Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Tag: Iran War

Doom, As Predicted

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On September 17, 2026

28 Comments

Sigh:

Regular readers will know I have been predicting this for some time. And understand that this is before the effects of Yemen basically shutting off Saudi oil and natural gas entirely because of shipping times.

Diesel is what farmers use. It’s what truckers use. It’s what most mining equipment uses. Much construction equipment. It’s probably more important for the operation of domestic economies than gasoline. Add to this fertilizer shortages, because much of the precursors come from the Middle East, and we’re in a world of hurt. Next up, bunker fuel, the stuff used to run freighters and tankers and without which international trade crashes to a halt, since shipping the is backbone of international trade.

Meanwhile the international bond market is freaking out:

Ouch.

Also ouch.

Are you sick of all the winning yet?

The Feds also increased the Federal reserve rate yet again, and indicated there may be another raise before the end of year.

Perhaps you’ve wondered why high interest rates are used to cool inflation? It’s because borrowing costs are a cost for businesses and individuals: when they go up, people have less money, and thus spend less. This leads to what economists like to call “demand destruction.”

Demand destruction means less economic activity, and enough of it causes recessions and shitty economies, and that’s in addition to the fact that expensive or insufficient fuel will also lead to a shitty economy.

And by shitty economy I mean that I expect to see actual food riots in multiple countries next year. This crisis is one of choice, and on top of that since there was no proper rationing which made sure that diesel and fertilizer and so on got to those parts of the economy which needed it most (yes, that means farmers in particular, but not just them) we’re going to be in a world of hurt.

Everyone with diesel refining who hasn’t already will put exports controls on at the least. That means if your country doesn’t produce enough, it’s not going to be able to buy enough otherwise. Yet another case of “no, you can’t buy anything that matters when it really matters.” Food exports will likely be restricted as well. Can your country feed itself? A lot can’t: for example Britain.

In personal terms I re-iterate. If you can afford to, start and stocking up on staples, medicine, fuel and so on. If you don’t need them, great, you’ll use them up in time anyway, but odds are you will need them and at the least, even if your locale doesn’t have physical shortages, be assured prices WILL rise.

This isn’t a theoretical matter any more, or a case of “later” as it was when I gave these warnings months ago. It’s happening now and it’s going to get worse. The only route out (and even then there’ll be problems, because rebuilding takes time) is for America to admit it lost the war and go to peace on Iranian terms and for Saudi Arabia to do the same with Yemen. All this nonsense about repairing the Saudi pipeline is almost meaningless because Yemen can hit it again and again and has no reason not to until the Sauds end their blockade.

This is a three alarm fire in the economy. The basis of the economy is on fire, and the fire is out of control and spreading. Act accordingly.

 

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The Imperial Presidency and Eterna-War

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On May 23, 2019

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Constitutionally, only Congress can declare war. Congress has given up that power, and continues to affirm that they have given up their war powers.

The Senate Foreign Relations Committee on Wednesday rejected a Democratic proposal to require congressional approval before the US can take military action against Iran.

Machiavelli has a dictum, “Good laws cannot save bad people; and good people can make bad laws work.”

The US constitution, despite American worship, is a flawed document. But it’s not its flaws that matter, because where it has virtues, such as putting war-powers in the hands of Congress and not the Presidency, Congress has refused to embrace it.

Likewise, as Pelosi twists in the wind, and is taunted by Barr when he refuses Congress’s subpoenas, there is a Congressional remedy: The Sergeant-at-Arms can arrest Barr. It would be constitutionally valid to do so. (And Congress runs DC, and DC has plenty of jails, so yes, there is somewhere to put him.)

The issue is that Congress members and leadership don’t want to use their power. They want an Imperial President. They want war, without the responsibility for it.

The Founders assumed that Congress members would want power and would protect their powers–they didn’t anticipate this debilitating weakness, this cowardice, on the part of Congress.

Bad people can’t even make good laws work.

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The Coming War with Iran?

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On May 7, 2019

32 Comments

Image by Yuan2003

It may turn out that the worst thing Donald Trump ever did was hire John Bolton as his National Security Advisor.

Trump was already deranged on the subject of Iran, possibly because Jared Kushner is his son-in-law, and Jared is having a (presumably) platonic love affair with Saudi Crown Prince (and de facto ruler) Mohammad Bin Salman Al Saud. Saudi Royals both hate and fear Shia Islam, in part because the regions of Saudi Arabia with the oil are Shia.

So Trump unilaterally left the nuclear weapons treaty with Iran, and the Treasury department has made it illegal for any country to buy oil from Iran. Since almost all finance in the world goes through US banks, the Treasury can do this. Only firms which don’t use the SWIFT system can avoid the Treasury’s grasp.

These sanctions are having a terrible effect on Iran, and one which will grow even greater as the final waivers expire. There will be smuggling, but even so, Iran will be starved of foreign currency.

The US has also declared the Iranian military to be a terrorist organization, the first time part of a foreign government has ever received that designation.

And a carrier task group has been sent to the region, specifically as a warning to Iran.

It is well known that the NeoCons, of which Bolton is a prominent member, want a war with Iran, to remake the Middle East. (This is part of the same project which saw Iraq destroyed, and which fuel US-led regime change aspirations in Syria. A little further afield, Libya, while not in the Middle East, was similarly dealt with.)

The issue, as Escobar points out, is that a new alliance is rising. Its key members are China and Russia, but Iran is part of it as well. The Chinese Belt and Road Initiative is meant to create routes to Europe and a Chinese-led trade zone. It is meant to bypass the straits of Malacca (which the US can shut down at any time to strangle China), and the land parts will be a lot faster (though not cheaper) than sea transport.

Iran is a key part of this system.

Because other countries aren’t cooperating with the US when it tries to stop the B&R system (indeed, Italy just signed on), the US needs to actually destroy part of it.

Thus Iran.

This isn’t the only reason, needless to say, the NeoCons have wanted to destroy Iran for far longer than the B&R system has existed, but it is now an important consideration.

But what if Iran survives the sanctions? No one except the US is happy about the sanctions. Others may submit, but they don’t like it. The Chinese will do a huge end-run, as with the Russians. Even the Europeans are angry, and have created a “special vehicle” to avoid sanctions. (Consensus seems to be that it doesn’t do a good job and that if they’re serious they need to improve it.)

Because no one is happy, there’s going to be a lot of oil still sold. It may be enough to keep the Iranian government in power.

Then what?

Well, war, maybe.

The problem with that is that Iranians can shut down the Strait of Hormuz. There is no situation, short of nuclear glassing, in which the US can keep it open. That spikes the price of oil to hundreds of dollars a barrel, because, at that point, a quarter of the world’s oil cannot get to the market at all.

And that causes an economic and financial crisis, likely even larger than 2008, because it involves economic fundamentals.

So the question is whether or not Bolton, who is a true believer, can talk Trump into it.

And the answer is… I don’t know. Just don’t know.

But that’s a serious precipice on which we’re walking.

Even without war, this is a serious situation. The US’s continued abuse of its privileged position in the world payments system to sanction countries like Iran and Venezuela, even when other great powers disagree, means that the loss of that privileged position through the creation of alternatives is inevitable. It is already happening and only a matter of time before they become viable enough that major countries will simply be able to ignore the Treasury’s sanctions.

This is also true because other markets are large enough that access to the American market is no longer required. Especially if the EU comes onside with this, the ability to sanction is basically finished if the other great powers (and especially China), don’t agree.

This is, for the US, a late Imperial period. Don’t mistake it as anything else. And remember, very few countries manage to regain their pre-eminence or Empire. Britain lost one Empire and gained another, but it is an exception, and driven by a specific situation (first mover in the Industrial revolution) which has no modern parallel (no, the information revolution is not even a rounding error on the industrial revolution.)

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