Israel-Iran crisis climbs ladder of financial risk: podcast
Follow on Apple or Spotify. Listen on the Reuters app. Read the episode transcript.
The outbreak of armed conflict between the two nations is a perilous new front in the ongoing Middle East hostilities. In this Viewsroom podcast, Breakingviews columnists discuss the dissonance between a mild market response and the manifold paths to further escalation.
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(The hosts are Reuters Breakingviews columnist. The opinions expressed are their own.)
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The Independent
32 minutes ago
- The Independent
Can Starmer afford to join Trump in an open-ended war?
In taking so long to respond to what is now a full-on war between Israel and Iran, Donald Trump has done the UK's prime minister a big favour. A US decision on the side of direct military intervention would present Keir Starmer with the greatest quandary yet of his year at No 10 – whether to offer UK support, and if so, how much, in what form, and for how long. The prime minister has already warned against any action that would 'ramp up the situation', that 'cooling tensions' and 'de-escalation is the priority' – and that, despite 'grave concerns' about the threat of Iran's nuclear programme, the British government is 'urging all parties to show restraint and return to diplomacy'. While Trump ponders on whether to join Israeli strikes on Iran, there is, in the words of the prime minister's official spokesman, a 'real risk of escalation'. And yet the longer the US president takes to make up his mind, the longer Starmer has to weigh up the pros and cons of the UK following its closest ally into a war that could engulf the whole of the Middle East. And the only really good option from London's perspective would be if Trump decided to keep the US, officially at least, on the sidelines. Any direct military intervention, and the UK, one way or another, has to choose. In essence, this is the dilemma that has long lurked somewhere in the nexus between the UK's departure from the European Union and the election of Donald Trump to a second term. These two developments left the UK straddled awkwardly mid-Atlantic, between an EU it no longer belongs to and a US out of sympathy with Europe on practically everything, from tariffs to collective security. Now may be the moment of truth. Were the US to decide to intervene, the UK could just about persist in its current holding pattern and do no more. That would mean repeated (vain) calls for de-escalation; new warnings to hard-pressed consumers about higher energy prices (with the blame now pinned on Iran, rather than Russia), more travel bans and terrorist alerts. The UK might also provide a much-needed channel to Tehran, given that David Lammy has, so far, kept up communications with his Iranian counterpart. Going some way, but not the whole way, to support the US – by offering facilities at UK bases in, say, Cyprus, could, however, present risks, including the risk of reprisals from Iran. The danger may be less now, given what appears to be Iran's debilitated state from Israeli air strikes. But the UK's early and categorical denial that the US had used Cyprus as a transit point for the extra air power it sent to the region showed that London clearly understood the potential risk. Not offering the US direct, or even partial, military support, however, could have costs of its own. Trump is regarded as prizing loyalty above almost anything else. Where would a passive UK stance leave the 'special relationship'? Might Trump re-consider the tariff concessions he has agreed for the UK? Might the US scale back intelligence cooperation (as it threatened over the UK's telecoms ties to China)? Might the UK lose what it sees as its privileged position in Washington to, say, Germany, whose new chancellor Friedrich Merz seemed to be auditioning for leader of Europe during his recent visit to the White House and been more forthright in support of Israel's action than Starmer? On the other hand, the balance between aiding and not aiding the United States in a new war may be finer than it may look from this single, close, vantage point. How special is that special relationship? Harold Wilson managed to keep Britain out of Vietnam without undue, long-term damage. Contrast this with Tony Blair's near-unconditional support for the US in Iraq. This bought exactly how much political capital for him or his government in Washington over the longer term? As for the damage to the domestic reputation of the UK intelligence services and the influence of the UK in the Middle East, that has been huge and lasting. At the time, however, Blair's argument was not just about security – destroying the supposed threat from Iraq's (as it turned out, non-existent) chemical weapon – but also about principle. He, like George W. Bush, was seduced by the promise of the 'freedom' and 'democracy' that were forecast to follow 'regime change', which may also be an objective of Israel's war on Iran. It is hard to believe that Starmer and Labour's leading lights today could be similarly seduced, given the experience not only of Iraq, but of Libya and Afghanistan, and of David Cameron's narrowly lost vote in Parliament over intervention in Syria. But might the current Parliament vote to support a UK military intervention on other grounds, such as the prospect of a nuclear-armed Iran or the view that Israel's very existence is threatened? That cannot be excluded. But the gulf that would then be exposed between MPs voting to put the UK in harm's way for the sake of Israel, and the weight of public opinion that condemns Israel because of Gaza, could present Starmer with big political difficulties, despite Labour's majority. A parliamentary debate could also open up the bigger picture. One of the arguments that raged during my childhood was whether the UK should keep a military presence 'east of Suez'. The upshot was that it sort of did, and it sort of didn't, but the UK's interventions in Afghanistan and Iraq had the effect of deciding the issue to this day. As it happens, the Israel-Iran war has erupted barely two weeks after the government published its Strategic Defence Review, which identified Russia as the biggest threat facing the country, recommending a 'Nato-first' policy and higher defence spending to address this threat. There was no mention of the UK becoming embroiled in a new and potentially open-ended war in the Middle East. With its self-accepted status as a medium-sized power, a pared-back military, and capabilities increasingly focused on Russia, the UK is likely to find its resources severely stretched in the event that Starmer decided in favour of actively helping the US in the Middle East. However the Israel-Iran war ends, the 'east of Suez' discussion needs to be re-opened, with the UK's present capacity and priorities in mind. In the meantime, the difficulty for Trump should not be minimised. He campaigned on a pledge to keep the US out of far-away, forever wars, and prides himself on the – correct – fact that the US avoided any new wars in his first term. He is clearly in two minds about Israel and Iran. Long, Starmer and his government must hope, may his indecision continue.
Sky News
33 minutes ago
- Sky News
Israel-Iran live: Trump responds to reports of attack plan - as Iran denies striking hospital
Donald Trump has rubbished reports he approved attack plans on Iran but is holding back on the final order. Meanwhile, Iran has denied attacking an Israeli hospital where dozens have been wounded. Follow the latest and listen to The World as you scroll.
Reuters
40 minutes ago
- Reuters
Germany's Merz urges moderation in call with Netanyahu, source says
BERLIN, June 19 (Reuters) - German Chancellor Friedrich Merz had a phone call with Israeli Prime Minister Benjamin Netanyahu in which Merz called for moderation in Israel's campaign against Iran, a German government source told Reuters on Thursday. Merz voiced Germany's support in principle for Israeli military attacks on Iran's nuclear infrastructure during the call on Wednesday evening but stressed the importance of seeking diplomatic solutions to the conflict, the source said. Germany plans to host nuclear talks with its European partners and the Iranian foreign minister at its permanent representation in Geneva on Friday, a source told Reuters on Wednesday, with the goal of getting assurances from Iran that its nuclear programme is used solely for civilian purposes. Iranian Foreign Minister Abbas Araqchi confirmed that he will attend the meeting with his counterparts from Germany, Britain and France. In a separate call, Merz agreed with the Emir of Qatar that there should be no escalation of the conflict into the wider region and in this context, Merz pointed to the Geneva talks, his spokesperson said in a statement. Israel has said the goal of its strikes is to eliminate Iran's ability to develop a nuclear weapon - but Iran says its nuclear programme is purely civilian. Merz and Netanyahu also discussed the situation in Gaza during their phone call, according to the source. The German government has called on Israel to adhere to international law in its war against Hamas in Gaza, where tens of thousands of civilians have been killed and aid restrictions are exacerbating a humanitarian crisis.
