This column is about the current war in Iran. Both the United States and Iran have suffered significant losses but the war continues into its eighth month. Why is that?
One reason the war continues is that each side believes it can outlast the other.
From a Trump administration perspective, Iran has suffered so much economic pain that it will soon be eager to make a deal.
According to Fortune magazine, Iran’s economy is in free fall, its currency is collapsing (it is now 2.5 million rials to the dollar) and the regime faces a major cash crunch soon. The U.S. naval blockade has reduced Iran’s oil exports through the Persian Gulf to virtually zero. Inflation is about 90 percent, GDP is expected to shrink 5.4 percent this year, and energy is being rationed. The current Ayatollah has expressed concern about “social cohesion amid the economic hardship.”
According to Secretary of State Marco Rubio, “ … when you are denying them money through oil sales and sanctions, you’re not just punishing them. You are preventing them from getting access to money that they will use… kill Americans and others around the world… and build weapons that threaten the world and ultimately break out to a nuclear weapons program.”
Iran sees its economic situation differently. Iran’s economy is reeling but it has not been completely destroyed. There are seven countries that border Iran and trade with it. Those countries also are conduits for trade with China, which is still buying Iranian oil. Even though the Iranian people are suffering, the dominant decision makers in Iran (especially the Islamic Revolutionary Guard Corps) are doing well. The IRGC owns about half of Iran’s economy and has used the war to tighten its authoritarian rule.
Iran also has legitimate reason to believe that it is winning the war. Iran has fought the world’s greatest superpower to a draw. That is a moral and propaganda victory. In some ways, the U.S. is actually in retreat. It has evacuated personnel from military bases in the Gulf that were attacked by Iran. The U.S. evacuated the entire fleet of B-1 bombers from Great Britain based on the fear of an attack sponsored by Iran. The U.S. military is now short of critical weapons supplies that can not be replenished quickly. Naval vessels have remained on station for months because there are not enough ships to relieve them.
Iran retains considerable military power even though its navy and air force were largely destroyed early in the conflict. Iran still has the capability to build missiles and drones. Iran has protected its highly enriched uranium. It may be rebuilding the infrastructure to make a nuclear weapon if it chooses to do so.
Iran damaged the U.S. economy when it closed the Straits of Hormuz. The cost to our government is at least $48 billion and growing. The increased cost of gasoline and diesel fuel has led to about $130 billion in additional costs to consumers. The economic pain has made the war very unpopular. That is a major political liability for Trump and the Republican Party.
A second reason is that neither side can afford to lose.
For Iran’s new leaders, the U.S. war aim of “regime change “ is perceived as an existential threat to the Islamic Republic itself. Therefore, Iran must keep fighting because losing would be catastrophic. The U.S. has international strategic concerns. A superpower that doesn’t win against a weaker country has effectively lost in the eyes of both friends and adversaries.
But there may be a way out: Both sides can proclaim victory.
There would be some truth to that because both countries are still standing and both sides can truthfully say that they have inflicted considerable damage on the other. Both sides could continue fighting if they wanted to. On the positive side, both sides could claim that they benefited from the viceroy that ended hostilities. For Iran, that means more revenue to revitalize its economy. For the U.S., it means lower fuel prices and lower inflation. On the military side, Iran avoids a possible confrontation with the Mecca Alliance (Saudi Arabia, Turkey and Pakistan) who have signed a mutual defense treaty. The U.S. can redeploy military assets to Asia to deter potential Chinese expansion. Both sides save the billions of dollars that would be needed to continue the war. For both sides, the benefits of ending the war overshadow the fact that neither side has achieved as much as it wanted to.
Final thoughts:
Sometimes a war continues because both sides think they can win. Sometimes a war continues because the antagonists lose too much by ending it. However, a war might end if both sides can proclaim victory. They would retain their prestige and military power while benefiting economically.
Richard Fein holds a master’s degree in political science and an MBA in economics. He can be reached at columnist@gazettenet.com.