Nasser Kanaani, spokesperson for Iran's foreign ministry, branded the Munich Security Conference politically driven as the regime attempted to claw back credibility after being banned for a second consecutive year.
Kanaani said, "The organizers and hosts of the conference are deviating from its founding principles, transforming it into a platform for advancing their own agendas. The inclusion of individuals with a criminal past, contrary to global norms, reflects a troubling trajectory for this conference, and we harbor reservations about its future."
Banned along with Russia, Kanaani said the conference "has become a forum for disseminating unjust and deceitful narratives against sovereign nations."
The Islamic Republic is outraged over the presence of prominent Iranian activist Masih Alinejad in the event who was one of many calling for the designation of Iran's Revolutionary Guard (IRGC) as a terrorist organization after multiple failed assassination attempts on her life.
Despite Iran's absence from the conference for the second consecutive year, discussions at the prestigious event centered on the global fight against terrorism, Russia and Iran still top of the agenda. Approximately 50 heads of state and government, along with around 100 ministers, participated in the conference, where Tehran and Moscow were notably absent from the guest list.
The conference occurred against the backdrop of Iran's proxy warfare through militias in the Middle East, collaborating with groups like Hamas, which perpetrated an assault on Israel on October 7, resulting in the deaths of over 1,200 predominantly civilians, and the capture of over 250 people into Gaza.
Iran's exclusion from the conference stems from violent protests in 2022, triggered by the death of 22-year-old Mahsa Amini while in custody of Iran's hijab police. The demonstrations posed significant challenges to the clerical regime, marking one of the most significant uprisings since its establishment 45 years ago.
In recent months, Israel and the Iran-backed Hezbollah have engaged in daily cross-border skirmishes following a deadly attack by Hamas on October 7, that killed 1,200 Israelis and ignited the Gaza war.
Yaakov Katz, renowned author of “Weapon Wizards: How Israel Became a High-Tech Military Superpower,” emphasized the pressing need for Israel to establish a stable and secure post-war environment in Gaza, preventing Hamas from regaining control. He believes that “The biggest challenge for Israel is creating a post war reality in Gaza that is stable and secure and doesn’t see Hamas regain control. Iran is obviously going to continue to stoke the flames and try to undermine anything that is meant to provide security for Israel.”
Katz added “And for that reason, we need to have a mechanism in place that can deny Iran that ability to continue to spread terrorism and chaos through the Gaza Strip that can then launch attacks against Israel. For that to happen, Israel needs to be involved at least in providing security control over the Gaza Strip.”
Israel is slated to seize the Gaza Strip’s southernmost border town of Rafah in an effort to secure the release of the over 100 hostages held by Hamas and root out the last vestiges of the jihadi Sunni group.
The Tehran-born Beni Sabti, from the Israeli National Security and Strategy Institute, told Iran International that there are two views on what the end of Hamas spells for Hezbollah.
“Some experts think that defeating Hamas bring a high level of deterrence for Israel. If Hamas is destroyed it will be a good thing against Hezbollah. They will be deterred, and it will decrease confrontations with Israel.”
Sabti shared the view that dismantling Hamas could serve as a deterrent to Hezbollah, prompting the militant group to reconsider its aggressive stance.
According to a Reuters report, France proposed a ceasefire deal that seeks to end the clashes on the Israeli-Lebanese border. A key element of the proposal would require Hezbollah’s elite unit to withdraw 6 miles from the border. Hezbollah rejected the plan and its General-Secretary Hassan Nasrallah previously said his Shiite militia’s attacks on Israel will end when Israel stop its “aggression” in Gaza.
Sabti emphasized Hezbollah's formidable arsenal of 150,000 missiles, representing a potent threat compared to Hamas.
The extensive rocket arsenal amassed by Hezbollah since the 2006 war was a focal point of Nasrallah's recent speech, where he boasted of precision-guided missiles capable of targeting all of Israel.
Nasrallah said in a televised speech last week that Hezbollah has a “huge arsenal” of precision-guided missiles that can target all Israeli territory “from Kiryat Shmona to Eilat.” Kiryat Shmona is in northern Israel and Eilat is the country’s southernmost city.
Sabti stressed the importance of Hezbollah’s withdrawal from the border for de-escalation, arguing that “Israel is not seeking war with Lebanon because the damage will be very great.”
Both Israeli viewpoints “agree that the outcome with Hamas will have repercussions for Hezbollah,” potentially altering the dynamics in the region, Sabti emphasized.
However, an alternative view held by a minority in Israel, according to Sabti, argues that “If Hamas is defeated, Hezbollah will feel a duty to make more trouble with Iran’s support,” potentially triggering a more destructive war.
Yigal Carmon, former counter-terrorism advisor to Israeli prime ministers Yitzhak Shamir and Yitzhak Rabin, said Lebanon will face immense damage to its infrastructure if Hezbollah launches a war against Israel. Carmon told Iran International that Israel “will bomb the sewage, the water and the electricity centers of Lebanon, “turning its capital into a uninhabitable wasteland.
In late December, Israeli war cabinet minister Benny Gantz said, “I am sure that [Hassan] Nasrallah is looking at what is happening here [in Gaza] and does not want it to happen to him [in Lebanon].”
Israel fought a 34-day war in 2006 with Hezbollah in response to the Iran-backed group’s kidnapping of two Israeli soldiers.
Iran International was the first news media to publish on September 5 Carmon’s early warning that one of Iranian proxy movements would invade Israel in September or October. Carmon is the founder and president of the Middle East Media Research Institute (MEMRI).
In a February policy paper for the Washington Institute for Near East Policy titled “Reinforcing U.S. Diplomacy to Stop a Hezbollah-Israel War,“ Hanin Ghaddar writes “Israel cannot return its citizens to the north without security guarantees, and Hezbollah cannot make major compromises without securing significant gains to advance its regional role and Iran’s interests. Such dynamics increase the likelihood of a widening conflict.”
Almost 100,000 Israelis have been compelled to flee their homes in the north due to Hezbollah’s bellicosity.
The possibility of edging closer to a high-intensity conflict gained momentum following remarks by Gantz on Sunday. Gantz stated, "Israel will achieve our objectives and remove Hezbollah from our border towns" along the Lebanese border. He further suggested that Hezbollah is at a crossroads, contemplating whether to "commit organizational suicide."
Iran’s involvement in the regional conflict hinders its economic growth efforts, further reduces the value of the Iranian rial, and decreases government income. Additionally, it has worsened economic problems such as inflation, diminishing oil exports, and weaker GDP growth.
The falling value of the rial is the direct result of fears about a wider war involving Iran. Domestic investors hedge their bets by buying US dollars and other currencies, part of which is sent abroad, exacerbating an already high rate of capital flight.
On February 15th, the Institute of International Finance (IIF) released a report on the Global Economic Fallout of a Regional War. According to the report, a pessimistic scenario could lead to a 0.4 percentage point decrease in global growth compared to the baseline scenario in 2024, resulting in a 2.4% global growth rate.
In this pessimistic scenario, the Middle East faces dire consequences, including potential disruptions to oil production, tight monetary policies in GCC countries, and damage to infrastructure in Lebanon and Israel. Egypt's economy could suffer from decreased cargo passing through the Suez Canal. Iran's economy may contract by around 5%, with inflation exceeding 100%.
Despite Iranian officials' repeated statements about staying out of a larger regional conflict, its proxy armed groups continue provocations that could lead to a direct confrontation with Israel and/or the United States. This could cause disruptions in shipping in the Strait of Hormuz, affecting oil flow.
The Gaza conflict significantly affects the global logistics and supply chain industry, particularly in the Middle East, raising concerns about shipping bottlenecks, increased freight rates, and erratic delivery schedules, disrupting the flow of goods and materials.
Iran's involvement in the Gaza crisis has significant economic implications. It may stir up nationalist sentiments at home and divert attention from its own economic challenges by supporting organizations like Hamas in Gaza. Furthermore, the conflict between Israel and Gaza not only has an immediate impact on the local economy but also has the potential to reshape the Middle East and North Africa region, affecting travel, commerce, investment, and energy sectors.
The International Monetary Fund (IMF) has underscored the adverse economic impact of Iran's participation in the Gaza conflict on local and regional businesses.
The Houthi's miscalculation that attacks on ships in the Bab-el-Mandeb strait and the Red Sea would go unpunished was debunked as the US and UK intervened, targeting Houthi positions. According to the IMF, the cost of shipping products from Asia to Europe, bypassing the Suez Canal due to Houthi strikes, has doubled.
Iran Economy
Iran's economy has significantly deteriorated over the past decade due to sanctions, corruption, and inefficiency, contrasting with the growth of other regional economies.
According to the IMF, if the destabilizing activities of Iran’s proxies persist, it could result in significant damage to the global economy, with Lebanon and Iran bearing the brunt of the impact.
The attacks by Iran-backed Houthi militants, along with controlled strikes by international coalition forces against their positions, has already caused Yemen's economy to contract by 1.2% last year, with further decline expected this year.
The IMF cautions that if the Gaza conflict escalates, Yemen's economy could shrink by up to 8% in 2024, while Iran and Lebanon might face GDP declines of 5% and 20%, respectively.
Furthermore, the potential for trade disruptions in the Strait of Hormuz looms if Iran becomes directly involved in the Gaza conflict. A significant portion of the world's liquefied gas (13%) and oil (35%) exports pass through this crucial waterway, with potential global energy price spikes.
Even if Iran were to temporarily succeed in blocking the Strait of Hormuz, it would ultimately harm itself. Notably, these southern waterways serve also as a major transit route for Iran's non-oil imports and exports.
Referring to IMF data, it's important to highlight that Iran's GDP has dropped by 40% from 2010 to the present day, whereas both Turkey and Saudi Arabia currently have GDPs that are more than three times larger than Iran's.
According to the Institute of International Finance (IIF)'s pessimistic scenario, there could be a contraction of 0.4 percentage points in global growth compared to the baseline scenario in 2024. This decline is primarily attributed to the heightened probability of disruptions in shipping routes via the Strait of Hormuz and the Suez Canal, particularly if Iran or its allies interfere with oil exports through the latter.
