‘The war after Isis’: has Trump r to conflict with Iran? - Guardian

‘The war after Isis’: has Trump opened the door to conflict with Iran?

As US forces strike Syrian militias backed by Tehran, many fear delegation to the Pentagon and the looming defeat of the Islamic State could fuel a fiercer fire

Julian Borgerin Washington

Sunday 18 June 2017 21.00 AEST

Last modified on Sunday 18 June 2017 21.07 AEST

US forces have opened fire on Iranian-backed forces in Syria three times in the past month, amid mounting tensions that observers and former officials worry could easily turn into an unplanned, spiralling conflict.

The three recent incidents took place at al-Tanf, a remote desert outpost near the point where the Syrian, Iraqi and Jordanian borders meet. There, a 150-strong force of US soldiers who are training local fighters to take on the Islamic State (Isis) was approached by convoys of militias fighting for the Assad regime. They responded with air strikes.

The encroaching forces seem to have been a mix of Syrian and Iraqi Shia militias, possibly accompanied by their chief sponsor, Iran’s Islamic revolutionary guard corps (IRGC).

From Tehran to Beirut: Shia militias aim to firm up Iran's arc of influence

Certainly the IGRC was not concerned about hiding its fingerprints. The commander of its Quds force, Qassem Soleimani, had himself photographedwith militia forces nearby and a drone shot down by US forces after it had dropped a bomb near them turned out to be Iranian-made.

The string of incidents has illustrated how the eastern Syrian desert is becoming an arena for confrontation between the US and Iran, a potential flashpoint alongside Yemen, where Washington and Iran back opposing forces in a two-year war, and the Gulf around the Strait of Hormuz.

Last Wednesday an Iranian navy vessel came within 800 yards of a US flotilla traveling through the strait, shining spotlights on the US ships and pointing a laser at a helicopter in an encounter US military officials described as unprofessional and dangerous.

Such encounters are not new in the busy Hormuz waterway, but the context for them is. There is a new administration in Washington that is in many ways chaotic, but is united on a desire to push back Iranian influence in the region. Internal opinion differs mainly on the degree of force and risk required.

High-level contacts established between Washington and Tehran by the Obama administration have been cut off. From the White House, Donald Trump has maintained the fervently anti-Iranian rhetoric of his campaign. He made the first foreign trip of his presidency to Saudi Arabia, siding unambiguously with Riyadh in its rivalry with Tehran.

Trump has portrayed Iranian influence as a global threat on a par with Isis and al-Qaida. When Tehran suffered a terrorism attack on 7 June, the US president implied that the Iranian government was ultimately to blame.

“We underscore that states that sponsor terrorism risk falling victim to the evil they promote,” he said in a White House statement.

Trita Parsi, head of the National Iranian American Council, this month published a book, Losing an Enemy: Obama, Iran and the Triumph of Diplomacy.

At some point, it may well be the supreme leader decides: ‘We are going to do something'

Robert Malley

“By going to Saudi Arabia and declaring there was going to be an all-out isolation of Iran,” he said “… not only did Trump close the window for an all-inclusive dialogue, but he also opened up a window for a potential war with Iran.

“There is no debate in the country about this. It may have the appearance of being accidental but if you’re following it closely you see it is a very deliberate escalation.”

Trump has not delivered on his campaign threat to dismantle the nuclear deal with Iran agreed by the Obama administration and five other major powers in July 2015, but he has continued to pour contempt on it while Republicans in Congress have pushed for new sanctions that would put the agreement’s survival in jeopardy.

“Three of the most dangerous places on earth today are in Yemen, the area between eastern Syria and western Iraqand the halls of the US Congress,” said Robert Malley, a senior Obama White House official who helped negotiate the nuclear deal.

“At this point what I’m hearing from the Iranians is they are determined to play it cool, not overreact to what the US does, and show they are the ones who are being fully compliant. At some point, it may well be the supreme leader decides: ‘We are going to do something.’”

The Trump administration says it is still reviewing Iran policy but secretary of state Rex Tillerson told the Senate last week the US would “work toward support of those elements inside of Iran that would lead to a peaceful transition”.

‘You can see it all going haywire’

The emphasis was on peaceful change but to Iranian government ears, that sounded like a reversion to the spirit of regime change of the Bush era and even more distant memories, of a CIA-engineered coup in 1953. Tillerson’s counterpart, Mohammad Javad Zarif, tweeted back a jab about the shadow of the Russia investigations hanging over the Trump presidency: “For their own sake, US officials should worry more about saving their own regime than changing Iran’s, where 75% of people just voted.”

There is growing concern among US allies in Europe that the Trump administration has struck a posture towards Iran before deciding on a strategy for addressing its influence in the region, and anxiety that such posturing could become louder and more dangerous as Trump feels hemmed in by investigations into his campaign’s Russia links.

Not all the increasing tension is of Trump’s making, however. The evolving battlefield in Syria and Iraq is drawing Iran and US towards a collision. A tacit understanding based on mutual non-aggression during the campaign against a common enemy, Isis, is expected to fray once Isis strongholds in Mosul and Raqqa have fallen.

“As Isis disappears off the map,” said Ilan Goldenberg, a former state and defense official, “this tolerance that Shia Iranian-supported groups and American-supported groups have shown for each other – there is a danger that will that will go away. You can see it all going haywire pretty quickly.”

Jennifer Cafarella, an expert on the conflict at the Institute for the Study of War, said: “The larger picture here is the war after Isis, the war to dominate the security sphere after the recapture of Mosul. Iran is already preparing for that next phase and has begun to take steps to win that next phase. The US is still fixated on Isis as if it’s the only strategic priority in the region.”

The US decision to open a new counter-Isis front in the south-eastern Syrian desert, and set up an outpost at al-Tanf, is a challenge to Iranian aspirations to control an east-west corridor from Tehran to Damascus to Lebanon. That corridor would run through al-Tanf.

“It looks as if the Iranians, Assad, the Iranian-mobilised Iraqi militias have made a determination that they will not allow the US to have free rein to gain more territory in the Syrian desert,” said Nicholas Heras, an expert on the region at the Centre for a New American

So far, the US has bolstered its position in the area by deploying a Himars mobile rocket system. But it is unclear how far the US will go to keep control. Defense secretary James Mattis was a hawk on Iran as a general, when his troops came under sustained attack from Iranian proxies in Iraq. In his new role, however, he has prioritised the struggle with Isis and the looming threat of North Korea. Foreign Policy reported on Saturday that Mattis had resisted pressure from White House officials to go on the offensive against Iranian-backed forces in southern Syria.

Such decisions, like the setting of troop levels in Afghanistan, have been delegated to the Pentagon. In the absence of an overall strategy from the White House, some worry that tactical decisions could lead to an unintended wider conflict.

“It is my understanding,” Goldenberg said, “from talking to people in the US government who are working these issues, that there is not much substantive material or deliberation on any of this, which is a huge problem. That’s the thing that scares me.”

The lessons from Canada’s attempts to curb its house-price boom - Economist

The lessons from Canada’s attempts to curb its house-price boom

IN MATTERS of finance, if not climate, Canada is usually temperate. It was barely moved by the economic storms that blew the roof off America and Europe in 2008-09. Its banks were steady, it was argued, in part because they were shielded from the ferocious competition for market share that pushed banks elsewhere into hazardous loans. For all that, in its housing market Canada has lately become a place of extremes.

Household debt has climbed to almost 170% of post-tax income. House prices rose by 20% in the year to April. Looked at relative to rents, they have deviated from their long-run average by more than any other big country The Economist covers in its global house-price index. In Toronto, one of two cities, along with Vancouver, where the boom has been concentrated, rental yields are barely above the cost of borrowing, even though interest rates are at record lows. In its twice-yearly health-check on the financial system, published this month, the Bank of Canada concluded that “extrapolative expectations” are a feature of the market. In other words, people are buying because they hope, or fear, that prices will keep rising.

Canada is not alone. House prices also look high relative to rents in Australia, where a few cities, notably Sydney and Melbourne, are booming. Prices in some American cities, such as Seattle and San Francisco, have been rising much faster than the national market, which looks reasonably priced.

Common to all these cities are buyers from emerging markets, notably China, who have helped to drive a wedge between the price of homes and the local fundamentals of incomes and rental payments. They are willing to pay above the odds to secure a safe place for their savings. Though fairly small in number, their presence is enough to inflate bubbles.

Canada’s housing market thus opens a window on a tragic flaw in the global economy. In only a few decades China has mastered the manufacture of high-quality goods. But it takes far longer to be able to manufacture safe stores of value. Instead, their affluent citizens seek out rich-country assets, including houses. This fundamental mismatch limits the ability of policymakers to stop bubbles from inflating.

Raising interest rates, which stand at just 0.5% in Canada, might seem the obvious answer. The economy is recovering and this week the Bank of Canada’s deputy governor has hinted that rates might climb. But several rises in succession might be needed to cool the housing market and that would probably send the economy into recession.

The authorities have instead attempted to deal with the problem at its source. Last summer Vancouver imposed a 15% tax on foreigners’ house purchases. The city’s property market has since cooled. But one effect of this extra tax has been to shift housing demand to other places, such as nearby Victoria, and to Toronto, where house-price inflation is above 30%. The province of Ontario imposed a similar tax in April, prompting fears of a price surge in Montreal. To improve the supply of rental properties, Ontario has also permitted cities to slap a tax on vacant homes. That will help, but it will not solve the problem. There are tentative signs that prices in Vancouver are reviving, suggesting that the tax there has only deterred foreign buyers temporarily. In any event, some foreign owners hope to settle in Canada soon, and so will be entitled to claim a rebate.

There is no fail-safe administrative tool for curbing house-price booms. The best course is to insure against the fallout from a house-price bust. Canada has been more active in this than most countries. People with mortgages above 80% of the value of the home on which it is secured are obliged to pay for insurance against default. The underwriting standards on such mortgages have been steadily tightened. Canada’s biggest banks have some protection against potential storms. They are highly profitable and exceed international benchmarks for capital (see article).

Strong foundations

Even so, a further tightening of such macroprudential measures would be wise, not because it would do much to slow the rise in house prices but as insurance against their eventual fall. The demand from emerging markets for safe assets will not soon diminish. Recent history shows that big run-ups in property prices often reverse suddenly. Better to batten down the hatches now in case the weather turns bad.

This article appeared in the Leaders section of the print edition under the headline "Maple grief"