THE MARKETS HAVE BEEN buzzing for months about an imminent attack by the U.S. or Israel on Iran's nuclear facilities.
Don't bet on it -- or on oil prices heading higher as a result of hostilities.
According to recent rumors, the U.S. and Israel have been pushed to the brink by Iran's stonewalling, in the face of global diplomacy aimed at persuading the country to suspend its nuclear-enrichment program and abandon its ambitions to join the nuclear-weapons club. Iranian President Mahmoud Ahmadinejad hasn't helped the situation with his defiant rhetoric, and a penchant for posing in a lab coat against a backdrop of uranium-enriching centrifuges.
Stratfor calls Iran's nuclear capability a negligible threat, and doubts the U.S. or Israel will attack. Look for cooler heads to prevail -- and for outside inspections of uranium facilities to continue.
Renowned investigative reporter Seymour Hersh wrote last month in a lengthy story in the New Yorker that such an attack is likely to come before U.S. President George Bush leaves office next January. Both the U.S. and Israel already have special-operations teams active inside Iran, gathering intelligence and seeking to destabilize the country and prepare the battlefield, Hersh's sources told him.
Yet, the possibility of an attack on Iran seems remote to George Friedman, founder and head of Stratfor, the Austin, Texas-based global-intelligence company. The risks to the global economy of such a move far outweigh any potential benefits, he says, especially as Iran poses what he views as a negligible nuclear threat.
America's "all-options-are-on-the-table" bluff seems to have had a salutary effect, Friedman says. For example, Iran has helped reduce the level of sectarian violence in Iraq in the past six months by reining in some of the rogue Shiite militias that it trains and supports. Likewise, the U.S. and Iran have begun to take tentative steps toward diplomatic rapprochement after 29 years of enmity, he notes.
Geopolitics is Stratfor's métier, and under Friedman, who holds a Ph.D. in political science, the company takes an academic approach to the subject, rigorously analyzing the information it gleans from sources around the world. These include local newspapers, government publications, Internet informants on the ground in different countries, and other overt and covert fact-finders.
Barron's consistently has found Stratfor's insights informative and largely on the money -- as has the company's large client base, which ranges from corporations to media outlets and government agencies.
The Iran-attack story gained widespread credence after the New York Times reported June 20 that more than 100 Israeli aircraft had participated several weeks earlier in a military exercise over the eastern Mediterranean, near Greece. The distance from Israel was roughly 900 miles, the same as that separating Israel from Iran, and the exercise was viewed as a trial run for a strike against Iran's nuclear facilities.
Just a day later, the Times of London quoted Israeli military sources who confirmed the "dress rehearsal" nature of the exercise, while a story in the Jerusalem Post alluded to previous statements made by Israeli intelligence officials who said Iran would cross an unspecified nuclear threshold in 2008, not 2009, as expected.
THE SABER-RATTLING BY unnamed officials smacks of psychological warfare to Friedman, however -- not preparations for the real thing. "Why would Israel telegraph its punch like that?" he asks. "Recall that when Israel took out Iraq's Osirak reactor back in 1981, it was successful precisely because it gave no hint at all of an impending attack."
An Israeli attack on Iran would require the close cooperation of the U.S., Friedman says, due to the distance involved. Israeli rescue helicopters would have to be flown to American air bases in Iraq before an attack, while refueling planes would have to orbit Iraqi airspace during the onslaught. "The U.S. would be better off doing the attack itself, since [it] will get much of the blame and opprobrium in the Middle East" even if Israel is the aggressor, he argues.
Friedman says it's possible that the aircraft maneuvers were a diversionary tactic designed to distract Iran from coming cruise missile attacks or commando raids on its territory. It's far more likely that the U.S. and Israel are attempting merely to intimidate Iran, in an effort to make it more tractable in ending its nuclear program and support for sectarian violence in Iraq.
In Friedman's estimation, any major attack on Iran could have grave repercussions for the global economy. Most likely, Iran would attack oil tankers in the Persian Gulf and mine the Strait of Hormuz, through which 17 million barrels of oil -- or about 40% of all seaborne traded crude-oil traffic -- passes each day, along with a significant share of global production of liquefied natural gas.
While the U.S. has war-gamed such a scenario and likely would make short work of Iran's shore-based missile batteries and various attack ships, de-mining operations would take a lot longer. In the meantime, shipping insurance and tanker lease rates would soar. "This is what could drive crude oil prices to more than $300 a barrel, which even over a short period would be cataclysmic to the global economy and stock markets," Friedman says.
IRONICALLY, THE NUCLEAR stand-off seems to be having a healthy effect on U.S.-Iranian relations. The U.S. has softened its negotiating stance toward Iran, even sending the No. 3-ranked State Department official to the latest Geneva talks on the Iranian nuclear program. And talks are likely to continue, even if Iran merely freezes its uranium-enrichment capacity rather than eliminating the program.
Stratfor has noted some developments inside Iran that betoken increasing flexibility.
Among them, Ahmadinejad has toned down his anti-Western rhetoric of late, even responding favorably when the U.S. raised the possibility of opening a diplomatic office in Tehran. He apparently is listening to the more pragmatic, conservative faction of Iran's clerical leadership, which remembers well the miscalculation Iran made during the 1979-'80 hostage crisis in thinking that then-incoming U.S. President Ronald Reagan would treat the country more fairly than did the outgoing Carter administration. Instead, Friedman notes, Reagan supported Iraq in its bloody but inconclusive war with Iran during much of the 'Eighties.
Meanwhile, the Iranian state-run press has carried numerous articles and op-ed essays in recent weeks on the merits of negotiating with the former "Great Satan," a.k.a. the U.S. "Two weeks ago, the vice president of tourism caused quite a stir when he called America 'one of the best nations in the world,' " Friedman says. "That's quite a leap from the traditional 'Death to America.' "
The success of the U.S. surge in Iraq also has made Iran rethink its hegemonic goal of creating a Shiite vassal state in Iraq, from which it could threaten the oil fields of Saudi Arabia, Kuwait and the Emirates, and create a Shiite arc deep into Sunni-ruled areas. In fact, Iran has played a somewhat positive role in Iraq for the past six months, "neutering" Shiite firebrand Moqtada al-Sadr and his Mahdi Army militia in areas like Basra as well as the Baghdad enclave of Sadr
AN ENDGAME IS UNDER way, Friedman says, in which Iraq will emerge as a buffer state protected by a residual force of 30,000 to 40,000 U.S. troops. They will be deployed in the desert, away from the Iranian border and Iraqi cities, serving in a non-combat, training role. As a result, Iran will have little reason to fear more aggression from Iraq. The combination of a U.S. presence, a revivified Sunni community, and Kurdish intransigence will keep Iran and a Shiite-dominated Iraq from threatening the Sunni Persian Gulf states. "In Iraq, we face no 1975 'Fall of Saigon' scenario, with helicopters taking the last American officials away from the embassy roof," Friedman says.
To Stratfor's founder, the two years of international talks on Iran's nuclear program have been more Kabuki theater than an attempt to settle an issue of transcendent importance. At best, the issue has given the U.S. and other Western nations an opportunity to impose economic sanctions in a vain attempt to destabilize Iran.
As Friedman sees it, Iran is "decades away" from developing any credible nuclear-arms capacity. More than likely, it will never get there, because it lacks the thousands of Western-trained scientists, engineers, electronics experts and metallurgists it needs to "weaponize" any sufficiently enriched uranium it might produce.
"Pakistan had A.Q. Khan and plenty of engineering talent, in addition to help from China," Friedman says. "Lacking this, the best Iran will be able to do is a controlled explosion of a crude device," much like that which North Korea achieved in 2006.
In Friedman's refreshing view, then, what 19th-century diplomats called the Great Game seems to be winding down in Iraq and Iran. Stratfor won't be lacking for other trouble spots to cover, however, given renewed turmoil in Afghanistan and Pakistan. But that's a story for another day.