Last of two parts
WHAT has happened since last week? More of the same. Brent Oil, which reached $120, went down to $80 when President Donald Trump said the war would end soon and then up again when maybe not. Iran is reportedly refusing offers to negotiate as both sides want better terms. Markets then sobered up and now the price of Brent Crude as of March 18 is around $111.
Why? One can start with what I consider the most profound interview on Iran last Saturday on Mishal Husain’s show on Bloomberg (available on YouTube). She interviewed Johns Hopkins Prof. Vila Nasr, whose father is a leading Islamic scholar and was chancellor of a leading university in Iran when the family had to leave after the revolution in 1979. I was so impressed I bought his book “Iran’s Grand Strategy: A Political History.” Here is an excerpt of how the Iranian regime views the ongoing war from the interview. “Their thinking is that this has to be ‘the last war.’ Either they go down or the United States and Israel will abandon the idea that they could go into Iran and have a war every six months or at will — this idea of mowing the lawn. The United States has to pay a high enough cost to lose its appetite for war with Iran... There’s a new political line opening up [in Iran]: ‘Are you for war or are you against war?’ As opposed to: ‘Are you for the regime or against the regime?’ This is complicating the picture. Increasingly, anti-regime Iranians are saying: ‘At this particular moment, it’s not the time to have our internal fight over politics, but to support the country.’ If [Trump] was looking for a quick political uprising in Iran, it won’t happen until the dust of this war settles.”
I don’t know if Iran will succeed or not, but as a strategy, does it make sense? Definitely. Do you think the US will have another war with Vietnam or Afghanistan vs Venezuela or Panama? He makes many more disturbing but persuasive points. Like what Iran learned from the Iran-Iraq war from 1980-1988. Nearly all the Arab countries and the US supported Saddam Hussein and Iraq, and most expected Iran to lose. Iran suffered a lot and was weakened, but after eight years, Iran won and Iraq left. Iran learned it could only count on itself and created a system that sourced nearly everything, including its armaments internally. Hence the drones which now even Russia uses in Ukraine. Speaking of Russia and the incoherence of the American policy — Russia is helping Iran with military intelligence yet to try to manage oil prices the Americans are waiving sanctions on oil trade with Russia! That greatly helps the Russian economy (estimates are higher oil prices give them $150 million a day) and their war in Ukraine. Back to the topic, Nasr discusses the asymmetric, mosaic warfare which Iran has been engaging in and fine-tuning for 47 years as they have been fighting off and on and facing sanctions from 1979, so are experienced in this. Besides surviving, Iran’s regime is making all of us suffer by shutting down the Strait of Hormuz, choking off oil transport and related products like natural gas and fertilizers. Iran also said they would not attack tankers whose contracts are settled in Chinese yuan. Now Trump even asked China to help escort tankers through the Strait but like the others asked refused. What a dilemma for Asia which buys 80 percent of the oil that goes via the Strait. Add helium which is necessary for semiconductors made in Taiwan.
By hitting their neighbors who host US bases, Iran is telling them you thought that would protect you? It is the opposite as you become a target. This is worrying as that most successful and cosmopolitan part of the Middle East are the Gulf States like the United Arab Emirates that were becoming akin to the Singapore of the Middle East. Hard to be that if they are hitting your airport (the world’s busiest for international travel) and five-star hotels. Armed drones hitting your home or office will make expats and multinationals rethink their commitment. Also, this implies a long war unless ironically, the US decides to declare victory and move on. Even then, for the Gulf States their embrace of the US will be rethought as all will not return to what it was prior.
Then there are moral issues like is it now OK to assassinate enemies, odious as they may be? And no apologies for bombing and killing innocents like the girls killed in the school. Just collateral damage from an optional war? Again, be careful, more than one side can act that way, even if asymmetrically and not immediately.
This war may cause a recession and higher inflation in the US and the rest of us. How will this dire scenario play out? I don’t know, yet most experts expect the Iranian regime to be weakened but survive. I keep thinking of Aesop’s fable on the fox and the rabbit. Why does the rabbit outrun the fox? Because the fox is running for his dinner, and the rabbit is running for his life. I am very worried. I hope this ends soon regardless of what the situation is. Economically, I recall what President Fidel Ramos told me on why he immediately opened peace talks with both the communists and separatists in the South. War is very expensive. I would add with no return on what was spent. That is why war has to be a last resort when one has no choice.
This is becoming a very complicated and multifaceted story that affects all of us and not just the US and Israel vs Iran. As Colin Powell said after the invasion of Iraq — “if you break it, you own it.” I have previously written and commented that this decade reminds me of the 1970s — social, political and economic upheaval, with resulting slow economic growth and elevated inflation as well. I do not expect this to be a happy decade. Better get used to it and change assumptions and expectations is my advice. The consequences of all these voluntary and unnecessary disruptions will sadly not end with a change in policy and administration in the US as one has to broaden one’s assumptions on what is possible. For us, enough of our short-term approach to everything, lack of contingency planning and faith in open markets without safety nets. No one will take care of us before taking care of themselves. It is foolhardy to remain so naïve, deluded and lazy. If there was a time to set aside politics to start achieving that it was decades ago. Still, belatedly prepare and plan long term now, rather than keep reacting short term as we yet again are.
The author is an independent director of the state-run Maharlika Investment Corp.
