Armed hostility between Israel and Iran is very likely to escalate

Israel senses a high-risk high-return chance to reshape West Asia that Trump might green-light

- Nouriel Roubini

The conventional wisdom after Israel's recent strikes on Iranian military facilities in retaliation for Iran's ballistic missile attack on Israel is that the risk of further escalation has been contained. Initial statements from the Islamic Republic's supreme leader suggested that Iran may not respond further. Markets seemed to agree, with oil prices falling 5% immediately after the Israeli strikes (even if they rose again somewhat a little later).

But this conventional wisdom is likely wrong. Israel's assessment of the threat posed by Iran has shifted in the last few months. It is not just Prime Minister Binyamin Netanyahu and his right-wing allies' views that have hardened; key leaders of the centre and centre-left opposition also argue that Israel should go further with strikes. Whether or not one agrees with that assessment, there is now a consensus that the Iranian regime represents a clear and present danger. With Iranian proxies Hamas, Hezbollah, the Houthis and Shia militias in Iraq and Syria continuing to attack Israel, Israeli leaders have concluded that they must address the problem at its source. That could mean targeting Iranian nuclear facilities and eliminating the regime's top military and political leaders, as done vis-à-vis Hamas and Hezbollah, actions which eroded the deterrent leverage that the Iranian regime once had over Israel.