- Since the start of the year, a series of incidents have severely exacerbated US-Iran relations, which have hit their worst nadir in almost three decades. This has geopolitical implications across the world, although the impact is most acute in the Middle East.
- On 3 January, a US drone strike killed Iranian Major General Qasem Soleimani – the commander of the Quds Force elite unit of the Islamic Revolutionary Guard Corps (IRGC) – a revered military figure in Iran and among Shia militias across the Middle East. The deputy commander of Iran-backed Popular Mobilisation Force, a local Iraqi militia, was also killed.
- In response, the Iranian government has retaliated militarily and threatened to upend the already very fragile ‘nuclear deal’, or JCPOA. On 8 January, the IRGC launched a series of missile attacks on two airbases in Iraq hosting US troops: Ain Al Asad in Anbar governorate and another base in Erbil, capital of the semi-autonomous Iraqi Kurdistan region. Iran has also threatened further attacks against Israel and the UAE, two of the US’s key allies in the region.
- The heightened geopolitical tensions and hostilities have a major impact on the overall security and stability outlooks in Iraq and Iran. These are also likely to increase political and security risks elsewhere across the globe. While direct military confrontation between Iran and major Western military powers is unlikely, Iran could intensify its covert operations against US and Western interests. This has wide-ranging commercial implications, particularly in the aviation and tourism sectors, and to global supply chains.
- In the event of a probable US attack, hostilities in Iraq are likely to worsen, while security in the wider region is also likely to deteriorate. Iran enjoys strong support from many Shia and Iranian-linked militias across the region. This includes Hezbollah in Lebanon, who continues to threaten attacks on Israel. The Houthis in Yemen have also continuously warned of attacks on oil assets in the UAE throughout last year.
- Tehran’s attack in Erbil also raises the security risk in semi-autonomous Iraqi Kurdistan, a fairly stable business hub, due to the Iraqi Kurdistan government’s perceived support for the US in the region.
- The Philippines has ordered the evacuation of its nationals from Iran, Iraq, and Lebanon, while several other countries have updated their travel advisories for the region. On 6 January, US oil and gas company Chevron ordered the ‘precautionary’ evacuation of all US staff and contractors from northern Iraq and US NGOs began evacuating all non-Iraqi nationals at the end of December. Evacuation orders are in line with our recommendation that all travel to Iraq and Iran should be deferred over the next 14-21 days.
- Flight operations across the Middle East have already been disrupted and will likely remain so until the situation de-escalates. On 8 January, several regional and international airlines suspended operations to Baghdad as well as Tehran. This includes Dubai-based Emirates and flydubai as well as other major airlines such as Lufthansa and Singapore Airlines, while KLM announced that flights via Iran were being re-routed, likely extending travel times. The situation is unlikely to normalise in the one-week outlook with more international airlines likely following suit.
- The heightened tensions also raise maritime risks in the Gulf. In 2019, the Houthis claimed responsibility for a series of rocket attacks on Saudi-owned oil facilities and international vessels in the Bab el Mandeb strait. In the same vein, both the Houthis and the IRGC seized several foreign-owned vessels transiting the Red Sea and the Strait of Hormuz. Similar tactics are likely to be used on international vessels transiting the affected waters in the one-month outlook.
- The US Department of Homeland Security (DHS) said on 4 January that it had no information on a specific, credible threat to the US mainland, although it noted that Iran and its partners have demonstrated the intent and capability to operate there. Likely against that backdrop, several airports, including Chicago’s O'Hare International Airport (ORD) and Chicago Midway International Airport (MDW), have increased their deployment of security personnel. People of Iranian heritage, including US citizens of Iranian origin, have reported facing robust questioning from immigration officials at airports and land border crossings when entering the country. Individuals have reported being asked about their place of birth, family history, employment, personal views and social media accounts.
- In Latin America, Argentina has increased security at airports, border posts and the US embassy in Buenos Aires. This is due to a confirmed presence of Hezbollah-linked individuals in the country, whose capital has suffered two major terror attacks linked to Iran. Hezbollah is also known to operate on the triple frontier between Argentina, Paraguay, and Brazil. The members are involved in organised crime, including money-laundering, in the border area.
- Several Asian countries have weighed measures to protect their many migrant workers in the Middle East. The Philippines on 8 January announced it is evacuating its citizens from Iran and Iraq, as well as Lebanon, and is considering similar measures for other countries in the Middle East. It has issued advisories for citizens in Saudi Arabia. South Korea does not have any plans for evacuation from Iraq as of 8 January, though it is considering measures to strengthen protections for its nearly 1,900 citizens living in Iran and Iraq. India and Pakistan have issued travel warnings for citizens travelling in or to Iraq. Though India said it was not planning evacuations from the Middle East 'yet.' The Philippines’ mobilisation signals that the situation has reached a critical phase of insecurity, and other Asian countries, especially those with large diasporas present, are likely to follow suit.
- In South-East Asia, US and Israeli citizens could face a backlash from local communities sympathising with Iran or by proxy operatives present in the region. In 2012, Israel accused Soleimani of orchestrating IED attacks on Israeli diplomatic missions in the Georgian, Indian, and Thai capitals. Such precedents lend credibility to the threat of pro-Tehran groups targeting the interests of the US or its allies within Asia-Pacific. Given that the region attracts many Israeli citizens, who travel there after military service, it is likely that such individuals are at a higher risk of isolated attacks.
- If Iran decides to escalate action against US allies in Europe, it will most likely use underground pro-Iran groups, who will most probably target dissident Iranian organisations. Dissident groups include the hardline Mujahedin-e-Khalq (MEK), which accused Tehran of plotting an attack during an event near Paris in June 2018. Another target could be Israeli interests, such as embassies or Jewish religious and commemorative sites. However, with the exception of the 2012 suicide person-borne IED attack on a bus carrying Israeli tourists in Burgas, Bulgaria – which was widely believed to have been carried out by Hezbollah – such incidents are rare. Ultimately, covert operations on EU soil would provide more legitimacy to US rhetoric and solidify opposition to the Iranian regime.
- EU countries will continue to urge restraint from both Iran and the US, and remain united on their condemnation for any acts seen as an escalation. Nevertheless, should there be a loss of European NATO military personnel stationed in Iraq, this will likely increase alignment with the US.
- Sub-Saharan Africa is unlikely to be directly impacted by the increased tensions, but these will have an incidental impact on business operations and travel. Intercontinental flights in and out of Sub-Saharan Africa are already being impacted by flight suspensions in Dubai, the second-busiest air hub into the region after Addis Ababa, Ethiopia. This could lead to increased congestion at regional air hubs in Addis as well as in Nairobi, Kenya.
- As part of Iran’s intention to up-end the JCPOA, Tehran is likely to increase its intelligence and US sanctions-evading efforts, either through its established network of intelligence operatives or shell companies. It could do this by further increasing its growing number of intelligence operatives in the region. Tehran could also tap into larger Shia Muslim communities, whether they are domestic groups in Nigeria or through the vast network of Lebanese businesses working across the continent.
- Commercial entities exposed to supply chains of the weapons industry are likely to be the worst-affected by such risks, as Iran has used a vast network of shell companies to circumvent US sanctions in the past. With US-Iran relations now at their worst since the 1980s and Tehran threatening to upend the JCPOA, manufacturers of weapons or dual-use equipment, including those in South Africa, should consider strengthening their compliance controls such as know-your-customer and due diligence on local and third-country partners in light of this escalation.