Here are two signs that the Obama administration is attempting to dial down tensions with Iran, sending powerful symbolic signals that Washington does not want to see the crisis with Iran militarized.

Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, will hold talks this week with his Israeli counterparts. He appears to be warning them not to strike out at Iran unilaterally.

I’ve been having this debate with friends on email and am arguing that the Obama administration will not launch strikes against Iran in an election year, and nor would President Obama greenlight an Israeil strike. Hence Gen. Dempsey’s visit.

The reason for this 2012 time out is that a military strike is inherently unpredictable in its outcome. Politicians don’t like uncertainty, especially in the middle of a hard-fought campaign. If the strikes turned into any kind of war, conventional or uncoventional, that outcome could make Obama look foolhardy and cost him the election.

There is lots of historical precedent for my conclusion. Eisenhower was furious at Israel, Britain and France for launching the 1956 war just before the presidential election. Since they hadn’t informed him they would do this, it made him look like he wasn’t strong in the Middle East. Then, the hostage crisis in Iran, along with the failed helicopter rescue mission, Helped make Jimmy Carter a one-term president.

In addition, the planned joint US-Israeli war games, Austere Challenge 2012, have been cancelled or postponed. The reason for this move has not been made clear by the US. Some are saying that Israel’s budget situation made it impossible to hold the maneuvers now, while others say that Washington became alarmed at what such an exercise might look like at a time of high tensions with Iran in the Straits of Hormuz.

Austere Challenge 2012 was meant to reassure the Israelis about US missile shield technology. That capacity, in turn, was intended to reassure the Israelis that their future was not in doubt, and that they did not need to take desperate measures against Iran immediately

My guess is that the Obama administration decided that reassuring the Israelis about the US missile shield via these joint military drills might have been misinterpreted in the region an implied threat of a joint US-Israeli military attack on, say, the Natanz nuclear facilities.

The US Open Source Center paraphrases two Israeli Hebrew-language sources on the cancellation or postponement of the exercises:

Joint US-Israel Drill Put Off Due to ‘Wrong Timing’; Sources Disagree on Reasons
Israel — OSC Summary
Sunday, January 15, 2012

Israeli Defense Sources Disagree on Reasons for Military Drill’s Cancellation

Amir Buhbut reports in leading news website Walla! in Hebrew at 1500 GMT: “Reports saying the joint US-Israeli military exercise may not take place generated numerous theories as to the reason behind the change. ‘We learned last weekend that the air defense exercise was canceled, and we were stunned,’ a senior defense source said in a closed conversation today (Sunday). The source added that ‘budget problems were not the reason for the drill’s cancellation.’

“Various defense sources disagreed on whether the exercise had been postponed or cancelled, as well as for the reasons. For example, contrary to previously reported explanations, a senior defense source said that a joint Israeli-US statement was supposed to be issued this week, announcing the drill’s postponement. The senior source explained that the reasons for the decisions have not been announced as yet, but they apparently revolve around the IDF’s budget problems.”

¬her source rejected the theory that it was a US decision made against the backdrop of the rising Israeli-Iranian tension. The Israeli side is yet to react to the reports.”

Drill Not Canceled, Merely Postponed Due to ‘Wrong Timing’

Amir Bar-Shalom reports on state-funded, independent Jerusalem Israel Television Channel 1 in Hebrew at 1900 GMT: “The postponement of the largest-ever joint US-Israeli military exercise seems to be the result of wrong timing. For the Americans, the exercise would have greatly exacerbated the tension in the region at the very time other moves — the sanctions — are starting to bear fruit. Israel too prefers to postpone the drill so as to be able to focus on other things. Thus the postponement suits both sides.

“Moreover, the whole world is watching the Israeli and the US moves in the matter of Iran. An exercise of this nature would undoubtedly give rise to speculation as to its objectives and would possibly cause Iran to misinterpret some facts. Both Israel and the United States are fully aware of this possibility. Therefore, a statement issued by the defense establishment tonight says that the exercise has not been canceled, merely postponed to the second part of 2012.”

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United Nations and United States financial and economic sanctions on Iran have probably gone about as far as they can in damaging Iran’s economy. They have had a significant effect, but are hardly in danger of shaking the regime or convincing it to cease its civilian nuclear enrichment program.

Iran is preemptively responding to threats of escalating sanctions by conducting a big naval exercise, Vilayat-90, in the Straits of Hormuz at the mouth of the Persian Gulf. Iran is making the point that if it wants to, it can close the straits, through which about 17% of the world’s petroleum exports flow. Any interruption in that flow would cause a global energy crisis. An Iranian admiral has said that closing the straits would be as easy as “drinking a glass of water.”

These exercises are not a threat to close the Straits, which Iran needs as well, any time soon. They are a demonstration that if the US tries to impose a global oil embargo on Iran, it has the means to reply to that act of war. It is a response to the threats of the US Senate.

The US- and Israel- led economic war on Iran is not a notable success so far. Iran’s central bank says, at least, that the Iranian economy grew some 5.5% in 2010-2011, which is pretty good given the state of the world economy and rather better than the US.

Iran’s annual oil income based on its performance in the past seven months is nearly $100 billion a year, and oil prices were up nearly 10% in 2011. (The Iranian state receives the oil income, since that industry is nationalized. Iran’s nominal gdp is on the order of $400 billion a year, in the range of South Africa, Taiwan, Argentina and Norway). That is, even with all the US and UN sanctions, Iran’s government is wealthy. Middle class Iranians may not be able to vacation in Europe very easily because of banking issues, and Iran isn’t attracting the kind of foreign investment that would allow it to grow 8% a year, as it would like (and which would be possible if the regime weren’t at loggerheads with the US and its allies). But the regime’s economic strength has probably grown in recent years, not weakened.

Another problem with trying to sanction Iran primarily through financial sanctions is that the world financial system is leaky. Venezuela, Turkey, and Russia, not to mention China, all offer Iran financial back doors for accessing the world banking system. Iran’s temporary problems in selling petroleum to India once it was kicked off the South Asian bank exchange under American pressure have been resolved, probably via Turkish banks. Iran can be put under pressure, and pain inflicted, but nothing debilitating.

A further step in the escalating conflict, advocated by the Israelis and their allies in the US Congress, is to impose an embargo on Iran’s gasoline imports or on its petroleum exports.

The time for the former idea has probably passed; Iran had a temporary shortage of refinery capacity to turn crude petroleum into gasoline. But the regime has addressed that problem by building more refineries and by phasing out gasoline subsidies, thus discouraging Iranians from driving so much.

The problem with imposing an embargo on Iran’s petroleum exports, which the US Senate wants to do by sanctioning Iran’s central bank, is that it is like cutting off your nose to spite your face. It would be South Korea, Japan, India and Italy that would suffer, i.e. US allies (along with China, which wouldn’t be happy and is not without resources to fight back).

Moreover it would put up world oil prices in an election year, harming Barack Obama’s reelection chances.

Israel, the US and some European states maintain that Iran has a secret nuclear weapons program, but there is no really good evidence for any such thing if by that you mean a rush to construct an actual warhead. The real problem for Israel and its allies is that Iran’s civilian enrichment program is potentially dual-use. If Iran can enrich uranium to 3.5 percent for nuclear reactor fuel, it could in theory use its centrifuges to enrich to 95 percent for a bomb. Israel and the US don’t want Iran even to have the possibility of making a bomb if Tehran someday chooses to, since that would knock Israel down a peg on the Middle East pecking order.

(It isn’t actually that easy for Iran to make a warhead, and the “in theory” should be underlined. For one thing, in order actually to develop a bomb, Iran would have to be able to evade US satellite and other surveillance, hide enormous use of water and electricity and trucking activity, and kick out United Nations International Atomic Energy Agency inspectors altogether. The inspections, while not perfect, are ongoing, and don’t find things like plutonium signatures that would point to a weapons program).

So, Iran is insisting on its nuclear enrichment prerogative, guaranteed by the Nuclear Non-Proliferation Treaty. And it is saying to the US Senate and the US Israel lobbies that if they go too far, it is perfectly willing to play the spoiler with the world economy.

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