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Explained: America, Iran, And The 'Very Big Mistake' That Might Start War

It's a "staring contest" in the Middle East right now, as America and Iran face off -- and experts fear a conflict could kick off accidentally.

A $130 million U.S. unmanned surveillance drone was shot down off the coast of Iran on Thursday. American officials decried an "unprovoked" attack on an asset flying over international waters; Iran maintained the drone had entered its airspace.

READ MORE: Iran Says Revolutionary Guard Shot Down U.S. Drone

READ MORE: Trump Says Iran May Have Made 'A Very Big Mistake' In Shooting Down Drone

President Donald Trump said he has no desire to start a military fight, but with vocal Iran opponents in his administration -- and a bold tweet hours after the drone strike -- there are fears the world may be heading for another war in the Middle East.

A Global Hawk drone, of the type, shot down in the Middle East. Photo: Getty

Reports emerged that Trump ordered -- then later cancelled -- a military strike in the country in retaliation.

"Trump has backed himself into a corner," David Smith, of the University of Sydney's United States Studies Centre, told 10 daily.

"Its a staring contest of who blinks first. It's a crisis... we’re reaching a critical phase," said Deakin University's Shahram Akbarzadeh, a professor of Middle Eastern politics.

So what's going on? Are we going to war in Iran? Here's what you need to know.

What's happening with Iran?

An unmanned Global Hawk drone was shot down on Thursday in the Strait of Hormuz, a narrow patch of water which separates Oman and Iran. The exact position is disputed -- Tehran said it entered Iranian airspace, but Washington disputed this.

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The attack ratcheted fears the U.S. and Iran's simmering standoff could escalate after oil tankers were bombed in the same region -- an important shipping route for 40 percent of the world's oil trade -- last week. American officials blamed Iran, Iran denied responsibility, and oil prices worldwide shot up.

Fire and smoke billowing from Norwegian-owned Front Altair tanker, said to have been attacked in the waters of the Gulf of Oman. Photo: Getty

Trump tweeted the drone's downing was "a big mistake", stoking fears of imminent retaliation -- but he later said it was shot down by a "loose and stupid" officer, possibly not on official orders. Trump later played the tension down further, stressing the drone did not have a pilot, which "would have made a big, big difference."

But on Friday, multiple outlets reported Trump ordered airstrikes against Iranian targets soon after the drone was downed. Ships were in position and aircraft launched, but the strike was later cancelled.

It is unclear how close the attack was to being carried out.

How did this start?

"This situation came about largely because Trump withdrew from the Iran nuclear agreement, and imposed very severe economic sanctions," said Professor Amin Saikal, Director of the Centre for Arab and Islamic Studies at Australian National University.

"This is affecting not only finances but overall development and their main source of income, which is oil."

Iran can't let their economy collapse.

A 2015 agreement drawn up by Barack Obama saw economic sanctions dropped against Iran in exchange for Tehran agreeing to limit its nuclear enrichment program. Trump exited the U.S. in 2018, calling it "a horrible one-sided deal". American sanctions were re-established, and new ones penalised other countries for doing business with Iran, wounding its exports and economy.

"When Iran is pushed into a corner, they want to react," Saikal told 10 daily.

Iran's President Hassan Rouhani at the Shanghai Cooperation Organisation in Kyrgyzstan last week. Photo: Getty

Iranian president Hassan Rouhani came to power on promises of finding a solution to the conflict with America, Akbarzadeh said, and hardliners want the country to stand up to U.S. aggression.

"Iran's trying to send a message to U.S. that it will give them a hard time if they persist with this pressure or consider military action," he said.

"Rouhani has hardliners criticising him for looking weak, giving up too much. Now Iran cannot afford to look weak and has to match the posturing of the U.S."

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Smith, a senior lecturer in American politics at USYD, said Trump hoped the sanctions would force Iran back to the nuclear negotiating table.

"He withdrew, not because Iran wasn't complying with the deal, but the belief Iran was making mischief all over the region... and that sanctions relief helped them do this," he told 10 daily.

Iran is a key player in the region, involved in simmering conflicts with Saudi Arabia, the United Arab Emirates, and Israel. Members of Trump's inner circle -- including secretary of state Mike Pompeo, national security adviser John Bolton, and Senator Lindsey Graham -- are considered 'hawks' on Iran, spoiling for conflict and seeing it as a bigger threat than any other nation.

"Iran has become an obsession with hawks, they viscerally hate it in a way they don't hate North Korea," Smith said.

What comes next?

Nobody knows. Trump isn't showing his hand -- yet.

The U.S. announced Wednesday it would send 1000 troops to the Gulf following the tanker attacks, but Trump coyly responded "you’ll find out" when asked about a response to the drone attack.

The New York Times reported a military strike was ordered against Iran on Thursday, but swiftly called off.

Pompeo, Trump and Bolton,  at the NATO summit in Brussels in 2018. Photo: Getty

"Trump hasn't come out to upscale the tension, he's tried to descale it, which is a positive thing," Akbarzadeh said.

Saikal -- who recently published a book titled 'Iran Rising: The Survival And Future Of Islamic Republic' -- said the situation remains "fluid".

"It could spiral into a conflict, maybe not even intentional, but accidentally. How do the Americans react to shooting the drone down? Will they retaliate or take it on the chin?" he mused.

Are we going to war with Iran?

Despite fears, experts thought it unlikely. Politico reported Trump has told friends a war with Iran would destroy his presidency, and he has publicly said he has no desire to drag the U.S. into another battle in the Middle East. Iran's military may be a match for American forces in a way that Iraq, Afghanistan or Syria never were, but the country's regime is also not in any mood for fighting.

“Iran will not wage war against any nation,” Rouhani said this week.

Akbarzadeh said there was potential for a peaceful resolution.

"It is possible for intermediaries -- Europeans, Australians, regional powers like Oman or Qatar -- to mediate and defuse the situation. It’s happening now, they're meeting in Europe, trying to talk to find some way of stepping back from the brink," he said.