Iran Nuclear Deal: Why Oil Prices might Pre- empt Trump’s Warmongering and Aggressiveness?

Iran Nuclear Deal: Why Oil Prices might Pre- empt Trump’s Warmongering and Aggressiveness?
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One of the major pitfalls and shortcomings of mass democracy is that it can throw up either a political “leader” who is either half witted, moronic or even a lunatic. Donald Trump of the United States might be the best representative example or, more accurately, sample of this general observation. The man, because of his obvious intellectual, mental and emotional shortcomings and inadequacies is unfit to be leading a country that is held to be the most powerful. This is perhaps best illustrated by Trump’s revocation of the nuclear deal arrived at by world powers with Iran. The deal, it may be recalled, halted Iran’s uranium enrichment program which would have allowed the country to reach the nuclear break out threshold. Now , Trump and his courtiers have revoked the deal, what next? The default reflex of Trump’s courtesans and courtiers would be to tighten sanctions with the hope that the pain accruing from these would engineer widespread discontent and disaffection with Iran’s governing class and lead to “regime change”.

Another option that might occur to Iran’s enemies in the Trump coterie would be a “ limited pre emptive strike” against Iran’s nuclear plants to debilitate these facilities by the use of America’s all too willing ally, Israel. These are two most egregious options that might be in the minds of American strategists. But, in the final analysis, both are flawed and hence doomed. Consider the case of sanctions. These will, in all likelihood , rally Iranians, around an external threat, in the form of techno nationalism cum Islamonationalism. This can only mean strengthening and consolidation of Iran’s ruling and governing elite. The clamor for acquiring a nuclear capability can only grow and it will be bottoms up. That is, the demand will emanate from the masses of Iran. In terms of the “limited pre emptive strike” on Iran, again besides rallying the people of Iran, this option is not really an option. First, it will set the United States against the “international community” and , there will be all too willing states, like China and Russia , which will check mate this potential move of the United States. But, as past precedent suggests, the United States has gone against the wishes of the comity of nations if and when it chose. ( The classic example here is the Second Gulf War).

However, this time, countervailing forces might be domestic for the United States. While the country has the wherewithal and force capability to go for a military invasion of any country, with or without help, but it will not be able to absorb the costs of even a short duration conflict in the form of an overseas military (mis)adventure this time round. The United States is too polarized and too drained at this point in time to deal with a conflict of this nature. But, all said and done, if the country recklessly chooses to attack Iran, either by itself or with the aid of Israel, besides throwing the delicate equations obtaining in the Middle East contemporarily into a tizzy, the United States will emerge as the biggest loser from the confrontation. The reasons here are not military. While Iran is not a pushover and has besides direct and indirect capabilities to resist the United States, the real impact of a potential confrontation will be economic with the United States feeling the most pain. The question is how and where? In oil prices lies the answer. At historic highs already, if the United States attacks Iran, oil prices will hit the stratosphere. The world or global economy still recovering from the 2008 financial crisis, will take a spin with collateral damage happening in the domain of trade and supply chains. The United States dollar can also a spin and so will interest rates with an allied impact on exchange rates. If, for example, the United States dollar, exceeds a certain level and interest rates fluctuate, there might not only be capital flight from the country but it will negatively impact the country’s trade deficit( which Trump has been trying to reduce). The country’s exports will be untenable and the Exim imbalance will exacerbate. Trump’s campaign slogan of “Making America Great Again” will take a bad hit and the country might slide into a recession with its attendant prices and costs , ripple effects felt across the globe. It is perhaps these factors that might give a pausal to Trump and his courtiers. The best place to watch out for the denouement of the aftermath of the revocation of Iran nuclear deal might not lie in Trump’s policy statements, tweets or even the posture of his administration but in oil price futures. We, indeed, live in interesting times.

—The author can be reached at: [email protected]

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