Today Daniel Davis sits down with The Heritage Foundation’s Jim Phillips, an expert in Middle Eastern affairs, to discuss what’s going on with Iran. Is war on the horizon? Why is Iran suddenly so aggressive? And what’s driving the conflict? Read the interview, posted below, or listen on the podcast:

We also cover these stories:

  • The Supreme Court hands down a major decision on gerrymandering.
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  • Oregon GOP lawmakers aren’t showing up to work—because they’re trying to block a cap-and-trade bill.

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Daniel Davis: Tensions are steadily rising between Iran and the United States, and here to unpack the latest developments is Jim Phillips. He’s the senior research fellow for Middle Eastern affairs here at The Heritage Foundation.

Jim, thanks for your time.

Jim Phillips: Thanks for inviting me.

Davis: So Jim, this week we saw the president issue new sanctions against top Iranian officials, just days after he called off a retaliatory attack on Iranian military assets. Walk us through what led to those new sanctions.

Phillips: Last week the Iranians ratcheted up their shadow war against U.S. allies in the Persian Gulf by increasing attacks on mines. And … Thursday of last week, they shot down an unmanned drone flying over the Gulf.

At that point, President Trump considered a military attack on the Revolutionary Guard missile batteries that had shot down the drone. And at the last minute, [he] decided to withhold that military action, instead opting for a cyberattack and another round of sanctions he announced on Monday.

So right now, we’re kind of in a pause, but the slow-motion confrontation between the U.S. and Iran is markedly accelerating.

Davis: From reports, a number of folks inside the White House were recommending that he go forward with that attack. What did you make of him pulling back?

Phillips: I would take him at his word. He said that he was concerned that the attack would be disproportionate, in terms of the loss of Iranian lives, and that may be true.

The problem with that is that the Iranian regime doesn’t necessarily feel those constraints, and so that may give them an edge in the future, if they think the president will refrain from going ahead, down the military path.

But, I think on a one-off situation, I think the fact that he did launch a cyberattack covers him on that score. I think they’d be crazy to challenge his determination by pressing their luck again.

Davis: The Wall Street Journal today is reporting a new strategy in the Gulf that the U.S. is putting forward, trying to put together. Can you unpack what that’s about?

Phillips: It looks like a lot of vague lack of details, but it appears that the U.S. is appealing to allies in the Gulf, in Europe, and oil-importing countries that have a stake in the continued flow of oil from the Persian Gulf.

About 20% of the world’s oil goes through the Strait of Hormuz, and by appealing to allies to help monitor the flow, that would free up U.S. naval forces for offensive action if needed.

This is kind of a replay of what happened in the 1980s when the Iranian Revolutionary Guards attacked neutral shipping, and the U.S. responded by re-flagging Kuwaiti tankers and escorting them.

This time, it would be done more by an international group, instead of just the U.S. I think that would be an improvement.

Davis: Tell us about these new sanctions. They’re really just on some the top leaders in Iran, the ayatollah and a few officials. Iranian President Rouhani called them outrageous and idiotic. What impact do you expect these to have?

Phillips: I think they’ve already definitely unsettled the Iranians.

They argue that the supreme leader doesn’t have billions of dollars of money inside the U.S., however, he does have an empire, a network of hundreds of companies with an estimated $100 to $200 billion around the world.

These sanctions would make it much more difficult for the Iranians to manage those financial assets and move them around.

Also, [they] would expose any foreign firms that cooperate with the Revolutionary Guard to the supreme leader in moving that money. That would expose them to sanctions. If nothing else, it will drive up the cost of the supreme leader’s normal business activities.

Davis: And of course, these are just the latest round of sanctions. We’ve seen the Trump administration really piling on the sanctions since he took office. What kind of impact have those sanctions had in the last couple years?

Phillips: The administration says that since the oil sanctions kicked in in November, Iran has lost an estimated $10 billion in oil export revenues.

The price is going up every month because the administration further tightened the oil sanctions in May, when it deprived eight oil-importing countries of waivers, which allowed them to continuing importing Iranian oil, as long as they were gradually diminishing it.

Now those oil exports have gone from about 2.5 million barrels a day to less than 500,000 barrels a day. That is really suffocating the Iranian economy.

Davis: What does that mean in terms of Iran’s ability to fund not only their own aggressive activity, but terror groups?

Phillips: It really takes away their latitude in moving these funds around. They’ve been forced to cut their military budget, their budget for the Revolutionary Guards.

Although, it’s interesting, they did raise their budget for internal security, kind of the regime thugs that keep Iranians off the streets. They are anticipating further protests, which is interesting.

But also, they’ve been forced to cut back their subsidies for their network of proxies.

Hezbollah, which is their leading proxy, the Lebanese Shiite Revolutionary terrorist group, has been forced to cut back its budget and has been forced to appeal for donations from Shiites around the Middle East. That’s an interesting development.

Davis: Yeah, certainly. You mentioned Iranians themselves becoming dissatisfied with the state of the economy. This week, President Trump tweeted:

The wonderful Iranian people are suffering, and for no reason at all. Their leadership spends all of its money on terror, and little on anything else.

Do you think that the people’s anger is mainly directed toward the U.S., or are they increasingly blaming their own government?

Phillips: They do blame their own government, not only for political repression, human rights abuses, but also incredible economic mismanagement and corruption. I think the president is trying to tap into that.

In a series of anti-regime demonstrations, the Iranian people spontaneously have broken out into chants, “Not for Syria, not for Gaza. We give our lives only for Iran.”

That shows that there is resentment about the adventurous military interventions the regime has staged in Syria, increasingly in Yemen, and its efforts to stir up conflict between Israelis and Palestinians.

Iranians want their money to be spent at home, and that, I think, is a long-term sore point that will continue to generate opposition to the regime at home.

Davis: We saw in 2009 the uprisings against the government in Iran, which were violently put down. Do you think regime change is a possibility in Iran within the next 10 years or so?

Phillips: I think it is a possibility, but it’s like predicting a volcanic eruption. It’s hard to say exactly when, and when it happens, it’s difficult to say who would end up on top.

I would anticipate that the Revolutionary Guards will step in with some kind of military coup, but I’m not sure how long they could hold on.

But what’s interesting to me, I think, is Iran is looking for a regime change in Washington, and it initially adopted a policy of strategic patience, hoping to outlast the Trump administration and deal with what it hoped would be a more tractable future successor administration.

Then recently, I think has been forced to give up that strategy because these sanctions have really bitten a lot harder than Iran anticipated.

They also may be seeing that he’s got a good chance of being re-elected. So, I think part of their strategy in kind of confronting the U.S. is not only to diffuse political opposition at home with a rally-around-the-flag kind of strategy, but also to accentuate the cost to the U.S. of this policy of maximum pressure.

I think they were hoping to drive up gasoline prices this summer, in order to kind of wear down the popularity of the president.

I think the Iranians remember that they played a role in bringing down the Jimmy Carter administration and depriving him of re-election. I think they hope to do that with Donald Trump, as well.

Davis: Interesting. So, you think that’s what’s driving the aggression?

Phillips: I think that’s part of their strategy.

I think, really, their ideology is what’s driving this aggressive grand strategy because Iran, and the regime especially, has defined its legitimacy in terms of resistance to the great Satan of the U.S., which it defines as a world-devouring infidel and corrupting force.

The regime sees the U.S. as great Satan, not just because it thinks the U.S. is evil, but because it knows U.S. culture, American culture, or Western culture more broadly. The regime sees it as a corrupting force on young Muslims, so it’s stressed this resistance at all costs.

I think regardless of what the U.S. does, the Iranians, the regime, will take a hostile attitude.

Davis: What should the U.S. strategy be here? Should we be trying to crush the Iranian regime with sanctions so that there’s internal dissatisfaction and regime change, or should we just accept the fact of an Iranian/Islamic regime and try to manage that?

Phillips: The problem with regime change is we really can’t count on it. As a conservative, I think it’s our ability to predict what’s going to happen inside Iran, or identify so-called moderate elements that could replace other elements, really has been shown to be pretty minimal.

Once changes start coming in Iran, I don’t think the U.S. is going to be able to control it. But we can, though a maximum pressure strategy, encourage political change in Iran, and penalize heavily the hard-liners that are leading Iran in this confrontational course and undermining the long-term economic welfare and political welfare of their own people.

I think that could eventually lead to regime change, but that’s something we can’t really count on.

So, until then, I think we need to manage this problem, present Iran with very hard consequences for hostile acts, and seek some kind of a more effective nuclear deal that would bar Iran for much longer time from any kind of a nuclear breakout.

But if the Iranians continue dragging their feet on negotiations that the president wants on the nuclear deal, then either long-term regime change strategy or, eventually, some kind of a war with Iran is likely to result.

I would prefer to avoid a war, but I would also argue that Iran has been at war with us since 1979, the revolution, but they prefer to fight a low-intensity shadow war and not elevate it to the point where the U.S. would take military action against their homeland.

At this point, it’s difficult for me to see a negotiated settlement of the nuclear agreement, so really, if Iran continues on this collision course, I think it’s increasingly likely there will be at least a military clash, if not a full-scale war.

Davis: Would you expect that to be a U.S. preemptive strike on nuclear assets, or Israel perhaps?

Phillips: It’s possible. I think Israel would be more likely to do a preemptive strike than the U.S. at this point. But if these present trends continue, and Iran has warned the Europeans that it will be leaving the nuclear deal, and it is increasing its enrichment of uranium, and as soon as tomorrow, could be in violation of that deal.

That would start a new time table for confrontation that would put the pressure more on the U.S. to take military action, if a negotiated solution cannot be reached.

Davis: Do we know the timeframe for how long it would take for Iran to get a nuke, if they start ramping up their uranium enrichment?

Phillips: We don’t have a precise timeframe, but one expert, Olli Heinonen, who was a former international atomic energy agency inspector who worked in Iran, he has said that Iran probably is at least six months away, maybe more, depending on whether it has mastered the art of shaping enriched uranium into a warhead.

That apparently is pretty difficult, but Iran has been doing experiments along those lines. I think that could be the key factor.

Davis: If there’s not much hope for a new nuclear deal, as you mentioned, then it certainly looks like they’re going to keep enriching, and that would provoke a military strike. Should we expect that within the next couple years?

Phillips: If they continue accelerating the way they are now, that could lead to a war, but I think the Iranians are master negotiators, too. They know that if there is a war, they’re going to come out on the short end of the stick.

I think this really is part of its negotiations. I see the symbolic attacks on the tankers, which they could’ve sunk if they wanted to, but they purposely put the mines above the water level, just to send a message.

I think that’s the opening skirmish in the negotiations over the nuclear issue. For that reason, I think the administration is wise to react in a restrained and patient fashion to the shootdown of the drone because the real issue is Iran’s uranium enrichment, and that’s the next crisis.

Davis: We’ll keep looking at that, and we’ll have you back on to discuss that. We’ll hope for the best. Jim Phillips, thanks for your time.

Phillips: Thank you.