Prime Minister Christopher Luxon says it's up to the US and Israel to assert whether attack on Iran is legal or not, New Zealand will have to 'wait and see' when it comes to potential economic impacts

As the United States and Israel's attack on Iran causes ripples around the world, Prime Minister Christopher Luxon says it's up to the US and Israel to assert whether their attack is legal or not.

This is not a position held by Labour leader Chris Hipkins, who told reporters that while successive governments have expressed concern about the Iranian regime, "that does not justify any action, particularly when it breaches international law".

These comments come as over the weekend, the US and Israel launched air strikes across Iran with the BBC reporting locations targeted included Islamic Revolutionary Guard Corps (IRGC) facilities, air defence capabilities, missile and drone launch sites, and military airfields.

According to the Red Crescent, at least 200 people have been killed and more than 700 people are injured across Iran. The BBC reported at least 153 people, including children, were killed after a reported strike hit a school in Southern Iran.

Following the US and Israel's attack, Iran launched missile strikes across the Middle East, and Israel, killing at least nine people in Beit Shemesh, Al Jazeera reported.

US President Donald Trump announced that Ayatollah Ali Khamenei, the supreme leader of Iran, was killed in an air strike and this was later confirmed by Iranian state media. Trump has made clear that attacks on Iran will continue until "all of our objectives are achieved".

'Not best placed to make that assessment'

Speaking to reporters on Monday afternoon at a post-Cabinet press conference, Luxon said: "New Zealand has consistently condemned the Iranian regime."

"We condemn in the strongest terms Iran’s indiscriminate, retaliatory attacks in the Gulf ... We cannot risk further regional escalation and civilian life must be protected," Luxon said.

When asked if the Government would designate the IRGC as a terrorist entity, Luxon said the process around terrorism designation was different and was separate from this event, "but suffice to say I think we’ll have a decision on that very shortly”.

And when asked if the Government would move to expel the Iranian ambassador, Luxon said no.

Asked if there was a breach of international law, Luxon told reporters: “We’re not best placed to make that assessment. We weren’t proxy or party to these attacks. They were independently launched by the US and Israel.”

“They all have information and intelligence that we haven’t received … So it’s really up for them to assert whether these are legal actions or not."

"You've seen that with the UN Security Council, where they have invoked Article 51 about self-defence ... It's ultimately for them to make that assessment and to explain their position," Luxon said.

"We’ve had a long-standing commitment under successive governments that any actions that stops Iran from getting a nuclear weapon is a good thing … Any actions that stops them from killing their own people is a good thing."

"This is not a good regime and that has been a long-standing position of New Zealand governments under different administrations.”

Challenged by reporters about his use of "any actions" and asked if New Zealand would support "carpet bombing the country", Luxon said he was not saying that.

"I don't know how to be any clearer ... We've long supported actions under our governments, under successive political parties, that actually stop Iran from getting nuclear weapons."

But Labour's Chris Hipkins, who spoke to reporters after Luxon's post-Cabinet press conference, said: “We need to see an immediate de-escalation, a return to diplomacy and a return to the international rules based order that New Zealand has consistently advocated for in the past.”

“Successive New Zealand governments have expressed significant concern about the Iranian regime but that does not justify any action, particularly when it breaches international law,” Hipkins said.

"We do not support this action taken in Iran, the governing parties can speak for themselves.”

Economic impact

When it comes to the economic impact, Luxon told reporters New Zealand will have to “wait and see."

“The futures market opened just a couple of hours ago. It was quite a muted response,” Luxon told reporters at a post-Cabinet media conference on Monday.

“I think you’ve seen markets over subsequent weeks, with the build up of the American military presence in the region actually pricing it into their markets."

“OPEC (The Organization of the Petroleum Exporting Countries) has been producing more oil over the last few weeks and recent months as well," he said.

“It looks like quite a muted response as we sit here today, with futures exchanges, which are a good indication of where it will go.”

ASB senior economist Kim Mundy said initial impacts for New Zealand will be contained to financial market moves, but "we are wary for what this may mean for the near-term outlook for inflation".

“It remains too early to make any concrete calls, but the risks are clearly skewed to the upside,” Mundy said.

“The conflict could lift tradeables inflation through a combination of higher global oil prices, and therefore higher prices at the pump, as well as a broad lift in the price of imports if the New Zealand dollar weakens further.”

Uncertainty at this stage remains elevated, Mundy said.

“But the prospect for higher tradeable inflation could be problematic when headline inflation is already sitting above target."

“Further, business confidence data released last week highlighted that pricing pressures remain elevated, which provides another challenge to the RBNZ’s forecast for inflation to drift back towards the 2% midpoint of the inflation target," Mundy said.

Mundy said this should be considered food for thought and they were withholding from making any firm conclusions at this stage.

“For now, our thoughts are with everyone caught up in the conflict.”