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Analyst Warns Iran Tensions a Bigger Threat Than China to US Investors

Analyst Warns Iran Tensions a Bigger Threat Than China to US Investors

Tensions between the U.S. and Iran have been in the forefront over the last couple weeks, and Alavan Business Advisory Director Alastair Newton thinks the outcome will have a greater impact on markets this year than the ongoing trade war between the U.S. and China.

“I actually think this (Iran) is going to be a more important issue for investors this year than China-U.S.,” Newton, who is also a former British diplomat, said CNBC’s “Squawk Box Asia.”

The U.S. and China are meeting this week to sign phase one of their trade deal that was agreed on back in December, but many argue that the newly minted truce won’t amount to much, and there is still a long way to go with negotiations.

Newton sees more retaliation coming from Tehran after multiple missile strikes on Iraqi bases housing American troops last week. Those strikes were in retaliation for the assassination of top Iranian Gen. Qasem Soleimani by U.S. drone strike the week before.

It was revealed Monday that U.S. President Donald Trump authorized the killing of Soleimani seven months ago if Iran took retaliation too far and ended up killing an American, according to five current and former senior administration officials. A U.S. contractor was killed in Iraq two weeks ago by an Iranian proxy group, which could explain the timing of Soleimani’s death.

Some experts, according to CNBC, have said that proxy groups in the Middle East could be used in retaliation against the U.S. along with cyberattacks.

Newton thinks relations between the U.S. and Iran are “just going from bad to worse,” and diplomacy doesn’t seem to be in the cards in regards to finding a solution. Trump tweeted Sunday that “he couldn’t care less” if Iran agrees to negotiate.

And Newton thinks Tehran wouldn’t even want to negotiate with Trump anyways, which makes sense given that the U.S. president unilaterally pulled out of Iran’s nuclear deal in 2018, and has turned to hammering the Middle Eastern country with a bevy of economic sanctions.

Iran admitted to unintentionally shooting down a Ukrainian passenger jet last week, and Newton warns that it may lead to new leadership for Iran’s Islamic Revolutionary Guard Corps. That means that a younger generation of officers trained by Soleimani who Newton called “a particularly ruthless man” but “outstandingly good” in military affairs, could soon rise in the ranks and allow the elite Quds Force to make a strong come back.

“I think that Iran’s foreign legion … still poses a significant threat in the region, pursuing Iran’s long-standing objectives,” he said.