Tag: iran

Posted on
by

Recent news is that a contingent of ground forces have arrived in Iran. The markets still seem expect that Trump will chicken out (which seems likely) and that things will return to normal in the Gulf (which seems very, very unlikely).

My most hopeful guess at this point:

  1. Trump chickens out, declares victory, says we have a deal with Iran, and pulls out.
  2. Europe and Asia make a deal with Iran that conditionally opens the Strait, with Iran deciding who can transit, and collecting large tolls.
  3. Europe and Asia start getting deliveries of oil and gas and fertilizer and helium. Because of the gap already embedded in deliveries, prices spike up in the meantime.
  4. Because the U.S. is an oil and gas exporter, our prices spike up less (but still spike up, because there’s a global market), and reduced supply of fertilizer and other things from the Gulf means other prices spike up as well, producing an inflationary recession that rivals the worst of 2008 and 2020.

All my other guesses are similar, except that my scenario is preceded by a step 0 in which a bunch of U.S. soldiers and marines are killed while failing to reopen the Strait.

Posted on
by
Graphic of data on shipping through the Strait of Hormuz from the International Energy Agency (IEA)

The U.S. has supposedly provided a “15-point plan” to Pakistan which has supposedly passed it on to Iran.

I have no idea what’s in that plan, nor what Iran’s reaction has been. But I do have some ideas about what would be a reasonable response by Iran. If I were in their shoes, this would be my starting point for negotiations:

  • We can resume enriching uranium, and start enriching it to levels that would allow us to build a nuclear weapon.
  • We can proceed to developing a nuclear weapon.
  • We can accelerate work on intermediate and long-range ballistic missiles.
  • We can continue to arm proxy organizations throughout the region.
  • The U.S. and Israel will pay us substantial reparations so we can rebuild destroyed facilities.
  • The U.S. and Israel will apologize for attacking us and killing our senior government officials.
  • Once these items have been agreed to, Israel and the U.S. will stop attacking Iran. Iran will stop attacking Israel, the U.S. and other Gulf states, except that we reserve the right to use military force in the Strait of Hormuz, and against other oil export facilities, such as those on the Red Sea.
  • As progress is made on these items, we will gradually reopen the Strait, under strict Iranian control, with the right to approve, inspect, and tax every cargo, in perpetuity.

[Updated at 16:56: I careless left off “End all sanctions” and “Return all frozen assets” from this list. Sorry!]

Now, I wouldn’t expect the U.S. or Israel to agree to all that, but it seems like a reasonable starting point for negotiations.

Trump is such a moron for having put us in such a situation. And he’s such a crappy negotiator, that I suspect we’ll end up with something very much like that before the war is over.

Oh, and I’m upgrading (downgrading?) my stagflation forecast to be more inflationary and more recessionary than I’d been assuming.