Aftermath: There Is No End to the War With Iran

This story was first featured in the Aftermath newsletter, a series from David Dayen exploring the economic consequences of the war in Iran. To have these stories delivered to your in-box as soon as they are published, sign up for the newsletter here.

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Usually at the top of every edition of Aftermath, we update current developments aimed at a permanent ending to the war in Iran. But today I want to reflect on how the idea of “ending” the war is a kind of fallacy, both because the end isn’t really an end in material terms, and because it will do nothing to slow down an ongoing crisis triggered by the ridiculous decision to start bombing. Cheery stuff in this edition of Aftermath.

Are We Still at War?

Every day we wake up to talk of a peace deal, and every day an oil trader makes money off it. There’s so much peace breaking out that the U.S. initiated military strikes on Thursday aimed at Iran’s Qeshm Port, a round of fire that was somehow deemed too “low level” to break the cease-fire. But sure, we’ll get to peace someday soon.

On Wednesday, we heard about a one-page memo that would end the war. (Funny, the Trump administration told Congress last week that the war was already over.) But the details of the memo just outline another set of negotiations: one to reach agreement on opening the Strait of Hormuz, and another on Iran’s nuclear program. So there are talks over a deal to have more talks.

The Iranian leadership is biding its time before making its next move. And why wouldn’t they? It’s become public that President Trump desperately wants a deal completed before his summit in China on May 14-15. Every day closer to that gives the Iranians more leverage to set terms, as well as giving the Chinese the upper hand on other matters like Taiwan, if Trump has to beg them to fix the Middle East situation for him.

The blockade that Trump imposed on Iranian exports is supposed to be debilitating Iran, forcing them to come to the table. But Iran pre-positioned its oil resources to avoid economic damage from a blockade, with tens of millions of its barrels of oil floating at sea, and land routes opened up for the rest. While the domestic economy is in trouble—that’s why Iranian citizens were protesting the regime in the first place—the oil industry that is the source of the regime’s wealth is trundling along. Indeed, U.S. intelligence now indicates, according to The Washington Post, that Iran can outlast a blockade for several months, not only because of oil mobility but because it continues to hold significant stockpiles of missiles and weapons. So if Iran can wait Trump out, and he needs a deal in a week, who has the leverage? Whatever you’re seeing in the media today about the state of negotiations will be better than the deal Trump actually gets, given these dynamics.

And that deal, when it happens, bears no relationship to the stated objectives of the war. The U.S. and Israel said they wanted to eradicate Iran’s nuclear program and change its regime. The regime is now composed of more hard-liners than before, and Iran’s nuclear capability has not budged since last summer. Now the two sides are negotiating the opening of the Strait of Hormuz, which was open before the conflict, and the terms of Iran’s nuclear program, which they were negotiating before the conflict. Moreover, the compromise being contemplated involves Iran pausing uranium enrichment in exchange for the U.S. lifting sanctions and unfreezing Iranian funds. That sounds suspiciously like the deal President Obama struck in 2015 that Trump ripped up when he took office, complete with the “bags of cash” sent to Iran that Trump flipped out over back then.

All this war has done is killed thousands of people, opened a new front for Israel in Lebanon, damaged most U.S. military sites and most energy production facilities in the region, led to oil spills that are visible from space, created a shipping bottleneck that will take at least a year to fix, raised domestic gas prices to a record for this time of year, cost American consumers $34.3 billion and counting, ended the life of one U.S. airline with more likely to come, and led us down an imminent path to physical shortages of critical commodities like oil, including in the United States.

I have never in my life seen a war that achieved literally none of its objectives while directly causing this many devastating costs, and I lived through Iraq and Afghanistan.

The Aftermath

That’s especially true because the war’s end, as stated above, won’t end the war, or at least won’t end the consequences of it. Oil prices are not going to return to prewar levels for a long time. Fertilizer shortages have already damaged at least one harvest. Commodities that derive from oil and gas like plastics, or commodities reliant on Gulf-area production like aluminum, will not bounce back immediately. Neither will semiconductor production that depends on natural gas and helium that comes from the region.

Ships aren’t even all that likely to travel through the strait if everything is still under negotiation. The ill-fated Project Freedom to liberate commercial ships from the region has ended in utter failure, with a grand total of two ships making it through. The Saudis wouldn’t let the U.S. use their bases or airspace for the operation, as they saw it as leading to a resumption of a hot war. Every ship will not risk missile damage until something is definitively in place. That will take some weeks, and every day of the shipping crisis will take another week to resolve.

Physical shortages or higher prices for necessities like food and energy inevitably spur economic hardship that leads to social unrest, political chaos, and internecine conflict. Despite the happy talk that America is “shielded” from these consequences, we’re seeing these outcomes as we speak. High stock prices are wishcasting, fueled by investors who want the war’s end to solve everything.

Today, Whirlpool talked about a “recession-level industry decline” as it released first-quarter earnings, with nobody wanting to make big-ticket purchases. McDonald’s, with its finger perhaps most directly on the pulse of the average consumer, said consumer spending is “certainly not improving, and it may be getting a little bit worse.” When energy and food take up a higher share of the monthly budget, demand for optional goods and services falls. And those optional luxuries support jobs in travel, transportation, tourism, and a host of other industries. Having a better recession than the rest of the world is cold comfort.

We’re going to be talking about the Iran war for much longer than there was an Iran war. Not everybody has caught up to how this has fundamentally changed the world. But they will.

The post Aftermath: There Is No End to the War With Iran appeared first on The American Prospect.