Mideast Tinderbox Set to Explode
Jim Rickards

There’s so much happening right now, including last night’s vice presidential debate, it’s hard to know where to begin.

But yesterday’s attack by Iran on Israel needs to be addressed because of its potentially massive implications.

Iran launched a major missile attack against Israel, in apparent retaliation for recent Israeli attacks upon Iranian proxy Hezbollah in southern Lebanon. Details of the attack remain sketchy, and Israel is extremely secretive about whatever damage it sustained.

So I don’t want to speculate too much because I only have limited information. But based upon available information, Iran launched close to 200 ballistic missiles against Israel.

Targets were apparently limited to military and intelligence facilities, not civilian centers. So in that respect, you can say that the Iranian attack was restrained.

We’re Not Fooling Around This Time

But unlike the Iranian attack on Israel back in April that included slow-moving drones and cruise missiles, this attack appears to have been conducted exclusively with ballistic missiles.

Iran claims 80% or more of its missiles got through to their targets. On the other hand, Israel claims it shot down about 90% of the missiles (with U.S. and even Jordanian intelligence).

Both can’t be true obviously. Maybe the truth is somewhere in between. Some reports indicate that Iran gave the U.S. advanced notice of the attack, while others say that’s not true.

Incidentally, Washington did release warnings ahead of time that Iran was preparing a missile attack. But that could have been the result of intercepted communications, satellite imagery or other forms of technical intelligence.

Depending on the missiles involved, flight time from Iran to Israel is between five–12 minutes, so Israel would have had little time to prepare if it didn’t have notice.

Both the U.S. and Israel claim the attacks were defeated and should be considered a failure — again, Israel claims to have intercepted most of the missiles.

But video clips of the attack clearly reveal that many missiles penetrated Israeli defenses and impacted the ground. In one clip, no fewer than 12 missiles landed nearly instantaneously in a fairly tight grouping.

They most likely saturated and overwhelmed Israeli defenses.

Did Iran Take out a Major Israeli Air Base?

Now, we don’t know what exactly these or any other missiles hit, as I stated earlier. But unconfirmed reports claim this particular cluster of missiles struck Israel’s Nevatim Airbase, which is one of its largest and most important air bases.

The base is also protected by the densest air defenses in the world. So if the reports are accurate, Iran was able to defeat Israel’s vaunted air defenses and severely damage a key base.

It seems that the missiles that got through were hypersonic Fatteh-2 missiles, which Iran claims it used in the attack. There’s presently no defense for hypersonic missiles.

The hypersonic Fatteh-2s may have been only a limited portion of the strike passage. The rest were likely slower and more expendable missiles that are easier to shoot down.

These missiles probably account for Israel’s claimed high intercept rate. But given the relatively high number of hypersonic missiles that evidently breached Israeli defenses, Iran sent Israel a clear message:

“We can hit you whenever and wherever we want with our hypersonic missiles. And you can’t stop it. Don’t make us do it again because next time will be worse.”

Don’t think Israel hasn’t noticed.

Hundreds of Millions up in Smoke

Iran is also imposing a high cost on Israel. Israel’s primary anti-missile interceptors are named Arrow and David’s Sling. These are not to be confused with Israel’s Iron Dome, which is primarily designed to shoot down slower, unguided rockets.

An Arrow missile costs about $3.5 million, while the David’s Sling costs about $1 million.

If we assume Iran launched about 200 missiles at Israel, yesterday’s attack cost hundreds of millions to defend against.

Even more importantly, these are highly sophisticated systems whose production is limited. How many more large-scale missile attacks can Israel withstand before running out of interceptors?

The big question is what happens next. The Iranian foreign minister has said Iran won’t conduct additional attacks if Israel doesn’t retaliate. But Israel has warned it will retaliate. Israel has indicated it could target Iran’s oil and gas facilities, even key Iranian leadership.

You can see how the entire thing can spiral out of control. How did we get to this point? And why did Iran attack yesterday?

This Was Supposed to Happen in August

In early August, I warned that Iran could attack Israel “any day now.” That’s because Israel had recently assassinated two key figures strongly linked to Iran.

The first assassination killed a leader of Hezbollah, a key Iranian proxy. That occurred in Lebanon, Hezbollah’s base.

Less than 24 hours later, Israel assassinated the political leader of Hamas, Ismail Haniyeh. That assassination actually occurred in Iran itself, as Haniyeh was in Tehran to attend the swearing-in ceremony for Iran’s new president.

Iran pledged “harsh” revenge for the two assassinations. But oddly, Iran did nothing. Why not? It’s possible that Russia pressured Iran to back off.

On Aug. 5, Sergei Shoigu, secretary of Russia’s National Security Council, was in Tehran to reportedly deliver a personal message from Vladimir Putin. The message urged Iranian leadership to refrain from retaliation.

It’s possible that Russia didn’t want a wider Middle East war to interrupt the upcoming BRICS meeting in Kazan, Russia later this month. That’s speculation of course, but Russia has no interest in a wider Middle East war.

I don’t know if China played a role in influencing Iran, but China needs Iranian oil and doesn’t want the Strait of Hormuz closed in case of a broad Middle East war.

But now, in October, Iran decided to strike Israel, against Russian and Chinese interests. Again, why now?

Is Netanyahu Goading Iran Into Attacking?

Since August, Israel has continued to escalate its attacks on Iranian interests in Lebanon.

Last week, Israel assassinated Hezbollah’s political leader, Hassan Nasrallah, in Beirut. The attack also apparently killed a senior general from Iran’s Islamic Revolutionary Guard Corps.

It’s almost like Israeli Prime Minister Benjamin Netanyahu has been goading Iran into attacking Israel so he can justify large-scale military action against Iran, with U.S. support.

Netanyahu has even recorded a video addressing the Iranian people, essentially calling on them to support regime change and telling them that “when Iran is finally free — and that moment will come a lot sooner than people think — everything will be different.”

What prompted him to say that?

Meanwhile, in recent days Israel has also launched “limited, localized and targeted ground raids based on precise intelligence” into southern Lebanon targeting Hezbollah. More provocation.

So why attack now? The answer is Iran may have felt it had no choice.

Iran Had to Save Face

After failing to retaliate against Israel in August, Hezbollah and other Iranian proxies in the region have begun to question Iran’s power and reliability as an ally. They saw weakness as Israel constantly provoked Iran while it did nothing.

Iran may have therefore concluded that it couldn’t back down from Israel’s most recent provocations, no matter if its allies disapproved. It simply had to retaliate in order to save face.

Now the ball’s in Israel’s court, as it were. Depending on what happens next, we could be facing a wider Middle East war that could potentially involve the U.S. Beside the human cost, it would have serious economic implications.

If we’re not in a recession already, we’re clearly heading for one. A new Middle East war will drive up the price of oil, maybe dramatically depending on how the conflict unfolds.

We’d be staring in the face of a major recession that would crush average Americans. That could be the final nail in the coffin of the Biden/Harris economy.

My advice to you is to put on your crash helmet. You might need it very soon.

Be selective with stocks, keep plenty of cash on hand and get yourself some gold if you haven’t already.

 

James G. Rickards is the editor of Strategic Intelligence, Project Prophesy, Crash Speculator, and Gold Speculator. He is an American lawyer, economist, and investment banker with 40 years of experience working in capital markets on Wall Street. He was the principal negotiator of the rescue of Long-Term Capital Management L.P. (LTCM) by the U.S Federal Reserve in 1998. His clients include institutional investors and government directorates.

His work is regularly featured in the Financial Times, Evening Standard, New York Times, The Telegraph, and Washington Post, and he is frequently a guest on BBC, RTE Irish National Radio, CNN, NPR, CSPAN, CNBC, Bloomberg, Fox, and The Wall Street Journal. He has contributed as an advisor on capital markets to the U.S. intelligence community, and at the Office of the Secretary of Defense in the Pentagon. He has also testified before the U.S. House of Representatives about the 2008 financial crisis. 

Rickards is the author of The New Case for Gold (April 2016), and four New York Times best sellers, Currency Wars (2011), The Death of Money (2014), The Road to Ruin(2016), and Aftermath (2019) from Penguin Random House. And his latest book, The New Great Depression was published in January 2021.

 

 

 

 

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