Even if it stays on the sidelines of the US-Iran war, the country is fragile. Unlike larger economies that can absorb shocks in global markets, it has little room to cushion the impact.
Cairo and Tehran have been at loggerheads since 1979, but the Iranian threat has always acted as a check on Israeli ambitions. If Iran is completely defeated, Israel will reign supreme.
The announcement last week that the US was pulling its 1,000 troops there has sparked worry, as American presence is seen as crucial for integrating the Kurds and fighting IS
Washington and Tel Aviv may think the key to ending Iran's regime is to kill its missile bank and capabilities, but sometimes strategy matters more than hardware
Washington weighs the desire to avoid a protracted war with offsetting the appearance of defeat, as Tehran debates whether to consolidate gains before conditions shift or press perceived advantages
Israel's parliament approved a draconian death penalty law last week that only applies to Palestinian prisoners, in a move that the UN says "would constitute a war crime"