Iran and the United States are barrelling toward a new round of fighting. James discusses the prospects for a wider Middle East war on Money FM 89.3. Transcript [Host Hongbin Jeong] Headlines move fast, we slow them down. The Big Story. Clarity, context, and what it means for you. Only on Money FM 89.3. Welcome to The Big Story, I’m Hongbin Jeong. The latest exchange of fire between the U.S. and Iran is raising fresh fears that a conflict that appeared to be winding down could be heating up again. The two sides have traded their biggest barrage of attacks since July, with the U.S. striking targets along Iran’s southern coast and Iran retaliating against American military assets across Bahrain, Jordan, Kuwait, and Iraq. And the rhetoric is getting increasingly aggressive. President Donald Trump says the U.S. hit Iran very hard and has warned that Washington is prepared to strike again. Iran, meanwhile, has threatened heavier and more widespread retaliation against American forces and countries that support them. At the same time, the conflict is putting the Strait of Hormuz, one of the world’s most important energy choke points, under renewed pressure. So how serious is this latest escalation? How close are we to seeing this turn into a much wider regional war? And with both sides already taking a significant military and economic toll, where does this conflict go from here? Joining us now to share more is Dr. James M. Dorsey, adjunct senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies. Hi, Dr. Dorsey. Welcome to the show. [James M. Dorsey] Always a pleasure to be with you, Hongbin. [Host Hongbin Jeong] Thank you so much for joining us. Well, Dr. Dorsey, what’s sparked this, you know, latest round of renewed fighting between Iran and the U.S.? Essentially, I think two things. [James M. Dorsey] On the one hand, frustration on the part of Donald Trump, who still seems to expect six months into the war that the Iranians would simply cave in and surrender. They’ve clearly demonstrated that they have no intention to that. On the other hand, you have, from the Iranian perspective, a situation of no peace, no war. That’s not a sustainable situation for them. And therefore, they have an interest in escalation in the belief that that will increase pressure on Donald Trump and force his hand. [Host Hongbin Jeong] OK, so how serious is this latest escalation then? [James M. Dorsey] I think it’s serious. We’ll have to wait and see how the Americans respond to the latest Iranian retaliation. Trump has already said that it’s going to be harsher than the last response. So we’re on a path of escalation that inevitably has to lead to a renewed round of fighting unless the two parties find a way back to the negotiating table. And frankly, I don’t see that pathway. [Host Hongbin Jeong] I mean, the rhetoric from both sides is also becoming more aggressive. President Trump has said the U.S. hit Iran very hard and warned that Washington is prepared to strike again any time they want. Iran, meanwhile, has warned that American forces and countries cooperating with them will face increasingly severe consequences. So, Dr. Dorsey, how close are we to a full scale war again? And with Iran targeting U.S. assets in Bahrain, Jordan, Kuwait and Iraq, could this turn into a regional war? [James M. Dorsey] I think we’re very close. Now, having said that, there is no military solution to this conflict, at least not at a price that is acceptable to any of the two parties. And so what the next round of fighting is designed to achieve is really on both parts the hope that that’s going to force the other party’s hand. With other words, the Americans hope that another round of fighting, which they which they don’t necessarily want, but for all practical purpose, being forced into that, that will lead to a softening of the Iranian position and vice versa. The Iranians think the same versus Donald Trump. Neither is going to bring us any closer. The gap between the two parties is extremely wide and if anything, it’s widening. [Host Hongbin Jeong] Definitely. So how exposed are U.S. forces in the region right now? [James M. Dorsey] Well, they’re exposed by definition. Fact of the matter is that until now, the Iranians have not targeted U.S. military, U.S. naval assets in the Gulf. Whether they’ve done that because they can’t reach those vessels or they don’t want to take the escalation that far is a question that remains unanswered. On the other hand, we’ve seen that the U.S. bases in the various Gulf countries are very vulnerable. There’s severe damage to those facilities over the last six months as a result of the war. And they remained exposed, as is evident with the latest Iranian retaliatory strikes. [Host Hongbin Jeong] Right. And have we seen any indication that countries hosting American forces are changing their posture? [James M. Dorsey] I don’t think that we’ve seen no indication that the Gulf states or any of the other Arab states where the United States have forces based, we’ve seen no indication that they are thinking about having those bases removed. I think that all parties understand, although the Iranians may not accept that, that the continued U.S. military presence in the Gulf is there to stay. It may change in terms of the conditions on which it is the U.S. bases troops in the Gulf. It may change in terms of the degree of consultation that the U.S. will have to engage with its Gulf hosts. But the fact that there are going to be U.S. bases in the Gulf, I think, remains unquestioned. [Host Hongbin Jeong] Definitely. I mean, the latest exchange of fire was the worst since July, when Trump abruptly halted two weeks of intense bombing of Iran after warnings from his military brass that they were using up munitions and running out of meaningful targets. Meanwhile, Iran’s military and economy have also been badly hit. So is the conflict, you know, draining both sides at the moment? Who is under more pressure at this point? [James M. Dorsey] It is draining both sides, but obviously the Iranians are under more pressure than the Americans and Donald Trump are. But in some ways, that’s the wrong question. It’s not whether or not one is more pressured than the other. It’s whether or not, or the degree to which parties can absorb the pain that is being inflicted on them. And the Iranians have proven not only in the last six months during this war, but over the last 47 years, that they have an incredibly high tolerance. [Host Hongbin Jeong] Right. And I mean, given how much of Iran’s military capability has already been taken out, what is the U.S. actually trying to hit at this point? Is there still a meaningful military target left? [James M. Dorsey] Well, fact of the matter is that Iran still is able to launch drones, still is able to lay mines, and still is able to launch ballistic missiles. So that all of that, and the infrastructure that goes along with that remains targets. Six months of operations by the United States have clearly diminished Iran’s capabilities and stocks, but they haven’t eliminated them. So, this can go on for some time. [Host Hongbin Jeong] And then there is the Strait of Hormuz, which is a major concern for global energy supplies. Around 20% of the world’s oil and LNG shipments pass through the Strait before the war. So how much of a threat is the latest activity around the Strait to global energy supplies? [James M. Dorsey] It’s a threat without question. Now, fact of the matter is that the Strait of Hormuz is neither completely open, as President Trump claims, nor is it closed, and only vessels that the Iranians have approved being allowed to go through it. That’s not true either. The truth is somewhere in the middle. Having said that, the amount of oil and gas that is going through the Strait of Hormuz is substantially reduced, and that’s going to presumably remain the case as long as the two parties don’t find a way back to the negotiating table. And on top of that, you have the threat of potential conflict in the Red Sea, in the Bab al-Mandab, on the western coast of the Gulf. And finally, if you look at this longer term, the emphasis is going to be going forward in the future on creating alternative routes to the Strait of Hormuz. I think none of the parties want to be wholly dependent on that waterway for the future. It’s proven to be too dangerous and too risky. [Host Hongbin Jeong] Definitely. And then Iran, I believe, has blacklisted 56 ships and warned that vessels passing through without its permission could be detained or have their cargo confiscated. How close are we to seeing the Strait effectively shut down once again? [James M. Dorsey] I don’t think we’re going to see it totally shut down. Shipping is caught, in a sense, between two rocks. One is the Iranians who say, you can only pass through if we approve your ship and you have properly interacted with the relevant Iranian authorities. And the Americans basically saying, we’re going to protect you. You may have to turn off your automatic signalling, identification signalling, but we’ll ensure that you can go through a southern route that does not cross Iranian waters, but is in Omani territorial waters. That will presumably continue. The problem for the shipping companies is that they’re being forced to make choices that could have longer term consequences. [Host Hongbin Jeong] Well, speaking of the Strait of Hormuz, there’s Trump’s Trump Strait idea. Now, Trump has gone as far as calling the Strait of Hormuz the Trump Strait and posting a map showing it as a showing it as a new U.S. territory, all while both sides are literally fighting around it. Is this just Trump being Trump, or is he really being serious that the U.S. intends to take a much more direct role in controlling the waterway? [James M. Dorsey] Well, he said several times that he wants the United States to have a role in the management of the waterway. How firm a demand that is, I think that’s what he would like to see. I’m not sure that that is going to be a game breaker if he were to come to an agreement with the Iranians on various other points. But Trump has this notion of putting on his social media, his social maps of territories that he thinks should be American and claiming that that is what’s going to do it. He did the same recently with Lake Ontario. [Host Hongbin Jeong] Right. So if the U.S. actually starts enforcing that control, won’t that take this conflict to another level? I mean, what does it also mean for the ships actually trying to get through the Strait? [James M. Dorsey] Well, it is already trying to enforce that control by encouraging shipping to go through the southern routes, the one that goes through Omani territorial waters, and by giving them some degree of some level of protection. At the same time, the Americans have prevented ships that were related to Iran because of the naval blockade of Iranian ports from going through the Strait of Hormuz. So in that sense, the United States is already trying to assert a degree of control. [Host Hongbin Jeong] Definitely. And for Trump, there is also a political calculation here with the U.S. midterm elections coming up soon in November and polls showing Americans largely opposing the war. How much room does Trump have to keep escalating if American voters are turning against the war in Iran? [James M. Dorsey] My question is, I don’t know how much he cares. We have heard Trump, despite the fact that the is highly unpopular, that Americans are concerned about rising prices, particularly gasoline prices at the pump in the United States. Trump has repeatedly said this is for the greater good. We have to pay a temporary small price to ensure that Iran does not go nuclear. And that suggests to me that he may not care all that all that much about the elections, or he may care about them, but not enough to change his Iran policy. [Host Hongbin Jeong] So what happens from here, Dr. Dorsey? What are the key things you’ll be watching to see if this is heading towards a wider Middle East war? [James M. Dorsey] Well, I think as a matter of principle, we’re going to see another round. The two questions are, are any of the Gulf states going to join in alongside the United States? I doubt it, but theoretically, it is a possibility. The other thing one has to watch is the Red Sea in the Bab al-Mandab, where the Yemeni Houthi rebels have banned Saudi-related shipping in the waterway. And of course, if you get a really full-fledged renewed round of fighting between Iran and the United States, they could expand that to shipping in general. [Host Hongbin Jeong] Definitely some things to watch out for. Thank you so much, Dr. Dorsey, for joining us today. [James M. Dorsey] Thank you for having me. It’s always a pleasure. [Host Hongbin Jeong] It’s been a pleasure as well. That was Dr. James M. Dorsey, adjunct senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies. This has been The Big Story with me, Hongbin Jeong. The Turbulent World with James M. Dorsey is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. |