Cyberattack and proxy violence warnings as Iran threatens 'nightmare' revenge against US

Key Points
  • "Harsh revenge" awaits the "criminals" who killed Qasem Soleimani, the former leader of Iran's elite Quds force killed by a U.S. drone strike, Iran's supreme leader declared as millions publicly mourned the slain general across Iran and Iraq.
  • The U.S. Department of Homeland Security has warned of "homeland-based plots" against infrastructure targets including cyberattacks by Iranian proxies like Hezbollah.
  • But as speculation mounts over Iran's next moves, analysts say Tehran does not want to provoke an actual war with the U.S. despite its enflamed rhetoric.
Pompeo says US 'got it right' by killing Iran's Qasem Soleimani

Weeping over the coffin of slain Iranian Gen. Qasem Soleimani, killed in a U.S. drone strike in Baghdad, Iran's supreme leader vowed severe revenge on America, echoing the anger of more than a million mourners in the streets of Tehran.

"Harsh revenge" awaited the "criminals" who killed Soleimani, Ayatollah Ali Khamenei declared. The U.S. assassination of Soleimani, the leader of Iran's elite Quds force, the foreign arm of its Islamic Revolutionary Guard Corps, has prompted "13 revenge scenarios," Iran's Supreme National Security Council secretary announced Tuesday.

"Even if there is consensus on the weakest scenario, carrying it out can be a historic nightmare for the Americans," Ali Shamkhani said.

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And the world appears to be taking it seriously: Markets fell on the news and money is moving into safe havens like gold in the face of potentially greater conflict in the Middle East. The U.S. Department of Homeland Security has warned of "homeland-based plots" against infrastructure targets including cyberattacks by Iranian proxies like Lebanese militant group Hezbollah.

"The Trump administration has essentially thrown a hand grenade into already extremely tense region," Ellie Geranmayeh, a senior policy fellow at the European Council on Foreign Relations, told CNBC. "This move has exposed every American boot on the ground to a possible retaliatory attack."

Thousands of mourners pay homage to assassinated Iranian Major General Soleimani in US Airstrike. The Pentagon announced that Iran's Quds Force leader Qasem Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis were killed on 03 January 2020 following a US airstrike at Baghdad's international airport.
Mazyar Asadi | Pacific Press | LightRocket via Getty Images

Soleimani's killing followed the storming of the American Embassy in Baghdad by Iran-backed Iraqi Shiite militias in the last week of December, reportedly at the Soleimani's direction. The violent demonstration was prompted by U.S. airstrikes that killed 25 of those militia members in retaliation for the group's launch of rockets that killed an American contractor on Dec. 28. Washington has called on all U.S. citizens in Iraq to leave the country immediately, and it's sending 3,500 additional troops to the region.

Revenge versus war

But as speculation mounts over Iran's next moves, analysts say Tehran does not want to provoke an actual war with the U.S. despite it calls for vengeance.

Iran "will still try to avoid provoking an all-out war, but it will be challenging for them to retaliate in a way that allows them domestically to save face without at the same time triggering some sort of military response," Aniseh Tabrizi, a Middle East research fellow and Iran expert at London's Royal United Services Institute, told CNBC on Monday. She noted that with an economy buckling under American sanctions and a military far less equipped than that of the U.S., the country is not in the position economically or militarily to fight a conventional war.

Demonstrators burn the U.S. and British flags during a protest against the assassination of the Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis who were killed in an air strike in Baghdad airport, in Tehran, Iran January 3, 2020.
Nazanin Tabatabaee | Reuters

The drone strike on Soleimani on Friday (late Thursday ET) was a blow to Iran — not just because the general was revered across much of the country for his role in leading Iran's regional expansion and resistance against the U.S., but also because it now completely upends Iran's calculations in terms of prospects for U.S. military confrontation, Tabrizi said.

Potential proxy violence and cyberattacks

Khamenei "has to respond in a way which is pretty forceful or else they risk losing face," Karim Sadjadpour, a Carnegie Endowment senior fellow, told CNBC's "Squawk Box" on Monday. "But with the erraticness of Trump, they have to be very careful how they respond," he said, describing the supreme ayatollah's approach as "calibrated."

"Iran's responses could come across a spectrum of measures, whether that's on the Middle East or on its nuclear program, or through covert direct actions like cyberattacks on U.S. territory," Geranmayeh said, highlighting the risk of attacks in third-country territory like Iraq and noting that Iran and the U.S. are practically neighbors in their theaters of operation in Syria, Iraq and Afghanistan.

Former CIA acting director John McLaughlin issued the same warning, writing in intelligence newsletter the Cipher Brief: "Iran will retaliate in some major way and probably turn loose its proxies such as the terrorist wing of Hezbollah and its militias in Iraq and Syria."

Iran will retaliate in some major way and probably turn loose its proxies such as the terrorist wing of Hezbollah and its militias in Iraq and Syria.
John McLaughlin
Former acting director, CIA

Iran's cyber capabilities have increased rapidly in recent years, and while the state has never been publicly tied to an attack on industrial control systems, cybersecurity professionals warn it is likely working to develop those capabilities. Iranian hackers have already carried out destructive digital attacks, paralyzing computer networks around the Middle East like Saudi Arabia's state oil giant Aramco in 2012 and hitting several U.S. targets, including banks, a dam and a major Vegas casino.

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The last year has seen a series of escalations including attacks on commercial tankers and oil facilities in the Gulf widely blamed on Iran. It also saw Washington's designation of the Revolutionary Guard Corps as a terrorist group, Iran's seizures of foreign tankers and its shooting down of a U.S. drone amid mounting U.S. sanctions.

"We're dealing with an actor like Iran that has proven to be very capable at executing kinetic responses across the field," Geranmayeh said, citing the drone downing and the Sept. 14 attack on Saudi Aramco that instantly knocked out half of the Saudis' oil production. "We're not just dealing with a third-rate country that's incapable of responding."

...But WWIII hype is 'asinine' and 'hyperbolic'

Regional experts maintain that the Iranian state's response is likely to remain somewhat measured and gradual, as war is in neither country's interest and regime survival is paramount for Tehran.

The hashtag "WW3" was trending on Twitter on Friday and through the weekend, but is "one of the most hyperbolic, stupid things I've heard," according to Phillip Smyth, a Washington Institute expert on Shiite militarism. "This isn't World War 3," he told CNBC. "That's not how any of this works ... it's asinine."

And Iran's supreme leader didn't stay in power for the last 30 years by getting into impulsive wars with the U.S., noted Ray Takeyh, an Iranian-American former U.S. diplomat now at the Council of Foreign Relations.

Iranian Supreme Leader Ayatollah Ali Khamanei makes a speech regarding Trump's withdrawal decision from Iran nuclear deal during a press conference in Tehran, Iran on May 09, 2018.
Iranian Leader's Press Office | Handout | Anadolu Agency | Getty Images

"For all the fears already circulating that the United States just started World War 3, Iran's reaction is likely to be a calibrated one," Takeyh wrote in a Politico piece on Friday.

"The Islamic Republic had already pledged to retreat further from its nuclear obligations by next week. A move in that direction seems more likely at this point, as opposed to blowing up American diplomatic and military outposts."

Indeed, the most immediate action from Iran was the announcement Sunday that it would suspend its compliance to 2015 Iranian nuclear deal. But notably, Tehran maintained that it would keep working with the International Atomic Energy Agency's inspectors, and left the door open for a return to full compliance if economic sanctions are lifted.

"My guess is they will be very careful in calibrating whatever decisive move they make," former Defense Secretary William Cohen, who served under the Clinton administration, told CNBC. "The Iranians will want to get their amount of blood back in terms of striking the U.S., but I don't think it will be a major strike because they'd be inviting a much more overwhelming strike against them."

What about attacks in the US?

DHS said in a bulletin Saturday that "At this time we have no information indicating a specific, credible threat to the Homeland," but added that "Iran and its partners, such as Hizballah, have demonstrated the intent and capability to conduct operations in the United States."

But the experts surveyed by CNBC believe operations on the U.S. mainland outside of cyberattacks are highly unlikely, as Iran doesn't want to draw attacks on its own mainland.

The regional proxy risk, however, remains very real especially since Tehran doesn't always have control over those groups — like the Shiite militias in Iraq or the Houthi rebels in Yemen — and they have acted out on their own in the past.

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"We can be predictive based on everything we've seen to date," Sanam Vakil, deputy head of Chatham House's MENA Program, told CNBC. "All the indirect, asymmetrical, proxy-related activity is viable. But we have to start thinking very far outside of the box."

Iran not only has to make a point and to avenge Soleimani's death, "they have to accelerate this process in order to find an off-ramp," — a way to force the other side to back down, she said.

Still, Vakil like many others believes there is a limit. "Nobody wants a conventional war, and I definitely don't think the Iranians want it," she said.

"The only caveat I will say is that while the Iranians don't want it, they might be willing to gamble, and I think they're gambling right now on anything they do."