This article was first published on the Stratfor website.
The author, George Friedman, is chairman and CEO of Stratfor, the
world’s leading online publisher of geopolitical intelligence

A small number of Iranian troops entered Iraq, where they took control of an oil well and raised the Iranian flag Dec. 18. The Iranian-Iraqi border in this region is poorly defined and is contested,
with the Iranians claiming this well is in Iranian territory not
returned after the Iran-Iraq War. Such incidents have occurred in the
past. Given that there were no casualties this time, it therefore would
be easy to dismiss this incident, even though at about the same time an
Iranian official claimed that Iraq owes Iran about $1 trillion in
reparations for starting the Iran-Iraq War.

But what would be fairly trivial at another time and place is not trivial now.

Sending a Message With an Incursion

Multiple sources have reported that Tehran ordered the incident. The
Iranian government is aware that Washington has said the end of 2009
was to be the deadline for taking action against Iran over its nuclear
program — and that according to a White House source, the United States
could extend that deadline to Jan. 15, 2010.

That postponement makes an important point. The United States has
treated the Iran crisis as something that will be handled on an
American timeline. The way that the Obama administration handled the
Afghanistan strategy review suggests it assumes that Washington
controls the tempo of events sufficiently that it can make decisions
carefully, deliberately and with due reflection. If true, that would
mean that adversaries like Iran are purely on the defensive, and either
have no counter to American moves or cannot counter the United States
until after Washington makes its next move.

For Iran, just to accept that premise puts it at an obvious
disadvantage. First, Tehran would have to demonstrate that the tempo of
events is not simply in American or Israeli hands. Second, Tehran would
have to remind the United States and Israel that Iran has options that
it might use regardless of whether the United States chooses sanctions
or war. Most important, Iran must show that whatever these options are,
they can occur before the United States acts — that Iran has axes of
its own, and may not wait for the U.S. axe to fall.

The incursion was shaped to make this point without forcing the United States into precipitous action. The location
was politically ambiguous. The force was small. Casualties were
avoided. At the same time, it was an action that snapped a lot of people to attention.
Oil prices climbed. Baghdad and Washington scrambled to try to figure
what was going on, and for a while Washington was clearly at a loss,
driving home the fact that the United States doesn’t always respond
quickly and efficiently to surprises initiated by the other side.

The event eventually died down, and the Iranians went out of their
way to minimize its importance. But two points nevertheless were made.
The first was that Iran might not wait for Washington to consider all
possible scenarios. The second was that the Iranians know how to raise
oil prices. And with that lesson, they reminded the Americans that the
Iranians have a degree of control over the economic recovery in the
United States.

There has never been any doubt that Iran has options in the event
that the United States chooses to strike. Significantly, the Iranians
now have driven home that they might initiate a conflict if they assume
conflict is inevitable.

U.S. and Iranian Options

Iran’s problem becomes clear when we consider Tehran’s options. These options fall into three groups:

1. Interdicting the flow of oil through the Strait of Hormuz and Persian Gulf through the use of mines and anti-ship missiles. This would result in a dramatic increase in world oil prices on the
   Iranian attempt alone and could keep them high if Tehran’s efforts
   succeeded. The impact on the global economy would be substantial.
2. Causing massive destabilization in Iraq. The
   Iranians retain allies and agents in Iraq, which has been experiencing
   increased violence and destabilization over the past months. As the
   violence increases and the Americans leave, a close relationship with
   Iran might be increasingly attractive to Iraqi troops. Given the
   deployment of American troops, direct attacks in Iraq by Iranian forces
   are not out of the question. Even if ultimately repulsed, such Iranian
   incursions could further destabilize Iraq. This would force the Obama
   administration to reconsider the U.S. withdrawal timetable, potentially
   affecting Afghanistan.
3. Use Hezbollah to initiate a conflict with Israel, and as a global tool for terrorist attacks on American and allied targets. Hezbollah is far more sophisticated and effective than al Qaeda was at
   its height, and would be a formidable threat should Iran choose — and
   Hezbollah agree — to play this role.

When we look at the three Iranian options, it is clear that the
United States would not be able to confine any action against Iran to
airstrikes. The United States is extremely good at air campaigns, while
it is weak at counterinsurgency. It has massive resources in the region
to throw into an air campaign and it can bring more in using carrier
strike groups.

But even before hitting Iran’s nuclear facilities, the Americans
would have to consider the potential Iranian responses. Washington
would have to take three steps. First, Iranian anti-ship missiles and
surface vessels — and these vessels could be very small but still able
to carry out mine warfare — on the Iranian littoral would have to be
destroyed. Second, large formations of Iranian troops along the Iraqi
border would have to be attacked, and Iranian assets in Iraq at the
very least disrupted. Finally, covert actions against Hezbollah assets
— particularly assets outside Lebanon — would have to be neutralized to
the extent possible.

This would require massive, coordinated attacks, primarily using
airpower and covert forces in a very tight sequence prior to any attack
on Iran’s nuclear facilities. Without this, Iran would be in a position
to launch the attacks outlined above in response to strikes on its
nuclear facilities. Given the nature of the Iranian responses,
particularly the mining of the Persian Gulf and Strait of Hormuz, the operations could be carried out quickly and with potentially devastating results to the global economy.

From the Iranian standpoint, Tehran faces a “use-it-or-lose-it”
scenario. It cannot wait until the United States initiates hostilities.
The worst-case scenario for Iran is waiting for Washington to initiate
the conflict.

At the same time, the very complexity of an Iranian attack makes the
United States want to think long and hard before attacking Iran. The
opportunities for failure are substantial, no matter how well the
attack is planned. And the United States can’t allow Israel to start a
conflict with Iran alone because Israel lacks the resources to deal
with a subsequent Iranian naval interdiction and disruptions in Iraq.

It follows that the United States is interested in a nonmilitary
solution to the problem. The ideal solution would be sanctions on
gasoline. The United States wants to take as much time as needed to get
China and Russia committed to such sanctions.

Iranian Pre-emption

The Iranians signaled last week that they might not choose to be
passive if effective sanctions were put in place. Sanctions on gasoline
would in fact cripple Iran, so like Japan prior to Pearl Harbor, the
option of capitulating to sanctions might be viewed as more risky than
a pre-emptive strike. And if sanctions didn’t work, the Iranians would
have to assume a military attack is coming next. Since the Iranians
wouldn’t know when it would happen, and their retaliatory options might
disappear in the first phase of the military operation, they would need
to act before such an attack.

The problem is that the Iranians won’t know precisely when that
attack will take place. The United States and Israel have long
discussed a redline in Iranian nuclear development, which if approached
would force an attack on Iran to prevent Tehran from obtaining nuclear
weapons. Logically, Iran would seem to have a redline as well, equally
poorly designed. At the point when it becomes clear that sanctions are
threatening regime survival or that military action is inevitable, Iran
must act first, using its military assets before it loses them.

Iran cannot live with either effective sanctions or the type of
campaign that the United States would have to launch to take out Iran’s
nuclear facilities. The United States can’t live with the consequences
of Iranian counteractions to an attack. Even if sanctions were
possible, they would leave Iran with the option to do precisely those
things Washington cannot tolerate. Therefore, whether the diplomatic or
military route is followed, each side has two options. First, the
Americans can accept Iran as a nuclear power, or Iran can accept that
it must give up its nuclear ambitions. Second, assuming that neither
side accepts the first option, each side must take military action
before the other side does. The Americans must neutralize counters
before the Iranians deploy them. The Iranians must deploy their
counters before they are destroyed.

The United States and Iran are both playing for time. Neither side
wants to change its position on the nuclear question, although each
hopes the other will give in. Moreover, neither side is really
confident in its military options. The Americans are not certain that
they can both destroy the nuclear facilities and Iranian counters — and
if the counters are effective, their consequences could be devastating.
The Iranians are not certain that their counters will work effectively,
and once failure is established, the Iranians will be wide open for
devastating attack. Each side assumes the other understands the risks
and will accept the other’s terms for a settlement.

And so each waits, hoping the other side will back down. The events
of the past week were designed to show the Americans that Iran is not
prepared to back down. More important, they were designed to show that
the Iranians also have a redline, that it is as fuzzy as the American
redline and that the Americans should be very careful in how far they
press, as they might suddenly wake up one morning with their hands full.

The Iranian move is deliberately designed to rattle U.S. President
Barack Obama. He has shown a decision-making style that assumes that he
is not under time pressure to make decisions. It is not clear to anyone
what his decision-making style in a crisis will look like. Though not a
prime consideration from the Iranian point of view, putting Obama in a
position where he is psychologically unprepared for decisions in the
timeframe they need to be made in is certainly an added benefit. Iran,
of course, doesn’t know how effectively he might respond, but his
approach to Afghanistan gives them another incentive to act sooner than
later.

There are some parallels here to the nuclear warfare theory, in
which each side faces mutual assured destruction. The problem here is
that each side does not face destruction, but pain. And here,
pre-emptive strikes are not guaranteed to produce anything. It is the
vast unknowns that make this affair so dangerous, and at any moment,
one side or the other might decide they can wait no longer.