Intelligence Briefings

Iran Spurs More Instability in 2023

Unlikely to be a good year for Iran-U.S. relations, and with that downturn comes the risk of military threats to oil production and transit in the Gulf region.

ESAI EnergyIran remains in the midst of a domestic upheaval that was most recently triggered by the death in police custody of an Iranian Kurdish woman, Mahsa Amini, who was arrested for what was deemed by the authorities to be an improper hijab. Since that time, large-scale protests have occurred against her treatment and against the hijab and other laws targeting women. These protests have morphed into broad anti-government unrest. All of this is at a time when Iran’s Supreme Leader, Ayatollah Ali Khamenei, is suffering from poor health and is reaching an age when the question of succession looms large. With any succession comes the question of legitimacy as a new leader is likely to be of an age where they were not part of the Iranian Revolution. The Iranian government has cracked down on the protests, including arresting large numbers of protesters and recently hanging two. The Iranian government is focused on internal threats to its power, but it also sees external foes who it believes will take advantage of the unrest.

The perennial concern with the Great Satan – revolutionary Iran’s sobriquet for the United States – as well as Israel, will not be ignored. Iran can strike at Tel Aviv using Hezbollah and Hamas. Washington can be hurt by increasing uncertainty about the security of oil production and export from the Persian Gulf region. Iran has done both in the recent past, and its attacks on Saudi oil facilities and its interference with oil tanker traffic in the Gulf did not cause Washington or the Gulf Arab states to respond in any significant way. Tehran authorities may believe they can strike at external enemies with little risk. Such moves could appease Iranian power centers who believe that the unrest is fomented from abroad, but it also could distract domestic opponents or cause a rally-around-the-flag effect.

However, Israeli and U.S. domestic politics and the international context in which clashes with Iran may play out, do not bode well for the mild response that Tehran may wish for. Israel, with its new harder-line government headed by Prime Minister Netanyahu, will be less tolerant of Iranian provocations and less risk-averse when it comes to strikes against Hezbollah targets in Lebanon and Syria as well as strikes against Hamas in the Gaza Strip. Moreover, absent a new nuclear accord, Netanyahu’s government may believe that it must deal with Iran’s nuclear capabilities more directly on its own. A Republican-led House of Representatives will press the Biden administration to become even more hard-line on all policies related to Iran, and it may not need much pushing. The Biden administration has recently cracked down on Iraqi monetary transfers through the Federal Reserve Bank of New York because much of the money was going to Iran and its proxies in Iraq. The Biden administration will likely look for ways to interdict Iranian shipments of drones and missiles to Russia, which Moscow is using in its ongoing campaign against Ukraine.

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