Has Israel Dealt Iran A Winning Hand?

July 27, 2006— -- Ian Bremmer is President of Eurasia Group a global political risk advisory and consulting firm. He is also the author of "The J Curve: A New Way To Understand Why Nations Rise & Fall.

Market watchers, persuaded that Israel's war on Hezbollah will not spill over into Syria and Iran, have moved on. They are now fixated instead on August 22, the date by which Iran's ruling clerics have promised to respond to a Western-sponsored incentive package intended to halt Iran's uranium enrichment program. That, market players believe, is the next red letter day for oil prices. But Israel's military offensive and Iran's nuclear strategy are hardly unrelated.

The bloodshed in Lebanon has intensified the conflict over Iran's nuclear ambitions. U.S. Secretary of State Condoleezza Rice has referred to the fighting in Lebanon as part of the "birth pangs of a new Middle East." If true, what kind of Middle East is now being born? Will it be a region in which Iran, Syria, Hezbollah, Hamas, and Islamic militants hold new leverage? Or will it be one in which the United States, Israel, and moderate Arab governments coordinate a more coherent and vigorous response to the metastasis of regional radicalism? Which group is playing a winning hand?

The greatest threat to regional stability flows from Tehran's belief (rightly or wrongly) that Israel has given it a trump card. The Iranian regime's new self-confidence emboldens its leaders to drive toward a collision over the nuclear issue. If Iran believes that it and its friends are emerging as the winners of the conflict in Lebanon, it's in part because the fighting there has postponed talk of sanctions and showcased Iran's ability to punch above its weight and beyond its borders. Most importantly, it has bolstered the regime's domestic popularity by allowing it to again pose as the vanguard of Muslim resistance to Israeli aggression.

In fact, Iran has seized the opportunity it believes Israel has provided to reaffirm its intransigence on the nuclear issue. Chief nuclear negotiator Ali Larijani warned on July 21 that if sanctions were imposed, "Iran would have no choice but to change its nuclear policies." Neither he nor other Iranian officials have yet explained exactly what that means, but it most likely implies Iran's withdrawal from the Nuclear Non-proliferation Treaty, a step which would clearly raise the region's political temperature.