Editor's Note: Below is a complimentary research note written by National Security analyst General Dan Christman. To access our Macro Policy research please email sales@hedgeye.com.

Iran | Geopolitical Risk Rises Once Again - 7 20 2020 10 12 15 AM

A string of unusual, disruptive activity has spread through Iran’s nuclear infrastructure over the last three weeks.

Given the tumult of other events, the activity was reported principally by outlets in the Middle East. But then last week, the New York Times and its always-insightful national security reporter, David Sanger, began to connect the dots. Based on Sanger’s analysis and reports of late from other respected media sources, here’s what appears to be going on - and why. 

First, THE WHAT -  Because the events centered on the Middle East, conspiracy theories of course exploded - along with Iranian nuclear facilities. But the damage trail includes: 

  • Natanz, the center of Iran’s centrifuge activity. Natanz appeared to have been struck two weeks ago, with Tehran publishing pictures of a new, above-ground building that they say “caught fire.” (Recall, the bulk of Iran’s centrifuge development lies deeply underground here.) First reports from all sources downplayed the severity. Sanger’s report, however, suggested that the damage was far more devastating than previously indicated.
  • The military complex of Khojirjust east of Tehran. This large facility is used for development of Iran’s liquid and solid fuel rockets; Tehran said an accident – a “gas tank explosion” – occurred here a week prior to the Natanz blast.
  • And Parchin, co-located with Khojir. Mysteriously, Iran initially described the Khojir explosion as occurring at Parchin, an especially sensitive site used to test conventional explosive “triggers” as part of nuclear warhead design; Tehran now seems to have backed off this claim. 

But these sites contain nearly all the key stages in the production and delivery of nuclear weapons that are of such concern to Israel: uranium enrichment (Natanz), warhead design and fabrication (Parchin), and missile delivery systems (Khojir). Not surprisingly, Middle East regional media speculated broadly that Israel was behind all this: cyber directed at Natanz, perhaps U.S.-Provided F-35 stealth fighters bombing Parchin/Khojir, and domestic sabotage orchestrated by Israel’s Mossad. 

  • While the precise form of the attacks may never be known (until David Sanger writes another book-length intelligence expose!), the best guess is that Israel was the instigator, with critical behind-the-scenes U.S. intelligence help - perhaps with aid also to Iranian conspirators. 

Second, THE WHY - Much speculation has centered on the likely Israeli attacks being a riposte for Iran’s cyber attempt in April to sabotage Israel’s water supply. This may have played some role; but the likely real reason? 

  • Bibi Netanyahu concluded (with U.S. intelligence endorsement) that Iran’s gradual shredding of the limits of the nuclear deal over the last 18 months has shortened Iran’s breakout time to acquire a weapon to substantially less than one year. Both Washington and Tel Aviv have simply said, “enough!” The devastation at Natanz, according to the Sanger piece, likely pushed Iran’s program back as much as two years.
    • Bibi may also have concluded that U.S. elections in November may bring to the Oval Office a president less willing to give him a blank security check; hence, strike now, not just at the nuclear infrastructure, but at other sites critical to Iran’s economic lifeline: an aluminum factory, several power plants, a petrochemical facility, and just a few days ago, a major shipyard in Bushehr. 

What’s next? An Iranian response, in all likelihood. But Tehran has to calculate how far to carry their own riposte if they are waiting for a Biden presidency and some hope for sanctions relief.

As always, they will calculate this very carefully. In the meantime, geopolitical risk in the region rises once again. 

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ABOUT LIEUTENANT GENERAL DAN CHRISTMAN

LTG Dan Christman, USA, Ret. serves as Hedgeye Potomac Research’s Senior National Security Analyst, providing deep insight into international affairs and national security. Most recently, Dan provided strategic leadership on international issues affecting the business community for organizations such as the US Chamber of Commerce. Dan’s long history of leadership includes his service as a United States Army lieutenant general and former Superintendent of the United States Military Academy. He served in highly visible and strategically important positions and four times was awarded the Defense Distinguished Service Medal, the nation's highest peacetime service award.

He also served for two years as assistant to the chairman of the Joint Chiefs of Staff, during which time he traveled with and advised Secretary of State Warren Christopher. He was centrally involved during this period with negotiations between Israel and Syria as a member of the Secretary's Middle East Peace Team. Further, Christman represented the United States as a member of NATO's Military Committee in Brussels, Belgium.

Graduating first in his class from West Point, Christman also received MPA and MSE degrees in public affairs and civil engineering from Princeton University and graduated with honors from The George Washington University Law School. He is a decorated combat veteran of Southeast Asia, where he commanded a company in the 101st Airborne Division in 1969.