Following a message from President Trump claiming "all is well", and another comment from Iranian Foreign Minister Javid Zarif claiming that Iran had "concluded" its reprisals for the killing of General Suleimani, markets have latched on to the belief that perhaps Iran is finished with its retaliation, while Trump appears to have found the "off ramp" that he was looking for.
But traders aren't the only ones betting on peace: Following the events of last night, journalists and regular people on the street have apparently started to realize that this isn't the beginning of WWIII after all.
But according to several analysts and Iran experts, anybody who thinks this is the end of it is being tragically naive.
Let's start with one of the most well-known journalists in the US, Iranian-American Yashar Ali, who delivered the following tweet thread warning the US that, if history is any guide, Iran's true reprisal will come in the form of a terror attack on civilians, likely carried out via proxies.
1. I want to express this carefully cause I don't want to minimize anything that results in loss of life. But missiles flying back/forth in Mid East is all too common (something US can handle) & not what makes me nervous about the Soleimani situation— Yashar Ali 🐘 (@yashar) January 8, 2020
Here's what makes me nervous https://t.co/F2LYk09m5w
2. What makes me nervous is illustrated in the WSJ story. The Iranian government has always operated on its own timeline. If you think Iran lobbing missiles over the border is the kind of revenge they ultimately have in mind, you're wrong. https://t.co/qeL7jkzQhd— Yashar Ali 🐘 (@yashar) January 8, 2020
3. Example: In 2012, assassins kill an Iranian nuclear chemist (likely directed by Israel). Iran promises revenge.— Yashar Ali 🐘 (@yashar) January 8, 2020
Where does the ultimate revenge take place?
A month later in Georgia, India and Thailand where Israeli diplomats are targeted with bombshttps://t.co/qeL7jkzQhd pic.twitter.com/qEkQP7ddG4
4. Example: In 1992, IDF killed the Sec General of Hezbollah— Yashar Ali 🐘 (@yashar) January 8, 2020
Where did Iran retaliate?
In Buenos Aires with a truck bomb driven into the Israeli embassy. That attack killed 29 people
Another attack two years later took place at the Jewish Community Center killing 85 people pic.twitter.com/DOZYWd26Tz
5. Those examples are pretty tight timelines for Iranians. The Iranian gov sees revenge as almost a generational thing...their timeline can be in months/years. Revenge always doesn't come via a show of force they take PUBLIC credit for.— Yashar Ali 🐘 (@yashar) January 8, 2020
6. So what I'm saying is all these people with their chest thumping, I would be cautious about what you see as Iranian revenge and unfortunately prepare yourselves for the kind of attacks that are unexpected, that don't follow a tight timeline, and show up where you least expect— Yashar Ali 🐘 (@yashar) January 8, 2020
7. If people think that this is it...that Iran has chosen to retaliate against the US for killing the second most powerful man in Iran, by lobbing some missiles across the border that didn't result in US casualties then I have a bridge to sell you https://t.co/urRMsYhZji— Yashar Ali 🐘 (@yashar) January 8, 2020
8. I can't believe I'm seeing people saying that this was a face saving move by Iran and now that there haven't been any US casualties, that we should move on.— Yashar Ali 🐘 (@yashar) January 8, 2020
The level of naivety is astonishing.
Do people really think this is how Iran is going to retaliate?
9. Read Jake’s tweet...for those of you thinking this is just a weak response from Iran & that they’re terrified of the US mil, ask yourself if this how a nation that has funded attacks globally would respond to the killing of its most important Generalhttps://t.co/Tg8Ra6YLRg https://t.co/aSDXWQquHv— Yashar Ali 🐘 (@yashar) January 8, 2020
10. That may very well be true, but if people think this is the only way Iranians will respond then they’re unaware of the reality. So while POTUS is taking the off ramp, the Iranians will sit and wait and do what they want and when they want to do it. https://t.co/Ff4xhBHo88 https://t.co/lKdGyEKMA5— Yashar Ali 🐘 (@yashar) January 8, 2020
11. The problem is so many people have thought about this situation through the lens of conventional warfare. So they believe if there is no conventional warfare that the situation has deescalated.— Yashar Ali 🐘 (@yashar) January 8, 2020
But conventional warfare should have never been the concern!
Indeed, CNBC adds that blowback from Iran could continue for years, and could come in the form of covert diplomatic action, cyberterrorism or even a more conventional attack.
If President Trump is suitably respectful during his expected address to the nation on Wednesday, then Iran might deliver another "overt response" in the coming days. Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace, warned of such a response in an interview with CNBC.
But if Trump gloats about how the US killed one of their top generals, and all they did was blow up a bunch of rockets in the desert, then it's possible that a furious Tehran could ratchet up the conventional weapons response.
Blanc said: "If he gloats that, you know, we’ve killed a top Iranian general and all they’ve done is hit the desert, he greatly increases the chances that there will be a further, overt response from Iran and again, increase the chance of a rapid escalation toward a really large scale conflict in the region."
If Trump doesn't gloat, then it's possible that could help defuse the situation, at least in the short term.
"If he manages to keep the gloating to a minimum, it’s possible that the large scale, overt response has been satisfied and we move again into the more covert responses which, while terrible and potentially very damaging, don’t quite pose the same risk of war in the short term."
But even if Trump doesn't say anything to offend the Iranians, Blanc believes that it's "almost inconceivable" that this is the last of Iran's retaliation.
"I think it is almost inconceivable that this is the end of Iran’s reaction," he said. "It might be the end of Iran’s short-term reaction, it might be the end of Iran’s overt reactions, but I think that there will continue to be blowbacks from Iran from the Soleimani assassination, whether that’s covert action or certainly diplomatic action over the mid to long term," Blanc said.
Looking ahead, there's a "huge number" of directions that Iran can take, Blanc said. "They can certainly have their own assassination attempt. There could be a covert or terrorist attacks against US interests in the region, or elsewhere."
Among the most likely scenarios is that Tehran will continue to push the Iraqi government to expel US troops, even as Trump sends reinforcements to the region.
"If they go through that entire process and make that decision, I think the United States is going to have to leave despite President Trump’s bluster," he said. "My instinct is that, the end of U.S. military involvement, U.S. military presence in Iraq is in sight."
"The Iranians have an opportunity now to force us out and, though it is of mixed interest from their perspective, they’ll probably take advantage of that opportunity," he added.
Setting aside what's next for Iran, Commentary's Noah Rothman points out that Iranian-linked rocket attacks on US positions in Iraq are nothing new. As of late December, there had been 11 Iran-linked rocket attacks on US positions in Iraq, including in the green zone, over 2 months, some of which produced American casualties.
This is retaliatory, asymmetric, and destabilizing. It is a response to Solemani. But it’s also not new. As of late Dec, there had been 11 Iran-linked rocket attacks on US positions in Iraq, including green zone, over 2 months producing American casualties https://t.co/9N1HPJO8Y8 https://t.co/3c0AaiFwcB— Noah Rothman (@NoahCRothman) January 7, 2020
Meanwhile, Iran's IRGC warned last night that any more attacks on Iran will result in "more painful and crushing responses," including possibly against Israel.
"We warn the Great Satan, the bloodthirsty and arrogant regime of the US, that any new wicked act or more moves and aggressions [against Iran] will bring about more painful and crushing responses."
For now, investors will simply need to wait to hear from President Trump to learn what might come next.