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Iran's oil attack presents most critical test yet for Trump's foreign policy
CNBC
Sat, 21 Sep 2019 12:00

Iran's oil attack presents most critical test yet for Trump's foreign policy

CNBC
Sat, 21 Sep 2019 12:00

Journalists gather next to a damaged installation in Saudi Arabias Abqaiq oil processing plant on September 20, 2019.

Iran's oil attack presents most critical test yet for Trump's foreign policy


Fayez Nureldine | AFP | Getty Images
Irans audacious drone and cruise missile attack last weekend on Saudi Arabias oil producing facilities has provided the most critical test yet for the Trump administrations foreign policy. A successful response will require both nerves and vision in a world of emboldened adversaries and perplexed allies.

The nerves will be necessary to navigate the short term demands for action, without falling into the Iranian trap of triggering a counterproductive military response that could strengthen the regime at home and abroad. Strategic vision could leverage the crisis to advance one of the loftiest (but least developed) Trump foreign policy initiatives: A Middle East security architecture to counter Iran and promote regional cooperation.
At the same time, the Iranian attack – both U.S. and Saudi officials agree no other party could be responsible – will test the Trump administrations understanding of regional stability, energy markets and what it takes to defend Middle Eastern resources and secure global supply.

Energy markets will see in the U.S. response the clearest sign yet of whether U.S. energy self-sufficiency over time will result in a reduced willingness to provide security guarantees to Gulf allies. If thats the case, traders should be concerned not just about current prices but also build in risk premiums due to increased Mideast supply vulnerability.

As the United Nations General Assembly opens on Tuesday, the attack also puts into stark relief how dramatically the world has changed from the time of the last comparable Middle East oil supply shock driven by military action, when Saddam Husseins Iraq invaded Kuwait back in August 1990.

For that fleeting moment, it seemed as though the United States would be presiding for some time to come over a rules-based "New World Order." The Cold War had ended, the Soviet Union was collapsing, and democracies were ascendant.

President George H.W. Bush constructed an unprecedented global coalition, acting with the blessing of the UN Security Council, which ultimately defended Saudi Arabia, defeated Iraq and liberated Kuwait. Operation Desert Storm, a 42-day military undertaking that deployed a 39-country coalition, raised hopes that a more promising era had dawned where the global community could rally better against international outlaws and for the common good.
Fast-forward to todays New World Disorder.
As the United Nations General Assembly opens on Tuesday, the attack also puts into stark relief how dramatically the world has changed from the time of the last comparable Middle East oil supply shock driven by military action, when Saddam Husseins Iraq invaded Kuwait back in August 1990.
The Trump administration wont find it easy to frame an effective response, one that would at the same time avoid war, rally the world community, defend global oil supplies, punish and then deter Iran, and reassure Mideast allies. The obstacles are both self-inflicted – uncertain allies reeling from trade and other disputes with the Trump administration – and unavoidable in a world shaped by a new era of major power competition with China and Russia, both Iran supporters.

President Trump on Friday ratcheted up sanctions with a new round against Irans national bank while his advisers review a list of military targets for a potential retaliatory strike. "Weve never done it at this level," he said of the sanctions, while indicating he had "plenty of time" to respond further.

"The Iranians – and other opponents of the United State in the region – have every reason to believe that Trump speaks loudly and carries a nonexistent stick," writes Stephen A. Cook of the Council on Foreign Relations in Foreign Policy. He argues that if the U.S. had responded to Irans shooting down of the American drone on June 20 that the Iranians might "have thought twice" before their latest attacks.

Whats in question, he says, is the long-standing, three-part rationale for U.S. engagement in the Middle East: ensuring energy supplies, securing Israel and making sure no state or group of countries can endanger the other two interests.

Assuming Iran was responsible for the attacks, "the Iranians are testing the entire rationale for U.S. investment in the Middle East over the last 70 years," says Cook. "If Trump does not respond militarily, the United States should just pack up and go home."

Not so fast.

A far better response would be to understand that Iran is lashing out more from a position of weakness than one of strength. That requires a cool, measured response that will continue to sap the Iranian regimes resources while avoiding a feel-good military strike that could inadvertently strengthen Irans autocrats at home and shore up their support globally.

"The regime is wounded and thus defensive, it is cornered and thus aggressive," says Kirsten Fontenrose of the Atlantic Council, who most recently served as senior director for the Gulf Affairs in the Trump administrations White House. "It feels increasingly squeezed financially, pressured socially at home, and let down politically by the European inability to move (Trump). It must escalate…or escalate."

Whatever course Trump chooses by way of response, he should at the same time revive his administrations efforts to create the Middle East Security Architecture, or MESA.

"The initial proposal," writes James Jay Carafano in the National Interest, "bundled a commitment to collective defense with: a structure for cooperative defense planning; a dispute resolution mechanism to resolve disputes between members, and a free trade network. Washingtons proposal was: if all the Gulf states signed up, the United States would back stop the agreement and join as a member itself."

An army of skeptics said this sounded too much like a NATO for the region, unachievable both due to Mideast divisions and US unwillingness to provide security guarantees. Over time, the concept has been watered down and gutted of the security aspects the region most needs. If the idea had got off the ground earlier, Carafano reckons "the recent attack on Saudi oil production might never have happened. Iran could have been deterred from messing with its neighbors."

No time will be better than this moment to revive the original MESA proposal, which doesnt require a NATO-like US security guarantee, as a long-term solution for a region the United States cant leave but doesnt want to continue to defend.

US energy self-sufficiency would be a flawed reason to exit the Middle East, as oil markets and their vulnerabilities are global. The West also has learned that it cant wall itself off from the regions security problems, which bleed over borders sometimes as migrants, sometimes in extremist violence.

"Never let a good crisis go to waste," said Winston Churchill.

It took World War II and more than 20 million dead before France and Germany settled their differences, and the US helped establish NATO. How fortunate would it be if the Mideast could achieve something similar before such scale of tragedy?

Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the papers European edition. His latest book – "Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth" – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past weeks top stories and trends.

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