ELECTIONS

It happened in 1980. It could happen in 2012. A few months after the victory of the Islamic Revolution in Iran, Islamic radical students stormed the US embassy in Tehran and took 52 Americans hostage. As explained years later by one of the hostage-takers, by “the admission of the Shah to the United States,” the radical Muslim students thought that, “the countdown for another coup d’état had begun.” He was referring to the 1953 coup that toppled the Iranian, democratically-elected Prime Minister, Mohammad Mossadeq, in which the US has admitted to playing a role. A leader of the students later said: “we intended to detain the diplomats for a few days, maybe one week, but no more.” However, the crisis endured for 444 days.

Lengthy negotiations to release the hostages, and a military rescue mission failed. As Election Day neared, incumbent President Jimmy Carter announced that he had a deal to bring the hostages home. However, the deal unexpectedly evaporated. Carter appeared as a weak man that was not fit for leading a superpower. Instead, Ronald Reagan presented himself - strong, willing, and determined to do whatever was necessary to end the hostage crisis. Reagan, confuting pre-election polls, won a landslide victory. On January 20, 1981, only 20 minutes after Reagan was sworn in as the new president, the hostages were released!

Years later, in 1991, the world was shocked by a New York Times editorial (later expanded into a book) written by Gary Sick, a member of Carter’s National Security Council, and aide to his National Security Advisor, Zbigniew Brzezinski. He wrote that, “In a nice, ironic twist, the phrase, ’October surprise,’ which Vice Presidential candidate George Bush [Senior] had coined to warn of possible political manipulation of the hostages by Jimmy Carter, began to be applied to the suspected secret activities of the 1980 Reagan-Bush campaign.” Sick reported an alleged, clandestine deal between the Iranian government and Ronald Reagan's campaign operatives. He maintained that in return for holding the fifty-two Americans until after the election, Republicans promised to pay back Iran through arms deliveries.

Ari Ben-Menashe, who claimed he was an Israeli intelligence agent, swore under oath before Congress that he saw Bush [Senior] in Paris over the weekend of “October” 18-19, 1980. Ben- Menashe told Congress that Bush and William Casey [later the head of CIA] were in a hotel and headed into negotiations with the Iranian cleric, Mehdi Karroubi. Ben-Menashe said the Paris meetings served to finalize a previously-outlined agreement calling for release of the 52 hostages in exchange for $52 million, guarantees of arms sales for Iran, and liquidating Iranian assets frozen in US banks.

Since then, there have been hot debates for and against Sick’s allegations. Senate and Congress investigated the case and rejected the credibility of the allegations. However, investigative reporter, Robert Parry, who was one of the first reporters that broke the Iran-Contra story, later reported that he had discovered in an abandoned Capitol Hill bathroom, “a Russian government report… which was dropped off at the U.S. Embassy in Moscow.” According to Parry, the report “corroborated allegations that Ronald Reagan’s presidential campaign interfered with President Jimmy Carter’s Iran-hostage negotiations in 1980.” The report “was apparently kept from the Democratic chairman of a congressional task force that investigated” the case, Parry wrote.

Whether or not the story of “October Surprise” was real, it can be said with certainty that the Iran factor determined the outcome of 1980 US presidential elections. Fast-forward thirty two years, Iran is again in a position to play a decisive role in determining the fate of US presidential elections. This time, however, with the help of a third party, that is, Israel. The Iran-Israel conflict may impact US elections in two ways.

First, an Israeli airstrike on Iran’s nuclear facilities would affect US elections. However, as discussed before, under the current circumstances, this is an unlikely scenario and prediction markets, which allow people to bet on real-world events, agree. According to Intrade, one of the largest prediction markets, the chance of a US and/or Israel strike against Iran before midnight 31 December, 2012 is approximately 32 percent. The median figure of this prediction (the chance of an attack in terms of percentage) has been virtually stable since April 2012.

If, against the odds, Israel attacks Iran, it is highly unlikely that president Obama and his administration would join the Israel offensive just for the sake of Obama’s re-election. The magnitude of such a US engagement would create huge and unpredictable consequences. However, Obama may engage the US forces defensively, in protection of Israel, against Iran’s missile attacks. In this case, gas prices will soar while Romney’s camp takes full advantage of blaming Obama for being passive. This scenario will probably win the elections for Romney.

The second manner in which the Iran-Israel conflict might impact the US presidential elections is through Israel’s heightened war rhetoric against Iran. During recent weeks, the media inside and outside of Israel have reported alarming news about Israel’s possible attack on Iran. Times of Israel recently wrote: ”Decision by Netanyahu, Barak to strike Iran is almost final-Israel TV”. There are numerous reports ascribing responsibility for the surge in oil prices since June to these waves of threats (Any thoughts as to why oil markets respond to Israel’s threats but the prediction markets don’t? Could the answer be found here? “Big Oil” heavily supports Romney. See here for the reasons).

So the debate with regards to the second scenario may go like this: If Israel steps up war rhetoric against Iran oil and gas prices will likely rise. To counter the soaring price of oil, especially as the US nears Election Day, the White House may tap strategic oil reserves. Experts believe that the tipping points at which Obama’s administration will tap the reserves are when oil exceeds $120 per barrel and/or gas prices exceed $4 per gallon nationwide. This, however, is not an easy decision to make.

Obama will be accused by his opponents of using strategic reserves, which are created for emergencies particularly related to national security and natural disasters, for electoral and personal gains. Additionally, such a move would clearly highlight that Washington’s sanction policies had become self-defeating and would call those policies into question. This would be a clear victory for Iran who repeatedly argues that sanctions against them hurt the West more than Iran. In any case, Republicans will not let Obama use the reserves arbitrarily.

Now, if Israel, by using different tactics (recently gas masks were distributed in the country), steps up war rhetoric and beats louder drums of war, the energy markets will probably continue to react as they have over the last two months and Obama will face an uphill battle and most likely, a final defeat in November. An ABC/Washington Post survey indicates that “eighty-five percent of registered voters say [the economy is] in bad shape, and, in a related result, seven in 10 (emphasis added) say the country’s seriously off on the wrong track – two highly hazardous numbers for incumbents…Obama’s support has slipped numerically in each of the last four ABC/Post polls…as economic sentiment has worsened amid persistent unemployment and a resumption in rising gasoline prices (emphasis added)”.

There is no doubt that Israel, especially under the leadership of Netanyahu, by far prefers Romney and his team over Obama and his. Mitt Romney would support Israel, should it decide to take military action against Iran, and Paul Ryan’s adviser has recently called on Congress to authorize war with Iran. So, it is understandable that Israel would adopt tactics that impact US elections in favor of the Republicans. Heightening tensions with Iran will do the trick. Israeli threats will likely result in the rise of oil and gasoline prices, ultimately leading Republicans to victory.

Logic dictates that the Iranian government, with clear public signals that the Obama administration opposes military action against them, would take a reverse path, preventing Israel’s tactics of elevating tensions to work in favor of Republicans. However, last week’s tough talks on Israel by both, the Iranian Supreme Leader and president indicate that the Iranian government cares more about sticking to its doctrine of “threat against threat” and/or its domestic politics than the outcome of the US presidential elections.

The current trend of public tit-for-tat statements between Iran and Israel will be largely in favor of Romney and against the incumbent president. Two things may offset the impact of this trend. One, tapping the oil reserves, and two, the energy markets losing their sensitivity to the war of words between Iran and Israel. Developments over the next two months will reveal whether the US presidential election has been impacted by the Iran factor again.

This article is part of Insider & Insight, a new American Iranian Council program aimed at providing an in-depth analysis of key developments in US-Iran relations.