Bitcoin turned upwards with some speed after the news of the killing of Maj. Gen. Qassim Suleimani, leader of Iran’s Quds Force, with Quds translating to Jerusalem and compared by some as the equivalent of the CIA.
That sent gold and oil up, as well as bitcoin which rose by about $500 before settling at $7,250 at the time of writing.
This jump in price to a specific event suggests markets are pricing in a changing situation whereby US and Iran are now extremely close to outright war.
Meaning chances have now increased that the value of Iranian money might fall. In addition, the dollar might weaken in anticipation of more printing, so making bitcoin a useful asset.
But is all this an over-reaction, or is war now inevitable? Does peace stand a chance, and what might come next?
The Proxy Squared War
Europeans woke up today to World War III trending on twitter as if Iran is mighty Germany or the Austrian empire, instead of not even a great power, just a regional power.
Yet things have been moving with some speed recently, and the ratcheting begins with the drone attack in September 2019 on the Saudi Aramco oil processing facility in Abqaiq and Khurais oil field in the Eastern Province of Saudi Arabia.
“U.S. intelligence indicates Iran was the staging ground for a debilitating attack on Saudi Arabia’s oil industry, people familiar with the matter said, as Washington and the kingdom weighed how to respond,” WSJ reported at the time.
Iran denies it, with Yemen’s shiite Houthi rebels claiming responsibility. Saudi Arabia says Houthi’s are Iranian proxies, but more importantly US claims this oil field strike was launched by Iranian-backed militias in southern Iraq.
An American contractor was killed in Iraq in December with US blaming Iranian backed militias. So US carried airstrikes on three sites of Kataeb Hezbollah, killing at least 19 militiamen.
After the funeral of these men, Iraqi shiites stormed the US embassy for two days, with US sending 700 soldiers to Iraq and considering sending 3,000 more.
So US’s response to this storming was the killing of Suleimani, who apparently had previously said in a text message in 2008: “General Petraeus, you should know that I, Qassim Suleimani, control the policy for Iran with respect to Iraq, Lebanon, Gaza and Afghanistan.”
Iran has now vowed to retaliate at the same level, with it unclear whether it is just bluster amid what might be a shock for the country, or whether more instability is to expected in the region.
War or Peace, the Question For Middle East
In a way it might seem like the entire Middle East is at war, with country after country in the region falling to a serpentine entanglement of complex and moving alliances and mercenaries.
The hottest war there is in Yemen, were an uprising during the Arab spring has descended into a civil war with the two Yemeni sides backed by opposing forces.
US-Saudi on one hand, Russia-Iran on another, Europe at arms length with the former, China at arms length with the latter.
A direct Saudi-Iran war would be very costly for both, but with this killing, US has basically declared they are willing to risk a direct confrontation with Iran.
That makes this one of the most dangerous time for Iran since the 70s revolution. So you’d expect them to back off, and perhaps even lay low for a bit as this is US basically saying: enough.
In a rational world, seeing as US is kind of edging, you’d expect Iran to try and arrange some red phone talks which maybe even lead to high level meetings.
Trump has said he doesn’t want war and we believe him based on his actions so far. The primary reason he was elected, and the chief reason plenty were willing to overlook much else, was because he looked like the candidate who could end the wars.
So you’d think some in Iran would be wondering why not give peace a chance, especially now that Trump’s polls might actually go up.
Trump has said that Iranians apparently do not want to talk to him. If that is true, then much is on Iran’s court.
So optimistically you’d hope the outcome of all this is talks because if there’s more tit for tats, well, nothing increases more US army numbers than seeing their embassy being attacked.
Trump was never going to allow another Banghazi situation. If Iran was behind this embassy attack in Iraq, then the question is obviously what on earth were they thinking?
Saudis are smart enough to not attack Russia because a regional power simply does not play with a superpower.
So Iran might have overplayed its hand, and might have taken Trump’s previous show of constrain as a weakness instead of a warning, bolstered perhaps by the Syrian win of sorts.
Russia might have overplayed its hand too, giving Iran an unrealistic sense of confidence, because while the American public is obviously against war, well what on earth are they doing striking oil fields within Saudi Arabia and killing American contractors.
Now these are US claims, Iran denies them, but the moderates there need to win the debate and get to the table because everyone is fed up of war and in fed up situations people want to end it no matter what, within reason obviously.
So you’d expect a de-escalation and even at least an attempt at peace, but they might be too much in a bubble in Iran and might retaliate instead which would make it even more of a mess.