America’s foreign policy, which includes attempts to de-escalate the current Middle East conflict, has only resulted in its escalation. In Part III of this series, we discussed the events of that escalation on both April 1 and April 13. After Israel’s victory on the 13^th, Israel was told to “take the win.” The implied message was for Israel to stop and de-escalate the conflict. They did not. A flight of Israeli jets easily took out a target deep in Iranian territory, which led Iran to disengage by attempting to change the optics and decrying Israel’s meaningless response.

This was a significant decision for the Iranian regime and there are lessons that need to be culled from these events.

 Lessons Learned

• April 13 made it clear that the ayatollahs were not deterred by American policies like “Don’t” or “Ironclad support for Israel,” and buttressed in their assumptions by the sudden American withdrawal from Afghanistan three years ago.
• Iranian military capabilities are “full of sound and fury, signifying nothing.”[i] The Iranian attack proved feeble against the combined combat arms of Israel and its allies, including the Americans, British, Jordanians, and Saudis. I am not implying that they aren’t a threat. They have a significant numbers of missiles, certainly more than any of their proxies. Those, combined with Hezbollah’s 150,000 missiles and rockets, would make a joint attack devastating to Israel. It is likely that Israel’s defense systems would be overwhelmed. They all know it. But Iran by itself: ineffective.
• Before these recent times, there has been support and cooperation between Israel and some Arab nations. But it was mostly under the table. The Abraham Accords created a situation whereby Arab support could exist on top of the table. It could be overt. The message here is that Arab nations are allying with Israel to counter Iran’s intentions for the region. Arab cooperation in the skies to repel the April 13 Iranian missile attack is proof enough.
• One lesson Iran received loud and clear was the futility of attacking Israel with weaponry, which by comparison was built in the Dark Ages. This is the real reason Iran so quickly backed down, despite their vociferous claims to the contrary.
• The ayatollah’s education was complete after their missile volley was over. A few days later, Israel responded with just one round that hit its intended target—a benign target to be sure, but one of their choosing nonetheless—and they did it like clockwork, all the while completely evading Persian defenses. If the ayatollahs themselves were the target, then they would have had no prayer. It must have been chilling for them to consider such a prospect.
• The Iranian regime knew at once that by themselves they had no chance of surviving a full-blown Israeli attack. This lesson has a major consequence which we’ll address in a bit.
• There is an international push for a quick end, a cease-fire, and a rush to a two-state solution—as if this last requirement has successfully worked before. But the reality is that this idea is wishful thinking. (For an explanation, please see endnote.[ii])

So, What Is This New Phase in the Israeli and Iranian Dance?

It is apparent that Israel is strong enough to beat Iran’s proxies, just not all of them at the same time. And this can only be done with continual American weapons resupply. It is also clear that Iran’s proxies are more effective than Iran itself, even if only because of their geographic proximity, ability to launch a ground war,[iii] and their rocket count. If that is the case, then Iran must seek other means to achieve their objective for annihilating Israel.

That leaves Iran with two options. The first is a total offensive by Iran and all of its proxies, simultaneously. This option is not available to them because it would quickly invite American wrath. It just wouldn’t work, and they know it. Why not?

First, the Iranians are depleting their resources by selling weapons to Russia for their war with Ukraine. Second, Russia can’t supply Iran with fighter jets or other weapons for the same reason. And lastly, the Israeli intelligence apparatus has been reawakened from its slumber after failing to detect the 10/7 surprise attack. Also, it has demonstrated that it is capable of hitting targets deep in Tehran, with great consequence. (The assassination of Hamas’s political leader, Ismael Haniyeh, in the downtown area on July 31 is proof enough. This is another chilling event that points to the vulnerability of the ayatollah’s security apparatus, which is the responsibility of the IRG. Not too swift.)

That means Iran must rely on a second option. You likely know what it is. Iran must have nuclear weapons to finally and for all time rid itself of the Israeli obstacle to their long-time desired establishment of a global caliphate. This is the major consequence of military hardware that cannot compete with Israeli capability. Unfortunately for Israel, this is a problem easily solved. Iran has adequate nuclear fissile material. They can spin up enough to create the weapons-grade they need. That means they are within weeks, if not days, of having the means to develop and arm missiles with nuclear warheads, according to Mark Dubowitz, CEO of the Foundation for Defense of Democracies. He says that Iran must be dealt with, not wished away. Of this, I have no doubt.

It all comes down to nukes.

The next article, Part V in this series, will describe what I think we can expect in the short term. Then, Part VI will describe what the likely ramifications are for the markets. Stay tuned.