Trump is looking at the wrong Gulf Economy

Trump needs to stop bleating on about how the Iranian economy is on the verge of collapse, and start looking at the economies of his “allies” in the Gulf. The immediate and longer term impact on the Gulf countries only gets deeper every day Trump continues his blockade (of the Iranian blockade) of the Strait. UAE is the first to ‘break’ with history, declaring that it is withdrawing from OPEC and OPEC+, a direct rebuke to Washington on its neighbours who are not pushing back against Washington.

Economic hardship can lead to social unrest. Trump is claiming that is imminent in Iran. He’s looking in the wrong direction. 

I repeat my earlier predictions that, unless Trump finds a way out of this mess (more bombs will only make it worse), the end will be a Middle East free of Amerikan bases and  power, a humbled Amerika, and potentially an economically failing Amerika.

I keep seeing the figure “$500 million per day” that the war is costing the Iranian economy in lost oil revenue and associated economic activity. While I’m sure there is some substantiation of this number, it seems to be, um, cherry picked, at best. After all, Iran was  exporting 3.2 million bbl/d before the war, and is estimated to be exporting 1.5 million bbl/d now,so a drop of 1.7million bbl/day. At the wartime price of $90/bbl,that would come to $153 million/day in lost oil revenue.

Based on the pre-war price of oil and Iran producing 3.2 million bbl, their ‘revenue’ would have been around $208 million/day. The difference, and my maths is complete rubbish on this, seems to be around $55 million/day, not $500 million/day. So even if my maths is completely off, I cannot see the net negative oil revenue impact being more than $50 - $75 million/day, even including knock-on effects to the rest of the Iranian economy. The Trump administration's numbers are a fantasy.

That number is for lost oil sales, yet Iranian oil was already under sanction, so oil revenues would not have been anywhere near that level - or it shouldn’t have been.

Missing from this is the daily cost to Trumpian “allies” in the Middle East whose oil exports have stopped or been hugely curtailed by the Iranian/Trumpian blockade of the Strait.

When we look at Saudi Arabia, their oil production has dropped by half from 9 million/d to 4.5 million/d, or a  loss of oil revenue of $405 million per day, three times the supposed Iranian losses. But again, let’s consider the pre-war and current price in the estimated lost revenue. So 9 million barrels per day versus 4.5 million at $90 results in a current net loss around $90 million/day. Again, terrible maths would suggest an ongoing loss of $90 - $150/day.

These losses are being felt across the Gulf. Total gulf revenues are probably down by over a half billion per day across all  products, in terms of exports only. Internal economic activity across the Gulf states is also falling, rippling out from the energy sector across economies.

In Dubai, the property sector has taken what I expect will be a multi-year negative hit to valuations, and the coming ‘safety’ premium payable to attract knowledge workers will increase while property values plummet. The same is happening in Qatar’s property and financial markets, and their LNG production capacity has been damaged and will take years to recover, stunting future income to pay for their recovery.

In all Gulf countries, migrants and manual labour (including lower skilled construction and services) are suffering. How long before there is open unrest? Will those countries begin to see serious problems with their migrant workforce? Historically anyone who stepped even a little out of line could simply be ‘put on a plane’ out. That’s not possible now. 

If the US carries out Trump’s threats against bridges and power infrastructure, what will be the impact on Gulf states if their power infrastructure is damaged? What will be the impact of loss of desalination and the availability of that most fundamental resource? How long will the poor, and yes the Gulf countries are full of the poor, accept degrading conditions. 

The Arab Spring was a series of economic rebellions. Are we looking at a Gulf Summer?

The more Trump ignores the potential impact on his “allies”, the sooner they will understand, as the Qatari Foreign Minister said, they have been living next to Iran and Iranians for centuries, and will continue to live next to them into the future. And the more they will understand that good, or at least tolerable, relations with their neighbour will be more important than very flawed relations with a stranger who has shown a willingness to abandon them at a moment's notice.

Gulf relations with the US and the world a year from now will be unrecognisable.

1974 Quneitra; Technique Practiced, Applied ever since.

In the final days of the 1967 "6-Day War", Israeli forces advanced on Damascus. At the centre of the Golan Heights stood the city of Quneitra, the capital of the province of the same name, and home to around 20,000 people. With the Israeli army advancing and with conflicting messages from the Syrian military high command, the city was abandoned by the Syrian army on the final day of the war.

This was a war of aggression, waged by Israel against its Arab neighbours, with the explicit purposes of territorial expansion and the destruction of the military capabilities of those who would oppose the Zionist state.

Quneitra was not returned to Syrian control until June 1974, when a destroyed shell was returned. Following the 6-Day War, Israel stripped Quneitra of anything of value, shipping it to Israel to be auctioned off. The contents of the hospital were shipped to Israeli hospitals, and the building was used for assault training. The bullet holes merged around windows, turning formerly square openings into curved corners and almost round forms. The stairs inside the building were also pockmarked and were no longer safe to walk on, for fear they would collapse.

Throughout the city, over 4,000 structures, mostly houses and shops, were demolished in the months leading up to the handover. While Israel claimed that the damage was due to shelling and combat during the October/Yom Kippur War, the post-war investigation by engineers appointed by the UN discounted that claim. The damage came from the systematic destruction of buildings, with supports pulled out by tractors or dynamited. 

The intent was clear: to make Quneitra uninhabitable and therefore unable to serve as any kind of administrative or market centre for the Golan, paving the way to claim the Golan is unpopulated and therefore available for settlement by Israel.

When I went to Quneitra as a teen in the late 1970s, the grass was growing around the demolished buildings, and trees were beginning to grow through destroyed roofs, obscuring the remaining doorframes and garden walls. 

At the time, there wasn't an expression for what they did. We learned a new expression during the Yugoslavian civil war: Ethnic Cleansing. The removal of entire populations and by so doing attempting to demographically, and permanently, erase a population from an area. Is it genocide? Maybe a sub-genocide, or genocide-lite.

The ongoing Liquidation of the Gaza Ghetto is a form of genocide, of that there can be no doubt. Entire families killed, almost every school destroyed, libraries, museums, hospitals, mosques and churches, administrative buildings, tens of thousands of homes. All destroyed. 

Every family photo, gone. Every memento, from parents and grandparents, every keepsake, almost all documentation proving who anyone is and their relationship to each other and to places, destroyed. That favourite serving dish. The carpet from the living room. The posters from the children's walls. Destroyed. The plants on the balcony, the trees in the garden and parks, destroyed. A people, defined by their culture and their documented heritage, erased. 

That is genocide.

Israel, as I write, is now doing the same thing in South Lebanon. BBC today reports that over 1400 buildings have been destroyed, probably many more.

Towns and villages in southern Lebanon are being levelled by Israeli demolitions, satellite images and videos obtained by BBC Verify reveal.

BBC Verify analysis found more than 1,400 buildings had been destroyed since 2 March based on verified visual evidence.

This is just a snapshot of the overall damage caused by Israeli air strikes and demolitions, because of limited access on the ground and available satellite imagery. The true scale is likely to be much higher. 

In 1974 and 1975, the UN voted to condemn the Israeli destruction of Quneitra. The US voted against both resolutions. Israeli learned then that not only could they carry out Ethnic Cleansing, but refined their techniques for doing so.

My visit to Quneitra was disturbing then. The fact that Israel continues to follow this model is more than disturbing; it is an indictment of the Zionist state. Human rights violations are part of the DNA of the Zionist state, and there is nothing that will change that.

On a hopeful note: there may come a time when no person who has served in the IDF for the past three years will be able to leave Israel for fear of an international arrest warrant waiting for them, for crimes against humanity at worst, and as an accessory and material witness to crimes against humanity. I look forward to that day.

Sources:

1. Personal memories

2. The Gun and the Olive Branch, David Hirsh, 1978

3. Six Days of War, Michael B. Oren, 2002

4. The Yom Kippur War, Abraham Rabinovich, 2004

5. BBC (https://www.bbc.com/news/articles/cdxkk1vnp57o accessed today)

6. Who can do anything without a little Wikipedia?

How Vance becomes President and stops a Nuclear War.

I've long thought there would be a coup d'état in the US during Trump's second term. I still think that will happen. Not that it will look like a coup to the outside world. My best guess is that the White House will, sadly, announce that Trump had a 'pillow event' and suffocated in his sleep. 

I'm beginning to wonder if there won't be a different type of 'coup', a fully legal and constitutional removal of Trump from office. How might this work?

The simple answer is the 25th Amendment to the Constitution (Section 4), which allows the President to be removed from office by a majority of the Cabinet. They would have to plan it carefully, but Vance and the cabinet could pull it off. There are some pesky requirements, such as requiring two-thirds of the House and Senate to agree (within twenty-one days), but nothing insurmountable.

After all, Trump is demonstrably batshit crazy. And as we've seen time and again, when public opinion and the threat of retaliation are removed, irrevocable change can happen very quickly. Trump is a mob boss, and when his power to threaten is removed, his ability to keep those he's insulted in line will also disappear. 

What can Vance do?

1. Very, very quietly, sound out, through unconnected intermediaries, I'm sure, the views of cabinet ministers, and what would be their price. They've all proven that they are for sale, so ignore any calls to conscience or 'the good of the country', and find out what their price is. For most, it will be a promise to keep them in post while also providing them with a pre-signed, undated pardon.

2. Sound out various leaders in the Republican Congressional representatives (and Senators) who are known to be disgruntled with Trump, or who are a serious risk of being thrown out by voters in November. Find out their price. There's always a price.

3. Wait for Trump's next visit to Walter Reed to spring the trap. When he is being treated or infuses, or whatever is happening that results in his monthy two-day trip and bruised hands, that is when to convene the cabinet, and with all documents pre-prepared, land "transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office". 

All presidential authority immediately transfers to Vance, but he'll have to move quickly, including the backup documents for when Trump (through his lawyers now doubt) "transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists". Those can be prepared in advance, and also "transmitted".

Now begins the twenty-one-day period for Congress and the Senate to decide.

That's plenty of time to arrest Don Jr. and the sychopants who didn't go along with the plot for various forms of corruption, and to release some of the worst of the worst Epstein Files. Explicit corruption allegations would get big play, and Fox News would be told (again, person-to-person between Vance/others and Murdoch) what the new script is.

Palentir (and others) will also be promised windfalls from a new regime, and will no doubt be able to produce, on demand, enough damning material on almost any Representative or Senator who does not go along with the plan once it is underway.

That's three weeks for the scales to fall from their eyes, and the payoff deals with the required Congressional reps and Senators to be agreed upon. There are enough Representatives and Senators who hate his guts and have been publicly shamed by him into subservience, all of whom will be happy for the chance to 'clear their own names' before November.

It would be a rough three weeks, but during that time, Trump will be held, probably heavily sedated. After all, he's been declared "unable to discharge the powers and duties of his office", possibly with the initial argument that he is unwell, thereby justifying the sedation.

In the meantime, the US military can work on real solutions to the military aspects of the war with Iran, real negotiations could take place, and a real peace deal could be arrived at that really does help all involved.

Will it happen? Sadly, probably not.

Ah, to dream.

Hormuz is the new Suez

I’ve seen more than one report suggesting that, since the US Navy escorted ships through the Strait of Hormuz in the 1980s, it can do so again now. That is a mistake, and a very dangerous mistake. The situations are not analogous at all. Maybe we should be looking at the Suez Crisis instead.

 

In the 1980s “Tanker War”, Iran and Iraq extended their land war to each other’s oil export capabilities, including both terminals and ships. Iran mined the Straits, and Iraq attacked ships. To restart the flow of ships, the US raised its flag on tankers and escorted them through the Gulf and the Straits. Both sides avoided attacking US-flagged ships, because to do so would have been an attack on the US, and that was something that neither side wanted to allow, at least not allow themselves to be viewed as the one attacking the US Navy. 

 

That is not the case today. 

 

Israel and its puppet, the United States, are at war with Iran. There is no other word for it, no matter how President Trump might want to dance around it to avoid breaching the US Constitution. Nonetheless, this is a war. And in a war, the opponent's military assets are fair game. Likewise, economic assets are equally ‘in play’ if it hurts the opponent's ability to sustain military action. 

Today, Iran wants nothing more than the US Navy to saunter through the Strait of Hormuz. I suspect they would even allow one or two ships to pass on the way in. Maybe even more. They can wait. They can wait until those ships want to leave.  

 

Once Iran has ‘allowed’ the US Navy into the Gulf, with maybe a token missile fired or drone attack (designed to fail), hubris on the American part will take over. A convoy will be put together, made up of a few US Navy vessels and a couple of tankers that have been reflagged as US ships (possibly even purchased by the US government to force them to attempt the Strait). 

  

What happens then is anyone’s guess. Does Iran let it pass again, with a few token attacks to lull others into risking a larger convoy? Or does Iran take this as the opportunity to attack US Navy ships with the intent of sinking them in the Strait?  

  

Either option works to Tehran’s benefit, not to Washington’s. 

  

Gaza and Southern Lebanon are the most heavily surveilled areas on the planet. Yet still the rockets fly, and still they are fired into Northern Israel. The combined military might of Israel and its offshore military industrial complex (the US) has been unable to stop the missiles, even with years of suppression. 

  

Does anyone have any confidence that Iran, with decades to prepare for exactly this event or circumstance, has not developed exactly the capability needed to keep the Strait closed and to sink anything that goes through without its permission?  For many years, it has been clear that there would be a war with Iran. Even in 2013, when I was in the Gulf, the talk then among expats (of all sorts) was when there would be a war with Iran, and what their individual plans were to mitigate such a possibility. Maybe those expats and the ones who followed all had such plans, and maybe they are working. But I equally suspect that too many either did not have plans, or bought the image of the Gulf as a new land of peace and tax-free prosperity for all (well, all the white-collar workers and ‘influencers’).  

  

And so the war has come, and each side (all sides) is acting out their plans, hoping to contain this. But containment for Iran means the defeat, yes defeat, of the United States and its ejection from the Gulf once and for all.  

  

That only happens when the US Navy has been proven to be unable to open the Strait and keep it open. The price to the GCC countries and Saudi Arabia will be high. The price to Iran will be higher. But the payoff for Iran will be decades of real peace, a seat at the table, and a region devoid of US military bases.  

  

Israel will be contained and forced to negotiate with its neighbours.  

  

How will this happen?  

  

Keeping the Strait closed for six months or more will bankrupt the United States. Even “boots on the ground” will not open the Strait. It will only highlight US impotence in the face of drones and missiles. Cheap drones swarming missile defences. Even when the US (or Israel) is able to effectively deploy powerful enough laser systems to shoot down drones and missiles, there will still be mines, torpedoes, speedboats, and more drones and missiles. There will be the munitions held in reserve, and the longer-range artillery that can be driven close to the coast, firing three or four shells before scampering away. 

  

This is without Iran going full scorched-earth and sinking three, four, or more of their own tankers in the middle of the Strait, creating hazards to navigation that would take months to remove in the best of circumstances. 

  

Asymmetric warfare is on Iran's side. 

  

They know it. 

  

Washington knows it (well, those who plan and understand capability). 

  

China knows it. 

  

Yes, most of the world knows it. And while Trump will lose interest and be distracted by something else (Cuba?), the Strait will remain closed. Oil will flow. Fertiliser will flow. To China, and a few other countries willing to pay the price. It is a price they’ve wanted to pay for years but have been unable to. Now they must, or their people will starve. Enough oil will stop flowing to countries like India, Indonesia, and Thailand. 

  

The price will be breaking from the US alliance system. Selling US Treasuries. Rejecting US Navy visits and bases. Dealing directly with Tehran. These countries understand that picking the US over Iran will be picking the US over their own people, and their people will let them know that.  

  

This could be the US’s Suez, when Great Britain became the “Island formerly known as Great Britain”. Because when the UK (and France, to be fair) invaded Egypt in 1956 to seize the Suez Canal, the US threatened to call in the UK’s debt. At that moment, the British pound stopped being the global reserve currency (though that was arguably already well underway), and the US dollar began its 70-year run. It doesn’t matter if you have the largest navy today if you cannot pay for it tomorrow. 

The era of US hegemony is coming to an end. It will not happen overnight, but the process is now fully underway.

  

And Israel cannot have the world’s biggest military if the US component of its military cannot pay for itself. When the US can no longer afford its own military and the American people are losing their houses and jobs in the coming Greater Recession, they will reject perpetual and unlimited support for the “Israeli Dream”. US money will stop flowing to Israel, and Tel Aviv will be forced to do the unthinkable: negotiate with its neighbours.  

  

Only then will peace be possible in the Middle East. 

  

Or maybe the US can keep the Strait open.  

  

Maybe.