This Risk Assessment Brief was prepared by NAVIGATOR Consulting Group Ltd. as part of our annual scenario planning and risk assessment process. This Brief is based on a scenario planning process and as such represents a possibly future rather than an assured outcome. This Brief is distributed free of charge, and can be copied or quoted, providing that its provenance is acknowledged. Please read the text version below, or download the PDF file. For further information, please contact:
Recently information that the US is positioning air and naval assets in the Persian Gulf and Middle East supports our earlier estimates that a military campaign against Iran is imminent. This Risk Assessment Brief presents our likely scenario for such a campaign, as well as its impact on Cyprus.
The Democratic Party regained control of Congress in the November 2006 elections. From this platform, and due to the disclosure in Bob Woodward's book Sate of Denial that the White House did not fully cooperate with the 9/11 Commission, the Democrats decided to launch a new Commission into the politicization and use of intelligence surrounding the invasion of Iraq, as well as the subsequent occupation of Iraq. With domestic political approval ratings at record lows, President Bush and his neo-conservative advisors decide to implement a long-planned military offensive against Iran.
The primary objective of this offensive is to rid Iran of its capabilities to manufacture and transfer weapons of mass destruction. The secondary objective is to interdict Iran's ability to support terrorist groups, such as Hezbollah and the re-constituted Taleban, as well as anti-American factions in Iraq and Lebanon.
1. Air attacks from B1, B2, F-15, F-14 and other attack aircraft from bases such as Incirlik, Bagram, Diego Garcia, Juffair and at least 2 carrier battle groups stationed in the region. The continental Unites States as well as friendly countries can be used for basing as well. Cruise missiles will be launched from ships and submarines in the Persian Gulf, Indian Ocean and Mediterranean. There would include four priority targets:
Ballistic missile sites.
In a second priority the US will strike Iranian leadership, communication and transport facilities.
2. A combined naval-air force blockade of the north-eastern shore of the Persian Gulf. The objective will be to interdict Iranian attacks using missiles, mines, torpedoes, fast attack vessels, divers and aircraft against oil shipping in the Gulf as well as friendly installations in Saudi Arabia, Bahrain, Iraq and other high value targets.
3. Special Forces attacks on suspected Iranian nuclear processing sites as well as naval and air defence sites. The objective will be, in the case of the nuclear sites, to capture materials, documentation and staff, and to destroy the sites.
Iranian Military Response
Iran will certainly be aware of US deployment activities, particularly in the Gulf region, and
as such will have a minimum of 1 month to prepare for an attack. Iran is likely to mount a
defence using four main methods:
1. Defence in depth: using geographic terrain to disperse and hide assets, while forcing US aircraft and Special Forces to over-extend and restrict their time over target;
2. Attacks on shipping, naval forces and installations in the Persian Gulf. The Saudi Ras Tanura and Abqaiq terminals on the Persian Gulf will be prime targets, as would the Iraqi Basra terminal, the US base at Juffair, and US carrier battle groups.
3. Attacks on US and multinational forces in Iraq and Afghanistan. In Iraq, the Madhi Army and SCIRI will most likely be mobilised against American forces. Regular Iranian Special Forces will cross the border and attack US targets. In Afghanistan, this will include intensifying the re-arming of the Taleban (including Osama Bin Laden's son, who has been reported in Iran) as well as forces under Mohammed Dostum.
4. Attacks on US and allied interests in the region, either using Hezbollah or pre-positioned assets. In particular, we predict Iranian action in the Red Sea aimed at shipping, smaller Saudi oil terminals and the Suez Canal.
We are not certain about the involvement of Syria: Involvement in a conflict of this magnitude is not in Syria's vital interests, but Syria may be forced into action by a combination of Israeli military aggression or US attacks on Syrian radar or other military assets. The US has openly stated its desire for regime change in Syria. It is highly likely that Hezbollah will take military action against Israel in the event of Israeli involvement in military attacks on Syria or Iran.
It is ironic that the presence of European peacekeeping troops in Lebanon may force Syria to deploy forces against this perceived threat, at a time when most European countries are not likely to back the US-Israeli offensive. They risk finding themselves in the middle of a hot battle zone, facing a conventional army as well as irregular forces, for which they are not prepared, and for which they have no political mandate. If this is the case, it would be a high point in US-Israeli diplomatic manoeuvres, but would mark a new low in trans-Atlantic relations, fracturing whatever unity and trust is left.
There is a high probability that there will be Iranian ballistic missile attacks on Israel and any Arab country harbouring US military assets.
Outcomes
1. We do not believe the attacks will be successful in delivering a serious setback to the Iranian nuclear arms programme. This programme is too dispersed and relies on relatively low technology means for enrichment, which could be replicated from various sources. There is every indication that Iran has mastered the enrichment cycle, even if it is encountering some technological difficulties. Iran will reconstitute and accelerate its programme, and in the future will have no compunctions about transferring technology to Hezbollah or other surrogates, or carrying out attacks on its own.
2. We believe Syria will try to remain officially neutral. However, it is likely that some attempt will be made to destabilise Syria and force the "regime change" of the Assad government. This will probably create chaos, and either a military dictatorship a fundamentalist Islamic entity. While defeating Assad may be an Israeli policy objective, such a course would in fact be detrimental to US interests (given the likely alternatives to an Assad Government). US interests would be better served by rebuilding the relationship with the Assad government.
3. Attacks on US forces in Iraq will exacerbate a dangerous situation and lead to the withdrawal of multinational forces. Parts of Iraq will turn into an openly Iranian surrogate, which will also control the majority of the oil supplies. An independent Kurdistan will exacerbate relations with Turkey, potentially causing a Turkish invasion.
4. Lebanon will be increasingly destabilised. Regimes friendly to the US in the Gulf, including Bahrain, Kuwait and Saudi, will also be destabilised and forced to seek closer military protection from the US. This will lead to re-establishing the post-World War II dominance of the US in energy development and military sales to the Gulf region, and will shut out suppliers from Europe, Russia, China, India or Japan, who have made recent inroads into these areas.
In short, we believe that a US attack will fail, similar to the failure of the Israeli attack on Hezbollah this summer. The US does not have the political will or military resources to accomplish its stated mission of regime change in Iran. Any attack will be motivated by a deteriorating political situation in the US as well as the actual problem of Iran's nuclear programme.
Over the long term, we anticipate growing radicalisation and terrorist attacks in mainland Europe, against European and American targets.
We also anticipate a regular US political strategy and culture of mobilising domestic support around foreign military adventures, in the name of "democracy" or the Global War on Terror. The domestic political dynamic will favour interventions regardless of cost, as has been amply illustrated by political dialogue since September 11, 2001.
Economic Impacts
1. Assuming a "hot conflict" of at least 3 weeks, probably extending up to 2 months, oil prices will rise to $ 135-150 per barrel. If Iranian attacks on crude oil and natural gas terminals in the Gulf are successful and result in closure, oil will rise to $ 175-200 per barrel.
2. Gold and some associated prices, such as copper, plastics, steel and steel wire, will rise significantly.
3. Central banks may have to increase interest rates to deal with higher inflation, although such a reaction may come after a conflict subsides.
4. Higher energy prices will affect Chinese, Japanese, European and US manufacturing and exports. We see a dramatic fall of the US dollar as Middle Eastern and Asian central banks convert dollars to euro or other stable currencies, partly in political protest, and partly as a defensive reaction. The euro will rise or fall, depending on (a) European Central Bank interest rates, (b) external demand for the euro as a reserve currency, and (c) analysis on euro-zone economic growth, which is heavily export-dependent and will be negatively affected by military activity in the Persian Gulf.
5. Incoming tourism in the entire Middle East (including Cyprus, Jordan, Egypt, Turkey, Israel) will obviously face very large cancellations, perhaps on the order of 40-90%.
Timeline
We expect US action to occur between late November 2006 and June 2007, but the timeline is flexible. Options narrow as we approach the 2008 Presidential election.
Indicators
1. A US-led, multinational sanctions of Iran sanctioned by the Security Council (or other organisation, such as the IAEA) that sparks a "hot" war;
2. An unexplained, unanticipated terrorist attack (which could even take a dimension similar to the Gulf of Tonkin incident);
3. Increased pre-positioning and deployment of US assets in the region;
4. Increasing rhetoric and/or an ultimatum to "disarm or else";
Risk Mitigation
We do not believe that Cyprus will be directly attacked. There is a remote possibility that Iran could attack the British Bases to prevent US re-supply, but this is unlikely for various reasons, chiefly technical. Nevertheless, by virtue of its geographic position, Cyprus should anticipate the following effects:
