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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.
When US president last week announced for the 39th time that a deal with Iran was “imminent”, in our 3W analysis we expressed strong doubts that this time things would end any different than all previous times.
Underpinning our analysis was the view that during the 40 day war, Iran achieved a strategic advantage. It was not defeated; it was able to strike back hard at the US – Israel Alliance, causing at least similar levels of pain; it achieved escalation dominance through its ability to destroy the energy infrastructure of the Arabian Gulf; and it put the global economy in a stranglehold through its control over the Strait of Hormuz.
The theoretical ways out of this situation for the Alliance are a decisive military escalation, which the Alliance would have done already of it had the ability to do so, or compromises in the direction of Iran. And, at 3W we have consistently said, the US mindset of “empire” does not allow compromises, while Israel’s interests are served by a continuation of a conflict that keeps the US military in the Middle East.
Nevertheless, last Wednesday the US and Iran signed a Memorandum of Understanding (MOU) to end the war, writes Reuters. Al Arabiya published the 14-points of the agreement. In exchange for an immediate opening of the Strait of Hormuz, the US promised to lift its naval blockade on Iran, lift sanctions on Iran, release the funds it has seized from Tehran over the years, withdraw its military from Iran’s neighbourhood, agree to permanent Iranian control over the Strait of Hormuz and its levying of “service fees” to ships passing through it, and prepare a $300 billion fund for Iranian reconstruction. In return, Iran promised not to have a nuclear weapons program, and engage in conversations with the US about its stockpile of 60% enriched uranium.
So, were we at 3W wrong in our assessment?
In an interview with Axios, US president Trump insisted the MOU was a total victory for the US, and that through it he had averted a global economic depression. He further likened the MOU to an “unconditional surrender” by Iran.
But, we at 3W note, this assertion is not backed up by anything in the agreement. We note, for example, that the MOU states the US is to move first, after which Iran will reciprocate. That is not usually how things work in case of an unconditional surrender. We further note that the US got none of its original demands, which were an end to Iran’s nuclear and ballistic missile programs, unconditional surrender of the enriched material in the country, and an end to its support for groups in the region such as Hezbollah. During the war, Trump added to this the demand that Iran unconditionally open the Strait of Hormuz, effectively surrendering its control over it. None, and we mean absolutely none of these demands survived the MOU! Meanwhile, Iran got everything it had on its wish list – and more, via the $300 billion restoration fund. So if there was any “unconditional surrender”, it came from Washington DC.
Was it then really the case that the US realized economic depression was imminent if the Strait of Hormuz was not opened immediately, and for that reason agreed to all Iranian demands?
At 3W we do not believe this theory. The US has proven time and time again, especially over the last 3 years, that it does not care about its “allies” around the world. And, through its effective control over oil and gas production in the Americas – at home, in Canada, Mexico, Venezuela, Colombia, Brazil – it can solve for itself most of the problems caused by the closure of the Strait. And, we note, the US remains stuck in its empire mindset, under which it does not compromise and does not respect any agreement. Already on Wednesday US president Trump violated the first point of the MOU, which states that both sides shall refrain from attacking and threatening to attack each other. Trump said that he could resume a bombing campaign if he did not like it or if Tehran did not “behave”, writes Reuters. “It’s a memorandum of understanding. And if I don’t like it, we’ll go back to shooting at them, dropping bombs on their head. If I don’t like it, if they don’t behave, we’ll go right back to dropping bombs right smack in the middle of their head, OK?” Trump said. Does this sound like someone who is concerned about the global economy, or someone who believes he has signed an agreement?
More likely in our 3W view, therefore, is the following:
3W has consistently spoken of the US – Israel Alliance since we see the two countries joined at the hip. And, as we previously noted, in this relationship Israel is able to make the US adopt its views and plans. Also, we wrote previously that in most of the previous 38 instances where the US said it was close to a deal with Iran, there was a pattern: Israel would then escalate in Lebanon, after which the US would try to mend things with Iran again, without seriously pushing back or punishing Israel. This pattern, we noted, indicates coordination and agreement.
No surprise to us, then, that a day after the US and Iran signed the MOU, Israel escalated dramatically in Lebanon, launching a renewed invasion in the south of the countries and killing at least 47 people via airstrikes, writes the BBC. In the fighting, Hezbollah killed at least 4 Israeli soldiers, in return for which according to Israel’s national security minister Itamar Ben-Gvir “all of Lebanon must burn”. “With all due respect to the Americans, Israel must make it clear to the entire world that the blood of our sons and the security of our citizens are not up for bargaining,” he said in a statement.
Was there any pushback to this by the US? Hardly! After Iran cancelled the first round of talks based on the MOU in protest against this, on Friday the US just announced that it had agreed with Israel that the ceasefire in Lebanon would be restored, writes the BBC.
What we at 3W suspect is that the MOU, and Israel’s behaviour afterwards, serve the following purposes:
First, it enabled a fleet of vessels laden with oil and gas and other resources to exit the Strait of Hormuz. This will avert global economic catastrophe in the short term, and thereby buy the US – Israel Alliance time.
Second, by dangling $300 billion in front of Iran, as well as an end of sanctions, the Alliance now wants to see if it can get Iran to soften its demands. Israel’s attack on Lebanon serves this purpose. Will Iran come and negotiate nevertheless? In that case the Alliance can increase its demands. If not, the US can blame Israel, feint unawareness and disagreement, and maintain the dialogue with Iran. (This is why 3W said previously that in our view Trump and Netanyahu are faking their disagreement. To give the US credible deniability in this strategy…)
Third, to keep up appearances, Israel is using the antipathy of US vice-president JD Vance towards Israel’s policies and behaviour to maintain the façade of disagreement within the Alliance. On Friday Vance came out strong against Israel, writes The National, criticizing Israeli criticisms of the MOU. In reality, Israel agreed to Vance being the face of the MOU, because it knows the MOU is fake. This enables it to achieve two of its interests. Add support to the “trap idea” that the US since sincere with Iran but Israel is not. And set up Vance to go down with the MOU that he is now actively pushing, as among the next generation of elite US politicians he is least supportive of Tel Aviv.
In light all this, Iran would be wise to stick to its demands, and close the Strait of Hormuz again in response to the Israeli actions in Lebanon – something which it has so far refrained from doing, writes Euronews. But if Iran does not actively work to keep up its deterrence, by severely punishing the US – Israel Alliance for even the slightest of violations of the MOU, then it will be doing that which the Alliance wants it to do: slowly lower its guard and pull back its Red Lines. The Alliance will for this reason keep “pushing and apologizing”, until Iran is at the point where a renewed military attack against the country makes sense again for the Alliance.
Our 3W conclusion is, therefore, that the US – Israel Alliance War on Iran remains active, and that the MOU has bought the Alliance some time to plan next steps.