Iran Spurns Incentives, Invites Further Isolation

Iran's rejection of the recent EU deadline did not come as a big surprise to many Western countries; however, the consequences of Iran's decision may come as a major surprise to its leadership.

By rejecting the offer of incentives, in one single move, Ayatollah Khamenei has managed to achieve what the U.S. has failed to do over the last three years, and that is to justify increased international pressure against Tehran.

This will come in two forms, economic and political. Economically, in all likelihood, there will be tougher sanctions imposed against Iran's banks, and quite possibly Iranian shipping and air links. These may not be back-breaking, but they will create a noticeable dent in Iran's economy.

What is likely to cause further damage is the political isolation in which Iran will find itself, especially in the Middle East. Nearly all of the leaders of the Persian Gulf emirates have until now been calling for U.S. engagement with Iran. Ayatollah Khamenei has shown that this does not work, even when the U.S. becomes directly involved.

It seems that rather than learn from America's mistake of rejecting talks with Iran, as part of the "Grand Bargain" offered by Khamenei in 2003, Iran is imitating America's mistake by refusing to accept the incentives offered by the EU and backed by the U.S.

It is a major red flag to those who fear Tehran: with such a clear-cut rejection of the diplomatic route, the rich sheikdoms now have cause for serious worry regarding the strong Iranian influence in Lebanon and Iraq.

We are likely to see increased Saudi assistance to Sunni groups in Iraq and Lebanon, as means of reducing Iran's leveraging power in the region and to push it back to the negotiation table. But this also increases the chances of war in the region.