Deal, Baby, Deal
Closure of Hormuz Strait may lead to another global recession, unless Trump gives Iran an off-ramp, sort off
Most people living today were born after 1990. Israel and Iran were already sworn enemies by then. But their feud didn’t bother the rest of us until four weeks ago, when US and Israel took a “decapitation” shot at Iran, and Iran retaliated by cutting off 20% of global oil and gas supplies. The pain is universal now. Oil, even after Trump’s recent talk of peace, has cooled to only around $100 – 40% costlier than on Feb 27. Gas is not only costly but also scarce, and that’s hurting home kitchens and industries alike. If Iran rejects Trump’s peace plan, and fighting continues, energy prices could soar. Inflation and slow growth are obvious risks. Oil at $150 would cause a global recession, asset manager BlackRock has warned. That would hurt everyone, everywhere, but especially the poor, who haven’t fully recovered from the Covid-induced recession of 2020.
So, this war must end immediately. But how? History shows ending festering conflicts like Israel-Iran, Ukraine-Russia, or Thailand-Cambodia isn’t easy. Ceasefires are negotiated, but they seldom last more than six months. The Bosnian war, for example, saw more than 70 agreements, over three years. Truces are broken when one or both sides believe fighting can get them a better deal, than signing treaties. And that’s an easy trap to fall into. Historians call it “victory disease” – extreme overconfidence in your own ability to win. US has been highly susceptible to it – Korea, Vietnam, Cuba, Afghanistan. It believed it would get out of Iraq in five months, but was marooned for nine years.
Iran has been a grave miscalculation by Bibi and Trump. It’s shown both the will and the means to fight on, and has no scruples about inflicting pain on its Gulf neighbours and other nations. It won’t come to the table, until it feels its aims are better served through talks. For that, some serious confidence building is needed. Maybe, Trump can convince Israel to hold off on strikes first. Negotiations that follow will require concessions from both sides. Expecting Iran to yield so much that it ends up looking like a loser, won’t get Trump anywhere. That’s basic bargaining theory. And the author of The Art of the Deal should know this. If Trump can find honourable off-ramps for both US and Iran – Israel will have to toe his line – he’ll be sparing US and the world a grave, and entirely man-made, crisis.
Disclaimer
Views expressed above are the author’s own.
END OF ARTICLE
