[R-G] Financial Meltdown Defuses Military Options on Iran

[Yoshie Furuhashi]

<http://www.reuters.com/article/newsOne/idUSTRE49K6Q920081021>
Financial meltdown defuses military options on Iran
Tue Oct 21, 2008 3:36pm EDT
By Dan Williams - Analysis

LONDON (Reuters) - The global financial crisis has eclipsed Western
jitters over Iran's nuclear program and may have put paid to the
possibility of the United States or Israel resorting to preemptive
military strikes.

To bomb Iranian sites now, diplomats and analysts say, would risk
triggering an even more intolerable tumult should Tehran choke off oil
exports -- something neither U.S. President George W. Bush nor his
imminent successor looks likely to countenance.

With the U.N. Security Council in stalemate after Russia and China
balked at initiatives to pass a fourth round of sanctions against
Iran, Western powers may be forced to focus on diplomatic engagement
and economic incentives instead.

That would leave Israel, which has vowed to deny Iran the means to
threaten its existence, with a stark choice between launching
unilateral attacks and being branded a warmonger or accepting the
prospect of an arch-enemy with nuclear weaponry.

"We have made it clear that an offensive option against Iran is not
something we want contemplated at this time," said a U.S. diplomat who
has had extensive dealings with Israel.

Some analysts suggest Israel could strike after the November 4 U.S.
election but before Barack Obama or John McCain becomes president in
January, to avoid alienating American voters while capitalizing on the
parting largesse of the Bush White House.

Yet there are already signals of a softening in Washington's hard line
on Iran, which insists its atomic ambitions are peaceful -- for
example, a State Department proposal to open an interests section in
Tehran, perhaps as early as next month.

Sam Gardiner, a retired U.S. air force colonel who runs wargames for
government agencies, said the banking meltdown and non-Middle Eastern
crises such as the Russian-Georgian conflict and escalating American
operations against al Qaeda targets on the Pakistan-Afghanistan border
had overhauled American agendas.

Whether the new president is the conciliatory Obama or more hawkish
McCain, he will inherit foreign policy priorities that stress
containment or cooperation on Iran, Gardiner said.

"The consensus among American decision-makers is that bombing Iran is
not the path to pursue right now. I see players being more and more
cautious about the consequences to fragile economies of an oil spike,"
Gardiner said.

U.S. military commanders have long voiced misgivings about the idea of
opening a front with Iran that would sap the resources of their
protracted campaigns in Iraq and Afghanistan.

BLOOD AND OIL

Though they have the planes needed for massive bombing runs, the
Americans' budgets, gutted by government bank bailouts, may find it
hard to fund a new war -- especially if ground troops are dragged in
or if Iran responds by stoking Iraq's insurgency.

"It stands to reason that it (an offensive against Iran) would be
expensive, and they (U.S. forces) are already doing a lot," said Mark
Stoker, a defense economist at the International Institute for
Strategic Studies in London.

One effect of the international money woes has been the sudden
slashing of oil costs by more than half from their July peak of $147 a
barrel. It is a silver lining for those who want to curb Iran, the
world's fourth-biggest producer of crude.

"We always thought that the best way to show up (Iranian President
Mahmoud) Ahmadinejad would be for oil prices to get cut dramatically,"
said a European government official.

Like Bush, Obama and McCain have said military force should remain an
option. Some experts argue that Iran, low on oil profits, is now be
especially vulnerable to effective air strikes and unlikely to mount
any major retaliation.

But Gardiner predicted the next White House would opt first of all to
toughen up sanctions -- say, by restricting Iran's refined fuel
imports -- ideally with Russia coaxed on board.

Few experts see Israel wanting to be blamed abroad for single-handedly
driving oil costs back up or drawing Iranian reprisals against U.S. or
Sunni Arab assets in the Gulf.

"A direct attack on Iran would be costly. There are other ways of
putting a price tag on their nuclear policy. It's not an
all-or-nothing, 'strike or appease' situation," said an Israeli
diplomat.

Outgoing Israeli Prime Minister Ehud Olmert has dismissed calls by
some of his cabinet colleagues for a unilateral attack on Iran as
"megalomania," saying on September 29 that Israel must "act within the
envelope of the international system."

That, diplomats said, referred to the Olmert government's lobbying of
foreign powers while sustaining the spectre of war via media leaks
about Israeli military readiness to hit Iran.

Olmert's heir-apparent, Foreign Minister Tzipi Livni, may prove to be
even more gun-shy. The Israeli newspaper Haaretz reported last year
that she had privately voiced doubts whether a nuclear-armed Iran
could threaten the survival of Israel, which is believed to have the
Middle East's only atomic arsenal.

(Editing by Alison Williams)