Tensions between the United States and Iran, and in the Middle East as a whole, have entered unchartered territory following the Trump-sanctioned assassination of Iranian General Qassem Soleimani using a weaponised drone strike at Baghdad International Airport.
With the killing of the IRGC Quds Force general, alongside an estimated nine other Iranian and Iraqi officials, the Trump White House has broken a pact with the Baghdad Government. It had affirmed in May 2019 not to carry out an attack against a third country on Iraqi sovereign soil. In carrying out the unilateral military operation, the US has again embarrassed Iraqi political leaders at a delicate time for an already strained bilateral relationship.
The targeted assassination of Iran’s most effective and influential foreign military operations commander immediately raised the undervalued Middle East risk premium in benchmark oil prices. Domestically, the incident will strengthen groups who want the US to entirely withdraw from Iraq and undermine US business activities and its long-term strategic influence there. In anticipation of a reaction, the US State Department has ordered all citizens to leave Iraq immediately.
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Iranian response anticipated but all-out war remote
As a result of this attack, the strategic aims and the security of US political, military and business interests are at risk in any country in which political actors have support from or are influenced by the Iranian government.
Despite the incident, the risk of direct military confrontation is still remote. The consequences to both Iran and the United States, and their respective allies, are still too great, and this would not serve any publicly stated goals of the Trump administration.
Questions remain whether the White House has anticipated and evaluated fully the potential political and security costs of this attack. The potential consequences for US allies in the region are, as yet, hard to gauge so soon after the incident.
We anticipate the most likely response in the next weeks and few months will be similar to the smaller attacks in 2018 and 2019 by proxies and affiliated groups: targeting military personnel, soft targets and potentially interests of close allies.
Iranian military commanders have the potential to use such groups even more than in recent years to limit direct exposure to US retaliation. However, contingent domestic factors will influence how effectively Iran can galvanise proxies such as Hizbullah in Lebanon, or affiliates like the Houthi movement in Yemen.
If Ayatollah Ali Khamenei does order a full-throated reaction by Iranian forces, we do not expect it imminently. More likely it will watch and wait for the Trump administration’s next move.