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Welcome to The Geopolity’s What We’re Watching (3W), our daily look at the interconnected worlds of Geopolitics, Economics and Energy. Curated from the world’s leading sources of information, our analysis and commentary is designed to help you make sense of the events driving the major developments in the world
Before 3W looks at the latest developments in the US – Israel Alliance War on Iran, we first review the current situation from a broader perspective.
The Asia-Pacific region was already hit “hard and quick” by the war, writes The New York Times. Countless businesses are verging on insolvency. Air traffic has already dropped by a third, and even smaller airlines are losing millions of dollars weekly. Travel agencies, hotels and restaurants are grappling with a sudden collapse in business. Cutbacks in manufacturing, including mining, are now multiplying due to energy shortages. Fuel and petrochemicals shortages and high prices are slowing down Asia’s garment industry as well as agriculture. On the higher-end of the industrial spectrum, Asian chipmakers are slowing production due to a shortage of helium. This “supply side disruption” will only worsen over comes weeks as “one bottleneck begets another” – that’s the pattern that became obvious during the COVID Lockdowns. Asian governments, meanwhile, are taking on enormous debt to slow inflation. By year’s end, millions across Asia could be pushed into poverty. This pattern will eventually reach the rest of the world, NYT writes. Meaning that canceled flights, surging food prices, factory pauses, delayed shipments and empty shelves for products long considered quick and easy to buy worldwide (plastic bags, instant noodles, vaccines, syringes, lipstick, microchips and sportswear) are now likely to characterize the global economy for months to come – even if there was a rapid solution to the conflict. The National has an overview of countries ranked countries by their vulnerability to disruption and Gulf reliance on oil and fertiliser shipments.
In this context, on Monday the US decided to again escalate in the conflict, this time by hijacking an Iranian container vessel. A US Navy destroyer fired on its engine room to disable it, after which US marines helicoptered in to take control of the vessel, writes The New York Times. Iran vowed to retaliate for the seizure of the ship, which Its Foreign Ministry called “extremely dangerous” and “criminal” in a Tuesday statement, writes CNN. 3W consciously chose to describe this even as an “escalation”, because we note it took place during the ceasefire. While the US might make itself believe that this its naval blockade is just a matter of “increasing pressure” on Iran, the reality is it worsens the US negotiating position. On Sunday 3W explained (again) why from a tactical perspective the blockade is a bad idea (the US cannot really enforce it and it sets into motion a sequence of events that could well end in armed conflict with China). Strategically, however, the blockade just adds to the evidences that the US is a completely unreliable negotiating partner. The blockade should therefore be expected to harden Iran’s negotiation stance, not soften it. Because Iran has proven an ability to absorb the pain of economic warfare, while it now has the ability to inflict worse economic pain on the US and (what remains of) its allies through its control over the Strait of Hormuz (and the Bab al Mandab).
Strategically, however, the blockade just adds to the evidences that the US is a completely unreliable negotiating partner
At 3W we are therefore of the opinion the US will be in a disadvantageous position in the next round of negotiations, which is to take place On Tuesday , 21st in Islamabad. The New York Times writes this disadvantageous position is made worse by the temperament that defines the US’s political elite at present: short on competence and experience, long on arrogance, impatient and short-sighted, tactics obsessed while strategically ignorant. CNN writes that Trump’s habit of making ridiculous claims on social media – that are proven false time and time again, 3W adds – is leading to frustration among the professionals in Washington DC as it hinders diplomacy.
CNN writes the next round of negotiation is far from certain. Iranian negotiator and parliament speaker Mohammad Ghalibaf said Monday that US president Trump “seeks to turn this negotiating table — in his own imagination — into a table of surrender or to justify renewed warmongering.” He added, “We do not accept negotiations under the shadow of threats”. Trump responded by just threatening more. “They’re going to negotiate, and if they don’t, they’re going to see problems like they’ve never seen before,” he said. The National writes that late Monday evening there was still no indication an Iranian delegation was underway to Islamabad. “Unconstructive and contradictory signals from American officials carry a bitter message; they seek Iran’s surrender. Iranians do not submit to force,” Iranian president Masoud Pezeshkian further said.
Amidst this unclarity and confusion, Trump said that he extended the ceasefire to “Wednesday evening Washington time”, writes Bloomberg. The originally agreed two weeks ceasefire was set to expire today, Tuesday. This move is quite likely designed to enable more time for negotiations. But at the same time, Bloomberg notes, Trump also said it’s “highly unlikely that I’d extend it” if no deal is reached.
Iran should demand that the negotiations henceforth involve a truly neutral party as facilitator, instead of Trump’s favorite marshal – China would be a wise pick. In time, Iran should push for China to take over the role of main-facilitator to the talks
3W notes this is a classic case of double speak: “I need deal urgently, hence I allow for more time to negotiate, but I don’t need a deal, so you had better make a deal!”. “I’m not going to be rushed into making a bad deal. We’ve got all the time in the world,” the president added. We believe that after trying this tactic so many before, its effect has really worn out. Trump has become the boy the cried wolf one time too many times.
We also note that Iran would be foolish to allow the US to take the lead. In our view, the mixed messages by Trump communicate desperation, in our view. Iran should therefore stick to its demands, including the demand that its 10-point plan is the basis for negotiations, not the US 15-point “unconditional surrender” plan. This, Reuters writes, Iran appears to be demanding, as it reflects on whether or not to participate in a meeting on Wednesday. In addition, in the 3W view, considering the current circumstances Iran should demand that the negotiations henceforth involve a truly neutral party as facilitator, instead of Trump’s favorite marshal – China would be a wise pick. In time, Iran should push for China to take over the role of main-facilitator to the talks.
…temperament that defines the US’s political elite at present: short on competence and experience, long on arrogance, impatient and short-sighted, tactics obsessed while strategically ignorant
China appears ready to get more involved in the diplomacy around the conflict. The Financial Times writes it has announced new legislation protect its supply chain security and counter foreign attempts to exercise extraterritorial control over Chinese companies.
The measures are part of an expanding set of Chinese regulations that can be used to punish companies that implement foreign export controls or other actions that block Chinese market access or restrict its ability to import essential goods. The rules are also intended to protect Chinese companies not only from being directly targeted but also from becoming collateral damage from foreign actions. Observers say the laws were probably written well before the outset of the US-Israeli War on Iran, but China has threatened to deploy it in response to US actions in this war.