Why There Are No Good Options Left in the US War Against Iran | Gregg Carlstrom

22:39So they're just not countries that coordinate well owing to all sorts of petty political rivalries.

22:46Demetri Kofinas:Well, that was going to be my next question, which is, does this make regional cooperation in building regional security architectures and frameworks even more difficult? And do we see more bilateral security arrangements between each of these states and the US coming out of this? Is that one of the consequences? You would think it would give them an impetus to work together. And for the moment, they certainly have put aside the petty disputes. I mean, if you go back to late December, early January, the crown prince of Saudi Arabia and the president of the UAE weren't even on speaking terms because they were arguing with each other.

23:22They were fighting in Yemen. They were fighting over their divergent policies in Sudan. And all of this came to a head. There was a crisis in Southern Yemen that led to almost a rupturing of relations at a high level between Saudi and the UAE. Nobody's talking about these things anymore. The crown prince and the president have spoken to one another. They've buried the hatchet for now. But will that remain the case after the war or will these old rivalries come back to the surface? I mean, if you spend enough time in the Gulf, I think you tend to believe it's the latter. So more likely, I think, when you talk about will there be bilateral arrangements between these countries and the US or other security guarantors, I think that's more likely to be the case.

24:03They would like to diversify their relationships a bit. They just don't have many options to do that beyond the United States. There's a lot of frustration with Europe, particularly in the UAE and Saudi. They feel like Europe is not doing enough to defend its allies in the Gulf to try and reopen the straight of formulas. So this has led to, I think, even more dismissal of Europe as a security partner. If you take Europe out, if China and Russia aren't going to fill the role, then there's not many other options.

24:31Demetri Kofinas:So one of the features of this phase of the war has been, when I say this phase, I mean, since February 28th, has been the confusion within the US about why it's happening. We've been given a lot of different reasons. I'm curious what the view is in the Middle East as to why this war happened, what's driving it, what would constitute a victory here for the US at this stage? What is the thinking there about why this has happened? I mean, everybody here is as confused as people in America, honestly. I think when you ask people this question in the region, what are the answers that you hear? One answer is some people think Israel dragged America into this war.

25:13I think that was the only reason for it. America is involved in this war at Israel's behest. Other people think America had agency in that decision, and I agree with that. But what is it trying to achieve? I would say the consensus view here is that everyone thinks Donald Trump believed this would be a short war. He would go in, he would find his Delce Rodriguez figure as he did in Venezuela. The regime would cut a deal and this would have been over in a matter of days. And obviously it hasn't gone according to plan. So now, what is the aim? Is it to overthrow the regime? Is it to make a deal with the regime as we're hearing talk of diplomatic outreach over the past few days?

25:54Is it just to smash things up in Iran and then leave to do damage to Iran's military capabilities and then call it a day? no one in the Gulf is sure. They're not getting any clarity on that when they speak to the Americans. And it's one of the reasons why we haven't seen them get involved themselves militarily, because they don't want to be in a situation where they start carrying out air strikes in Iran. And then a week later, America decides to declare victory and go home and they're left holding the bag.

26:22Demetri Kofinas:So another feature of this war, it has been a confusion on the part of everybody, everybody who's not maybe in the inner circle, about how much of what Trump says is posturing for a deal and what he does is posturing for a deal, whether that's escalating to de-escalate as Bessett was suggesting, and how much of it actually reflects an intention to escalate. So what is your feeling covering this conflict and covering the president and the comments of members of his staff, his cabinet, about what he's willing to do here, how far he's willing to escalate, what his pain points are. Do you believe, for example, do you buy some of the recent comments coming out of the White House about negotiations, looking to get a deal?

27:08Demetri Kofinas:I mean, what's true? What's not true? The Iranians are throwing cold water on everything. How do we make sense of what's going on right now? For me, I'm trying to tune out as much of what Trump says as possible because he has said everything over the course of the war. It's going to be over in a few days. It might last four or five weeks. We're close to a deal. We want to overthrow the regime. We want to free the Iranian people. I mean, he's been all over the place as he usually is. So set that aside and look at what he's doing. This talk in the past day or two about possibly striking a deal with the regime, my understanding is yes, there have been messages passed between America and Iran.

27:48They're not speaking directly, but they are passing messages through intermediaries. America has proposed direct talks. The Iranians, my understanding is, have not yet responded to that offer. They haven't rejected it, but they haven't agreed either. But it hasn't gone any further than that. So when Trump says that we've reached agreement on a detailed plan and we're going to resolve all of the outstanding issues between the United States and Iran, I don't see any evidence that that's the case. Nobody that I've spoken to believes that to be the case. And so I think when Trump sort of misrepresents or embellishes this very nascent diplomatic outreach as being we're close to a deal, I think he's doing that mostly with an eye towards calming the markets.

28:32I mean, as we all noticed, did this right before they opened on a Monday morning. Meanwhile, while he's talking about diplomatic outreach, you have a Marine Expeditionary Unit that is still on the way from Japan that should arrive in the region on Friday. You have these other naval and marine units that are on their way from California. They need another, I think, about two weeks to arrive in the region. The military buildup is continuing, even as Trump is saying, we're close to a deal. And for me, the military part of it is more revealing than what Trump may or may not say.

29:06Demetri Kofinas:And what is it revealing of? that I think this will escalate further, that I think this for the White House cannot end with a situation where the Strait of Hormuz is still closed unless there is a deal, unless there is a really comprehensive deal by which it is reopened and other issues are dealt with. But I think absent that, absent the deal, to just declare victory now, I don't think it would go over well domestically. I think Trump would worry about the politics of that. It would not go over well at all with American allies in the Gulf. They would be furious. And so I think whether it's this talk of trying to seize Khark Island, which is the site of Iran's main oil export terminal, or maybe other islands in the Strait of Hormuz, whether it's a commando raid to try and secure Iran's highly enriched uranium, although that's a very complicated endeavor, or just trying to do some sort of military effort to reopen the Strait of Hormuz, there is something that they are building towards, something escalatory.

30:10I don't think this is over anytime soon.

30:12Demetri Kofinas:You alluded to the whipsawing of markets recently. I do want to ask you about that because there have been allegations of insider trading as some large trades were put on right before the president announced a temporary halt to the attacks. Let's talk a little bit about the Strait of Hormuz because the more accurate term is not that it's closed. I know what you mean by that, but actually it's being controlled by the Iranians. The Iranians are able to let some vessels through and attack others. And one of the concerns about the US leaving the region having sort of broken it, it's funny because when I was younger and we went into Iraq, there was that famous dictum by Colin Powell that if you break it, you own it.

30:47Demetri Kofinas:And so there was a lot of concern about actually going in because once it's broken, now it's yours. But the concern among the Gulf states, obviously, one of the concerns is that this president doesn't give a shit whether he breaks it or not. And he doesn't feel that he necessarily does own it. So, he has many personal relationships with people, whether it's some of these Gulf monarchs, whether it's Dana White at the UFC, who's poured a bunch of money into Dubai. I mean, it's hard to know really where his loyalties are on this. But one of the concerns is that then the Iranians would effectively control the Strait of Hormuz, exact attacks, use that to fund their proxies, double down on their nuclear program.

31:23Demetri Kofinas:So this is such a mess that we're now at a place... And I feel like... Let me get through this long-winded observation so you can comment on it, Greg. It seems to me that pre-February 28th, the US was in a great position in the Gulf. They had degraded Iran's ability to project power in the region over the course of two years in combination with Israel, to now where all the options available are awful. There actually is no option. So there's a state of denial, I think, where markets and policymakers also want to go back to the world before February 28th, but they cannot. And all the options available to them now are worse than the ones before.

32:06Demetri Kofinas:And the question that really seems to sit before us is, do we want to cut our losses here or do we want to escalate and get bogged into a potential quagmire because walking away is no longer possible. And so is that, I'm curious, does that resonate with you? Is that, do you think the view out of Washington and is that the concern, the primary concern among people in the region? It's very much the concern in the region that this is going to be the reverse of that Colin Powell dictum. It will be, we broke it, you buy it. It's not our problem anymore. And America is going to go home. I mean, I think you're right.

32:42You go back to pre-war, it's not just that Iran's ability to project power in the region had been weakened. Iran had also just been through a period of major domestic unrest that it was only able to quell by murdering thousands of protesters. Its currency is all but worthless. At this point, it rolled out a new 5 million riyal banknote in February, and it just unveiled the 10 million riyal banknote. That's how quickly the currency has lost value over the past couple of years. Inflation is high. People are angry. It did look as if the regime was at its weakest since the Iran-Iraq war in the 80s.

33:21I'm not saying it's strengthened now. I think it's going to come out of this war internally in a much worse place. The economic problems are still there. Its military capabilities have been degraded. But it has shown this newfound ability to impose enormous costs on the region and the world and to essentially hold its neighbors in the Gulf hostage. And so when they're talking to the White House right now, I mean, again, that is the message that they're sending, that you can't end the war with that state of affairs still there. But what are your options? If you escalate, if you start bombing Iran's power plants, as Trump threatened to do, Iran is going to respond in kind against Gulf countries.

34:00And the consequences of that will be catastrophic for the millions of people that live in this region. You can continue. You can just try and stay the course and we'll do a few more weeks of bombing and maybe we'll get to a tipping point where either Iran can no longer fire missiles and drones at its neighbors or maybe everything implodes and the regime collapses. I guess that's possible, but there's also a very good chance it won't happen. It's a proposition that you can't test. You mentioned Iraq. We all remember in Iraq constantly hearing the next six months will be critical for turning the corner in Iraq.

34:35And then six months later, the next six months will be critical. And so you can get sucked into that pattern. But at the same time, if you leave now, then you leave a situation that's really intolerable for the region. So there is no good option at this point.

34:48Demetri Kofinas:So let's go back to the comment you made earlier about Israel and the war aims of the Israelis versus the Americans. Because I think this is an important framework to try and have. As the Israeli hawks that I've spoken to, while they may not be happy with the current state of affairs, the turning Iran into Syria, or just kind of going back and mowing the lawn, which is a comment I've actually heard in the context of what's going on right now as an end game, is better than the status quo pre-February 28th for a lot of folks. Again, people on the hawkish side of the, on the Israeli side, hawks on the Israeli side.

35:25Demetri Kofinas:Whereas that's not in the strategic interest of the United States. So if I had to guess, I feel like the president became increasingly impressed by and reliant upon Israeli policymakers, the intel community out of Israel, and maybe drank the Kool-Aid on this, didn't really think, as you said, that this... And again, you can't over-index to what he says, because he's also said, nobody saw this coming. Maybe that is a way of him saying, I never saw this coming, but essentially he thought that he was going to get a quick resolution. I remember actually during the 12 day war, didn't he initially come out and reprimand the Israelis and then quickly backtrack and essentially even say, I want some credit for this.

36:03Demetri Kofinas:I want to jump on the victory parade here. And so maybe he thought this was going to be a repeat of that. And for the Israelis, the risk reward was very different because while again, they would have preferred an outcome that would align more with what Trump maybe was hoping for, they're not unhappy with the current state. So how important is it to understand really these divergent strategic aims? How much are we over-relying on the Israelis within the Gulf to manage this, to manage what's going on, both from intelligence and on the operational side? And how does that increasingly drive this train as we project outwards?

36:41If you're Israel, this is your once in a lifetime opportunity to fight your main state adversary and to do it in partnership with the world superpower, right? So you want to keep going as long as you can. You want to do as much damage to Iran as you can. Maybe you can't topple the regime from the air. Many policymakers in Israel are aware of that, but you could destabilize it. You can undermine it. And that is your only strategic interest here. Whereas the United States, first, I think, doesn't have an interest in completely collapsing the Iranian state because of what that will mean for the region.

37:24It might mean refugee flows. It might mean 400 kilograms of highly enriched uranium that goes missing, that winds up in the hands of a militia or some other group. Iran, obviously, it's a country with a lot of missiles and other weapons. Those things too might find their way to non-state actors if the country collapses. So you don't want that to happen. And you have other interests to juggle. You're a superpower, so you have to worry about what this means for energy prices and the knock-on effects of that on your allies elsewhere. You have to worry about every precision-guided munition that you use in the Middle East is one that will not be available for some hypothetical future war in Asia or elsewhere.

38:04You have to balance all of these things. And it's not clear how much the Trump administration is balancing these things. I think he was shaped, I agree, he was shaped by the experience last summer. And it seemed like it went well from Israel's perspective. And so Trump came out and demanded credit for it. I think if it had gone badly last summer, Trump would have said, well, I knew this was a bad idea and I told them not to do it. But once it went well, he wanted credit for it. I I think he was also shaped by the Venezuela experience. He feels like air power and US special forces can achieve strategic outcomes easily and cheaply and without casualties or costs to the world.

38:44This was never going to be that kind of conflict. But I think that the mix of his own experience over the past year and then watching what Israel has done led him to believe this was going to be a lot easier and cheaper than it is.

38:58Demetri Kofinas:So you've mentioned Iran's nuclear program a few times and enriched uranium. One of the other concerns that not only have I heard this raised, but honestly watching videos of ballistic missiles and drones hit infrastructure in Tel Aviv and Israel has made me wonder whether the Israelis, not whether, actually I think the Israelis would be willing to threaten to use nuclear weapons, but the question is what would be the threshold to do so? and I think that the threshold is lower. And it's especially lower since Russia also threatened to use nuclear weapons during the Ukraine war in the early period.

39:31Demetri Kofinas:I think there's a general consensus that the use of quote, tactical nuclear weapons is now no longer taboo in the international discussion. And in fact, that's kind of worrying. It's being introduced more and more into the public discussion. Is there any discussion in the region about whether or not the Israelis would be willing to escalate on a nuclear level, should the United States threaten to exit this conflict or exit it entirely, leaving it unresolved and festering like an open wound? People in the region have asked me the nuclear question, but actually about the United States rather than Israel.

40:07Will Donald Trump do it? If this goes on for weeks and weeks and weeks, will America decide to use a nuclear option? And any other president, I would tell you 100%, absolutely not. That's not going to happen. Donald Trump, 99%. I don't think it will happen, but you can't tell anyone definitively what he's going to do.

40:25Demetri Kofinas:You only give him a 1 % chance of threatening to use nuclear weapons or a 1 % chance of using them? Using. Threatening, I would give it a much higher chance. I mean, he's already threatened to bomb Iran into the Stone Age essentially. So I wouldn't be surprised if he made those threats. Yeah. I mean, he could do that so easily. So, one more question about that. I want to go back to that question about insider trading before we end this interview, Greg. So, I saw this is again, in the world we live in today, there's way more information flooding out all over the internet than you can possibly process.

40:58Demetri Kofinas:And again, we're recording this on Tuesday, March 24th. But when Trump recently announced that he had a five-day interregnum to this conflict, we saw that right before he came out with that announcement, there was something like, the AFT report, I think$570 billion worth of trades. I don't know what those trades referred to, what exactly was being traded, but suffice it to say that there have been enough people reporting on this that it seemed to have a high level of accuracy. What do you know about this and what's been reported on with respect to insider trading this White House? And this isn't, of course, the first time, even with respect to this conflict, I think right in the early days of the conflict, there were some bets placed on polymarket before some similar types of announcements.

41:40Demetri Kofinas:So what do we know about this? Yeah. So I honestly, I haven't had a chance to do any reporting around that myself yet. So I don't know anything more than what's been in the papers, but you're right. It's not the first time we've seen with Venezuela. We saw last summer with the war with Iran, all sorts of suspicious trades on polymarket, on other prediction markets. It's happening in Israel too. They just arrested someone recently. I think someone from the Israeli military who was making trades connected to Israeli military activity. So I wouldn't be surprised if someone connected to Trump was making a profit off of this, but I don't have any information about it.

42:17Demetri Kofinas:So actually, another question just came to me, because it's very easy to get caught up in the mimesis of pessimism around this conflict because it's everywhere, and correctly so. But also, we don't know much about, we know even less about what's going on internally within Iran. We don't know what kind of jockeying for power is happening within the regime. They're obviously under way more pressure than the US, as bad as it is here, with the pressure that the Iranians are under is much worse. Is there a possibility that we're discounting their willingness to, quote, make a deal and come to the table?

42:48Demetri Kofinas:And again, the power structure there, again, we don't know. We don't really know what's going on, who's in charge exactly, what the chain of command is, and whether or not someone can emerge or a faction can emerge within Iran that will be ultimately motivated to bring peace to the region on some level or another while having obviously established deterrence. So anyway, my question essentially is like, are we discounting how close we may actually be to a deal because we don't have insight into Iran's internal state? I think we're discounting the possibility that in a year or two, Iran is not going to look like it does today.

43:24The regime is not going to look like it does today. I'm more skeptical about a deal in the short term. I think if the administration is talking to, if they do get to hold face-to-face talks with Mohammed Khalibaf, who's the Speaker of the Iranian Parliament, he is the right guy to talk to. He is probably the most powerful man in the country right now. He's not just Speaker of Parliament, but he was a previous high-ranking officer in the Revolutionary Guard. So he has ties in the military, has ties with the business community. He's an extremely corrupt businessman who enriched himself with construction, real estate deals.

43:58So you can imagine if he and Trump ever end up having direct talks, they'll get along pretty well, I think. So he is the right guy to negotiate with. But I think there is such a gulf between what the Americans and the Iranians want out of a deal. And I think there is probably so much infighting inside of Iran right now. It's not clear that anyone can drive the system towards a deal that renounces the nuclear program, suspends the missile program, ends support for regional proxies. I mean, if Iran does these things, it sort of stops being the Islamic Republic, or at least as we've known it for decades.

44:36And I'm not sure that there's any man right now, any one man who can push the system that far. But I think what we're discounting or not focusing on enough is all of the problems Iran had before the war, they're still going to be there after the war. This is a deeply unpopular government. Maybe 20 % of Iranians are still staunch supporters of the Islamic Republic. But as we've seen with wave after wave after wave of protests in recent years, there is a huge well of popular discontent. The economic problems are only going to get worse because Iran is going to come out of this war isolated. It talks about wanting reparations and wanting trade and investment from Gulf countries.

45:22I don't think any of that is going to happen. The Gulf is going to come out of this very hostile to Iran. You have officials in the UAE talking about clamping down on Iranian business, Iranian money laundering. There's all sorts of dodgy finance that goes through Dubai, which has now been bombed by the Iranians. And so they're talking about clamping down on that. So isolated, unpopular, bankrupt regime at the end of the war, I think there's a good chance that when the fighting stops, we see domestic unrest resume. And maybe at some point, that is what pushes the regime to a breaking point. It's not going to be external military intervention that does it.

46:00It's going to be this constellation of internal problems.

46:04Demetri Kofinas:So in closing, Greg, can you give me some scenarios, lay out some scenarios for us and for the audience for how you think this work could play out, like from best case to worst case? I would say my most likely scenario, I'm not sure there's any best case at this point. As you said before, they're all bad options. I think my most likely scenario is we're going to have several more weeks of this, not significant escalation, not bombing power plants, that sort of thing on the American side, but several more weeks of airstrikes, moving more naval assets to the region, trying to not reopen Hormuz. That's a very difficult thing to do militarily, but at least make a show of getting a few vessels through there so that Trump can say, okay, it's open.

46:47And at that point, he decides to declare victory and leave. I could see that happening sort of mid-April, late April. I feel like that's the most likely scenario. Second most likely would be the escalatory scenario. Trump decides to seize islands or carry out a commando raid or do something like that. But I think any of those options, they're operationally risky for the American troops that are involved. And there's a very good chance that Iran will escalate in kind, and that pushes us down a very dark path of greater attacks on energy infrastructure in the Gulf. The deal scenario, I would say, is probably the least likely one at this point.

47:25I'm just very skeptical that these talks, if they do even happen, are going to go anywhere. So my base case right now is maybe two or three weeks more of conflict at roughly the level we've seen it so far. No major escalation, at least on the American side.

47:40Demetri Kofinas:Greg, thank you so much for coming on the show. This was very helpful. And I know our audience will appreciate it as well. If people want to follow you, you tweet pretty regularly. You're a great follow. What's your Twitter handle for people to follow? GLKarlstrom. And you write at The Economist. I do. Yep. Thank you so much for coming on the show, Greg. It was a pleasure. Thanks. If you want to listen in on the rest of today's conversation, head over to hiddenforces.io slash subscribe and join our premium feed. If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, you can also do that through our subscriber page.

48:18Demetri Kofinas:Today's episode was produced by me and edited by Stylianos Nicolaou. For more episodes, you can check out our website at hiddenforces.io. You can follow me on Twitter at Kofinas, and you can email me at info at hiddenforces.io. As always, thanks for listening. We'll see you next time.