Prof. Steve Hanke: Israel ASKED to See the Iran MoU – Trump SHUT THEM DOWN
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Summary
Takeaways
- ❖The US-Iran MOU is considered 'not worth the paper it's printed on' due to its non-binding nature and lack of penalties.
- ❖Israel is viewed as a fundamental 'spoiler' in any peace process involving Iran, actively working to prevent its normalization.
- ❖The US-Israeli strike on Iran led to a 'major strategic defeat' for the US, shifting control over the Strait of Hormuz to Iran.
- ❖Trump's 'optimum strategy' is to rhetorically spin a victory while the reality on the ground remains an 'extremely unstable equilibrium'.
- ❖GCC countries are recalculating their positions, recognizing Iran's stronger hand and the US's weaker strategic standing post-conflict.
- ❖Pakistan emerged as a key facilitator in US-Iran talks, potentially due to the strategic access its airfields provide for striking Iran.
- ❖The situation in the West Bank and Gaza is massively deteriorating, characterized by a 'state of anomie' or lawlessness.
Insights
1The US-Iran MOU's Fundamental Weakness
Professor Hanke dismisses the US-Iran Memorandum of Understanding as practically worthless, comparing it to a 'verbal contract not worth the paper it's printed on.' He emphasizes that MOUs lack penalties for non-compliance, rendering them ineffective in resolving complex geopolitical conflicts, especially when key regional players are not party to the agreement.
Hanke states, 'a verbal contract is not worth the paper it's printed on... a contract without penalties is is basically worthless.' He notes Israel and Hezbollah were not parties to the MOU.
2Israel as a Geopolitical Spoiler
Hanke identifies Israel as a primary 'spoiler' in any US-Iran peace process. He argues that Israel actively works to prevent Iran from being viewed as a 'normal country' and will sabotage the implementation of any agreement that does not align with its interests, often with implicit US facilitation.
Hanke states, 'I view Israel as fundamentally a spoiler in in the in the process... they're going to do everything they possibly can to sabotage the implementation of whatever it is that's going to happen.'
3US Strategic Defeat in the Strait of Hormuz
Applying an 'event study' framework, Hanke concludes that the US-Israeli strike on Iran resulted in a 'major strategic defeat' for the United States. Before the event, the Strait of Hormuz was open and Iran was not a significant player in its management. After the event, Iran is poised to exert control and impose 'logistical management fees,' similar to Turkey's Montreux Agreement for the Bosphorus, marking a clear loss of US influence.
Hanke explains the 'event study' where 'before the US Israeli strike on Iran... the straight itself... was open. And Iran basically wasn't involved.' After the event, 'Iran is clearly going to have some control or or be a a visible player in in the strait going forward.'
4GCC Countries Recalibrate Post-Conflict
The war and its aftermath have forced GCC countries to reassess their geopolitical alliances and economic strategies. Countries like Qatar and Kuwait are expected to face significant economic hits, while the UAE's alliance with Israel contrasts with Saudi Arabia's opposition. The overall calculation among GCC nations is that Iran has emerged with a stronger hand, and the US, despite its global power, is strategically weaker in the region.
Hanke notes Qatar and Kuwait will 'take a big hit' economically. He highlights the UAE's alliance with Israel versus Saudi opposition. He concludes GCC countries will calculate that 'Iran has come out with a much stronger hand... and the US has come out much weaker.'
5Pakistan's Unexpected Diplomatic Leverage
Contrary to initial expectations that India might mediate, Pakistan played a significant role in facilitating US-Iran talks. Hanke conjectures this leverage stemmed from Pakistan's strategic airfields, which offer short flight paths for potential US strikes into Iran, making Pakistan a militarily valuable partner for the US.
Hanke states, 'Pakistan has played a pretty good hand of cards with Trump.' He conjectures that 'airfields in Pakistan that allow for a very short flight into Iran to strike Iran' was 'the camel's nose under the tent that started getting moving Pakistan into the picture and moving Modi and India out of the picture.'
Bottom Line
The Montreux Agreement of 1936, which granted Turkey rights to impose management fees on the Bosphorus, serves as a potential model for Iran's future control over the Strait of Hormuz.
This historical precedent suggests that despite US objections to 'tolls,' Iran could implement similar 'logistical management fees,' normalizing its control and generating revenue from international shipping, fundamentally altering maritime trade dynamics.
Shipping companies and logistics firms must factor in potential new costs and Iranian oversight for passage through the Strait of Hormuz, and explore alternative routes or diplomatic channels to ensure certainty and safe passage.
The UAE's decision to withdraw from OPEC was based on an 'optimum pumping model' recommending faster depletion of oil reserves for higher present value, rather than slower depletion constrained by OPEC quotas.
This reveals a pragmatic, business-like approach to national resource management in the UAE, prioritizing immediate economic gain over long-term resource conservation or cartel solidarity. It indicates a strategic divergence within oil-producing nations.
Other resource-rich nations could apply similar economic models to re-evaluate their resource extraction policies, potentially leading to shifts in global supply and pricing dynamics, and creating opportunities for investment in accelerated extraction technologies or alternative energy sources in countries that 'take the money and run'.
Key Concepts
Event Study
A financial analysis method applied to geopolitics, comparing a situation 'before' and 'after' a significant event (e.g., a war or agreement) to assess strategic gains or losses. Hanke uses this to argue the US suffered a strategic defeat post-Iran strike.
State of Anomie (Lawlessness)
A sociological concept describing a breakdown of social or legal norms. Hanke applies this to the Middle East, particularly the West Bank, where agreements like the Oslo Accords are broken, and vigilante actions prevail without effective legal enforcement.
Lessons
- When evaluating international agreements, prioritize enforceability and the inclusion of all relevant stakeholders, as MOUs without penalties or broad buy-in are often ineffective.
- Recognize that geopolitical events can lead to significant strategic realignments; continuously reassess the 'before and after' to understand shifts in power and influence.
- Be wary of rhetorical 'victories' in foreign policy, as they may mask underlying 'unstable equilibria' and continued regional conflicts.
Quotes
"A verbal contract is not worth the paper it's printed on."
"If it's a part of the deal, they're not going to agree to it and they're going to spoil it."
"Whatever they come up with is going to be more or less the same thing that he came up with."
Q&A
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