Protesters hold up a damaged U.S. flag and anti-USA banners during a demonstration following the U.S. airstrike in Iraq which killed a top Iranian commander, in Tehran, Iran, on Friday, Jan. 3, 2020.

Ali Mohammadi | Bloomberg | Getty Images

The U.S.-China trade fight dominated investors’ attention for much of 2019 — but that will likely get overshadowed by tensions between the U.S. and Iran this year, a political risk consultant predicted Monday.

“I actually think this (Iran) is going to be a more important issue for investors this year than China-U.S.,” Alastair Newton, director of Alavan Business Advisory and a former British diplomat, told CNBC’s “Squawk Box Asia.”

He predicted there will be more Iranian retaliation this year, after Tehran fired missiles at Iraqi bases housing U.S. troops last week — a move seen in retaliation to the U.S. killing of top Iranian general Qasem Soleimani.

Newton didn’t say how Iran could retaliate, but other experts have said that future moves could include aggression by Iranian proxy groups in the region and cyberattacks.

Newton added that the “bad relationship” between the U.S. and Iran is “just going from bad to worse,” and there have been no signs the two sides could turn to diplomacy to resolve their conflict. His comment came as U.S. President Donald Trump said in a post on Twitter that he “couldn’t care less” if Iran agrees to negotiate.

But Tehran wouldn’t want to negotiate with Trump either, Newton said.

Iranian authorities “are not going to talk with Donald Trump, the Iranians will hope that Donald Trump is defeated” in this year’s U.S. presidential election and “they have a different democratic party administration to deal with,” he said.

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Iran still a ‘significant threat’

Overall, Iran remains a “significant threat” in the Middle East, said Newton.

That’s despite the country’s leadership now facing pressure from protests which have broken out after the military admitted it had mistakenly shot down a Ukrainian passenger aircraft.

“There should be no doubt … that authorities will crack down if they feel that the regime is under serious threat,” said Newton, who pointed out that the current regime has a track record of “ruthlessly putting down protests” and will do so again “if necessary.”

He also said the downing of the Ukrainian plane could result in a changing of guards within Iran’s Islamic Revolutionary Guard Corps, paving the way for a younger generation of officers trained by Soleimani to take over.

Soleimani was “a particularly ruthless man” but “outstandingly good” in military affairs, said Newton. He added that the younger officers who have modeled themselves after Soleimani could rise quickly, allowing the elite Quds Force which he led to bounce back.

“I think that Iran’s foreign legion … still poses a significant threat in the region, pursuing Iran’s long-standing objectives,” he said.



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