Transcript When you’re losing a war, but it’s not an existential defeat, your country, your government can continue pretty much as before. Aside from the humiliation, there’s a well-established technique, which is to declare victory and pull out. But it appears that Trump can’t even pull that off. Hi, Paul Krugman with a Saturday update on the situation in the Strait of Hormuz and all of that. It’s been clear for a while that the United States has basically lost this war. The goal was to achieve regime change, possibly to take Iran’s uranium. Neither of those is going to happen. The Iranian regime is harder line than it was before. Iran has ended up strengthened because it’s demonstrated its ability to shut off traffic through the Strait of Hormuz. No way the United States, even under current management, is going to commit ground troops to attempt to really do in Iran’s nuclear program on a sustained basis. So the indicated strategy was to essentially give up, but claim that something wonderful was accomplished, and that’s certainly something that Trump is good at doing. But he hasn’t been able to pull that off, I think because he himself is incapable of facing reality. So the Iranians said that they are willing to allow free passage of shipping through the strait, by which it turns out they mean basically passage that stays close to the Iranian coast and pays a toll along the way. Well, what’s our alternative to that? What is it that we want to get? The United States has started imposing a blockade on Iran, which hurts the Iranians. It does give them a reason to seek a deal, but only if they get something out of it. So if allowing ships to start carrying oil and LNG and fertilizer and helium out of the Gulf allows them to sell their own oil again and to import food, which apparently is an important issue for Iran, then that’s a deal that can be done. It will, in practice, be a strategic defeat for the United States, but something that the Trump administration could try to spin as a victory. But in order to get that, you have to actually deliver on that deal. You can claim that you’re winning and that they’re surrendering, not us, but you have to actually deliver on the deal. What Trump tried to do was to say, great, they’re opening up the strait, but meanwhile, we’re going to continue our blockade. And also, they have promised that we can have the uranium, which they had not. That doesn’t work. It’s just basic logic. Why would the Iranians agree to a deal if they don’t get a lifting of the US embargo, don’t get their ability to sell oil and their ability to import food back? If that’s what’s going to happen, then you might as well keep the strait blocked. So what was this supposed to be? What was the idea? What was the thinking? Well, as best I can tell, and this is all speculation now, I don’t think that Trump has taken on board, maybe he’s emotionally incapable of taking on board the reality that he screwed up, that he took us to war and lost, that he, in his mind, still thinks that America has the upper hand and that the Iranians are cowering in fear over the might of the U.S. military, and that he doesn’t need to make any concessions, Does he really believe that? Do we even know? Is really believing a thing that makes sense in his case? Probably not. But to some extent, he is at least incapable of accepting as a basic proposition, never mind in public, but at least in terms of actual policymaking, accepting as a proposition that, well, the U.S. just found the limits to its power, and they turn out to be closer to our goal than they are to the Iranians’ goal. So we basically have to cut our losses by making a deal that leaves the Iranians with some stuff that they didn’t have before. He can’t seem to do that. But if he doesn’t do that, then the Strait of Hormuz will remain closed. In fact, it’s more closed than before because the Iranians are not managing to export oil, which is new. They were exporting oil before, and now that little bit of supply to the world market has been cut off. It’s about 2% of world oil supply. Not huge, but in a very tight oil market, it is significant. And I have no idea where it goes from here. Once again, we’re in a situation of total uncertainty. Now, I might be willing to say, maybe I’m misunderstanding, maybe the United States does have, in some sense, more leverage. But, you know, we do have markets. The futures markets are closed for the weekend. So let’s see what happens when they reopen Sunday night. But the prediction markets are open, and for all the problems with the prediction markets, they show very clearly that the perceived probability that the strait would reopen by June 1stspiked last week and is now back basically to where it started. All of a sudden, we’re down to a 30% or so probability of getting the strait open anytime soon, which looks about right. Maybe that’s even a bit high. But, my God, like I said, we are led by people who not only can’t plan a war right, they can’t even successfully execute a surrender. And that’s a really bad omen, not just for the Iran conflict, but for everything else. |
