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Decrypted: Hackers show off their exploits as Black Hat goes virtual

Every year hackers descend on Las Vegas in the sweltering August heat to break ground on security research and the most innovative hacks. This year was no different, even if it was virtual.

To name a few: Hackers tricked an ATM to spit out cash. A duo of security researchers figured out a way to detect the latest cell site simulators. Car researchers successfully hacked into a Mercedes-Benz. A Windows bug some two decades old can be used to plant malware. Cryptocurrency exchanges were extremely vulnerable to hackers for a time. Internet satellites are more insecure than we thought and their data streams can contain sensitive, unencrypted data. Two security researchers lived to tell the tale after they were arrested for an entirely legal physical penetration test. And, a former NSA hacker revealed how to plant malware on a Mac using a booby-trapped Word document.

But with less than three months until millions of Americans go to the polls, Black Hat sharpened its focus on election security and integrity more so than any previous year.

Here’s more from the week.


A major voting machine maker is finally opening up to hackers

The relationship between hackers and election machine manufacturers has been nothing short of fraught. No company wants to see their products torn apart for weaknesses that could be exploited by foreign spies. But one company, once resistant to the security community, has started to show signs of compromise.

Election equipment maker ES&S is opening up its voting machines to hackers — willingly — under a new vulnerability disclosure program. That will see the company embrace hackers for the first time, recognizing that hackers have knowledge, insight and experience — rather than pushing them away and ignoring the problems altogether. Or, as the company’s security chief told Wired: “Hackers gonna hack, researchers gonna research.”

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Edtech’s newest unicorn, ApplyBoard, lands $1.4B valuation with fresh funding

Brothers Martin, Meti and Massi Basiri all left Iran to study abroad in Canada. After struggling with every aspect from the visa process to grade conversions, the brothers saw an opportunity to make the transition to study internationally more seamless. So, they started Applyboard in 2015 at University of Waterloo’s Velocity Garage.

ApplyBoard has two main parts of its business. First, the company helps international students search and apply from a single platform to universities and colleges across the world. Similar to how American students use the Common App to apply to schools, ApplyBoard seeks to be the college undergrad application for international students, and serve as a marketplace. It is free for students.

The other part of ApplyBoard’s business is on the university side. The startup makes money from revenue-sharing agreements with colleges and universities. If a student attends a college from using their services, ApplyBoard gets a cut of the tuition.

While the SaaS-enabled startup did not disclose revenue, it said it took in $300 million in sales last year.

Five years after founding, ApplyBoard has helped assist over 100,000 students across 110 countries to study internationally. Today, the Ontario-based startup announced it raised $75 million (USD) at a $1.5 billion valuation, making it the latest edtech unicorn.

Unlike most of the reported rounds we’ve been covering these days, this round was closed at the end of March in the thick of the pandemic for Canada, co-founder Martin Basiri told TechCrunch . It means that ApplyBoard’s new valuation is yet another example of how edtech as a sector is feeling dollar sign momentum from COVID-19.

The pandemic has forced millions of students to learn from home, putting tech companies at the forefront of making remote education possible. ApplyBoard, said Basiri, had a 200% month-over-month surge of new schools signing up for its service.

“A lot of investors noticed the importance of our digital platform that can do such an important job,” said Basiri.

While most unicorns in the edtech space hail from the B2C space, like Duolingo and Udemy, the story with ApplyBoard shows that there is promise in selling to large businesses. Across the world, colleges have been turning to alternative marketing channels as campus tours and limited travel hurts their exposure to international students.

The new round was led by Drive Capital. Other participating investors include Fidelity Investments Canada ULC, Business Development Bank of Canada, Anthos Capital, Artiman Ventures, and Plug and Play Tech Center. ApplyBoard plans to hire 100 more employees, atop its existing 400 staff.

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Jailed Huawei Workers Raised a Forbidden Subject: Iran

The five men were all locked in disputes with their onetime employer, the Chinese technology giant Huawei. And they had all joined a group on the social app WeChat to organize.

Then, one of them wrote a message to the group that would upend their lives:

“I can prove that Huawei sold to Iran.”

The message, and the brief discussion that followed, touched on an explosive issue for the company. Huawei had just begun fighting allegations by the U.S. government that it had committed fraud to bypass sanctions against Iran. The company’s chief financial officer, a daughter of its founder, had been arrested less than two weeks earlier as part of the case.

The employees’ messages in the chat group included no hard evidence that Huawei’s activities in Iran were unlawful. Yet within weeks, the Chinese police had arrested all five men, two of them told The New York Times.

The two former employees — Li Hongyuan, 42, and Zeng Meng, 39 — said officers had questioned them about Iran and asked why they had been in contact with foreign news outlets, both topics they had discussed on WeChat.

Mr. Li eventually spent more than eight months in detention. Mr. Zeng spent three.

For over a year now, Huawei, the world’s largest maker of telecommunications equipment and a leading smartphone brand, has been the target of an intense clampdown by the Trump administration. The Justice Department has charged Huawei with stealing trade secrets and lying about its business in Iran. The company denies wrongdoing. American officials say Huawei answers to the Chinese state, which the company also denies.

But even if Huawei is not government controlled, Chinese officials often defend it as if it were a strategically vital state asset.

Beijing has vowed to retaliate for the U.S. government’s restrictions on Huawei. China’s ambassador to Germany threatened consequences if that nation’s government excluded the company from its telecom market. State propaganda outlets cast supporting Huawei as a patriotic act.

And in the case of the jailed employees, Mr. Li and Mr. Zeng said, the police appear to have arrested them in part to stop them from speaking out about Huawei’s activities in Iran.

Huawei declined to comment. It referred to an earlier statement saying that Mr. Li’s case was not a labor dispute, and that the company had reported suspected illegal conduct to the authorities. Huawei also reiterated that it was committed to complying with the law wherever it operates.

The police in the city of Shenzhen, who seized the men, didn’t respond to a faxed request for comment.

News of Mr. Li’s detention set off a wave of anger at Huawei in China last year. Internet users were outraged at what seemed to be a case of a vindictive corporation’s punishing an employee who dared to demand the pay he was owed. Censors quickly erased critical comments and articles. But at the time, the police’s interest in the employees’ discussions about Iran was not reported.

Mr. Li, Mr. Zeng and the three others were first detained in December 2018, not long after the world learned that Washington was accusing Huawei of fraud related to its Iranian business. The five men were embroiled in labor disputes with the company, and they chatted and commiserated in a WeChat group.

The discussion about Iran took place on Dec. 11, according to screenshots seen by The Times. Days later, Mr. Li was arrested in Shenzhen, where Huawei has its headquarters. Mr. Zeng was arrested shortly thereafter in Thailand, where he was vacationing, and taken back to China.

For Huawei, not all sales to Iran would have been illegal. In principle, only those involving U.S.-origin goods, technology or services would have fallen afoul of American sanctions. The company has said its sales in Iran were for commercial civilian use and did not violate sanctions.

Even so, Mr. Li said, the police asked him about his involvement in Iran, which he had mentioned on WeChat. As a former global manager in Huawei’s electrical inverter business, Mr. Li naturally had contact with colleagues in Iran, he told The Times. But he said he had never been there himself.

“I only knew so much. Whatever I knew, I told them all of it,” Mr. Li said. The police did not say why they were questioning him about Iran, he said.

The police also knew that he had been arranging to meet with a reporter for a Hong Kong news outlet that month, Mr. Li said. But he had planned to talk with the reporter about Huawei’s labor and tax practices, not Iran, he said.

“I said, ‘There’s nothing illegal about that,’” Mr. Li recalled.

Mr. Zeng said the police had explained it clearly to him: By discussing Huawei’s Iranian business and communicating with foreign news outlets, the former employees had crossed a line.

China and the United States were in a trade war, Mr. Zeng said one officer had told him. At a delicate time, weren’t they just making trouble?

It was the equivalent, Mr. Zeng said the officer had told him, of supporting Japan after it invaded China in the 1930s.

“At the time, the Meng situation was too hot,” Mr. Li said, referring to the arrest of Huawei’s finance chief, Meng Wanzhou. “They might have been afraid that we were making these noises and would cause problems for Boss Meng.”

The three other employees who were jailed couldn’t be contacted.

Mr. Zeng said he had been working as a product manager for Huawei in Morocco when the company began hinting, in 2017, that it was dissatisfied with his performance. In May the next year, he was let go, but his severance package did not include his year-end bonus, and he sued.

During that time, Mr. Zeng looked for other disgruntled Huawei workers to add to a WeChat group. Word reached Mr. Li, who was suing Huawei for his own bonus after his contract wasn’t renewed. The group eventually swelled to more than 60 people.

They knew they were probably being monitored. Huawei has a habit of infiltrating unhappy employees’ chat groups, Mr. Zeng said.

In November 2018, a WeChat group consisting of Mr. Li, Mr. Zeng and a few others split off from the larger one. They discussed how to draw the international news media’s attention to Huawei’s labor practices.

On Dec. 11, the larger WeChat group was discussing Huawei’s political troubles when someone in the group brought up Iran, screenshots of the messages show.

“I worked on IranCell projects from 2012 to 2014,” the person wrote, referring to an Iranian telecom operator. “I went on business trips.”

“I can also confirm,” Mr. Li replied. “Internally, it’s an open secret that Huawei sells to Iran.”

The police arrested Mr. Li on Dec. 16, according to a document from Shenzhen prosecutors. He was initially accused of leaking trade secrets, he said. Mr. Zeng said he was arrested two weeks later on the same accusation.

The three other employees were also in the smaller WeChat group, Mr. Zeng said. He said one was the person who had first spoken up about Iran in the larger group.

When the police took Mr. Zeng back to his Thai hotel, one officer demanded his phone, he recalled. The officer saw that he had been in contact with international news outlets, including The Times, about his colleagues’ arrests.

The officer uttered an expletive, Mr. Zeng said. Did he really have to go to the foreign media? the officer asked.

Mr. Zeng said his damp cell in Shenzhen had held more than 30 detainees. Only at midday would it get some sunlight, on a patch of wall near the toilet. They would crowd around, basking in the warmth and holding their noses.

After Mr. Zeng had spent a few weeks in detention, the police changed the accusation against him to fraud, he said. He denied wrongdoing, and in March 2019, he was released. But he said the police had first made him write a statement promising that he would not publicly go against Huawei’s company line on Iran or be manipulated by foreign forces with ulterior motives, a reference to the international news media.

The accusation against Mr. Li ended up being extortion. He was freed in August with no charges.

“China is still some distance away from having rule of law,” he said.

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Pro-Iran accounts blamed the US for the coronavirus in latest social media disinformation campaign

As the coronavirus wreaks havoc on economies and populations around the globe, the chaos also presents a unique opportunity for disinformation efforts.

According to a new report from social analytics company Graphika, which tracks online disinformation, Iran’s propaganda operations have turned to promote the country’s causes through the lens of the coronavirus in recent weeks. Since February, a group known as the International Union of Virtual Media (IUVM) has seeded memes, articles and videos promoting Iranian and Chinese interests and accusing the U.S. of creating the virus as a biological weapon. The IUVM efforts also blamed U.S. sanctions for worsening Iran’s situation and praised Iranian leaders for their response to the pandemic.

Image via Graphika

Through mid-February, accounts linked to the IUVM were preoccupied with the U.S. assassination of Qasem Soleimani, but they turned their attention to the coronavirus around the time that Iran reported its first COVID-19 deaths. An article in late February with the headline “Is coronavirus an American creation?” accused the U.S. of bioterrorism and claimed that “America is the biggest beneficiary to creating a virus that will paralyze China and pose internal challenges to a power that poses a threat to the White House in the economic sphere.”

A series of editorial cartoons also pushed the message that the U.S. was to blame for the pandemic, depicting President Trump as a the virus itself. As Iran began to recover from its worse wave of coronavirus cases, the message shifted to praising the country’s response to the virus and highlighting the failures of the Trump administration as the virus spread quickly through the U.S.

Image via Graphika

While the IUVM generally focuses its efforts on creating website content, it also promotes pro-Iran propaganda through social platforms. The propaganda group has struggled to keep a foothold on social media as platforms grow more savvy to disinformation threats, but the IUVM renewed its efforts with a handful of new accounts across Facebook, Instagram, YouTube and Twitter promoting pro-Iran coronavirus content. Those accounts, which had fewer than 5,000 combined followers, were taken down by April.

The IUVM can be expected to continue this kind of operation in the future, but Graphika notes that “its amplification network has been significantly disrupted by a series of takedowns over the years,” particularly on Facebook and Twitter.

“The IUVM operation is significant and manned by a well-resourced and persistent actor, but its effectiveness should not be overstated,” Graphika’s researchers said in the new report.

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Iran’s Economy Is Bleak. Its Stock Market Is Soaring.

LONDON — He looked past Iran’s cratering economy, ignored the unraveling nuclear deal and tuned out the bellicose threats of war from President Trump. Maciej Wojtal was focused on a mundane yet crucial question: Where were Iran’s people going to buy their chocolate biscuits?

Iranians were being forced to economize, trading lunch at kebab restaurants for cheap pleasures like sugary snacks. Mr. Wojtal, who runs an investment fund devoted to Iranian stocks, identified a company that was poised to benefit: Gorji Biscuit was well positioned to raise prices, given that foreign competitors were forced to steer clear of Iran because of American sanctions that restricted commerce with the country. He bought its shares and watched their value multiply more than fivefold over the course of 2019.

“You have companies that actually benefit from sanctions,” Mr. Wojtal said. “Whoever had to compete with imported goods, he’s better off.”

Born and raised in Poland, Mr. Wojtal, 36, oversees the only foreign fund that is focused on buying stocks that trade on two exchanges in Tehran. This may seem a forbidding realm of finance, a marketplace overseen by an Iranian government under siege by sanctions. To avoid American-enforced prohibitions on using the dollar to transact with Iran, Mr. Wojtal’s fund is administered in the Netherlands and operates entirely in euros.

A fund centered on Iranian equities may also seem frivolous. Who wants to buy into a country that is, by most indications, devastated by sanctions, cut off from the rest of the world economy and seething with public anger over rising prices and declining living standards?

Mr. Wojtal does. As he portrays it, obsession over sanctions misses the breadth of Iran’s economy. Sanctions have barred sales of Iranian oil, a major source of revenue for the Iranian government, though unknown volumes continue to be smuggled out of the country. Oil is such a large piece of the economy that a hit to that sector is guaranteed to produce a downturn.

But beneath that headline reality is an enticing emerging market — a nation of more than 80 million people, many highly educated, intent on transcending decades of isolation to integrate with the rest of the world. Iranians have forged fast-growing businesses in an array of industries, from petrochemicals and automotive to mining and agriculture.

These are the sorts of companies that trade on the Tehran stock market, now the bearer of an unlikely distinction: Last year, it was the best performing equity market on earth, more than doubling in dollar terms.

The run-up in Iranian equities perversely stems from the country’s status as an international pariah. With hardly any outside investment trickling into the country, and with an overall economy that has been rapidly contracting, stocks have been stuck at rock-bottom values. Even after soaring last year, many companies’ stocks still look cheap when compared with their profits.

It is worth noting that the title of world’s best performing stock market tends to be captured by nations with alarming proximity to calamity, where even tentative shifts toward normalcy can drastically alter a company’s fortunes. In 2018, the IBC Caracas exchange in Venezuela produced the world’s best returns, according to Last year, the list of contenders included Athens.

Still, the doubling of Tehran stock prices speaks to the resourcefulness of Iranian companies in evading the bite of the Trump administration’s sanctions while, in many instances, profiting precisely because of them.

“It’s an important barometer of confidence in the private sector,” said Esfandyar Batmanghelidj, publisher of Bourse & Bazaar, a news and analysis website in London that focuses on the Iranian economy and business world. “It shows you there is a lot of wealth in Iran.”

The Iranian economy is contracting at a 9.5 percent annual rate, according to the International Monetary Fund. Protests choked Iranian cities in November after an increase in fuel prices. Demonstrations exploded again last month amid anger over the government’s cover-up of its culpability in shooting down a Ukrainian passenger jet.

Some say the stock market is an aberration in a story of strife, the product of Iranian leadership’s exhorting people to entrust their savings to equities in a time of scant alternatives.

“My fear is that this doesn’t end well,” said Adnan Mazarei, a former International Monetary Fund deputy director and now a senior fellow at the Peterson Institute for International Economics in Washington. “This thing becomes a bubble.”

Mr. Wojtal revels in telling stories that challenge conventional views about Iran. On a recent day, he went snowboarding at a mountaintop resort built in the 1960s by the later-deposed shah of Iran.

“It’s absolutely amazing,” he said by phone from Iran. “This will be the major destination for skiing and snowboarding in the Middle East and Central Asia.”

An unapologetic devotee to the bottom line, Mr. Wojtal betrays no squeamishness about investing in a country run by a government that imprisons political dissenters, supports an authoritarian government in Syria and fuels by proxy a brutal war in Yemen.

“We just buy and sell shares,” he said.

He rattles off the last frontiers for global capitalism — Cuba, Venezuela, North Korea. Iran is bigger and more promising, he said.

In Poland in the 1980s, as the country threw off the strictures of Communism, his father ran one of the first international-standard restaurants in Warsaw.

Mr. Wojtal’s career began in banking — first as an equity researcher at Citigroup in Warsaw and later as a trader focused on stocks and derivatives at JPMorgan Chase in London. He worked at a hedge fund, then returned to Poland to manage an investment fund.

The trigger for his interest in Iran was the nuclear deal brokered by President Barack Obama in 2015. Iran promised to restrict its nuclear development plans while submitting to international inspections in exchange for relief from years of stifling sanctions.

With an anticipated surge of international investment, Mr. Wojtal flew to Tehran to have a look. He found a stock market that had been operating for more than two decades. Its two exchanges included some 600 companies, among them makers of everyday staples like food and cleaning products.

Many companies were recording revenue growth of 30 and 40 percent per year, but their stock prices were not reflecting this. The market was full of bargains.

“It had the lowest valuations in the world,” he said.

Mr. Wojtal started his fund, Amtelon Capital — which stands for Amsterdam, Tehran, London — in July 2017, stocking it with money drawn from friends and relatives. He operates out of a glass-enclosed cubicle inside a WeWork space in central London. He travels every other month to Iran, where he has another office.

Among his first buys was a glass producer. With abundant energy and seemingly endless supplies of sand — the key raw material — Iran beckoned as the best place on earth to make glass. He heard stories about Iranian producers trucking glass bottles through Turkey and on to Italy, still undercutting the price of competing products sold there. He took a stake in a company that made glass bottles for the pharmaceutical industry and was exporting them across Europe.

He bought shares in a software producer that was making inventory management systems for Iranian companies, replacing the crude spreadsheets many were using. He bought into an Iranian copper miner.

Then, in May 2018, President Trump revoked American participation in the Iran nuclear deal and reimposed sanctions. Mr. Wojtal was forced to sell his largest holding, a utility that had a monopoly on selling water and natural gas in southwestern Iran. It appeared on the sanctions list.

Ordinary Iranians raced to exchange the domestic currency, the rial, into dollars, pushing its value down by about 70 percent in 2018.

For Iranian exporters, a weak currency was good news. They used rials to pay their workers and buy materials, but earned dollars on their sales. Their profits skyrocketed. So did their stock prices.

Mr. Wojtal bought shares in petrochemical companies that exported urea, an element in agricultural fertilizer, and methanol, which is used in fuel and antifreeze. He bought into companies that mined zinc and iron ore. They sold their wares in dollars to domestic producers of steel.

After losing 20 percent in 2018, Mr. Wojtal’s portfolio soared by nearly 170 percent last year.

Mr. Wojtal bought shares in an Iranian company that makes toothpaste and soap. He took a stake in a manufacturer of dishwashing liquid. Both had previously competed against Chinese brands. Their earnings grew fourfold.

His most successful bet was Gorji Biscuit. Not only were Iranians snapping up its snacks, but the company was exporting one-fourth of its wares to Iraq, earning dollars.

The roughly nine million euros (close to $10 million) he now manages comes from 20 wealthy individuals from Britain, Germany, Sweden, Switzerland, Belgium and Poland. He aims to increase the fund 10 times over “as soon as possible,” he said.

Realizing that goal will entail much evangelizing about Iran.

It may also require continued adjustment to circumstances beyond his control.

“The risks are obvious,” he said. “It’s geopolitics.”

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Senators attempt to force Twitter to ban Iranian leadership

Four senators, including Ted Cruz (R-TX), have asserted that, as a consequence of sanctions placed on Iran, Twitter must cease providing its services to Ayatollah Khamenei and other leaders in the country. “The Ayatollah enjoys zero protection from the United States Bill of Rights,” he wrote in a letter to the company.

Although the move comes as relations between Iran and the U.S. grow ever more strained following a series of violent incidents connected with the country, it is also an attempt to exert executive power over tech companies that have resisted the yoke of federal regulation.

In a letter (PDF) sent to Twitter, the U.S. Attorney for Northern California and others, the senators explained the rationale for their demand. The Obama administration created rules in 2014 that specifically made an exception to export rules allowing free messaging and social media-type services to be offered to Iranians. The idea being that, though Twitter and many other such apps are mostly banned in Iran, it could not hurt to offer tools for free expression and communication to its citizens.

But there are exceptions even to exceptions, and this is what Cruz et al. claim now apply to Twitter. Specifically, they say that following Trump’s executive order in June imposing additional sanctions on Iran, the Khamenei and foreign minister Javad Zarif have lost the protection the law previously offered.

“All Americans — including you and Twitter — are prohibited from ‘the making of any contribution of provision of…goods or services’ to them,” the letter reads. “While the First Amendment protects the free speech rights of Americans… the Ayatollah and any American companies providing him assistance are entirely subject to U.S. sanctions laws.”

Not being an expert in import/export law myself, I can’t judge the merits of this argument, though on its face it seems sound. But it may not be a question of whether Twitter can or can’t “offer services” to persons blacklisted by the federal government.

There is the argument that Twitter choosing to offer the use of its platform to others is itself a protected act of free speech.

After all, the White House could just as easily have issued an E.O. blacklisting the leaders of the countries subject to the travel ban. Should that be a possibility? Is it the right of a U.S. company to extend its platform for free speech to anyone in the world, regardless of their legal status in the eyes of the government?

Sens. Ted Cruz, Marsha Blackburn (R-TN), Tom Cotton (R-AR) and Marco Rubio (R-NJ) think otherwise.

Twitter declined to comment.

Source: Social – TechCrunch

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Iran’s Grim Economy Limits Its Willingness to Confront the U.S.

LONDON — Iran is caught in a wretched economic crisis. Jobs are scarce. Prices for food and other necessities are skyrocketing. The economy is rapidly shrinking. Iranians are increasingly disgusted.

Crippling sanctions imposed by the Trump administration have severed Iran’s access to international markets, decimating the economy, which is now contracting at an alarming 9.5 percent annual rate, the International Monetary Fund estimated. Oil exports were effectively zero in December, according to Oxford Economics, as the sanctions have prevented sales, even though smugglers have transported unknown volumes.

The bleak economy appears to be tempering the willingness of Iran to escalate hostilities with the United States, its leaders cognizant that war could profoundly worsen national fortunes. In recent months, public anger over joblessness, economic anxiety and corruption has emerged as a potentially existential threat to Iran’s hard-line regime.

Only a week ago, such sentiments had been redirected by outrage over the Trump administration’s Jan. 3 killing of Iran’s top military commander, Maj. Gen. Qassim Suleimani. But protests flared anew over the weekend in Tehran, and then continued on Monday, after the government’s astonishing admission that it was — despite three days of denial — responsible for shooting down a Ukrainian jetliner.

The demonstrations were most pointedly an expression of contempt for the regime’s cover-up following its downing of the Ukrainian jet, which killed all 176 people on board. But the fury in the streets resonated as a rebuke for broader grievances — diminishing livelihoods, financial anxiety and the sense that the regime is at best impotent in the face of formidable troubles.

Inflation is running near 40 percent, assailing consumers with sharply rising prices for food and other basic necessities. More than one in four young Iranians is jobless, with college graduates especially short of work, according to the World Bank.

The missile strikes that Iran unleashed on American bases in Iraq last week in response to Gen. Suleimani’s killing appeared calibrated to enable its leaders to declare that vengeance had been secured without provoking an extreme response from President Trump, such as aerial bombing.

Hostilities with the most powerful military on earth would make life even more punishing for ordinary Iranians. It would likely weaken the currency and exacerbate inflation, while menacing what remains of national industry, eliminating jobs and reinvigorating public pressure on the leadership.

Conflict could threaten a run on domestic banks by sending more companies into distress. Iranian companies have been spared from collapse by surges of credit from banks. The government controls about 70 percent of banking assets, according to a paper by Adnan Mazarei, a former I.M.F. deputy director and now a senior fellow at the Peterson Institute for International Economics in Washington. Roughly half of all bank loans are in arrears, Iran’s Parliament has estimated.

Many Iranian companies depend on imported goods to make and sell products, from machinery to steel to grain. If Iran’s currency declines further, those companies would have to pay more for such goods. Banks would either have to extend more loans, or businesses would collapse, adding to the ranks of the jobless.

The central bank has been financing government spending, filling holes in a tattered budget to limit public ire over cuts. That entails printing Iranian money, adding to the strains on the currency. A war could prompt wealthier Iranians to yank assets out of the country, threatening a further decline in the currency and producing runaway inflation.

In sum, this is the unpalatable choice confronting the Iranian leadership: It can keep the economy going by continuing to steer credit to banks and industry, adding to the risks of an eventual banking disaster and hyperinflation. Or it can opt for austerity that would cause immediate public suffering, threatening more street demonstrations.

“That is the specter hanging over the Iranian economy,” Mr. Mazarei said. “The current economic situation is not sustainable.”

Though such realities appear to be limiting Iran’s appetite for escalation, some experts suggest that the regime’s hard-liners may eventually come to embrace hostilities with the United States as a means of stimulating the anemic economy.

Cut off from international investors and markets, Iran has in recent years focused on forging a so-called resistance economy in which the state has invested aggressively, subsidizing strategic industries, while seeking to substitute domestic production for imported goods.

That strategy has been inefficient, say economists, adding to the strains on Iran’s budget and the banking system, but it appears to have raised employment. Hard-liners might come see a fight with Iran’s archenemy, the United States, as an opportunity to expand the resistance economy while stoking politically useful nationalist anger.

“There will be those who will argue that we can’t sustain the current situation if we don’t have a war,” said Yassamine Mather, a political economist at the University of Oxford. “For the Iranian government, living in crisis is good. It’s always been good, because you can blame all the economic problems on sanctions, or on the foreign threat of war. In the last couple of years, Iran has looked for adventures as a way of diverting attention from economic problems.”

How ever Iran’s leaders proceed, experts assume that economic concerns will not be paramount: Iran’s leaders prioritize one goal above all others — their own survival. If confrontation with outside powers appears promising as a means of reinforcing their hold on power, the leadership may accept economic pain as a necessary cost.

“The hard-liners are willing to impoverish people to stay in power,” said Sanam Vakil, deputy director of the Middle East and North Africa program at Chatham House, a research institution in London. “The Islamic Republic does not make decisions based on purely economic outcomes.”

But Iran’s leaders need only survey their own region to recognize the dangers that economic distress can pose to established powers. In recent months, Iraq and Lebanon have seen furious demonstrations fueled in part by declining living standards amid corruption and abuse of power.

As recently as November, Iran’s perilous economic state appeared to pose a foundational threat to the regime. As the government scrambled to secure cash to finance aid for the poor and the jobless, it scrapped subsidies on gasoline, sending the price of fuel soaring by as much as 200 percent. That spurred angry protests in the streets of Iranian cities, with demonstrators openly calling for the expulsion of President Hassan Rouhani.

“That’s a sign of how much pressure they are under,” said Maya Senussi, a Middle East expert at Oxford Economics in London.

In unleashing the drone strike that killed General Suleimani, Mr. Trump effectively relieved the leadership of that pressure, undercutting the force of his own sanctions, say experts.

Within Iran, the killing resounded as a breach of national sovereignty and evidence that the United States bore malevolent intent. It muted the complaints that propelled November’s demonstrations — laments over rising prices, accusations of corruption and economic malpractice amid the leadership — replacing them with mourning for a man celebrated as a national hero.

A country fraught with grievances aimed directly at its senior leaders had seemingly been united in anger at the United States.

“The killing of Suleimani represents a watershed, not only in terms of directing attention away from domestic problems, but also rallying Iranians around their flag,” said Fawaz A. Gerges, a professor of international relations at the London School of Economics.

Mr. Trump had supplied the Iranian leadership “time and space to change the conversation,” he added. Iranians were no longer consumed with the “misguided and failed economic policies of the Iranian regime,” but rather “the arrogant aggression of the United States against the Iranian nation.”

But then came the government’s admission that it was responsible for bringing down the Ukrainian passenger jet. Now, Iran’s leaders again find themselves on the wrong end of angry street demonstrations.

For now, the regime is seeking to quash the demonstrations with riot police and admonitions to the protesters to go home. But if public rage continues, hard-liners may resort to challenging American interests in the hopes that confrontation will force Mr. Trump to negotiate a deal toward eliminating the sanctions.

Iran may threaten the passage of ships carrying oil through the Strait of Hormuz, the passageway for more than one-fifth of the world’s consumption of liquid petroleum. Disruption there would restrict the global supply oil, raising the price of the vital commodity. That could sow alarm in world markets while limiting global economic growth, potentially jeopardizing Mr. Trump’s re-election bid, as the logic goes.

Iran previously had a different pathway toward gaining relief from the sanctions: Under a 2015 deal forged by President Barack Obama, the sanctions were removed in exchange for Iran’s verified promise to dismantle large sections of its nuclear program.

But when Mr. Trump took office, he renounced that deal and resumed sanctions.

The Iranian leadership has courted European support for a resumption of the nuclear deal, seeking to exploit divergence between Europe and the United States. The Europeans have been unhappy about Mr. Trump’s renewed sanctions, which have dashed the hopes of German, French and Italian companies that had looked to Iran for expanded business opportunities.

Whatever comes next, Iran’s leadership is painfully aware that getting out from under the American sanctions is the only route to lifting its economy, say experts.

The nuclear deal was intended to give Iran’s leaders an incentive to diminish hostility as a means of seeking liberation from the sanctions. Mr. Trump’s abandonment of the deal effectively left them with only one means of pursuing that goal — confrontation.

“They see escalation as the only way to the negotiating table,” said Ms. Vakil. “They can’t capitulate and come to the negotiating table. They can’t compromise, because that would show weakness. By demonstrating that they can escalate, that they are fearless, they are trying to build leverage.”

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Oil Prices Are Slow to Reflect U.S.-Iran Tensions

The most surprising thing about the oil market’s initial response to the American killing of an Iranian general, Qassim Suleimani, was that it appeared to be so muted. Although prices jumped soon after the killing, the upward momentum quickly eased.

But oil can be a highly volatile commodity, and crude oil prices rose by roughly 4 percent on initial reports Tuesday night that Iran had launched missiles on two United States bases in Iraq. Since the attack was not directed at oil facilities, it was impossible to assess whether the spike was a hasty reflex or the beginning of a lasting climb.

Oil flows have not been disrupted — so far — and there is no sign that Iran will seek to hobble trade in the fuel by, for example, closing the Strait of Hormuz, the narrow channel that many oil tankers have to pass through when they leave the Persian Gulf.

The markets are “pricing in just a low probability of something happening,” said Bjornar Tonhaugen, head of oil market research at Rystad Energy, a research firm.

By Tuesday evening, the American benchmark, West Texas intermediate, was trading around $65.50, up from $61 last week and $62.70 earlier in the day.

The standoff between the United States and Iran follows several years of downward pressure on prices because of a gusher of supplies, largely from the shale boom in the United States.

American oil production has more than doubled over the last decade to more than 13 million barrels a day, and the United States is now the world’s biggest producer. It imports about four million fewer barrels of oil a day than in 2008 because of its production surge and greater use of more fuel efficient vehicles.

Concerns about growing restrictions on the use of fossil fuels because of their role in climate change have also weighed on prices, said Gary Ross, chief executive of Black Gold Investors, a trading firm. People “don’t want to be invested in oil,” he said.

Markets have become so accustomed to a surplus of oil in the global market that they are not as worried about tensions in the Persian Gulf region as they once were.

“Oil has become a broken barometer for gauging Middle East tensions,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, an investment bank. “It now only reacts after something seismic happens.”

Ms. Croft said the markets had largely ignored the steps Iran had taken to respond to the reinstatement of American economic sanctions by the Trump administration. The United States and Saudi Arabia have said Iran was behind naval mines that damaged oil tankers and was behind an aerial attack on key facilities that temporarily cut Saudi oil production by more than half. These moves were apparently intended to demonstrate that Tehran would make it difficult or impossible for American allies like Saudi Arabia and the United Arab Emirates to export oil if the Trump administration hemmed in Iranian exports.

“I do not know how anyone can be sanguine about Iran’s disruptive capabilities after that drone/cruise missile attack,” Ms. Croft said. Saudi Aramco, the national oil company, managed to restore production remarkably quickly, but Ms. Croft said it was not clear that the company would be able to respond as fast to future attacks.

Analysts also say the drone strike on General Suleimani in Iraq may well worsen an already tumultuous political environment in that country. The killing has already sent ripples including calls from the Iraqi Parliament and government for the United States to withdraw its troops. Those in turn drew threats of sanctions from President Trump.

Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, and its oil fields have been largely unaffected. But there would be serious consequences if the turmoil spread to those fields, analysts say. For instance, the prolonged loss of half of Iraq’s exports, which amount to close to 4 percent of world supplies, could propel prices toward $90 a barrel, Mr. Tonhaugen said. And Iraq might not have the backup systems and other safeguards that allowed the Saudis to recover from the September attacks.

Mr. Tonhaugen and other experts are skeptical that Iran would resort to the “worst-case type of scenario” by trying to close the Strait of Hormuz, through which around 18 million barrels a day of oil is transported. Occupying much of the eastern side of the narrow strait, the Iranians can easily tamper with ship traffic there, but analysts are skeptical that they would do more than seize or target the occasional vessel, as they have in recent months.

Anything more could “invite a very muscular response from the U.S.,” said Antoine Halff, chief analyst at Kayrros, a market research firm, and a senior scholar at Columbia University’s Center on Global Energy Policy.

David Fyfe, chief economist at Argus, a research firm, said Tehran would be wary of responses that raised oil prices substantially or jeopardized supplies for China, a key supporter, which buys much of the oil Iran sells and is heavily dependent on the Middle East for fuel.

“I don’t think a major blockage of the Strait of Hormuz is really much more likely than a week ago,” Mr. Fyfe said.

Of course, investors could quickly bid up the price of oil if the strait was closed or hostilities between the United States and Iran boiled over into a major conflict.

That’s because the world’s oil producers have a small buffer of around two million barrels a day of potential output that they could quickly add. Most of that spare capacity is in Saudi Arabia.

If millions of barrels a day of oil production were suspended, that would quickly draw down storage tanks and send oil prices soaring, analysts say, although the United States government could seek to calm markets by releasing fuel from the Strategic Petroleum Reserve.

A big oil price increase would have a much more modest impact on the United States economy than in the past, though it could hurt other countries like China and India more.

The United States remains an importer of oil, but it roughly exports as much oil as it buys from other countries. Higher prices at the pump would hurt consumers, especially lower-income families in regions like the Northeast that do not produce oil.

But higher prices would help parts of the country that produce oil, such as Alaska, Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Texas and Wyoming. Higher prices would potentially expand employment and consumer demand in those states.

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Oil Prices Jump, and Stocks Slide, After U.S. Kills Iranian General

Oil prices jumped about 4 percent Friday, and Wall Street opened about 1 percent lower, on news that a powerful Iranian military leader had been killed in a strike authorized by the United States, ratcheting up geopolitical tensions in a region that supplies around 25 percent of the world’s oil and threatening to disrupt global supply.

The price of Brent oil, the international benchmark, surged to nearly $70 a barrel after the Pentagon said President Trump had authorized the airstrike against Maj. Gen. Qassim Suleimani at Baghdad’s airport. West Texas Intermediate, the American oil benchmark, also rose more than 2 percent, to $62.51 a barrel.

On Wall Street the S&P 500 opened about 1 percent lower, following global markets, but recovered much of that ground later in the morning. Hong Kong’s Hang Seng lost 0.3 percent, and Germany’s DAX index was trading 1.7 percent lower.

Analysts warned that Iran would interpret the strike as an act of war. Iran’s supreme leader, Ayatollah Ali Khamenei, pledged “harsh retaliation,” according to Iran’s state news media. These developments raised the prospect of volatility in Iran and Iraq, two major oil producers.

Around noon in New York, Brent crude oil was trading at about $68 a barrel.

The immediate price jump was among the largest since an attack on a critical Saudi oil installation in September temporarily knocked out 5 percent of the world’s oil supply. While Friday’s strike did not target any oil production, it raised fears of a protracted conflict in the region that could involve strategic attacks on oil fields.

In other markets, investments that are considered havens safe from market turmoil, such as gold and currencies like Japan’s yen, strengthened on the news.

The coming days could bring further pressure on assets that investors consider riskier, like stocks. It could also threaten a rally that began just a day ago in global markets.

The killing of the Iranian Revolutionary Guards commander inevitably raises fears about further instability in a region critical to the world’s oil supply. While sanctions imposed by the United States have cut Iranian oil exports to a trickle, other critical oil producers, including Saudi Arabia, Kuwait, Iraq and the United Arab Emirates, are clustered around the Persian Gulf.

It remains to be seen how Iran will respond to the loss of a top leader, but there is widespread concern that whatever action Tehran takes might affect these crucial oil supplies and push prices higher.

“Iran’s ability to impact the U.S. will probably be mostly within the Middle East theater,” said Neil Beveridge, a senior analyst at Bernstein, a market research firm. “Iraq and Saudi Arabia are obvious targets.”

Tankers carrying most of the oil leaving the Persian Gulf region — about 18 million barrels a day — as well as giant vessels loaded with liquefied natural gas, must pass through the Strait of Hormuz, a narrow channel that separates the United Arab Emirates, Oman and Iran and leads to the Indian Ocean.

The strait is 21 miles wide at its narrowest point, and the width of the shipping lane in either direction is just two miles wide, according to United States Energy Information Administration.

Iran’s coastline covers much of the east side of the Gulf, leaving Tehran well-placed to harass shipping with small boats, missiles, mines and other weapons. Last year, Iran seized a number of tankers in the area in an apparent effort to show that if Tehran were not permitted to export its oil, then supplies from other producers in the area were at risk.

Market participants worry that Iran could step up such attacks on shipping, although such a move would be likely to bring a quick response from United States military forces in the area.

Iran has other options for retaliating against Washington and its allies. It was clear in September that key Saudi oil installations could be knocked out with missile and drone attacks. Analysts worry about a similar strike by Iran, or a larger version.

Analysts also say that the oil installations of Saudi Aramco and other producers around the Persian Gulf could prove vulnerable to cyberattacks that might severely disrupt their operations.

Having just raised more than $25 billion through Aramco’s initial public offering, the Saudis have an interest in easing tensions in the region, and have been trying to solve problems like a long-running dispute over oil with Kuwait. But they could still find their oil industry under attack, analysts say.

Analysts say that Iraq, which has become the second largest oil producer in OPEC after the Saudis, could be where conflict between the United States and Iran plays out.

“Iraq is potentially the geopolitical flash point for 2020,” said Amrita Sen, chief oil analyst at Energy Aspects, a market research firm. If Iraq does become the scene of escalating conflict between Tehran and Washington, “you can imagine, then, that the fields could be at risk,” she said, referring to the oil fields that supply around 5 percent of world oil supplies and leading to a much larger surge in prices.

American oil companies operating in Iraq, including Exxon Mobil, could also become targets in this proxy war, said Helima Croft, an analyst at RBC Capital Markets, an investment bank.

Exxon Mobil and Chevron, which has been exploring in the Kurdistan region in the north, said they are monitoring the situation. “Exxon Mobil has programs and measures in place to provide security to protect its people, operations and facilities,” said Julie King, a company spokeswoman in an email.

“With trade wars receding, the heightened tensions in the Middle East may be poised to make a more meaningful impact on the oil market in 2020,” Ms. Croft wrote in a note to clients on Thursday.

Even before Friday’s events oil prices were edging higher as the outlook for supplies tightened. An agreement in December between the Organization of the Petroleum Exporting Countries and Russia to cut output has given oil prices a lift.

Analysts at Kpler, a firm that tracks oil shipments, said in a note published Friday that Saudi Arabia “clearly attempted to send a message” by cutting December exports by nearly 800,000 barrels a day, to 6.3 million barrels a day, the largest monthly decrease in five years. Analysts said that some refiners have not been able to buy as much oil as they wanted.

The prospect that President Trump will sign a partial trade deal with China has also eased the concerns about weak oil demand that weighed on the oil market in 2019. China is the world’s largest oil importer.

“Nobody’s worried about China now this year,” said Mr. Beveridge of Bernstein, who said that markets may be shifting back to a focus on geopolitics.

Thanks to the shale oil boom the United States is now much less dependent on oil from the Persian Gulf than it once was.

The United States is now a net exporter, competing with the Saudis and other Persian Gulf producers for markets. Asian countries like China, Japan and India are now major destinations for oil from the Persian Gulf, and would be most directly threatened by any disruption.

Oil, though, is a globally traded commodity, and so American consumers would feel the impact of any outages in the Persian Gulf or elsewhere in the prices they pay at the pump.