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Israel Eyes Regime Change in Iran—And is Counting on Trump to Make it Happen

LONDON – A seismic shift is underway in the strategic thinking of some Israeli circles, where the long-simmering shadow war with Iran has escalated into a direct confrontation, prompting a stark re-evaluation of long-term security. The unprecedented exchange of missile and drone fire in April has moved the once-unthinkable goal of regime change in Tehran from the realm of covert aspiration to a potential policy objective, one that could find a powerful and willing partner in a second Donald Trump administration.

This hardening stance was captured in a frank assessment reported by BBC News, reflecting a growing sentiment within parts of Israel's security establishment. "If it's through attack or through other means, I don't know, but certainly we should leverage the situation to switch regimes," one source noted. The sentiment underscores a willingness to absorb short-term pain for what is perceived as a permanent solution: "If it's going to help us in the longer term to feel safer here then we will have to go through it."

This calculus represents a high-stakes gamble, not just for the Middle East, but for the global economy. For financial markets, the prospect of an overt push for regime change—backed by a U.S. president known for his transactional and disruptive foreign policy—introduces a level of geopolitical risk not seen in decades.

The Shifting Calculus in Tel Aviv

For years, Israel's strategy toward Iran was one of containment and attrition. This involved a "war between the wars"—covert operations, cyberattacks, assassinations of nuclear scientists, and strikes on Iranian proxies in Syria and Lebanon. The goal was to degrade Iran's capabilities and prevent it from obtaining a nuclear weapon without triggering a full-scale regional conflict.

The direct Iranian attack on Israel on April 13th, involving over 300 drones and missiles, shattered that paradigm. While Israel and its allies successfully intercepted nearly all projectiles, the event marked a new era of direct, state-on-state hostilities.

• From Containment to Confrontation: The attack demonstrated Iran's willingness to risk open war, forcing Israeli planners to question whether the long-standing strategy of containment is still viable.
• The Nuclear Clock: A primary driver of this strategic shift is Iran's advancing nuclear program. With Tehran enriching uranium to near-weapons-grade levels, the window for preventative action is perceived to be closing rapidly.
• A Perceived Opportunity: Rather than just a threat, the current tension is also seen by some in Israel as an opportunity to leverage global and regional dynamics to fundamentally alter the Iranian threat, rather than merely manage it.

The 'Trump Variable': A Calculated Gamble

Central to this strategic pivot is the potential return of Donald Trump to the White House. The first Trump administration's "maximum pressure" campaign, which included withdrawing from the 2015 nuclear deal (JCPOA) and imposing crippling economic sanctions, is viewed by many in Israel as a more effective approach than the diplomatic overtures of the Biden administration.

A second Trump term is seen as the key enabler for a more aggressive Israeli posture.

• Anticipated Policy Alignment: Israeli strategists anticipate a Trump 2.0 administration would not only reinstate but intensify economic pressure on Tehran, further weakening the regime's grip on power and its ability to fund its military and proxy network.
• Reduced Diplomatic Restraint: Unlike the current U.S. administration, which has consistently urged de-escalation, a Trump White House is expected to offer Israel greater latitude to conduct military operations against Iran and its interests without fear of public rebuke from Washington.
• Potential for U.S. Support: While direct U.S. military involvement in an Israeli-led operation is not a given, the assassination of Iranian General Qasem Soleimani in 2020 demonstrated Trump's willingness to take decisive, high-risk action against Tehran—a precedent that emboldens Israeli hawks.

Financial Markets on High Alert

For global investors and corporate leaders, the rhetoric points to a period of extreme volatility and heightened risk. The stability of the global energy supply, inflation forecasts, and investment flows are all contingent on the delicate balance of power in the Middle East. A concerted push for regime change in Iran would upend this balance entirely.

The economic implications are stark and far-reaching:

• Energy Markets: The most immediate and significant impact would be on oil prices. Iran has repeatedly threatened to close the Strait of Hormuz, a chokepoint through which roughly 20% of global oil consumption passes. A direct conflict could see oil prices spike well into the triple digits, sending shockwaves through the global economy.
• Inflationary Pressures: A sustained oil price shock would act as a major headwind for central banks, complicating the fight against inflation. Higher energy and shipping costs would feed directly into consumer prices, potentially forcing policymakers to maintain higher interest rates for longer, stifling economic growth.
• Investment and Capital Flows: Heightened regional risk would trigger a significant sell-off in emerging market assets and a flight to safety, likely benefiting the U.S. dollar, gold, and sovereign bonds. Foreign direct investment into the Gulf region, which has been booming as countries like Saudi Arabia and the UAE diversify their economies, would likely freeze.

What to Watch

As the U.S. election cycle progresses, market participants and policymakers will be closely monitoring several key indicators to gauge the likelihood of this high-risk scenario unfolding. The path forward is fraught with uncertainty, but the direction of travel will be determined by a few critical variables.

• The U.S. Election: The outcome in November is the single most important factor. A Trump victory would be interpreted by markets as significantly increasing the probability of a more aggressive, joint U.S.-Israeli posture toward Iran.
• Rhetoric and Posturing: The language used by Israeli, Iranian, and U.S. officials will be a crucial barometer. Any shift from strategic ambiguity to explicit threats of regime change will be a major red flag.
• Military Deployments: The movement of U.S. naval assets, particularly aircraft carrier strike groups, in the Persian Gulf and Eastern Mediterranean, alongside Israeli military exercises, will serve as tangible indicators of operational planning.
• Iran's Nuclear File: Reports from the International Atomic Energy Agency (IAEA) on Iran's nuclear activities will be paramount. Any confirmation that Iran is moving to weaponize its program could act as the ultimate trigger for pre-emptive action.

For now, the world watches and waits. But in the corridors of power in Tel Aviv and on the trading floors of London, New York, and Tokyo, the potential for a new, far more dangerous chapter in the Middle East is being priced in.