Iran plans military exercises in preparation for Israeli strike on nuclear facilities Mohsen Rezai, who led the Revolutionary Guards during the 1980-88 Iran-Iraq war and is now an influential member of Irab's powerful Expediency Council, made more explicit threats than Mr Salami. I have heard they [the Israeli government] have estimated that 400 to 500 people in Israel would be killed. They are wrong," he told a newspaper. Iran's reaction would be so severe that nobody would ever dare think of attacking us again. The targets of Iranian retribution are unlikely to be just Israeli. Hezbollah's leader, Hassan Nasrallah, told a Lebanese television station this month that the US would be held responsible for any Israeli action. The response will not just be Iranian targets. If Israel targets Iran, America bears responsibility. However, despite the bluster, the official Iranian assessment appears to be that an imminent attack is highly unlikely. "It's hard to assess exactly what they think but from everything the Revolutionary Guards and the Quds Force (the elite unit tasked with operations abroad) say, I don't think they believe Israel will attack Iran," said Mohsen Sazegara, a founder member of the Revolutionary Guards now exiled in the US. All their statements indicate that they think Netanyahu is indulging in psychological warfare. Indeed, with negotiations between the West and Iran over Tehran's nuclear programme at a standstill, Ayatollah Ali Khamenei, the Supreme Leader who has the final say over all state matters, appears to have calculated that he can wait until the US presidential election and possibly well beyond it before either side makes a decisive move. Believing that President Barack Obama's hands are tied, Ayatollah Khamenei may even prefer to see Mitt Romney triumph in November's poll on the grounds that a Republican president has greater domestic scope to make concessions to Iran than a Democrat incumbent. "Khamenei is relatively relaxed that nothing will happen before the US presidential election and so there is no sense of urgency in Iran to make a concession on the nuclear issue," said Mehdi Khalaji, senior fellow with the Washington Institute and a former seminary student in the Iranian religious city of Qom. He believes that although Israel is talking about war, what they actually want is to mobilise the West against Iran rather than go to war themselves. If Obama gets re-elected, Khamenei believes he won't go to war - instead he needs to come up with a new package to offer Iran. If Romney wins, it will take him several months to form a national security team and he then needs to try diplomacy first before going to war. That gives Iran another year. Mr Khalaji added: "Khamenei thinks Romney winning would be great for Iran. He thinks he might be willing to comrpomise than Obama. And historically, despite their tough talk, the Republicans have always been more willing to cooperate with Iran. Despite a catalogue of economic woes including plummeting oil revenues and a sharp decline in the value of the Iranian rial against the dollar, there is little sign that the economy is about to implode. Although President Mahmoud Ahmadinejad recently acknowledged that Western sanctions have caused difficulties, officials are trumpeting the emergence of a self-sufficient "resistance economy" that will see Iran become less reliant on its oil income. "Economically, Iran is doing better than expected," Mr Khalaji said. It is true that prices are going up and ordinary people are suffering, but it doesn't mean life has stopped in Iran. What we are seeing is more mismanagement rather than the impact of sanctions. In the short-term, sanctions cannot cripple the economy in a way that would force Iran to suspend uranium enrichment.