The Wall Street Journal reports that investors pulled back Wednesday following the news that the Iranian warship flotilla was transiting the Suez Canal into the Mediterranean. (For those keeping score, the transit means that my original thinking on this task force – that Egypt’s interim government might reject its proposed movement through the canal – was wrong.) Apparently, the shekel took a brief dive with currency traders as well. Gold and crude have risen in the wake of the warship news; the dollar has fallen.

Avigdor Lieberman announced that the Iranian task force is headed to Syria. Assuming this bears out, the Assad regime will get to have the best of both worlds: a brand-new American ambassador — dispatched in January with vows of “engagement” — and a historic visit from the warships of revolutionanary Iran. As Israeli authorities point out, moreover, Iran stated earlier that the naval task force would spend up to a year in the Mediterranean. Its base of operations is likely to be Syria, but triumphal port visits to Beirut are undoubtedly on Tehran’s to-do list.

The ships themselves are hardly impressive: one frigate with old anti-ship missiles and one barely armed replenishment ship. From that perspective, the reactions of global markets might seem excessive. These ships can’t fight a war. But the reactions are actually quite rational. The big shift here is in political perceptions of power. The important facts are that revolutionary, terror-sponsoring Iran — under U.S., EU, and UN sanctions — feels free to conduct this deployment, and Syria feels free to cooperate in it. Egypt’s interim rulers apparently saw no reason to block the Suez transit, in spite of the Egyptians’ very recent concern over Iranian-backed terrorists and insurgents operating on their territory. Saudi Arabia, for its part, considered it prudent to host the Iranian warships last week — in spite of the Saudis’ own conviction that Iran has been aiding rebel groups that threaten Saudi territory.

The cooperation from the Arab nations should not be misread, however. The Arabs have no desire to see Iran in a position of regional hegemony. The threat of that prospect will raise the stakes for the governmental turmoil in the Arab world. The view is likely to gain momentum that Arabs need to organize as much to counter Iran as to address their own domestic issues. That factor — so inimical to the unforced development of political liberalism — was never going to be dismissible; the Iranian warship deployment makes it inevitable.

In information-speak, Iran is “inside our OODA-loop” right now: acting faster than we have prepared to react. Complacent assumptions about inertia in the status quo will not be borne out. Iran’s proximate strategic objective is consolidating the rule of Hezbollah in Lebanon. Former prime minister Saad Hariri declared his opposition to the Hezbollah-backed government in a speech on Monday; Hassan Nasrallah is promising that Hezbollah fighters will occupy Galilee; Ehud Barak warned on Wednesday that Israel might have to enter Lebanon again to counter Hezbollah. With the battle lines being drawn, Iran’s posture is hardening: the Islamic revolutionary regime is “all in.”

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