Category Archives: Iran

Britain, Economic, Government, Iran, Politics, Russia, Saudi Arabia, Society, United States

A winter of global discontent beckons

GLOBAL ECONOMY

Intro: As energy and food prices soar, we face a winter of global discontent facilitated by the West being run by failures of truly historic proportions

Houthi rebel forces have swept down the western coast of Yemen, seizing the strategic Red Sea port of Mokha (long renowned for its global coffee trade) then Dhubab, another port, before taking Perim Island at the mouth of the narrow Bab al-Mandab Strait that connects the southern end of the Red Sea to the Indian Ocean.

Many will say these are far off places of which we know nothing and care even less.

Perhaps. But what has just happened there is about to hit us even harder at the petrol and diesel pumps, the supermarket checkout counter, in monthly mortgage payments, bank loans, and household food and energy bills. Bab al-Mandab is Arabic for “The Gate of Grief” – and grief is what the global economy is in for this winter.

Oil and gas prices have already soared since Donald Trump’s war on Iran resulting in Tehran seizing control of the Strait of Hormuz, a development the President managed somehow not to foresee.

Since then the US Navy has been deployed to wrestle back control, with mixed results.

Before Trump attacked Iran, around 25 per cent of global seaborne oil trade passed through the Strait of Hormuz and 20 per cent of global liquified natural gas (LNG). Oil flows are now less than half of that (perhaps no more than a third) and almost no LNG at all is getting out.

It’s hardly surprising, then, that oil and gas prices have soared. But nothing like the trebling and quadrupling of prices in previous energy crunches: that’s because several workarounds were instigated, none more important than the East-West pipeline from Saudi Arabia’s oil field heartlands to the oil port of Yanbu on the Red Sea.

The Saudis built this 750-mile pipeline in the 1980s, as the Iran-Iraq war was raging, precisely as a contingency for the Strait of Hormuz being shut. This year it became the most important piece of energy infrastructure in the world, its daily capacity of 7 million barrels doing its bit to mitigate the rise in oil prices.

No longer. Which brings us back to the Houthis.

Just as the Islamic Revolutionary Guard Corps (IRGC) threatened all vessels trying to transit the Strait of Hormuz, so the Houthis, Shia insurgents funded and armed by the IRGC, now threaten all shipping attempting to pass through the southern exit of the Red Sea.

The two most crucial maritime chokepoints in the world are now under the thumb of a hardline Iranian regime and a proxy doing its bidding. It would be hard to think of a more disastrous outcome from Trump’s war on Iran. But there’s worse.

As the Houthis pushed south to take control of Bab al-Mandab, the Saudi East-West pipeline came under attack from drones dispatched by Iraqi Shia militia, yet more Iranian proxies.

Even the dim-witted can surely see a pattern here.

The drones took out pumping stations, forcing the Saudis to close the pipeline for at least six weeks for repairs. This has crippled Saudi oil exports in the process, a harbinger of the global spike in oil prices to come.

This week the benchmark Brent crude oil price hit almost $110, the highest since May, before falling back a bit. Aramco, the Saudi national oil giant, told European refineries there would be no deliveries next month. The prices of what’s refined from crude oil – jet fuel, petrol, diesel – are rising fast.

Tehran has, in effect, opened a second front in its war with America, with huge consequences for the global economy – and Trump, still struggling to escape from the first front (which he started), has no idea what to do about it.

The Saudi crown prince, Mohammed bin Salman, has pleaded with the US President for military help to repel the Houthis. Washington will likely be reluctant to assist, mindful that the Houthis survived a massive US bombing campaign, lasting over 50 days and involving 1,000 airstrikes, in the spring of 2025.

The Saudis are certainly in no position to dislodge the Houthis on their own. The group already controls a big chunk of northern Yemen, including the capital, Sanaa, despite previous Saudi military interventions on behalf of the beleaguered Yemeni government.

Now that the Houthis have their foot on the Saudi oil-export windpipe, they are going nowhere fast.

TWO

Sometimes it really doesn’t rain but it pours. The coming global energy crunch will be compounded by the fact that Ukrainian drones have taken out a third of Russian diesel-refining capacity. Russia is now having to import diesel from India, pushing up global prices even further.

Russia is retaliating by sending its drones to hit Ukrainian grain infrastructure and exports going through the Black Sea, seriously hindering the amount of grain getting out from one of the world’s great bread baskets.

It’s a prelude to the soaring food prices to come. Farm machinery is powered by diesel. So that cost is rising. So is the cost of fertiliser. Around 20 per cent of global supply used to come through the Strait of Hormuz. Not now. The upward pressure on food prices will become relentless.

Suddenly we’re looking at the prospect of soaring energy and food prices, as oil and grain markets buckle. A new broad-based inflationary surge is coming down the pike.

The Bloomberg commodity index has already risen by 48 per cent this year. That’s now working its way into consumer prices.

UK inflation is back over 3 per cent – with more rises to come. European gas reserves are at historic lows, with time running out to replenish them for winter. So, gas is about to become much more expensive, too.

OFGEM’s energy price cap is forecast to rise by as much as 25 per cent in January.

We are now moving into a world of higher interest rates. The European Central Bank increased its benchmark rate last week; the US Federal Reserve did the same just days ago. The Bank of England kept its rate on hold. But it’s only a matter of time before it starts raising rates too. Now that inflation is back, it will have no other choice.

We are looking at higher interest rates for as far as the eye can see. The chance of reviving the housing market is non-existent. While all this unfolds, politicians on both sides of the Atlantic debate and promise irrelevancies while ignoring what really matters.

Britain has been consumed by rows over political donations which in the grand scheme of things barely matter a jot, but allow politicians to posture at their hypocritical worst.

America has a President – who’s caused much of the global economy’s turmoil – trying to bribe voters with a $5,000-a-head “dividend”. France has a lame-duck President who talks a lot and does nothing as his country sinks into a fiscal morass.

German Chancellor Friedrich Merz might not survive next week following a series of bad results in elections.

The markets, of course, know exactly what’s happening. Inflation is coming back with a vengeance, the war on Iran is being lost, and the global economy is at the mercy of Islamists bent on our destruction.

It should come as no surprise the bond vigilantes demand ever higher interest rates. A risky world means ever-rising risk premiums.

We face a winter of global discontent with a political leadership missing in action, obsessed with an agenda that means little and is of a self-serving discourse, wholly inadequate to the challenges about to confront us. When the IRGC and the Houthis hold the upper hand, nobody can be in any doubt we’re being run by failures of historic proportions.

Standard
Iran, Israel, Middle East, United States

The folly of boots on the ground in Iran

US-IRAN WAR

Intro: After the pain of Iraq and Afghanistan, it’s almost inconceivable the US would again send troops to the Middle East – but its president is desperate and narcissistic

Concern and anguish are justifiably growing that a cornered Donald Trump will send US ground troops into combat on Iranian soil to avoid being personally and politically humiliated in a war of attrition he started, mismanaged, and cannot end. Such a self-serving escalation, however – even if limited in scope and duration – could itself prove catastrophic for him and the American people. Think what happened in previous US-led military interventions. In sum total, he’s caught in a modern-day catch-22. Pick your own metaphor for dumb. Trump’s stumped, hoist by his own petard, stuck between a rock and a hard place, and up the creek without a paddle. The creek in question is, of course, the Strait of Hormuz.

Firmly ensconced in his strange parallel universe, Trump insists the war is all but won, Iran is suing for peace, and talks are making good progress. In the real world, Iran is still fighting on all fronts, Israel is still relentlessly bombing, the strait remains largely closed, and the Iran-allied Houthi militia in Yemen has joined the war, attacking Israel and potentially blocking Red Sea trade routes. The US and Iran have each issued maximalist demands, but there is no sign of actual negotiations. They are poles apart, further even than they were before Trump, egged on by Benjamin Netanyahu, abandoned diplomacy four weeks ago. Sometime soon, Trump will be forced to confront the huge gap between what he wants and what’s on offer. At that point he could turn to the troop buildup amassing in the Gulf and order ground attacks.

How did it come to this? It’s incredible to think that after all the mortal agony and pain of Iraq and Afghanistan, a US president is once again seriously contemplating boots on the ground in the Middle East. It’s even more amazing the president concerned is Trump, a noisy and outspoken critic of costly foreign adventures. Yet this is no unlucky break, no accidental misfortune. It’s the result of deliberate policy. If the US is facing impossible choices, the responsibility is entirely Trump’s, though he will surely blame and scapegoat others. For one, Pete Hesgeth, the Pentagon’s troubled comic-book warlord, is in his gun-sights.

Ignoring facts on the ground, the White House continues to spout lies and bombast. Trump is plainly in denial, claiming “regime change” has already been achieved with the assassination of Ayatollah Khamanei. Trump has this strange habit of behaving like a spectator, detached from the chaotic events he himself sets in motion. He acts and behaves as if the global energy shock, the US’s abject failure to defend the Hormuz strait and its Gulf allies, Iran’s unyielding defiance under fire, and the absence of the much-predicted popular uprising in Tehran, have nothing to do with him. He doesn’t understand Iran is fighting an asymmetric war, that even the biggest bombs cannot obliterate pride and ideology, faith and history.

Trump is increasingly isolated and out on a limb. His wealthy Arab business cronies no longer trust him. US bases on their territory now resemble a liability, not a defence. When he demanded NATO’s help, Europe said: we’ll let you know. Likewise, Iran’s ethnic Kurds are less than eager to die for a muppet. Support for the war among the US public and the MAGA right, always weak, is a fast-vanishing mirage. Having egged him on, Netanyahu refuses to bail him out – or to stop bombing everyone in sight. Trump believed Israel’s assurance of quick victory. As for Iran, its surviving leadership, dominated by ultras, reckons it’s winning. Its hard line gets harder by the day.

Imagine being one of the thousands of US marines and paratroopers now deploying to the Gulf. With a commander-in-chief like Trump, who needs enemies? Except plenty more lie in wait. Iran’s armed forces number 610,000 active-duty personnel, with reserves of 350,000. The regime may no longer be able to fight in the air or at sea. But on land, treading familiar terrain and ultimately willing, perhaps, to sacrifice “human waves” of troops, as in the 1980’s Iran-Iraq war, it remains a formidable foe. The Islamic Revolutionary Guard Corps (IRGC) says it’s ready to carpet-bomb its own territory if invaded.

If ground attacks were to materialise – both Trump and Netanyahu have publicly discussed the possibility – the targets would most likely be the coastal batteries, missile defences, and concealed armed speedboat bases dotting the northern flank of the Hormuz strait. An attack on the Kharg oil export terminal further up the Gulf is also predicted. Ominously, Kharg is known as the Forbidden Island; it may be easier to overrun than hold. Such incursions would be intended to force the reopening of the strait, thereby easing the energy crisis, and strengthening Trump’s negotiating hand.

The inherent, inescapable military risks are daunting. Causalities would be inevitable. Even if operations went well in the short term, questions would immediately arise about potential escalation when Iran counterattacked, expansion of the operational area, and duration of the occupation. If they went badly, the cry would go up for reinforcements – a scenario grimly familiar to anyone who recalls mission-creep in Iraq and Afghanistan. More risky still, to the point of suicidal, is another floated option: sending US and Israeli special forces deep into the interior to snatch Iran’s hidden, physically volatile stockpile of highly enriched uranium.

For all his childish threats of epic fury and maximum punishment, does Trump really want to unleash this nightmare? A rational person would strive to avoid it. At one level, his desperate-sounding, fiercely disputed claims that Iran is privately “begging” for peace reflect a realisation that a bloody, open-ended land war could destroy his presidency. His problem is that Iran’s regime knows this too. So, entirely logically, it will continue to rebuff his maximalist 15-point “peace plan” – which amounts to a call for complete surrender – while upping its own demands. They include a permanent end to US-Israeli aggression, undisputed sovereignty over the Hormuz strait, financial reparations, and lifting of sanctions.

Any deal that fails to satisfy bottom-line US and Israeli demands – namely, a definitive end to Iran’s nuclear weapons and ballistic missile development programmes, a halt to Tehran’s support for allied regional militias, and guaranteed freedom of navigation in the Gulf – will be seen as a defeat for Trump. He now plainly wants to end the war but on his terms, with a deal superior to that secured by Barack Obama in 2015 (and subsequently trashed by Trump). Iran – angry, wounded, yet resilient – will not give it to him. Trump’s choice: cave or escalate.

At this dreaded juncture, what is there to say or think? This illegal war should never have been launched. Trump acted foolishly and opportunistically. Netanyahu, too, is greatly to blame. The threat was not “imminent”. And the war’s most persuasive justification – a promise to free Iranians from tyranny – has been abandoned. Negotiations, unconditional on both sides, are the only sane way out. Trump must swallow his pride, admit his error, eat humble pie. Yet, as all the world knows, the very idea that this most ignorant, reckless, and narcissistic of US leaders might actually do so is utterly ridiculous.

Not only was the second Trump presidency going to end in disaster, but the US-Iran war will be the greatest of all disasters of its foreign interventions.

Standard
Iran, Middle East, United States

Trump’s dilemma of his own making

IRAN WAR

Intro: Iran’s leaders will not be threatened into relaxing their hold on the Strait of Hormuz. The US president will have to break it for them

It cannot have been part of America’s plan that nearly four weeks into this war with Iran, Donald Trump should still be issuing furious threats and ultimatums.

By now, he must have believed that the Islamic Republic would either have been overthrown or so incapacitated by American and Israeli firepower that its surviving leaders would be imploring him for terms. The reality is closer to being the other way round. Incredibly, it is the US president who finds himself making ever more fevered demands for Iran to reopen the Strait of Hormuz.

The reason why he has landed himself in this invidious position is that his administration failed to foresee the blindingly obvious: that Iran’s regime, once backed into a corner, would retaliate by closing the Strait of Hormuz and start firing missiles at America’s allies in the Gulf. Why else would Iran have spent decades amassing the biggest arsenal of ballistic missiles in the Middle East? The commanders of the Islamic Revolutionary Guard Corps always knew that their greatest strategic asset was the power given to them by Iran’s geography to, in extremis, wreck the global economy.

Supertankers laden with 20 per cent of the world’s seaborne oil pass every day – at least in normal times – through the Strait of Hormuz.

By attacking only a handful of these tankers, the IRGC calculated that it could sabotage global oil supplies as no one has ever sabotaged them before. That is exactly what has happened.

If Trump had possessed any foresight, he would have ordered the US navy to secure the Strait of Hormuz before the war began. That was supposed to be why the US Fifth Fleet was based in Bahrain.

Instead, before starting the war on Feb 28, Trump neglected to send any more warships than would be needed to bombard Iran and protect the two American aircraft carriers.

Now that the IRGC has closed the strait to any shipping that Iran considers hostile, the president has resorted to threatening escalation. Will Iran give way and allow free passage? That is almost inconceivable.

Will Trump have to make good on his threat to attack power stations in Iran? Given his unpredictable habit of zig-zagging from one position to another, no one can be sure. But even if he did, the IRGC would almost certainly refuse to yield. Iran would then likely act on its threat to strike power stations in “countries in the region that host American bases”. Given that the IRGC has already fired missiles at the world’s biggest gas export facility – Ras Laffan in Qatar – this cannot be excluded.

At some point, it should dawn on President Trump that the Iranian regime will not be threatened into relaxing its stranglehold on the Strait of Hormuz. Given that they will never choose to loosen their grip, Trump will have to break it for them. He will soon have to decide whether to reopen the Strait by force – a highly risky operation that would probably require troops on the ground – or endure huge economic damage. He surely never planned in having to face this dilemma.

Standard