Oil prices surged, gold hit a more than six-year high and equities tumbled Monday (scroll down for the numbers) on fears of a major conflict in the Middle East.
Markets reacted after President Donald Trump on Sunday thumbed his nose at critics angered at being kept in the dark over the US killing of a top Iranian general.
Trump said he didn’t need congressional approval – even for a “disproportionate” strike.
Trump also aroused concern when he doubled down Sunday on a threat to attack Iranian cultural sites despite accusations that any such strike would amount to a war crime.
House Speaker Nancy Pelosi has been leading the backlash against Trump’s decision to authorize a drone strike against Qasem Soleimani in Baghdad, an operation that Trump only officially informed Congress about on Saturday – nearly 48 hours after the event.
Two Democratic lawmakers announced on Sunday that they would introduce a new resolution before the House of Representatives that they said would prevent Trump from unilaterally leading the United States into a war against Iran.
But a defiant Trump made light of the calls for him to get Congressional approval in any future military action, saying such notice was “not required” – and then saying his tweet would serve as prior notification if he did decide to strike against Iran again.
“These Media Posts will serve as notification to the United States Congress that should Iran strike any US person or target, the United States will quickly & fully strike back, & perhaps in a disproportionate manner,” Trump wrote.
“Such legal notice is not required, but is given nevertheless!”
While previous administrations have tried to garner bipartisan support for significant military operations by briefing opponents beforehand, both Pelosi and the top Democrat in the Senate, Chuck Schumer, were kept in the dark about the targeting of Soleimani.
A furious Pelosi said that what she called “this initiation of hostilities” was taken “without the consultation of the Congress and without the articulation of a clear and legitimate strategy to either the Congress or the public.”
“As speaker of the house, I reiterate my call on the administration for an immediate, comprehensive briefing of the full Congress on military engagement related to Iran and next steps under consideration,” she said in a statement.
Speaking on ABC television, Schumer said he was worried that the president would drag the US into “what he [Trump] calls another endless war in the Middle East”.
“I am really worried, and that is why Congress must assert itself. I don’t believe the president has authority to go to war” in Iran without congressional approval, he added.
Secretary of State Mike Pompeo said the administration had begun to brief Congressional leaders about the justification for the strike and promised to “keep them fully apprised.”
Asked whether the administration would seek authorization for any new military action, he told ABC television: “We have all the authority we need to do what we’ve done to-date. We will continue to do things appropriately, lawfully, and constitutionally.”
Trump doubled down Sunday on a threat to attack Iranian cultural sites despite accusations that any such strike would amount to a war crime.
After his top diplomat, Pompeo, had insisted that any military action would conform to international law, Trump said he would regard cultural sites as fair game if Iran resorted to deadly force against US targets.
“They’re allowed to kill our people, they’re allowed to torture and maim our people, they’re allowed to use roadside bombs and blow up our people and we’re not allowed to touch their cultural site? It doesn’t work that way,” Trump told reporters.
“If they do anything there will be major retaliation.”
His comments on his return from a break in Florida followed a welter of criticism over a tweet on Saturday night in which he said sites which were “important to … Iranian culture” were on a list of 52 potential US targets.
Tehran’s foreign minister had reacted to those initial comments by drawing parallels with the Islamic State group’s destruction of the Middle East’s cultural heritage.
And as Twitter was flooded with photos of revered Iranian landmarks in ancient cities such as Isfahan under the hashtag #IranianCulturalSites, leading US Democrats said the president would be in breach of international protocols if he made good on his threat.
“You are threatening to commit war crimes,” Senator Elizabeth Warren, one of the top Democrats hoping to challenge Trump in November’s election, wrote on Twitter.
“We are not at war with Iran. The American people do not want a war with Iran.”
“Targeting civilians and cultural sites is what terrorists do. It’s a war crime,” added fellow Senator Chris Murphy.
In a flurry of interviews on the Sunday talk shows, Pompeo said the US would not hesitate to hit back hard against Iran’s “kleptocratic regime” if it came under attack, but pledged that any action would be consistent with the rule of law.
Both sides have traded threats since a US drone strike in Iraq on Friday killed Qasem Soleimani – one of the most important figures in the Iranian government.
“We’ll behave lawfully. We’ll behave inside the system. We always have and we always will,” Pompeo told the ABC network.
“The American people should know that every target that we strike will be a lawful target, and it will be a target designed with a singular mission, of protecting and defending America.”
His comments came after his opposite number in Tehran Mohammad Javad Zarif tweeted that “targeting cultural sites is a WAR CRIME.”
“A reminder to those hallucinating about emulating ISIS war crimes by targeting our cultural heritage: Through MILLENNIA of history, barbarians have come and ravaged our cities, razed our monuments and burnt our libraries,” said Foreign Minister Zarif.
“Where are they now? We’re still here, & standing tall.”
Nicholas Burns, who served as US ambassador to NATO under president George W. Bush, said the Trump administration would be guilty of hypocrisy given it was part of international efforts to deter IS from destroying countless pre-Islamic artefacts, including in the Syrian UNESCO-listed site of Palmyra.
“Donald Trump’s threat to destroy Iranian cultural sites would be a war crime under UN Security Council resolution 2347 – supported by the Trump Administration itself in 2017 to warn ISIS+Al Qaeda of similar actions,” said Burns, now a professor at Harvard University’s John F. Kennedy School of Government.
“His threat is immoral and un-American.”
Others drew comparisons with the Taliban’s 2001 destruction of the Bamiyan Buddhas in Afghanistan
Pompeo refused to give details on the 52 potential targets which Trump said had been drawn up to represent each and every hostage held in the standoff at the US embassy in Tehran four decades ago.
But one former official expressed skepticism that military planners would agree to target cultural sites.
“I find it hard to believe the Pentagon would provide Trump targeting options that include Iranian cultural sites,” said Colin Kahl who was national security dviser to former vice president Joe Biden.
“Trump may not care about the laws of war, but DoD (Department of Defense) planners and lawyers do … and targeting cultural sites is war crime.”
Oil prices surged, gold hit a more than six-year high and equities tumbled Monday.
Donald Trump warned of a “major retaliation” against Tehran after it threatened revenge for the killing Friday of commander Qasem Soleimani, which shocked world markets and sparking a sell-off in stocks and a spike in crude.
Iran announced on Sunday a further rollback of its commitments to its nuclear accord, while Iraq’s parliament demanded the departure of American troops from the country as fallout from the attack spreads.
The crisis has jolted investors, who had been in an upbeat mood as China and the US prepare to sign their mini trade deal next week, while data indicate a slight improvement in the global economy.
Both main crude contracts were up more than two percent in early Asian trade, with Brent above $70 for the first time since September when attacks on two Saudi Arabian facilities briefly halved output by the world’s top producer.
White facing criticism for the actions and calls to dial down the tension, the US president was in combative mood.
“Geopolitical tensions look like remaining elevated in coming days, so lending support to oil prices and keeping risk asset markets on the defensive,” said Ray Attrill at National Australia Bank.
Safe-haven assets popular in times of turmoil were also on the rise, with gold at highs not seen since mid-2013, while the Japanese yen was at a three-month high against the dollar.
Equity markets tracked losses on Wall Street, where the three main indexes fell from record highs, while all seven bourses in the Gulf Cooperation Council states finished sharply down, with some fearing Iranian revenge attacks on US assets or troops.
Some of the GCC members, including Kuwait, Qatar and Bahrain, are home to major US military bases, while there are also hundreds of troops in Saudi Arabia.
The losses on equity markets extended into Asia, with Tokyo down two percent by the break as dealers returned for the first time since the new year break. Hong Kong lost 0.7 percent and Sydney was off 0.4 percent.
Singapore fell 0.5 percent, Seoul shed one percent, Taipei lost more than one percent and Manila dived 1.7 percent, with Jakarta down 0.7 percent.
However, Shanghai rose 0.3 percent as investors cheered authorities’ pledge at the weekend to support China’s troubled banking sector and small businesses in the face of a growing debt mountain.
Friday’s attack sent shockwaves through global markets, which had been enjoying a healthy run of gains in the wake of the China-US trade deal, which eased tensions between the economic powers.
Looser central bank monetary policy, improving economic data and easing concerns about a possible no-deal Brexit had also lent support.
“Everyone got comfortable in that fact that the truce in the trade war had come through and the outlook for 2020 looked a little bit better and then we had another geopolitical reminder come through,” Peter Dragicevich, a market strategist at Suncorp Group Financial, said.
As of 0230 GMT:
Brent Crude: UP 2.4 percent at $70.24 per barrel
West Texas Intermediate: UP 2.2 percent at $64.42
Tokyo – Nikkei 225: DOWN 2.0 percent at 23,173.35 (break)
Hong Kong – Hang Seng: DOWN 0.7 percent at 28,251.31
Shanghai – Composite: UP 0.3 percent at 3,094.18
Dollar/yen: DOWN at 107.97 yen from 108.11 yen at 2200 GMT Friday
Pound/dollar: UP at $1.3078 from $1.3074
Euro/pound: UP at 85.36 pence from 85.29 pence
Euro/dollar: UP at $1.1163 from $1.1155
New York – Dow: DOWN 0.8 percent at 28,634.88 (close)
London – FTSE 100: UP 0.2 percent at 7,622.40 (close)
— Bloomberg News contributed to this story —