What Keeps Obama Up at Night

Illustration by Hieronymus for TIME

A year out from election day, Barack Obama's strongest policy suit is the one that matters least to the public--foreign policy. He hasn't been perfect. His naive attempts to negotiate the Israel-Palestine question have been an embarrassing failure. But he has succeeded at the most important thing, fighting al-Qaeda. In the spring of 2011, he overruled his generals twice--and rightly so: he decided to have SEAL Team 6 go after Osama bin Laden and secure his document stash, rather than bombing the compound from the air; and he decided to begin drawing troops out of Afghanistan. His willingness to use drone strikes against terrorists in Pakistan, Yemen and Somalia has been a net success. He got rid of Muammar Gaddafi at a cost of $1 billion and zero American lives.

But there are two foreign policy issues that could crash through the nonstop economic debate of the next year and cause Obama real trouble: Iran's militarism and China's mercantilism. These are exceedingly complicated problems, and the Obama Administration has redoubled its efforts in recent weeks to come up with more effective policies toward both.

Iran is the less significant but more dangerous challenge. Even the U.N.'s extremely cautious International Atomic Energy Agency now believes Iran is working on a nuclear weapon. There are those in the Administration who still hold out hope for successful negotiations with the Iranians, but Obama gave that a real shot in 2009 and came up empty. And there is a more immediate worry: the possibility of lethal, Iranian-backed mischief in Iraq as the last U.S. troops there come home in the next few months, which will leave the remaining U.S. diplomatic installations more exposed to rocket attacks from Iraqi militias. "If an Iranian rocket hits the embassy in Baghdad or the consulate in Basra and there are American deaths, there are going to be calls for a military response," an Administration official told me. Indeed, there are specific plans to retaliate by bombing an Iranian rocket factory or, perhaps, Iranian Revolutionary Guards training camps near the Iraqi border. A regional expert told me that the Obama Administration is divided about this course of action, "but there is a certain appeal to kicking the Iranians in the teeth as we exit Iraq, just to be sure they don't get the wrong idea about us leaving." But that sort of attack could lead to yet another war against a Muslim nation.

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