How Does the War in Iran End?
With a whimper, not a bang.
I’ve been consistently writing on the blog that the Iranians are winning the war, and nothing has changed my mind. But with both sides continuing with their tactics largely without military confrontation there will not be a Waterloo, Hastings, or Gettysburg; a sort of decisive battle where the war is decided in the field. Instead, this looks set to be a test of wills, one which the Americans will lose. Politics is informed by economics, as few people overthrow their governments or force major foreign policy shifts like making peace for purely ideological or realpolitik-al reasons. Allow me to explain why I think the US is going to lose, before explaining what I think peace looks like.
For all the digital ink spilled on how poorly the Iranian economy is doing, their military has been very successful not just in terms of making transiting the strait of Hormuz difficult but also in strictly military terms. For all of Netanyahu’s bluster, and the Israeli anger over the June memorandum of understanding, Israel has not struck Iran for months and unlike the US it does not engage in warlike conduct with its navy. For all intents and purposes Israel and Iran are at peace – albeit an unsteady peace between two deeply distrustful enemies both of which are sure there will be another war in the future. But that is the exact status quo ante bellum. While the US has lost an ally, Iran has had an ally choose to enter the fray in the form of Ansar Allah in Yemen.
On one hand, the gaining or losing of allies might seem of lesser importance given that there will not be a big pitched battle for the future of the Persian Gulf, but on the other hand, opening the Yemeni front has meaningfully enhanced the efficacy and intensity of Iran’s tactics. Making sure hydrocarbons cannot get out via Hormuz is pointless if those hydrocarbons can be easily transported through harbours in other seas, but with the Bab-al-Mandeb shut down to Saudi Arabia, which is the only Gulf oil producer with a Red Sea port, it becomes an even more effective chokehold. To be fair, losing Israel’s help has essentially no impact on the US’ gameplan of escorting ships through Hormuz and blocking maritime traffic to Iran, but that tactic will never achieve the initially proposed maximalist goals of dismantling Iran’s nuclear weapons programme and installing a new regime in Teheran.
We must also acknowledge the essential asymmetry in tactics which massively favours Iran. Building things is harder than tearing them down, and making sure a strait is impassible is far less difficult than preventing an enemy from shutting it down. An added benefit for Teheran is that every tanker struck is another tanker which needs repairs is another tanker not exporting Qatari crude oil, even if it will eventually be repaired. Every struck vessel is also another crew of individuals who will have had a near death moment which might make them reconsider whether the risk is worth the reward. Finally, consider the time it takes to build new tankers if they are sunk or damaged beyond repair. Finding sources on this is difficult, but from what I’ve seen, it takes one to three years between ordering and delivery for a large oil tanker.
With oil index prices on the rise again recently, we are likely approaching a time where the stock narratives of an imminent return to normality are losing credibility, and if that is the case then Iran’s tactic is getting another boost. For the longest time traders, politicians, and analysts have come up with narratives about the wars which, if they were true, would put a limit on the catastrophic supply disruption that is shutting down Hormuz. Now that the final deadlines like the Israeli general election and the US midterm elections are just hours and days away, the pressures which had been building for finding a solution to this impasse have started to release, and in the absence of diplomatic talks it is difficult to find some new person, date, or event to pin ones optimistic hopes on. If Mr Market starts to treat Hormuz being closed as the new normal, coupled with high crack spreads, and some of the lowest oil reserve numbers on record we might see oil become quite a bit dearer from this already high base.
That will start to pile on the kinds of political and economic pain that could really get the diplomatic process going again. Ironically, perhaps the bankers and investment types who have for so long cried that peace is near are finally right, just as the rest of us have stopped believing them. If prices were allowed to skyrocket at the beginning of the conflict, it would probably have ended sooner. But I digress. An American withdrawal is almost a foregone conclusion, and now that the rhetorical trenches have been dug so deep, and the diplomatic trust has suffered so many sea mines and anti-ship missiles, I think the Israeli model of peace is what we should expect. Iran demands its frozen assets back, its ownership of Hormuz and the ability to levy fees recognised, the naval blockade lifted, the US evicted out of its bases in the Middle East, and an end to the Israeli wars. It will gain everything the US can give it without signing any treaties or sending any money, and the US will leave Israel to fend for itself. When the blockade is lifted no US military personnel will return to its bases and in return tankers will be free to sail through Hormuz unharassed again.
If you liked this post you can read a previous post about riots in France here or the rest of my writings here. I also have a section for longer reads I call essays here, I particularly recommend my series called The Bird & The Technoking exploring Elon Musk's takeover of Twitter, and its political and cultural implications. It'd mean a lot to me if you recommended the blog to a friend or coworker. Come back next Monday for a new post!
I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.
Written by Karl Johansson
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Cover photo by Saifee Art from Pexels, edited by Karl Johansson
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