Iran’s use of proxy groups has experts concerned about the possibility of moving closer to war based on a series of ‘miscalculations’ of how the U.S. might respond to further attacks.
We asked Cipher Brief expert and former Vice Admiral Kevin Donegan, USN (ret.), who also served as Commander of the 5th Fleet, to provide some much-needed context and perspective on Iran’s use of proxy groups as well as its own internal politics, which is driving its response, primarily, to U.S. sanctions.
Donegan: In looking at the current situation, there are a couple of things at play. One of those things is politics. Is it the politics that’s driven us to the current crisis or have other things driven us here? Maybe I can add a little context that puts this in perspective.
When you look at what's happened, the United States has significantly ratcheted up pressure, and we ratcheted it up using multiple different avenues. We brought sanctions back. We even went to the eight nations that had exemptions related to oil and said that they don’t have the exemptions anymore. We declared the IRGC a terrorist group. We started calling out Iran for the malign behavior they were carrying out in multiple places, including Yemen. Lastly, we increased our military force in the region. At the same time if you look inside Iran, you now have as a result of all of that, a significant reduction in their ability to export oil. They went from 1.5 million barrels a day to just a bit over 900,000. The value of their currency has gone down. Iranians can't travel because you need U.S. dollars in the travel market to travel. Inflation is up significantly, and Iranian GDP is down 6%. Food prices are up. Some medications aren't available and there are other shortages. Some of these things are the result of sanctions, but some of this is the direct result of Iranian’s internal problems. More simply put, the sanctions have a greater impact because of Iran’s internal mismanagement of their own economy and internal corruption.
However, no matter the cause of these impacts, Iran now has to do something. So, they’ve come back with their own rhetoric, with statements like ‘I'm not going to comply with the nuclear deal if you don't do these things in 60 days’. They are trying to fracture any coalition of the willing related to them.
Vice Admiral Kevin Donegan, USN (ret.), Former Commander, 5th Fleet
"They’re trying to deal with the Europeans separately from the U.S. and they’re trying to get the Gulf Cooperation Council (GCC) to fracture. For example, Iran is happy to see Qatar pushed outside the GCC. And they’d like to separate the GCC from the United States, or certainly increase pressure along those lines."
So again, they have to do something and what we saw were attacks that send a clear signal that if you align with the U.S. pressure campaign Iran can, using their proxies and surrogates, reach out and hurt you where it hurts the most. For example, the attacks in the Port of Fujairah were because the UAE has been and remains a financial marketplace that’s been built on safety and security. Then there were attacks on the east-west pipeline in Saudi Arabia.
It was messaging to show Saudi Arabia that it doesn’t matter where your oil is shipped, on the water or overland they can get at it. And Iran is no longer threatening to close the Strait of Hormuz, instead they are disrupting flow through the Strait of Hormuz because they have learned why hurt themselves by closing a water way, they need to bring their own oil to market. Disrupting that flow is a much better alternative for them because it could result in rising oil prices, bringing them more cash to counter the reduced number of barrels they are exporting.
With all this as context, now we in the West are trying to figure out what’s going on. Things have been blowing up, but is Iran actually behind it? It’s always hard to pin a single event or action on Iran directly if they’re using IRGC and/or surrogate forces to do it. But Iran still hasn't been hiding. They've been found out before and the international community has done little about it. You remember when our ambassador to the United Nations, Nicky Haley, called out all the things Iran was doing in the Red Sea and in Yemen and the missile shipments to Yemen and all of Iran’s violations of UN sanctions. But still, each time that the Iranians have done these things, there’s really been no one to push back against them. That's the context in which this is happening. Now when you add in ships that blew up near Iran and a video of a device being taken off the side of the ship. People are asking, ‘Did Iran to this?’ And I always go back to history. There is only one nation and one entity that's really been blowing things up in the water or shooting missiles or being disruptive like that in this region. And it is Iran. Whether they’re doing it directly or they’re doing it through proxies that are being directed from the top. I am certain that the IRGC isn’t going to do anything that isn’t sanctioned by the supreme leader.
Now on the other hand, an Iranian proxy or a surrogate group could act without specific direction from Iran. For example, when they’re supplying weapons to Yemen, they don’t get to control exactly how those weapons are being used because the Houthis are their own force. In that case, maybe the Iranians don’t have a vote in how these weapons are always used, but they certainly had a big vote because they gave them the weapons capability, while flaunting the UN resolutions banning it. And they're happy to see it used against Saudi Arabia or the UAE. Either way, Iran is complicit.
So now, what does the U.S. do about it? Well, the best thing that the U.S. can get out of this is a united multi-national coalition with the common denominator being the free flow of commerce. In other words, bring the international community in alignment. The message to Iran would be clear - stop blowing things up on the water and impacting the flow of commerce - and this would be coming from not just the U.S. but from a united coalition that includes Europe and Asia and the GCC. In the past, sanctions were effective with Iran because it was a coalition and not just the U.S. that was lined up behind them. Sending a very clear message that if Iran keeps disrupting the flow of commerce, the outcomes will be what they do not want. Instead of a fracturing of the GCC and getting to deal with Europe and the EU instead of the U.S, they would see a coalescing of nations against Iran’s actions.
Vice Admiral Kevin Donegan, USN, (ret.), Former Commander, 5th Fleet
"Another question being asked is can or should there be a military response? Certainly, there could be. And although neither country wants a war, certain scenarios could happen on one side or other, that would further ratchet up the tensions and create a potential path to a larger conflict."
For example, if there was an event that caused mass U.S. casualties, or caused casualties to an ally, now you’re risking retaliatory measures that have to be greater in response. But to answer the question directly, the better approach is not a military response but direct pushback on Iran’s malign behavior from a multi-national coalition that is tied to harsher sanctions if the malign behavior and attacks on commerce continue.
The Cipher Brief: How do you see this playing out? World markets haven’t really reacted overly aggressively to the attacks. There was some price fluctuation, but there wasn't shock to the markets.
Donegan: That's because of a couple things. First, there is always conflict in the Middle East. These events haven’t caused mass casualties or the stoppage of flow of commerce yet. What would start to add pressure here is if attacks continue, then you’re going to see higher insurance rates for the transportation of goods and then you’re going to start to get to the impact on the flow of commerce.
No one wants conflict now. And the risk of conflict is more in the miscalculation of using proxy forces and forces like the Houthis, where you run the risk that your tools can be used in ways you didn’t precisely intend. IRGC forces can be pretty precise. Not so precise that they tried to hit a Japanese ship when Japanese Prime Minister Shinzo Abe was there. That's a stretch probably. The flagging and ownership of shipping is so complex, that its pretty hard to know who exactly who owns a ship. There are often multiple constituents. You have the flag of the nation that's flying. You have the owners, which may have nothing to do with the flag that's flying. And then you have a crew that could be from a completely different place. And then a master from another place. It becomes a very complex thing to say that was a Japanese ship, unless it’s labeled with a name that's clearly Japanese.
It is clear that the objective of the U.S. is to pressure Iran to the negotiating table, after all Iran has agreed to negotiations under less pressure in the past. That said, I have little hope that the negotiating table would have a positive outcome because if you were Iran, why would you negotiate with the current administration that is clearly not inclined to offer Iran a good deal and is up for election in a year? That doesn’t mean Iran won’t go to the table with the current U.S. administration, because it could allow both sides an opportunity to buy time and reduce the chance for a broader conflict that neither side wants.
The Cipher Brief: If the U.S. were to launch a proportional response, how do you think Iran would react?
Donegan: They haven’t attacked the U.S. directly. These were not our ships, nor our pipelines. But Iran is using the attacks to warn other countries that there will be consequences for siding with the U.S. I think that's important. Iran has a lot of tools at their disposal. They can significantly hurt those who live in the region. Their missile capabilities are extensive, they can do a significant amount of damage in a short period of time. Their number one concern is regime survival. If that's threatened, that’s when you would see Iran become much more aggressive. Right now, the collective impact from sanctions is layered on top of Iran’s own mismanagement of their economy and their extensive internal corruption. This has resulted in painful conditions inside Iran in terms of inflation, shortages of food and some medicines in places, a marked reduction in GDP and a reduction in the sale of their oil on the international market, but even with all this I don’t believe the regime is threatened. For a lot of reasons, I do not believe regime change is in our interest either.
Vice Admiral Kevin Donegan, USN (ret.), Former Commander, 5th Fleet
"I am most concerned about a miscalculation that results in a situation where one side becomes compelled to respond that could result in expanded conflict. An example could be an action by Iran or one of its proxies that causes significant U.S. casualties."
To sum up, I do not think Iran wants to go to war, but they very much want to have these sanctions relieved in some way. Some potential first steps toward an easing of tensions and a potential path toward negotiation would have to come from both sides. It could be that Iran releases some folks that they have in custody and the U.S. eases some portion of these sanctions. But right now, there’s still a lot of exchanging of rhetoric and that’s when you have a greater risk of miscalculation that could escalate to a broader conflict.
Read also Limited Options for Dealing with Iran in The Cipher Brief and more from the former National Intelligence Manager on Iran at ODNI Norm Roule, and Restoring Deterrence with Iran, from Cipher Brief expert and former Senior CIA Analyst Steven Ward.
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