The Tribune

FOR the first time in nearly two decades of escalating tensions over Iran's nuclear programme, world leaders are genuinely concerned that an Israeli military attack on the Islamic Republic could be imminent -- an action that many fear might trigger a wider war, terrorism and global economic havoc. High-level foreign dignitaries, including the UN chief and the head of the American military, have stopped in Israel in recent weeks, urging leaders to give the diplomatic process more time to work. Israel seems unmoved, and US Defence Secretary Leon Panetta has reportedly concluded that an Israeli attack on Iran is likely in the coming months. US President Barack Obama said Sunday that he does not think Israel has decided whether to attack Iran, telling NBC News in an interview that the US was "going to be sure that we work in lockstep as we proceed to try to solve this -- hopefully diplomatically". Despite harsh economic sanctions and international pressure, Iran is refusing to abandon its nuclear programme, which it insists is purely civilian, and not threatening Israel and the West. Is Israel bluffing? Israeli leaders have been claiming Iran is pursuing nuclear weapons since the early 1990s, and defence officials have issued a series of ever-changing estimates on how close Iran is to the bomb. But the sabre-rattling has become much more direct and vocal. Prime Minister Benjamin Netanyahu frequently draws parallels between modern-day Iran and Nazi Germany on the eve of the Holocaust. On Thursday, Defence Minister Ehud Barak claimed during a high-profile security conference that there is a "wide global understanding" that military action may be needed. "There is no argument about the intolerable danger a nuclear Iran (would pose) to the future of the Middle East, the security of Israel and to the economic and security stability of the entire world," Barak said. On Friday, Iran's supreme leader, Ayatollah Ali Khamenei, called Israel a "cancerous tumour that should be cut and will be cut", and boasted of supporting any group that will challenge the Jewish state. When faced with such threats, Israeli has a history of lashing out in the face of world opposition. Armed with a fleet of ultramodern US-made fighter planes and unmanned drones, and reportedly possessing intermediate-range Jericho missiles, Israel has the capability to take action against Iran too, though it would carry grave risks. It would require flying over Jordan, Saudi Arabia, Iraq, Syria or Turkey. It is uncertain whether any of these Muslim countries would knowingly allow Israel to use their airspace. The US has been trying to push both sides, leading the charge for international sanctions while also pressing Israel to give the sanctions more time to work. In recent weeks, both the US and European Union have imposed harsher sanctions on Iran's oil sector, the lifeblood of its economy, and its central bank. Israeli officials say they want the sanctions to be imposed faster and for more countries to join them. Even a limited Israeli operation could well unleash regionwide fighting. Iran could launch its Shihab 3 missiles at Israel, and have its local proxies, Hezbollah in Lebanon and Hamas in the Gaza Strip, unleash rockets. Israel's military intelligence chief, Aviv Kochavi, warned last week that Israel's enemies possess some 200,000 rockets. While sustained rocket and missile fire would certainly make life uncomfortable in Israel, Barak himself has said he believes casualties would be low -- suggesting it would be in the hundreds. Iran might also try to attack Western targets in the region, including the thousands of US forces based in the Gulf with the 5th Fleet. To some, the greatest risk is to the world economy. Analysts believe an Israeli attack would cause oil prices to spike, since global markets so far have largely dismissed the Israeli threats and did not "price in" the threat. According to one poll conducted by the Rapidan Group, an energy consulting firm in Bethesda, Maryland, prices would surge by $23 a barrel. The price of oil settled Friday at $97.84 a barrel. "Traders don't believe there's anything but bluster going on," said Robert McNally, president of Rapidan and an energy adviser to former President George W Bush. "A potential Israeli attack on Iran is different than almost every scenario that we've seen before." McNally said Iran could rattle oil markets by targeting oil fields in southern Iraq or export facilities in Saudi Arabia or Qatar -- and withhold sales of its own oil and natural gas from countries not boycotting. Iran also could attempt to carry out its biggest threat: to shut the Strait of Hormuz, a strategic waterway through which a fifth of the world's oil passes. That could send oil prices soaring beyond $200 a barrel. But analysts note Iran's navy is overmatched. If a surge in oil prices proved lasting, financial markets would probably plummet on concerns that global economic growth would slow and on the fear that any conflict could worsen and spread. Nick Witney, former head of the EU's European Defence Agency, said "the political and economic consequences of an Israeli attack would be catastrophic for Europe" since the likely spike in the price of oil alone "could push the entire EU, including Germany, into recession". By Dan Perry and Josef Federman of the Associated Press