Following the recent attacks in the Persian Gulf, U.S.-Iran tensions seem to be escalating on a weekly basis. Last week, Sen. Lindsey Graham (R-S.C.) warned Iran of a potential “overwhelming” U.S. military response should it continue with its provocations, while Sen. Tom Cotton (R-Ark.) said military strikes were already warranted.

To get a deeper insight into U.S. policy options, Wikistrat sat down with Hudson Institute senior fellow and former U.S. intelligence officer Michael Pregent. The following is an excerpt from that interview:

Q: Welcome, Mike, to Wikistrat’s Insights interview series. Thank you for taking time to join us. I want to ask you about the impact of the Trump administration’s maximum pressure campaign against Iran and how it relates to the latest escalation we have seen in the Gulf of Oman in the past week or so.

A: The maximum pressure campaign is working. The Iranian economy is suffering, but it was suffering before we left the JCPOA [the Joint Comprehensive Plan of Action or 2015 nuclear deal]. It was suffering before we left the Iran deal. It was already being mismanaged by the regime.

But if you look at the lack of payments to Lebanese Hezbollah, the strains on Iraqi militias and on other militias based on Iran simply not being able to do what it was doing before, and with the lack of oil payments to [Syrian President Bashar] Assad in Syria, the fact is that the Iranian economy is simply not as attractive as it was at the beginning of the JCPOA.

The Iranian toman has lost almost 60 percent of its value. Inflation is through the roof. And the regime is in a situation now where it believes that if it conducts aggressive actions in the Strait of Hormuz and Gulf of Aden, somehow the international community and the United States will lessen sanctions and encourage economic investment in Iran’s economy.

I think it’s an errant strategy by Iran, but I also think it just might work, based on the present political climate in the United States.

Q: How have the recent attacks on oil tankers in the Gulf of Oman been part of the result of the maximum pressure campaign?

A: When we look at the various attacks the Iran regime has conducted, directly and through proxies, what we’re seeing, I believe, is a testing of the United States’ limits of restraint, our red lines.

We’ve had the ongoing conflict with Yemen and Saudi Arabia, the UAV attack on a Saudi pipeline, the random rocket fired in the vicinity of the U.S. Embassy in Baghdad, and the recent attacks on oil tankers in the Gulf of Oman and on the Persian Gulf.

The upshot is that Iran has learned that the United States isn’t going to launch a military response when you attack one of our allies. At least, not yet.

As we’re conducting this interview, intelligence and DOD—the U.S. intelligence community and State Department—are about to release more intel on the oil tanker attacks. And we have individuals questioning the veracity of a video that allegedly shows the IRGC [Islamic Revolutionary Guard Corps] navy removing an unexploded magnetic mine from one of the tankers that was hit.

Q: We’ve been reading the past few days that neither the United States nor Iran wants a full-blown conflict. So what can explain this behavior, which seems intent on checking the limits of U.S. restraint?

A: The United States is about to present evidence to the U.N. Security Council and to our European allies that Iran was behind the oil tanker attacks. If the international community simply got behind the intelligence and said, “Listen, Iran. We’re looking at you. You’re to blame,” Iran is benefiting from the narrative that because we’re putting maximum pressure on the regime, their behavior is justified.

We even have Americans saying that because we designated the IRGC a terrorist organization, that’s why it’s acting like one. And then we use terms like ‘full-scale war.’ There will be no invasion of Iran. There will be no Iraq strategy in Iran, no U.S. strategy to put boots on the ground.

Taking on Iran is easy, if you look at where Iran is in the region. You hit its proxies. You can do anything in southern Syria against the IRGC without repercussions. Lebanese Hezbollah wants nothing to do with that fight.

Now, if we act against Lebanese Hezbollah directly, that’s different. Lebanese Hezbollah wants nothing to do with the Israeli air force striking Iranian targets in southern Syria. So, we can hit Iran everywhere.

You can hit the IRGC navy boats that are harassing vessels in the international waterways of the Strait of Hormuz, the Gulf of Oman, the Persian Gulf, the Gulf of Aden, and Bab al-Mandeb. You can hit them.

You can hit the C2 platforms, which are disguised as civilian frigates but are actually serving as command and control for these attacks. You can do these things.

Nobody is looking at deploying 120,000 troops in Iran. That was a strawman argument set up by the Obama administration during the Iran deal.

And other people keep pushing the idea that any escalation with Iran will require a 16-year commitment, cost thousands of American lives, and will require 100,000 boots on the ground. That’s just simply not going to happen, nor is it even an option.

Q: Targeting Iran’s proxies in the region seems to make perfect sense, given that Iran’s strategy largely relies on proxies to advance its regional interest. So this strategy basically outmaneuvers Iran on its own terms, hitting proxies across the region.

A: Exactly. We’ve hit Kata’ib Hezbollah [an Iraqi Shi’ite paramilitary group supported by Iran] in southern Syria. We’ve hit Kata’ib Hezbollah in Al-Bukamal, along the border between Iraq and Syria. We’ve hit Kata’ib al-Imam Ali [The Imam Ali Battalions, also believed to be an Iranian proxy]. We’ve hit Harakat Hezbollah al-Nujaba [another Shi’ite militia].

Q: How far do you think Iran will go, using proxies and the IRGC, towards testing the waters, to discovering the limits of U.S. restraint, and how far will the international community tolerate these actions?

A: If you look at what they’ve been able to do so far, they’ve used proxies to hit allies, with no U.S. response. They’ve used proxies to launch a rocket. We’ve had motor attacks on Balarad Airbase in Iraq. We’ve had a Taliban attack on the U.S. delegation in Afghanistan.

And people say, “What? The Taliban? That’s ridiculous.” Everybody who looks at Iran, and looks into their proxy network, knows that the Taliban receive lethal aid from the IRGC Quds Force. You can also hold Iran responsible for providing materials that offer lethal support.

But Qasem Soleimani and others will use proxies to test and hit U.S. targets.

Now the red line, I think, that has been communicated to them is this one: “You injure an American, you kill an American, you hit an American base, and there will be actions.” So they may push their incursions right up to that red line.

We knew to expand that red-line coverage, to cover our allies in Northern Iraq. Erbil has been threatened as a target of Iran if the US escalates. Erbil is an ally. Any attack on Erbil should be a red line. Any attack on our allies in the region should be a red line.

But again, when Iran has the benefit of saying, “What? Somebody else did this!” Even though we know the entity is tied directly to the IRGC, it still benefits them.

Q: Secretary of State Mike Pompeo said that the United States is looking at a full range of options to retaliate against Iran, given recent escalation. What do you think the options will include? What can the United States do to respond to Iran’s recent actions without risking a full-blown war with Iran?

A: I believe the next time Iran launches a missile at a U.S. drone, the missile [launch] site should be taken out. That’s not full escalation. That’s a logical military response to an attack on an American asset in international waters trying to help a civilian water tanker that’s been damaged by the IRGC navy.

The IRGC navy is a target. The Foreign Terrorist Organization [designation] carries weight. Everybody in [Washington] D.C. talks about State Department equities and U.S. treasury equities. The Department of Defense has equities when something is labeled a Foreign Terrorist Organization. It makes it easier to target. Everything falls into place faster.

And when you have the benefit of unassailable intelligence showing that the IRGC navy did something, you should be able to hit it.

But this wouldn’t be viewed as a full escalation. Our allies in the region know that if you hit Iran hard and fast, they tend to back off and run away. This isn’t me predicting what they’ll do, it’s just something they’ve shown in the past.

The United States hasn’t done anything against Iran except for an accidental takedown of a civilian airliner [Iran Air Flight 655, a passenger flight from Tehran to Dubai that was shot down in 1988 by the USS Vincennes]. We haven’t done anything against Iran for 40 years. And Iran knows it’s going to take a lot to get us to do something.

They’ve killed Americans in Iraq. They’ve killed Americans in Afghanistan. … They’re providing lethal aid to the Taliban. They’ve killed Americans across the region.

And now they’re pushing us. They know we have a lot of tolerance for this archaic rogue regime. But I think our tolerance is running out, and I think they’re going to find out what the new red line is. And I expect more attacks.

Mike Pregent is a senior fellow at Hudson Institute. He is a senior Middle East analyst, a former adjunct lecturer for the College of International Security Affairs, and a visiting fellow at the Institute for National Strategic Studies at the National Defense University.

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