Markets were extremely jittery this week, awaiting a retaliatory attack by Iran following the Israeli strike on Tehran's embassy in Syria, which killed a key Iranian general and other diplomats/military personnel. Israel is preparing for an attack, both at home and in proxy venues.
But Tehran is already showing signs that it's attempting to back down without losing face. It would not survive a direct attack on Israel and all that would entail in terms of blowback. The only way it would potentially survive the aftermath of an attack on Israel would be if this becomes an all-out regional war scenario, but the allies game is a tricky one in the region right now, and the GCC countries will find themselves in quite a bind.
Tehran is walking things back with a choreographed PR campaign that has shifted focus to building a nuclear bomb. It's been a wildly successful campaign that has generated end-of-the-world headlines suggesting that Iran is only days away from having nuclear weapons capabilities. That was the narrative earlier on Thursday. Later on Thursday, Iran seemed to walk things back even further, with its Foreign Minister telling Germany that it would respond to Iran in an "appropriate" and limited way (as reported by Axios, citing an unnamed source). Another unnamed source linked to U.S. intelligence told Reuters that Iran has made it clear it is not planning something escalatory and would use its proxies against Israel.
This takes the pressure off of…
Markets were extremely jittery this week, awaiting a retaliatory attack by Iran following the Israeli strike on Tehran's embassy in Syria, which killed a key Iranian general and other diplomats/military personnel. Israel is preparing for an attack, both at home and in proxy venues.
But Tehran is already showing signs that it's attempting to back down without losing face. It would not survive a direct attack on Israel and all that would entail in terms of blowback. The only way it would potentially survive the aftermath of an attack on Israel would be if this becomes an all-out regional war scenario, but the allies game is a tricky one in the region right now, and the GCC countries will find themselves in quite a bind.
Tehran is walking things back with a choreographed PR campaign that has shifted focus to building a nuclear bomb. It's been a wildly successful campaign that has generated end-of-the-world headlines suggesting that Iran is only days away from having nuclear weapons capabilities. That was the narrative earlier on Thursday. Later on Thursday, Iran seemed to walk things back even further, with its Foreign Minister telling Germany that it would respond to Iran in an "appropriate" and limited way (as reported by Axios, citing an unnamed source). Another unnamed source linked to U.S. intelligence told Reuters that Iran has made it clear it is not planning something escalatory and would use its proxies against Israel.
This takes the pressure off of Tehran to launch an attack of greater magnitude than Israel's (unclaimed) attack on Iran's embassy in Damascus. Our assessment is that Iran will not directly attack Israel and that the nuclear shift is how it's getting out of it and hoping to still look strong. Tehran may move to attack Israel by proxy, as both have been doing extensively in Lebanon, Syria, Iraq, the Red Sea, etc. Several days ago, Tehran said Israeli embassies were not safe-but where, and who will allow it? For now, this conflict is likely to stay on proxy terrain.
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