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Thursday, April 5, 2007

Some Consequences of an Attack on Iran

Some of these consequences may be a bit hyped but certainly consequences akin to these are likely if the attack occurs. Even the UK sailor incident sent oil prices up.

Shock and Awe II - The Consequences of an US attack on Iran / Politics / Iran
Apr 04, 2007 - 04:21 PM

By: Nadeem_Walayat


The British and American public appear to being hyped up towards a possible attack against Iran . Despite recent rhetoric. the actual consequences of an attack need to be fully investigated before another ‘Mission Accomplished' photo opportunity turns into something far worse than the quagmire in Iraq, which so far is on target to cost over $1 trillion, with estimates being revised higher every quarter.





A ground invasion of Iran is not possible, not with the USA tied down in both Iraq and Afghanistan . Therefore any attack would only be ariel attacks, most probably limited to Iran 's nuclear and key military infrastructure. Still this ‘ Shock and Awe II' would involve thousands if not tens of thousands of missiles and ordinance. So on a scale similar if not greater to the attack on Iraq in 2003.

An attack on Iran will likely have the following consequences -

1. Crude Oil – This one is easy, the price of oil would likely jump to a new high, how high is unknowable, but the immediate response would be a price north of $80. the consequences of this on a weakening world economy is obvious – Recession 2008.

2. Financial Markets Panic – Financial markets seek stability and order, not chaos, an attack against Iran would reek of panic, the last throw of the dice before the Neo-cons lose control of the White House.

3. Unknown Knowns – Iran probably has anticipated an attack and it is highly likely some unknown strategic retaliatory action is planned. As to what ? I can only speculate that Iran would seek to draw Israel into another war with Lebanon but on a much grander scale. There is speculation that Hezbollah possessed advanced Iranian missiles to be launched in the event of an attack against Iran .

4. IRAQ – At this point in time most of the conflict against the Co-alition in Iraq is from the Sunni insurgency. Should an attack against Iran occur, then the fallout would be double if not triple the current level of insurgency as the Shiite's are the defacto government and majority of the population of Iraq .

5. Objective 1 – Get Rid of Iranian Nuclear Programme – An attack would reinforce Iran 's resolve that the only deterrence against attack would be for Iran to double its efforts to secure a nuclear deterrence regardless of the consequences.

6. Objective 2 - Weakening Iran , may have the exact opposite effect, out of the fires of 'Shock And Awe' we may in 3 years time awaken to an fundamentalist Iranian super state that engulfs most of Iraq and parts of Saudi Arabia . The Iranians sacrificed some 1,000,000 soldiers in the war against Iraq , and it is not inconceivable that another 1,000,000 will be sacrificed or as the Shiite ideology would have it Martyred in the formation of an Iranian super state.

I am of the opinion that an attack against Iran would be a disaster. Iran is not Iraq , it has not been disarmed over the last 10 years. It will have the effect of opening Pandora's box, the consequences of which we would have to live with for decades and in far greater magnitude than the fallout from the disaster that is Iraq .

I am more or less certain that this time, Britain would not ally itself in an attack on Iran , therefore this time, the USA would truly have to go it alone. The recent release of the 15 British Navy personnel is likely to further diffuse the situation in Britain.

I still consider an attack against Iran during 2007, as a very low probability, less than 15% chance of occurring. The only realistic way to deal with Iran 's nuclear ambitions is via negotiations and security guarantees, which is the primary purpose of an Iranian nuclear programme, i.e. to secure against another war similar to that which cost Iran 1 million lives during the 1980's when Iraq attacked Iran .

However, should the US attack Iran , then Gold and Oil and related companies are set to benefit. The stock markets (apart from the Military industrial complex), will take a hit. Which would represent a good buying opportunity, for adding to investments in the emerging markets, i.e. China , India , Brazil , Russia etc.

By Nadeem Walayat,
Editor of The Market Oracle.
Copyright © MarketOracle.co.uk 2007

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