Alastair Crooke
A market downturn in the U.S. - exacerbated by an energy crisis - could spell disaster for Trump's midterm hopes.
When the U.S. Navy, in co-ordination with Qatar and Oman, tried to slip a convoy of four vessels through the Strait of Hormuz, via Omani waters, on Tuesday night - rather than pass via Iran's officially approved route - Trump may have imagined (or been told) that with the massive funeral for the late Supreme Leader Ali Khamenei under way, that Iran would not react as the U.S. Navy attempted to force open an American corridor. Trump however, misread the Iranian jibe - Hormuz is its' 'atomic weapon'. Iran will not relinquish it.
Trump insists - in clear contradiction to the terms set out in paragraph five of the MoU - that Iran has no right to interfere with any ship trying to transit the Strait of Hormuz. Iran nonetheless is acting within the terms of the agreed de-escalation framework, and has warned repeatedly that it would strike any vessel circumventing the Iranian control mechanism.
Iran responded directly to Trump's challenge to Iranian control of the Strait by striking two vessels with missiles and a third with an armed drone. A forth Qatari-owned tanker, laden with liquefied natural gas, was set ablaze, forcing its crew to abandon the stricken vessel.
These Iranian ripostes provoked Trump to order American air strikes against Iranian targets; to reimpose sanctions on the Islamic Republic's oil exports; and to revoke the MoU framework he had signed with what he called the "Iranian scum" - thus ending the ceasefire. "We hit them hard last night," Trump said at the NATO summit in Ankara. "We will probably hit them hard again tonight".
Trump did hit Iran again Wednesday night - even though Iran had not attacked another vessel seeking to by-pass the Iranian corridor. In response, Iran launched ballistic missiles and drones at U.S. bases in Kuwait, Bahrain, the UAE and Muwaffaq Al-Salti airbase in Jordan.
Vice-President Vance is saying to Iran, "If you try to close the Strait of Hormuz, the American military will respond. It's that simple" - i.e. Iran either keeps the Strait fully open to all, or the U.S. will keep hitting it, as it did on Tuesday night.
Iran insists that it is the U.S. that has violated the MoU and (via the spokesman for Iran's Parliamentary National Security Committee) warns that further attacks by the U.S. on Iran will be met by a comprehensive all-out surprise offensive by Iran - and potentially by other options too, such as an Iranian withdrawal from the NPT, changing the country's nuclear doctrine, and closing the Bab al-Mandab Strait alongside the Strait of Hormuz.
So, Vice-President Vance is saying if Iran restricts Hormuz (i.e. it stays open to friendly states' vessels) the U.S. will escalate. And Iran is responding to this threat by warning that it will escalate militarily - two strikes for every one American strike - and that they may also turn to new doctrines of warfare.
Essentially, Trump has plunged into an escalatory trap, seemingly in part out of pique at his collapsing polls at home. He did, however, directly put himself in this situation by trying to 'act cute' during the Khamenei funeral pre-occupations in order to try to gain a 'quick win'.
How long will this escalatory episode last ? Certainly, it will not lead to the opening of the Strait; nor bring a return of the status quo ante that preceded the war. As long as Iran maintains its ability to exert control over Hormuz, there is no basis to assume that the situation will return to what it was.
On the contrary, and more likely, the crisis will accelerate the onset of looming global economic crisis that could last until the economic pain becomes acute, as the drawdown on sour crude continues - and as the effects on the real economy in the West become visible.
With shortages of munitions and the drawdown on air assets from the Middle East already beginning, Trump probably lacks the wherewithal to go full 'Iran War 3.0'.
The timeline to this new bout of low-intensity tit-for-tat therefore, is likely dictated by refinery inventories in the U.S.; but also by the extent of the 'hurt' being experienced by Trump back home in the context of his fading political prospects, but also by his dislike for any personal humiliation.
Where did this all go wrong ? Possibly the crux of it derives from the moment that Iran's new Supreme Leader, Sayyed Mojtaba, issued his statement that he had held a different view on the MoU to that of the negotiating team, but had agreed to proceed with it after receiving an assurance from the Iranian President that he would ensure and take into account Iran's overarching principles in respect to relations with the U.S..
The Supreme Leader Mujtaba Khamenei's statement put on notice both the U.S. - and the Iranian negotiators - that Iran's approval of the MoU was no open mandate, but rather closely tied to the 10 principles originally enunciated bythe new Supreme Leader.
At some point, the Iranian leadership seemingly came to the conclusion that Iran was being played by the U.S.; that the MoU was a deception -
"and that the entirety of events since the announcement of the MoU reflected a U.S. strategy based on the view that in the previous round of the war against Iran - [that the U.S. and Israel] failed to achieve their objectives - necessitating a halt to the confrontation, albeit temporarily, in order to regroup and prepare 'more thoroughly' for a new round when the right conditions arise".
This led to the Iranian reassessment that the Hormuz and Lebanon components constituted the vital leverage to engage in a new war as the West ramps up pressure as a holding strategy - whilst the U.S. and Israel prepare for the next round of war.
The interim U.S. strategy is no change to U.S.-Israeli objectives, but rather an adjustment to their operational mechanisms to provide for certain compromises that Washington considers necessary (i.e. closer working with Turkey and via Erdogan to engage Syria's Jolani) to reshuffle the Lebanon deck, and then to 'assess how the cards lie', as Vance outlined.
It is not certain that this new U.S. policy will work. The world is changing rapidly. Their expected triumph of Israel over the Middle East has resulted in failure. Trump's MoU ploy to open Hormuz likely will fail, too.
The connected war on Russia and the siege of China are faltering too - and Israel's (until now unassailable) hold over the U.S. is in question too. A senior U.S. democrat, Rahm Emanuel, and potential 2028 U.S. Democratic presidential candidate, spoke in Israel yesterday; he warned in no uncertain terms that Israel "has lost the world's support, become a 'regional pariah', [and that its] alliance with the U.S. is 'at a crossroads'".
And finally, a 'black swan' now can be observed swimming in increasingly sunlit waters - Eric Katz writing in Notus writes that, "a draft report inside the U.S. Treasury Department is set to warn of the risks posed by the artificial intelligence market, likening key aspects of it to the dotcom bubble that upended the U.S. economy when it burst in the early 2000s".
Treasury analysts wrote -
"Career Treasury analysts found that AI firms are more deeply entrenched in the U.S. economy than their dotcom predecessors and pose significant risk to the entire system if financial conditions change, productivity goals are missed or various choke points stymie growth".
"A downturn in the AI market would send shockwaves throughout the entire economic ecosystem".
A market downturn in the U.S. - exacerbated by an energy crisis - could spell disaster for Trump's midterm hopes.