The U.S. has approximately spent $6.4 trillion on wars post the 9/11 attack and would continue to spend if the tensions escalate. But with a crippling economy, it is uncertain how far Iran is willing to go in order to avenge the death of their top general. Financial Chief Investment Analyst John Lynch has explained that the U.S economic fundamentals or the corporate profits are unlikely to be effected on a large scale due to such escalations as the stocks have encountered heightened geopolitical tensions in the past and has survived through it. The “war puzzle” which has been witnessed by the analysts in the past predict that the stock prices rise after an outbreak of a war without any clear explanation. Thus, if a war were to happen, the stock market of the U.S is likely to rise rather than fall.
The effects of the air strike have not been confined to the countries and their people alone. Global oil prices shot up by 4% to about $69.16 per barrel and pushed up oil stocks like Royal Dutch Shell on the London Stock Exchange. Even the arms company stocks like Lockheed Martin rose in the light of the event. Also, the U.S. embassy in Baghdad urged the Americans there to leave Iraq immediately Australia and Britain issued similar warnings to their nationals in Iraq citing security reasons.
The war between U.S. and Iran can emerge as various proxy wars in the middle east and the world ‘cannot’ afford another Gulf war. The recent airstrike has escalated the tension between the two nations to its highest peak and all the countries like Germany, France, Britain and even the UN have called for maximum restraint by the nations.
By 8th January, Iran had launched a dozen ballistic missiles at 2 Iraqi bases which housed the U.S troops but no casualties were reported. However, the IRGC commander, Hossein Salami told the parliament that their aim was not to kill the enemy soldiers rather to prove the point that they were superior than their enemies and could hit any point they chose.
The ball was now in the court of the U.S to respond to this retaliation. But on 12th January Pentagon stated that it did not expect any more Iranian retaliatory attacks. Instead of standing together with their military commanders, the local ‘Iranians aspired for a better government –a different regime’, Pentagon stated. What happened that completely changed the scenario?
On the latter half of 8th January, a Ukrainian International Airlines Flight 752 which carried 176 passengers from Tehran to Kiev was downed by the IRGC attributing it as a ‘human error’. The IRGC’s top commanders took full responsibility for the act and mourned for the victims of the attack along with the Iranians. However, protests erupted across Iran pressuring the leaders to flee the country as they believed that ‘their enemy was not in America, rather it was right there in Iran’. This was also because more than 50% of the passengers were Iranians.
Iranian generals tried to play the blame game by re-directing the blame to the U.S stating that it was a human error due to the heightened tensions between the nations. But the Iranians stood with the victims and Donald Trump commented that he was inspired by the courage of the long-suffering, brave Iranian protesters. Thus, a war which was at the horizon was probably averted due to ‘human error’.
Gautam Rathi
Senior MemberGautam has been with the Finance and Investment Cell since 2019.
He is known for his creative ideas. He has a rather quirky style of writing;
his ability to convey serious geopolitical issues in a
light manner is commendable.