MEI Senior Vice President Gerald Feierstein and Senior Fellow Alex Vatanka join host Alistair Taylor to discuss the rapid rise of tensions between the US and Iran this week,  the political calculations being made by each side, and where things could go from here.

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Alistair Taylor [00:00:10] Welcome to Middle East focus. I'm Alistair Taylor MEI's editorial director and today we're going to be talking about the rapid rise in tensions between the U.S. and Iran. To discuss the current situation and where things might go from here, I'm joined by two of my colleagues, Alex Vatanka and Jerry Feierstein. Alex is a senior fellow here at MEI and Jerry is MEI's senior vice president. Alex, Jerry thank you both for joining me today. And welcome back to the program.

Gerald Feierstein [00:00:35] It's a pleasure.

Alex Vatanka [00:00:36] Thank you.

Alistair Taylor [00:00:37] Alex let's dive right in as there's a lot to discuss. Over the past few days there's been a steady escalation in tensions between the U.S. and Iran playing out in the Gulf. What's driving this. And where do things stand now.

Alex Vatanka [00:00:48] You know Alistair as we came to the first anniversary of the decision by the Trump administration to kind of pull out from the 2015 nuclear agreement and the decision by the Trump administration to introduce more sanctions. And on top of that the Iranians being disappointed in what they felt was very slow European sort of assistance to them because let's not forget that the Iranians have been waiting all along the last year hoping that Europe somehow could do enough to provide for Iran's economic needs that would justify Iran staying in the nuclear deal even though the Trump administration had taken the U.S. out of it. Now when it came to the first anniversary the Iranians felt the Iranian side felt that the Europeans weren't doing enough that American pressure was just piling on. And they had to do something and that something was their decision to partially withdraw from parts of the nuclear agreement.

Alex Vatanka [00:01:47] And this as we've seen over the last few days escalated with mostly--and this is important to stress--mostly a war of words brinkmanship on both sides and from all I can tell fundamentally, in the big picture, Tehran does not want war with the United States. They don't underestimate what that could potentially mean which in worst case scenario from their perspective would be the end of the Islamic Republic as you know it. On the U.S. side I would probably have to take people like Secretary Pompeo at their word when they say they're not interested in war either. I don't think the U.S. takes the option of going to war with Iran likely either so that leaves me to sort of think at least for right now we're seeing both sides flexing muscle mostly obviously in the region and around the Persian Gulf area. And the only danger is that this escalation and war of words by accident becomes a hot war. We're not there yet but that's the danger.

Alistair Taylor [00:02:55] Jerry I want to ask you about some of the specifics of this muscle flexing in and around the region starting with the events on Sunday. Four ships, Saudi Emirati and Norwegian vessels, were damaged off the coast of Fujiwara in what the UAE government calls an act of sabotage. How much do we know about what happened there at this point.

Gerald Feierstein [00:03:15] Well it's under investigation. I think that we've seen some photos of at least some of the ships and they did apparently suffer some relatively minor damage. Nothing that either threaten the integrity of the ship resulted in an oil spill or of course caused any loss of life. So they were relatively minor in scale. They're being investigated and of course the Central Command has said that they are cooperating and coordinating with the UAE government on the investigation.

Alistair Taylor [00:03:52] How significant is the location where this happened. Fujiwara is a major regional port. It's a major center for bunkering of oil I know as well. But it struck me that the significant thing is that it's actually outside the Strait of Hormuz which is the flashpoint that everyone normally points to when they think about risks associated with the Gulf and oil in Iran.

Gerald Feierstein [00:04:12] Well let me first make the point that I agree entirely with Alex's analysis and to also draw in the second event over the last few days which was the alleged Houthi drone attack on a Saudi oil pipeline. And you're absolutely right on both of these points. If we go back and look at Javid Zarif's visit to the United States at the end of April he was in New York. He made a very well publicized speech to the Asia Society in which he said basically that if there is an effort on the part of the United States to bleed Iran to death then Iran had options, Iran would retaliate. And he went on to say Iran would retaliate against first and foremost the UAE and Saudi Arabia. So right after that we've seen these two kind of mystery events occur and the significance of them is exactly as you said that both of them were outside the Strait of Hormuz the pipeline that was attacked was in fact the pipeline that allows Saudi Arabia to bypass the strait and to export its oil directly from the Arabian Sea. The attack on the ships again outside the Strait of Hormuz and it seems to me although it's not established and the United States has been very careful to not say that we are convinced that Iran was behind this but if it was indeed to be established that it was an Iranian attack then I would say that the significance is that the Iranians were demonstrating to the United States as well as to Saudi Arabia and the UAE that they do have that capability and that they can strike Saudi and Emirati assets outside the strait and interrupt the flow of oil and upset the global energy market.

Alistair Taylor [00:06:30] If you're sitting in Riyadh right now how concerned are you about oil infrastructure security.

Gerald Feierstein [00:06:35] Well you know there have been concerns about Saudi Arabia's oil industry and infrastructure for many many years. We've been working with the Saudis to help improve their critical infrastructure protection. This has been a high priority for both of our countries. Remember there was a failed terrorist attack on the huge Abqaiq oil facility over 10 years ago. And as a result of that we really identified what these vulnerable facilities are and have worked at improving their security. But nevertheless there have been attacks. There was a very well known cyber attack against Aramco. There have been other kinds of attacks and I would have to say that depending on the nature of the threat even though they are much stronger and robust today than they were 10 years ago they're still vulnerable.

Alistair Taylor [00:07:36] Alex, on Wednesday the U.S. State Department ordered all non-emergency U.S. government employees out of Iraq. And according to media reports U.S. officials claim that there is intelligence that Iran has greenlit attacks on U.S. forces in the region. What do you make of that. How credible does that seem to you.

Alex Vatanka [00:07:53] I would argue that if you monitor what the Iranians are saying right now in terms of their options it's very clear to me that you know having proxies in Iraq fire off rockets and targeting U.S. forces would be the kind of escalation that the Iranians are trying to exactly avoid. So I I'm skeptical although obviously I don't have access to classified material and what the US government is able to detect in terms of what's going on in Iraq and I would also say this if you are Iran and you feel that perhaps the U.S. has certain military intentions by perhaps generating certain chatter moving troops or forces around deliberately allowing that to be picked up by the U.S. to sort of let the other side know, Washington that is, that you know the Iranians are preparing to retaliate again as a way of shaping the calculations of the US and perhaps allies in the region I'll probably include the Iraqi government as part of that camp. But fundamentally I don't see the Iranians are going to embark on the kind of because you know having proxies in Iraq hit U.S. forces would represent a major escalation. And I don't think the Iranians want to go there yet. And to Jerry's point you know what we've seen with the vessels off the coast of Fujiwara in the Gulf of Oman. If it turns out to be the Iranians there's two things here. The damages are relatively small presumably they could have sunk those vessels if they wanted to. Deliberately it seems to be designed in such a way to make a point but then take a step back. Having made the point. And I would say when I look at the military posture of of the Iranian regime overall, while they obviously believe their use and the availability of proxies they have in the region is certainly a positive from their point of view when it comes to--if it comes to a confrontation militarily with the United States they have always argued their strength is bringing the United States into the homeland if you will-what they call the quagmire-and then proceed to to sort of attack the U.S. forces within Iranian soil. I think they feel much more comfortable on that front than being able to pursue a comprehensive region wide military lasting military campaign against the United States. They simply don't have the resources for that at the best what they can do is kind of a hit and run operations which will not be a lasting campaign. So if I could put it to this way in a in a scenario where U.S. and allies go to war with each other I would envisage the Iranian regime probably would feel it would be better placed to make the United States bleed if the United States actually enters the Iranian homeland and obviously we're far from that point right now.

Alistair Taylor [00:11:21] Absolutely. Jerry, taking a step back, what do rising U.S. Iran tensions mean for the region more broadly. It seems like as as Alex touched on Baghdad is probably in the most precarious situation of anyone but what's your kind of read on on the region as a whole.

Gerald Feierstein [00:11:36] Well certainly it's kind to to raise tensions across the border. If you're if you're looking at any kind of a political way forward in Yemen it's going to make it somewhat more complicated particularly if the Iranians are encouraging the Hutus to escalate their attacks across the border into Saudi Arabia and potentially into the UAE. It also of course raises tensions in the north between Israel and Iran in Syria between Israel and Hezbollah. Israel and Hamas all of those areas and again it goes back to this point that if the Iranians decide for whatever reason that that they are now in a situation where they need to retaliate where they need to raise the ante for all of the forces that they see encircling them not only Saudi Arabia UAE although they would see those as the softest targets but also U.S. forces Israel. There are many different in areas many different fronts so that they could exploit many different militias and and affiliated organizations like Hezbollah, the Houthis, Palestinian Islamic Jihad, that they could use in order to increase the price and increase the pressure on what they see as their opponents.

Alistair Taylor [00:13:20] Jerry, it seems like there's been some pretty mixed signals on both sides. On the one hand Trump basically said last week that the Iranians just needed to call him and on the other hand we've got this kind of sharp ratcheting up of tensions. Is this the sort of good cop bad cop routine? Does this reflect the kind of broader dispute within the administration? What's your kind of take on that?

Gerald Feierstein [00:13:41] Well I can say that that what the Iranians believe based on Zarif comments while he was here is that they do believe that there is a difference within the administration and that they believe that Donald Trump wants to use this maximum pressure campaign on them in order to force them back to the negotiating table. They don't believe that Donald Trump is personally looking for a conflict. They distinguish that from what Zarif referred to in his Asia Society speech as the B team by which he meant John Bolton, Bibi Netanyahu, Mohammed bin Salman, and Mohammed bin Zayed. And he did accuse those four of trying to use this campaign as a way of forcing a conflict. so the Iranians do believe that that there may be a negotiating path forward with Trump although whether they see that now or prior to the November 2020 presidential election here in the United States is an open question.

Alistair Taylor [00:14:53] What is your sense of what the divides are like within the Iranian regime on this issue. Obviously in addition to what Foreign Minister Zarif said I've noticed that the supreme leader has also been trying to cool things down saying there would be no war, saying that, you know, we don't want it they don't want it either. What's your kind of sense on the divides in Tehran?

Alex Vatanka [00:15:13] I genuinely think that they're reading in Tehran that the United States as a whole is not right now ready or even willing to go to war with Iran. So I don't think Khamenei made that point in his speech this week lightly. In terms of differences within the Iranian regime, I think they haven't really shifted much despite the sort of increase in tensions and this war of words that we've seen the last couple of days. You have the supreme leader Ayatollah Ali Khamenei and you have the generals around him from the Revolutionary Guards who believe who have always believed that you have to speak to the United States from a position of strength, that if you give in to us the United States will simply come back to you and demand more. That if you give in on a nuclear issue, that was the argument all along, that there will be a point where the U.S. will come and say Well give us you know concessions on A and B and C as well. What are you doing in the region. Why are you this way at home and so on. That's the line of argument by the hardliners and I put the two principal actors within the hardline camp together on this Khamenei, the supreme leader, and the Revolutionary Guards. Now the other side in the presidential palace in the shape of Hassan Rouhani and his foreign minister Javad Zarif. You know they probably are much more inclined to sort of want to talk to the United States less categorical in their sort of posturing about what are you short of meeting United States from a position of strength or not. They probably don't get too worked up about some of those sort of issues. But having said that when we talk about a potential round of talks between the Iranians and the Trump administration both sides frankly would need to show flexibility. If you look at the trump administration's list of demands from May of 2018 which are basically twelve demands about what Iran does in terms of its nuclear program missile program what it does in the region. And they subsequently added a third point the 13th point which is about Iranian human rights violations at home. If you put that list together and you want that to be the starting point of talks with the Iranians it's really hard to see how that can ever fly. It amounts to asking the Iranians before the talks start that they agree that they're going to entirely change they make up the nature of the regime. It won't be called Islamic Republic any more once they do that and obviously as the Iranian regime feels he is hasn't reached that point yet that it can try and get itself out of this position. And one of the things they're clearly doing right now because I totally agree with what Jerry said they don't think President Trump wants to go to war with them. And they have identified three countries as essentially shaping if not dictating American Middle East policy right now in those three countries or Israel Saudi Arabia the United Arab Emirates. That is the view in Tehran whether we like it or not doesn't matter. That's how the Iranians look at it. So it's not a coincidence that over the course of the last month we've had the Iranians cheering on Islamic Jihad with its rocket fire from Gaza into Israel. And an Iranian promise that maybe these Palestinians one day shoes will have better missiles to aim at Israel with which is a clear threat to the Israelis which Israeli government has recognized publicly recognized that this is probably one way that Iran will get to Israel. And you know on top of that we had the attacks on the vessels off the coast of UAE and the oil pipeline in Saudi Arabia. All of them are relatively speaking from an Iranian point of view only signals only attempts to get their attention at least three countries to get them to get to Trump and say OK maybe we should change shift here and do something different than we've done because you know it's it's potentially getting out of control at least that is what I think the driving forces in Tehran are are you busy trying to put together what are you going to succeed or not. I don't know. But let me just add one other point because we talked about what are you run was involved in the attack on the vessels on time will show if that's the case or not but the fact is they were advertising it before anybody else. The Iranians and the Russian media were the first ones to advertise these attacks and we've had prominent Iranian members of the parliament in that country talk about you know how weak the security situation is in some of these Arab states of the Persian Gulf. Again a pretty explicit threat that if you continue egging the United States on to come to war against Iraq we will come back and the potential conflict to be had will not be limited to Iranian soil. But you know what are these are going to shape calculations in places like Riyadh Abu Dhabi or Jerusalem. I don't know but that's at least what I think the Iranians are trying to do.

Alistair Taylor [00:20:34] Seems like the message is you've got a really nice oil pipeline there, it'd be a shame if something happened to it. Jerry you look like you wanted to comment on what Alex had to say.

Gerald Feierstein [00:20:43] No I agree completely with his comments. Yeah.

Alistair Taylor [00:20:48] What's the role of the Europeans in all of this. I know Secretary Pompeo was in Brussels this week kind of last minute change of plans seem designed to sort of present a united front. Didn't really go to plan. Is there any hope of kind of bridging the divide at least in a short term basis between the U.S. and Europe on this.

Gerald Feierstein [00:21:06] Well my understanding of Pompeo's trip to Brussels and the meetings with the British French and German foreign ministers, serially, not together, was twofold. One he wanted to brief them on what we understood of the intelligence that we've gathered what we believe is what is going on in the region and then he also clearly wanted to to demonstrate that in fact there is broad support for the U.S. approach. I think that the first point my understanding is that indeed the the three foreign ministers heard his comments and were and we're very concerned about about the intelligence but they're also very concerned about what the United States is doing. And it was pretty clear that from their perspective they absolutely don't want to see this situation deteriorate further. They're concerned by what both sides are doing in terms of ratcheting up the tension and they would like to see this whole issue put back in the box. And I think it's equally instructive that the Spanish pulled one of their naval vessels out of the out of the supporting vessels accompanying the USS Abraham Lincoln on its way into the Gulf. And while they didn't say so explicitly. There certainly have been reports that their rationale for doing that was that they didn't want to be drawn into a U.S. Iranian conflict. They wanted to stay away and so I think that what that should demonstrate to Washington is that if they if the situation does deteriorate further if there is some kind of a hot war between the U.S. and Iran the Europeans are very likely to say that they're going to sit this one out.

Alistair Taylor [00:23:10] Alex we're running short on time here but where do you see things going from here.

Alex Vatanka [00:23:15] I think the Iranians are hoping that they will be getting the Europeans to give them enough economic assistance if you will trade enough with them that they can prevent further economic pain at home. I mean one of the things we haven't really discussed and this is the great unknown in many ways is what are the Trump administration's Iran strategy is actively trying to instigate unrest within Iran. One thing is to put sanctions on them and hope that there will be a revolution of sorts inside Iran. Another way is if you have an intelligence led operation that is actively trying to come to that you know objective. I don't know the answer to that but certainly the Iranians feel that if there is more money coming in from the export of say crude oil and trade with Europe that would give them more time. Having said that it seems to me they are losing hope in Europe for whatever reason whatever it's structural or other factors. The Europeans are from at least in the Iranian perspective acting very slowly which really leaves the Iranians in a position to have to come to this reality that they've tried to avoid for so long which is Is there a way to talk to Trump directly because if we don't then you know we can't rely on the Europeans and who on earth could could we talk to us as someone that can mediate the Russians the Chinese there aren't many good candidates out there. So I wonder it's getting to a point where they realize this this individual in the White House is not someone they like like can they really afford to wait for another two years for the next U.S. election. What if Trump is reelected. Can this Iranian economy in this country of 80 million people under the most severe sanctions ever seen in history of man wait another six more years. I don't know if they are that courageous that bold in their own capability so I you know it might come to a point where they might surprise us and reach out to Trump and talk to him see if there is a way to talk to him because the alternative is not pretty.

Alistair Taylor [00:25:27] Jerry any final thoughts?

Gerald Feierstein [00:25:29] Yeah I think that's right. What I would say is that while Zarif was here in the U.S. He did tell people that that the Iranian calculation is that Donald Trump will be re-elected in 2020. And that they do anticipate that there's going to be six more years of economic pressure. They also of course have talked about the number of times they claim that the administration has tried to contact them to engage them in some kind of a discussion and the fact that that they for their part have refused those openings and an outreach and and whether or not the Iranians can withstand this kind of of pressure for two more years six more years research only remains to be seen. Zarif was clear that the Iranians believe they will still be able to export oil regardless of the U.S. sanctions. Certainly if you look at previous efforts I was involved of course in the efforts through the 1990s up until 2003 of cutting off Iraqi oil exports never succeeded despite full on effort with the support of the international community to try to accomplish that. I think that that the Iranians want to demonstrate to the U.S. and to our allies and partners in the region that one they are resilient and will be able to withstand whatever pressure we put on them. And to that as Zarif said if they feel that they're being bled to death they will not go down by themselves they're going to take others with them. And I think that that's exactly where we are right now. It goes back to Alex's first observation and that is that you know the real risk here is not that the parties won a war and turned to go to war but you are on a escalatory slope here where even a miscalculation can lead you in a direction you don't want to go in.

Alistair Taylor [00:27:51] We'll have to leave it there but this is obviously a situation we'll be continuing to watch closely going forward. Jerry, Alex, thank you again for joining us on the program today.

Gerald Feierstein [00:28:00] My pleasure.

Alex Vatanka [00:28:01] Thank you Alistair.

Alistair Taylor [00:28:01] And thank you as well to our audience for listening in and to our production team for their work on today's program. We will see all of you next week.