The US attacks on Iran have backfired horribly – but a path to peace is still possible | Simon Tisdall

Recent US and Israeli military actions against Iran, intended to curb its nuclear program and destabilize the regime, have reportedly backfired, strengthening hardliners and escalating internal repression, marked by a surge in political executions. These attacks have prompted Iran to suspend UN nuclear inspections, ironically heightened the risk of the country developing a nuclear weapon for self-defense, and pushed Tehran closer to non-Western alliances, exacerbating regional instability and setting a precedent for other states to act with impunity.

Analysis

Recent US and Israeli military actions against Iran have failed to achieve their strategic objectives of halting uranium enrichment or precipitating regime change, instead producing a series of counterproductive outcomes that heighten regional risk. The attacks have demonstrably strengthened the position of Iranian hardliners, leading to a severe internal crackdown on political dissent, evidenced by a surge in executions to over 600 this year, according to the UN. This internal consolidation, contrary to the attackers' intent, signals regime entrenchment rather than fragility. From a strategic standpoint, Iran has responded by suspending UN nuclear inspections, a move that obscures its atomic progress and, paradoxically, increases the likelihood it will pursue a nuclear weapon for defensive purposes. The geopolitical fallout includes a deepening of Iran's alliances with non-Western powers like China and Russia and a reinforced international perception of Western aggression, which could embolden other states to act with similar impunity. The strongly negative sentiment (-0.8) and high market impact score (0.7) associated with these events underscore the significant increase in systemic risk for global markets, particularly in the energy sector.

Key Decisions for Investors

• Investors should increase risk premiums for assets with exposure to Middle Eastern political instability, as the failure of recent military interventions suggests a prolonged period of heightened tension rather than a swift resolution.
• Monitor crude oil and energy markets for increased volatility, as Iran's suspension of UN nuclear inspections and the elevated risk of regional conflict introduce significant potential for supply-side shocks.
• Re-evaluate strategies based on the assumption of an imminent Iranian regime collapse; the article indicates that the current conflict has paradoxically consolidated the power of hardliners, making such bets highly speculative.
• Consider the long-term implications of Iran's strategic pivot towards China and Russia, which could reshape global energy flows, trade routes, and military alliances, impacting a wide range of sectors beyond energy.