Increased tension between Iran and Israel complicates efforts to pull the Middle East back from the abyss.

With the two archenemies walking a fine line between waging covert or overt war, escalation between Israel and Iran has the greatest potential to push the Middle East off the cliff.

That is not to say that multiple other conflicts — the Gaza war, hostilities along the Lebanese-Israeli border, Yemeni Houthi attacks on shipping in the Gulf, and Iraqi militia attacks against Israel –, could not spark an all-out regional conflagration or tip the balance in the Israeli-Iranian confrontation.

A powerful explosion at an Iranian-backed Iraqi militia base south of Baghdad early Saturday morning threatened to undermine a seemingly newfound level of deterrence in the Israeli-Iranian equation.

The Popular Mobilisation Forces, a coalition of Iraqi Shiite militias, blamed Israel for the attack, even though the Islamic State is another potential culprit.

US and Israeli officials were quick to deny involvement in the incident, although Israel, unlike the US, did not release an official statement.

The Iraqi military said “there was no drone or fighter jet in the air space of Babil before and during the explosion.”

While Israel has a history of selecting what incidents it comments on, the Israeli officials’ remarks on background suggested they, irrespective of whether Israel was responsible for the attack, want to keep Iran on a path of de-escalation after weeks in which the two countries were on the brink of war.

The US and Israeli denials followed a series of tit-for-tat attacks that threatened to suck Israel, Iran, and potentially the United States into an all-out Middle East war.

Nevertheless, if Israel was responsible for the Iraqi explosion, the attack would suggest that Israel was signalling it wanted to revert to a covert war following strikes by Israel and Iran on each other’s territory.

The tit-for-tat kicked off with Israel’s April 1 bombing of the Iranian consulate in Damascus, in which seven Islamic Revolutionary Guards operatives, including two top commanders, were killed. Israel has not confirmed or denied responsibility for the attack.

The attack took notions of deterrence to a new level, despite Israeli officials’ insistence that they did not view the assault on the consulate as an escalation of a covert war in which Israel has long targeted Iran.

The Gaza war moved Syria centerstage In the covert Israeli-Iranian confrontation. Israel has killed scores of Iranian operatives in Syria in undeclared strikes since Gaza erupted in October.

This month, Iran laid down a new redline in the confrontation with a barrage of drones and missiles fired for the first time since the 1979 Islamic revolution from Iranian territory at Israel and declaring that it would respond harshly to any attack on Iranian interests, which likely includes Iran’s non-state allies in Iraq, Syria, Lebanon, and Yemen.

Israel’s denial of involvement in the Iraq incident constitutes an acknowledgment of Iran’s newly drawn redlines, even if that is no guarantee that Israel will abide by them.

Similarly, if Israel attacked the Iraqi militia base, the denial suggests it intended to call Iran’s bluff without putting the Islamic Republic on the spot.

With Iran declaring after the drone and missile barrage that it did not want further escalation, Israel responded to the barrage by dispatching a paltry three drones to Isfahan, home to significant military bases, arms industry installations, and nuclear facilities.

Like Iran’s barrage, Israel’s drones were shot down before they hit their targets. Israel did not confirm or deny responsibility for the attack.

Nevertheless, the Israeli message was clear: ‘We are not deterred, and we selected Isfahan to demonstrate our ability to hit vital Iranian targets, but we don’t want to escalate hostilities.’ It was a message Iran acknowledged by downplaying the attack and suggesting it would not respond.

Israel deployed an unidentified weapon in the strike that evaded Iran’s system to detect and counter threats to its Nantaz nuclear facility in a demonstration of Israel’s ability to bypass Iranian defenses undetected and paralyze them while deploying a fraction of the firepower Iran employed in its attack on Israel, according to The New York Times.

Meanwhile, the Gaza war has moved Syria centerstage. Israel has killed scores of Iranian operatives in Syria in undeclared strikes since Hamas’s October 7 attack against Israel.

While Iran may be the determinating factor in a potential escalation of Middle Eastern tensions, Gaza holds the key to pulling the Middle East back from the brink.

De-escalation of the Israeli-Iranian confrontation would ensure that the space for a resolution of the Israeli-Palestinian conflict remains intact, even if ceasefire negotiations have stalled, and it’s hard to see Israeli Prime Minister Benyamin Netanyahu or a potential successor playing their part.

Potentially reading too much into Arab assistance in intercepting the Iranian drone and missile barrage, the Biden administration has, against all odds, revived its efforts to forge a grand bargain that would resolve the Palestine problem, cement US relations with Gulf states, and more fully integrate Israel into the region.

US officials argue that the assistance illustrates that a resolution of the Israeli-Palestinian problem would substantially enhance Israeli security.

It would remove obstacles to broadening Israel’s regional diplomatic relations, with Saudi Arabia as the crown jewel, and open the door to stronger military and security ties, including an integrated regional air defense system.

The Biden administration appears willing to entertain Saudi Arabis price tag on the deal: US guarantees to defend the kingdom, a proposition likely to encounter headwinds in the US Congress; US support for Saudi Arabia’s peaceful nuclear program; and a credible, irreversible Israeli-Palestinian peace process in exchange for Saudi recognition of the State of Israel.

In parallel to the US effort that the Gaza war put in the freezer, Arab states have privately touted a plan of their own that goes further by incorporating provisions for the day the fighting in Gaza ends.

Saudi Arabia, the United Arab Emirates, Qatar, Jordan, and Egypt have delayed officially announcing their plan at the request of the Biden administration.

The plan calls for an immediate and permanent ceasefire in Gaza, the replacement of Israeli forces by a predominantly Arab peacekeeping force in Gaza and the West Bank at the invitation of Palestinian President Mahmoud Abbas, the restructuring of the Palestine Authority in which Hamas would have a secondary role to play, and a time-limited Israeli-Palestinian peace negotiation process to ensure that it does not drag endlessly.

“Gaza has raised the bar. There can be no normalisation without addressing Palestinians’ national rights. The Iranian attack on Israel demonstrates the common interest Israel shares with Saudi Arabia and other Arab states. The question is whether Israel is capable and willing to step up to the plate,” said an Arab diplomat.