explain the change of Turkey’s policy? Is it, in some way, in accord with its US ally? I am sure that when all the Arabs agree to have peace with Israel, Hamas and Hezbollah will not be able to say no, because their populations will not accept to fighy anymore and they know it. Best Regards, Roger AKL

  4. ERER

    IN MY OPINION ONLY… 1. How ready are we for this frightening but real scenario? NOT AT ALL POLITICALLY, READY TO ADDRESS MILITARILY AS THIS IS THE MOST HEAVILY GAMED AND PLANNED SCENARIO AT USNWC and DOD… OBAMA ADMIN IN DENIAL… ASSUMES ISRAEL WILL NOT MOVE WITHOUT GREEN LIGHT… INFO FROM FRIENDS AT IDF AND CENTCOM INDICATE THIS BELIEF IS MISTAKEN 2. What are the drivers and barriers to change the aforementioned while it is not too late? UNFORTUNATELY I BELIEVE IT IS TOO LATE TO AVOID MILITARY ACTION… NEGOTIATIONS HAVE FAILED AND THE END GAME IS NEAR IN RE ENRICHMENT AND THE IAEA IS DONE AS FAR AS EFFECTIVE INSPECTIONS ARE CONCERNED – THE CALENDAR IS THE ENEMY OF ISRAEL AT THIS POINT, AND THE FRIEND OF THEIR ENEMY One key issue that comes to mind in here is for example how will the religious issues develop? IN THE AFTERMATH, IT WILL BE PORTRAYED AS SUCH – RELIGION WILL HAVE LITTLE TO DO WITH THE DECISIONS LEADING TO THE INITIAL STRIKE AND EVERYTHING TO DO WITH THE INFORMATION AND PROPAGANDA WAR THEREAFTER 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? THE GCC WOULD NEED TO ENGAGE IN THE PROCESS IN A VERY DIFFERENT WAY THAN THEY HAVE TO DATE – THEY NEED TO FRAME THE ISSUE NOT AS SUPPORTING ISRAEL BUT ADDRESSING THE INSTABILITY AND REAL FEAR ON THE PATH CURRENTLY TRAVELED – IN THE END, THEY WILL BE INEFFECTIVE GIVEN REGIONAL AND INTER-GULF POLITICAL DIFFERENCES. THE DIE IS CAST. I do not want to be a defeatist, but if one looks at all the evidence and progression of this crisis to date, it is virtually impossible to see a peaceful, negotiated resolution – trust is broken, and questions of existence and the future are now the focus. When threatened with destruction, I do not expect Israel to wait for it to come to them.

  5. Peterson ANPeterson AN

    Indeed a difficult issue with many possible scenarios, all with grevious implications for all involved, as well as the world as a whole, therefore the “balance of fear” might act as a deterrant, unless of course Iran, driven by its zealot radical religious government will try and convert words into action, as always “Talk is cheap”. Action is deadly. I do not agree with your interpretation of possible Turkish allignment with Iran, Syria, Lebanon, Hyzbullah & Hamas. For the time being Turkey’s interest still lies with NATO and the US. It has nothing to gain from joining the Shia led axis, and everything to lose from exiting NATO, and anatgonise the US. Nor will the Arab countries welcome the emergence of Turkey as a “leader” of Arab/Palestinian causes. Turkey after all is not well remembered or cherished from its days as ruler of the middle-east. There are too many scenarios to reasonably comment on the impact such conflict will have on the region and the world. If Iran instigates action against Israel (with the Syrians and Lebanese, Hyzbullah and Hamas opening additional fronts), it is not inconceivable to see Iran’s industry and infrastructure destroyed. Israel will suffer severe civilian casualties, but the damage to Syria and Lebanon (as well as Iran) will be much much harsher. I agree with your assessment that most of the other Arab nations will watch from the sidelines, especially if they see and understand the magnitude of the destruction in Iran, Syria and Lebanon (lets not forget that Israeli forces are stationed 60 Kilometers from Damascus and Beirut). Israel’s devatsation will be great with losses of up to 25% of its population, but it will survive. What is clear is that it will lead to a total disaster for the Palestinians, who do not have the civil defences, shelters, and infrastructure to defend themselves against an Iranian, Hyzbulla, or Hamas rocket attack. Even the best rocket guidance systems available to Iran, Hamas and Hyzbullah will hit and damage Palestinian and Arab-Israeli population centres In Israel proper and on the west bank (and even Gaza) proportionately the Palestinain losses will be much greater (than Israeli), and will erase their hopes for statehood and nationhood. If Iran’s nuclear arms ambitions, and continued threats to “erase Israel off the map” will appear to be within reach, Israel, with the consent and support of the US and some European and Arab countries, will launch a pre-emptive strike against Iran. Such a strike will be so devastating that Iran will be left with no meaningful reply (remember 1967 when Israel was threatened with destruction by 7 Arab countries?!). Interestingly enough this might be the least harmful scenario overall, as a devastating pre-emptive strike would limit the appetite of Lebanon, Syria and others to expand the conflict. Let’s remember that Iranians are not Arabs, and many Arab countries will not feel that Arab pride was “hurt” or damaged… There has not been much love lost between Arabs and Iranians over the centuries, and with pressure from the world powers (wishing to minimize potential damage to energy sources), will convince the Arab world to “sit this one out” and watch from the sideline. Such “non action” by the Arab countries will be rewarded with the resolution of the Israeli Palestinian conflict, and the Palestinians will be getting their nationhood at long last. The potential for terrorist attacks in European/American cities will be much greater, agreed, but so will be the desire of many moslems living in Western countries (and wishing to continue to live there) to help prevent such terrorist actions, making the radicals much more vulnerable than today. The potential for suspension of civil rights in the event of a massive Islamist Terror Campaign is high, and the likelyhood that it will lead to mass incarceration of moslems is high. The impact on the world will be polarization between western and eastern countries. With as much as 15% of world’s oil production at risk, and in harm’s way, the great losers will be the Europeans (and Iranians) who are most dependent on Iranian and Gulf oil. This means that BRIC countries will suffer as their economic growth is dependent on European buying power. Paradoxically, the US (and to a lesser extent Russia) will be the big winners. The US because it will have sufficient oil (relative to other countries) to sustain its diverse economy, which unlike the European, is fairly self-contained and diverse. Russia will benefit as it will become the largest oil & gas supplier to Western Europe. China a major importer of Iranian Oil and dependent on European and American markets will also suffer decline/stagnate. I suspect that Syria and Lebanon will be reduced to rubble and their economies (as weak as they already are) will be severely impacted. Israel fighting for its survival under attack from Iran, Syria and Lebanon will not hesitate to strike horrendous and wildly disproportionate blows at Syria, Lebanon, Hyzbullah, Hamas, and if attacked with non-conventional weapons from Iran, will unleash its non-conventional arsenal to horrendous effect. World Public Opinion will not be a consideration which will tie its hands (as it seems to do now). The Israeli economy will suffer heavy losses, but because it is a technology driven economy, with much of its markets, production and product/service delivery outside the borders of the country, they will be able to rebuild relatively faster than Iran, Syria, Lebanon (and any other regional power tempted to enter the fray). If Other countries enter the regional war, the risk is that it could escalate to a multi-national war, with the US, certain Europeans, Russia, and China becoming involved as well to protect their economic interests and sources of natural resources. In such a scenario all bets are off… I would rush to the nearest church, synangoge or mosque, and pray for world peace.

  6. Eric ReehlEric Reehl

    This seems a foregone conclusion at this point… wtih recent discussions between Israel and KSA regarding fly safe corridor, preparations are being made… end of year/early next is my guess

  7. KaloKalo

    I think we need to change the idea that Israelis are the interlopers from Europe. That will prevent westerners from also adopting the idea that west belongs to westerners and all else must go home. For this to go away, tolerance must be shown from all ends. Hate begets hate, just like there are small groups of haters from the islamic side, we have many on the western side waiting for the right moment to strike as well.

  8. Richard ShattoRichard Shatto

    Interestingly, most would scoff at those in our nation who would suggest stockpiling goods and purchasing gas masks, but if an entire nation of Israel does it, by demand of the government, it makes a lot more sense when we really sit down and think about the logical conclusions of a full on Middle East war. And, are we really insulated by so much water and land as a couple of oceans and a large continent? But, the initial and very real vulnerability is economic, and if America’s back isn’t broken yet, the mule’s pack is getting plenty heavy and there is only so much a mule can carry.Interestingly, most would scoff at those in our nation who would suggest stockpiling goods and purchasing gas masks, but if an entire nation of Israel does it, by demand of the government, it makes a lot more sense when we really sit down and think about the logical conclusions of a full on Middle East war. And, are we really insulated by so much water and land as a couple of oceans and a large continent? But, the initial and very real vulnerability is economic, and if America’s back isn’t broken yet, the mule’s pack is getting plenty heavy and there is only so much a mule can carry.

  9. Martin Thomas - DubaiMartin Thomas - Dubai

    If this occurs I would expect significant Shia backlash in GCC and real trouble from fundamentalists – a major outbreak of internal terrorism and the wrecking of for example any chance of these countries being part of the mainstream global economy afterwards. I’m seriously thinking of heading for Sri Lanka and hoping the wind keeps blowing the other way

  10. HaythamHaytham

    No doubt, this is an extremely important issue to discuss. I would go a step back to note that Iran has already established its cells in the region, and if we look at Hizbullah as an example, we may spot o similar, known and unknown, experiences. Hamas being one example, the GCC countries already have sleeping cells, one of which was lately discovered in Kuwait for instance, added to the well known one in Egypt. Based on that, these “hands” will be the first defensive line for Iran and their capacity to act in the countries where they exist is to be studied carefully. Any moves from security forces in the GCC and other Arab countries in the comming period to wipe out these cells is worth watching. Anyhow, a Sunni Shite clash is inevitable, because Iran has long played this card and today all the Shiites in the region believe Iran is their main destination, religiously and ideologically. But i would have liked to see something about Lebanon and Syria in the aftermath scenario. As for Lebanon, i think it will be a major loser. The country has no infrastructure to lose yet the government is trying to do something on this front, a very big debt 148% of the GDP high unemployment and a fragile sectarian society which may break down at any event.

  11. LQLQ

    I think the political focus should include the religious sectors in the discussions about any possible fighting in this region. Being from the secular west has made our political and philosophical values less than meaningful with relationships between extremist factions of each religious side. I believe we have underestimated the religious power that the extremist groups have embraced. This is a reversal of common sense in many areas of geo-political concern. The saber rattling is not so much about power in the traditional sense, but the power of the faithful.

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