It’s tempting to see Sunday’s declaration that all holders of US Treasuries are now legitimate targets of violent retaliation as a clear escalation.
Iran has – attacking US bases in the region as far as Cyprus, restricting traffic through the Strait of Hormuz, attacking Israeli communities near secret nuclear research sites, and threatening to destroy critical infrastructure in Gulf countries—already escalated to levels that many observers, including the White House, apparently did not foresee.
And with the absence of clear platforms off-limits, and with Iran now under the impression that concessions or performative responses only invite further attacks from the US and Israel, it stands to reason that this conflict could accelerate further – in new and deadly ways.
However, there is reason to think that Iran will not make good on this specific threat, regardless of what the US does in the coming days.
For one, the “financial entities that finance the US military budget” extend far beyond the American, or Western, institutions that Iran would be inclined to blame as US collaborators (regardless of their current perspective on the conflict).
Entities linked to the People’s Republic of China have reduced their holdings significantly over the past decade and a half, from a peak of more than 9% in 2011 to somewhere north of 2% today. It is true that the PRC has not exactly rushed to Iran’s defense since the start of the war, but aggression against a country that shares the Iranians’ goal of undermining US global hegemony is not in Iran’s interest.
Nor is it in Iran’s interest to attack other debt holders less friendly to the Iranian cause, such as South Korea, Germany, the United Kingdom, or – the largest US debt holder of all – Japan.
For now, the US and Israel are going it alone in their campaign to cripple Iran as a threat – an effort that has done neither country’s international reputation any favors. Escalation to currently neutral countries carries unnecessary risks, namely that neutrality may become unsustainable.
Therefore, Ghalibaf’s statement can be read differently if one considers Tehran’s overall approach to the escalation of the conflict, along with the domestic conditions in both Iran and the US.
Iran cannot hope to defeat the US – much less the combined forces of the US and Israel – in combat, but the Tehran regime has the time to make the conflict intolerable for the Trump administration because it knows that its hold on power is more secure than that of its nemesis in Washington.
Donald Trump’s approval ratings have hovered somewhere between the mid-30s and low-40s for months, as his tariffs have failed to restore US manufacturing and American jobs, as the takeover of major US cities by Immigration and Customs Enforcement has made headlines for all the wrong reasons, and as the administration has more problems handling the president’s files.
The poll points to a serious hurdle ahead for Trump starting this fall, with the main question being whether his party can hang on to its hold on the Senate once its narrow House majority is gone.
Perhaps expected to produce a rally-around-the-flag effect upon the declaration of conflict — as both Presidents Bush experienced with the start of their wars with Iraq — Trump’s Iran campaign has faced widespread disapproval from the start, with Democrats and independents, and even a narrow (but sensitive) section of his former supporters denouncing him.
Compare this to Iran. The initial statements from the president encouraged an uprising by the Iranian people, perhaps expected after their recent displays of discontent. In addition, Israel is said to have tried to pave the way for a Kurdish offensive.
None of this has happened, however, as Iranian protesters cannot see a path to overthrowing the regime and Kurdish aspirations are, as ever, undermined by complex regional dynamics.
Iran’s Islamic Revolutionary Guard Corps remains as omnipresent and firmly in control of domestic politics as ever. The Iranian opposition is divided and distrustful of US intent.
Whether the shots are called by the son of the recently deceased Ayatollah Khamenei, the IRGC leadership, or Ghalibaf himself, there is no serious prospect of reform that will lead to an erosion of Iran’s theocratic autocracy under current conditions—at least, barring a large-scale invasion that would risk tremendous loss of life.
Iran has pushed this advantage by restricting the strait and sending gas prices spiraling, effectively asking the Americans how long they can tolerate this conflict. Gas prices have already risen about 30 percent since the conflict began.
It would make sense for the US to seek an exit ramp rather than allow this to continue. The question is whether Washington will capitulate before it is certain that Tehran will allow traffic through the Strait again, before Iran backs down on its maximalist demands, and in the full knowledge that Operation Epic Fury may have only strengthened Iran’s regional position.
Holders of US debt probably won’t take the speaker’s bait. But even a small erosion of confidence in the US position, coupled with the growing pain Americans now feel at the pump, serves Tehran’s interests – which gives up very little in trying to advance those interests.
How the US can counter the impact of such financial and political warfare tactics in the future will be one of the great challenges for US policymakers in the coming years.
Rob York PhD is director of regional affairs at the Pacific Forum in Honolulu.
