Dem
47
GOP
53
Now we have experienced TACO Tuesday. As usual, the stock market went wild (the Dow was up 1,325 yesterday). Donald Trump loves that, so what is his next move? Iran mentioned a 10-point plan, but didn't release an official plan with 10 items numbered from 1 to 10. What they did release came by way of the Pakistani government. Still, Trump said that is a workable basis on which to negotiate, even though it lists everything Iran wants and nothing the U.S. wants. It is not exactly a complete surrender, so if Jared Kushner puts on his negotiating hat and can tear himself away from the Saudis' money for a day or two, he might be able to weaken a couple of the most odious points. Trump's incredible lack of understanding of diplomacy came through by his not having his own 10-point plan ready as a counteroffer. Starting with Iran's plan and working from there is a sign of not understanding how to negotiate. People have written entire books on the art of the deal. He ought to go find and read one.
Since there does not appear to be an official list of the points, here is what we gleaned from The Guardian, The National, and Al Jazeera:
The various sources are not entirely consistent, but the list above seems to cover most of the likely possibilities. The offiicial list may come today, but it is unlikely to be very different from this. Suppose Kushner goes and finds some book on the art of the deal, speed-reads it, memorizes the key ingredients, and with his new negotiation skills, gets Iran to drop nine of the 10 points and keeps only one of Kushner's choosing. Your homework assignment (remember, we became professors so we can give out homework assignments) is to please explain how this would differ from a surrender by the U.S. In your own words, explain how the U.S. is better in any way than it was before spending tens of billions of dollars and ending the lives of 13 brave American soldiers on Operation Epstein Fury.
The first five are going to be tough to sugarcoat. If Trump accepts any of them, the blowback domestically will be enormous. He will have given up all America's leverage in the Middle East in return for nothing. In its place, he will have achieved a far more powerful Iran. All Iran lost was its air force and navy, neither of which was any good or of any importance, really.
It took Barack Obama a couple of years to negotiate a deal with Iran that resulted in it shipping 97% of its enriched uranium out of the country. Is Trump going to get a better deal in 2 weeks, now that Iran absorbed everything the U.S. could throw at it (except nuclear weapons) and the regime is stronger than ever? We shall see, but don't hold your breath.
The deal could really shake up geopolitics, and not in a good way. European countries would see the U.S. as weak and unreliable and would greatly accelerate their move toward their own defense. That would include building their own weapons industries as fast as possible, to end their dependence on Lockheed Martin, RTX (Raytheon) and Northrup Grumman. Saudi Arabia would fear Iran even more than it does now, now that it knows the combined (and enormous) military might of the U.S. and Israel was unable to take down Iran. It would have to accept much more Iranian dominance in the region than it would like. China would see the U.S. as militarily not as strong as it feared since it was unable to beat a medium-sized power it really cared about beating. Xi Jinping might conclude that taking Taiwan would not provoke much of a response from the U.S. and even if it did, the U.S. would give up as soon as gas hit $4/gal. Russia would double down on taking all of Ukraine knowing the U.S. is running out of munitions, and even if Congress appropriates an extra $200 billion for the DoD and has an accelerated bidding process, it could take defense contractors more than a year to actually produce more munitions.
Four weeks ago, Trump talked about an "unconditional surrender." We may yet end up with one, his only mistake was picking the wrong country that surrendered.
There is another point that is not on Iran's golden wish list, but could arise during negotiations: the end of the petrodollar system. Jonathan V. Last has a good (partially paywalled) piece on this. Currently, nearly all oil transactions in the world are in U.S. dollars. Suppose Iran demands that the tolls it will impose on the Strait of Hormuz be paid in yuan. This will reduce the role of the dollar in world trade and boost the role of the yuan. Countries will sell their T-bills and buy C-bills (which China will have to grudgingly create, despite its dislike for other countries stockpiling yuan). The U.S. currently gets a free ride in a lot of ways on account of the petrodollars. Whenever the budget is not balanced (which is always since Bill Clinton), the Fed can just magically create more dollars. But if world trade moved to yuan, the U.S. couldn't do that without devaluing the dollar against the yuan, which would stoke massive inflation, make Social Security unsustainable, and a lot of other bad things. Nothing good for the U.S. can come from replacing the dollar with the yuan as the world's reserve currency.
Then there is this. If you thought Trump would put the country's interest above his own for a minute, you greatly underestimated his creativity. Now Trump is in favor of tolls in the Strait of Hormuz, which would raise the price of energy in the U.S. Why the change? He thought of the idea of forming a joint venture with Iran to charge and manage the tolls. If the joint company charged a toll of $1/barrel, it would make about $20 million per day (or 137 million yuan). That comes out to $7.3 billion (or 50 billion yuan) per year. Suppose Trump got one-third of the take (he is a generous man, so he might well allow Iran to own two-thirds of the stock, to teach them about capitalism), then he would make $2.2 billion per year while Americans would struggle to buy gas. Seems par for the course, no? Does this deal count as an emolument? Of course not. What's an emolument, anyway?
If you are one of those people who likes to look at the bright side of everything, no matter how dark it is, here is the bright side of this: It will take a while for gas prices to come down and if Iran, in some joint company—call it Tiran—imposes tolls on tankers going forward, energy prices are going to rise, permanently. Higher energy prices will aid the move away from fossil fuels faster than anything in the Inflation Reduction Act, which Trump has largely gutted. Higher energy prices will help mitigate climate change as people are forced to use less fossil fuel due to the price. Europe and Asia will start pushing electric vehicles as hard as they can. Nuclear power may become economically competitive. The solar and wind power industries will grow. Greece, southern France, and southern Italy have plenty of sun. In the U.S., the total cost of car ownership may increasingly favor electric cars and consumers will take notice. Of course, those cars will come from China because Trump's policies have decimated the domestic electric car industry. But maybe South Korea and Japan will be able to rev up fast enough to take market share away from China. (V)