By Tom Luongo
April 24, 2024
"You either die a hero, or you live just long enough to become the villain."
- Harvey Dent, The Dark Knight.
Too many people are trying to downplay last weekend's response from Iran to Israel's attack on their consulate in Damascus as some kind of "Wag the Dog" event. While I do agree there was a certain level of theatrics in the entire scene, to think this wasn't a major geopolitical event is the worst kind of cynical cope.
Usually that type of detached cynicism is reserved to Millennials, but when I see folks in my age cohort doing this I become far more worried that everyone's in denial to a dangerous degree. I was contacted by Sputnik News to discuss the Biden administration's options and potential response via sanctions on Iran among other things.
While Biden signed off on a bunch of toothless virtue signaling, the reality of the post-Israel/Iran exchange is far starker.
Like when Trump assassinated General Qassem Soleimani in January 2020, Iran reacted with just the right amount of force, bloodying US forces in Iraq, showing off a little as to what their missile arsenal is capable of, and leaving the ball squarely on Trump's side of the court to either pick up or ignore.
Trump, smartly, left the ball where it lay.
Iran's strike on Israel, as others have pointed out quite effectively, was designed to show the Israeli people who support Benjamin Netanyahu's unhinged, in my opinion, response to the October 7th attack that they can be gotten to.
This was an example of asymmetric warfare at its finest. The economics of war have changed. Now, attacking with swarms of drones and missiles is far cheaper than the sophisticated air defense systems and the property they are protecting.
Iran made that point very clearly last weekend.
Israel's leadership has led the Israeli people to the brink of extermination just as Hamas' has led the people of Gaza to the same fate. Never think for a minute that either of these groups of people are anything but cannon fodder for the globalist imperative to remake the world in their preferred image.
So, before the attack on Iran's embassy Benjamin Netanyahu was their standard bearer, if polls from Israel are to be believed, for the extermination of the Palestinians in Gaza. Today, after digesting the sight of hundreds of drones and missiles from Iran and its allies impacting in the backyards he better be on his way to being their villain.
Because the theatrical part of Iran's attack on Israel was that it wasn't intended to do a ton of damage or kill hundreds of people. The goal was to send the right message to various groups of onlookers. And part of that message was that Iran and the United States agreed on a general framework for the strike so as to put the ball in Netanyahu's court and dare him to have the strength that Trump showed.
I don't have high hopes for that.
But it does signal a change in US behavior. And if my read on the Obama/Biden axis in the US is correct, then Bibi has vastly overplayed his hand. I believe the facts fit the scenario that the US told Iran they wouldn't stop an attack on Israel as long as it fit within the scope of Israel and its allies' ability to defend. Step out of that box, Iran, and we'll let you have it.
Iran had every incentive to take a deal like that because it preserves their victim status and continues to cast Israel as the regional aggressor. It's the message the US wants to send as well as the image Iran wants to project.
From this perspective it's the only win/win on the table.
And Israel is the loser, but it's a manageable loss.
The problem is that in my view Bibi one of the truly sinister people on the world stage today. And he's operating under a number of misconceptions which inform us of his likely course of action from here.
He believes that he still has the power, like he did in the 1990's, to order the US to jump and we would say, "how high?"
Bibi is staring at not only the end of his political life but one where he walks around as a free man, if not a breathing one. And when a man like him, a serial abuser and narcissist adept at triangulating his allies and his enemies, who gets off of the attention he courts in his pursuit of power and his own agenda, will use this moment to the fullest.
He doesn't know how to back down here. He just knows that he can play every card in his deck and commit his 'allies' to bail him out because of their interests, their enmeshment with him and Israel.
Our outrage is Bibi's fuel, his supply. He's like the kid who picks fights with people bigger than him knowing that his big buddy will come to his rescue out of loyalty. Narcissists use your humanity against you.
And the question I have now is whether the US finally told Bibi with this strike he's gone too far. When he convinced Trump to kill Soleimani (because come on, who else could have?) he left Trump to clean up the mess he created. Trump, for his part, won't speak to him anymore, from the reports I've seen.
Now he's upped the stakes taking out IRGC Generals in Syria and has to be thinking there's an angle to play where he can take things to the next level. But, the Biden administration, being the Obama administration 2.0, may finally leave Bibi out to hang.
It's now a liability to back Israel within Biden's fading base. My read from the past few years that Bibi has the support of the UK and US neocons, but his opposition in Israel work for Davos and continental Europe, broadly speaking.
That is the pressure Bibi is under; to back down in Gaza and Lebanon, back off Iran. And that means he's a cornered snake.
Does anyone seriously think this man is going to do back down under these circumstances?
We could be staring at that moment where Israel strikes back at Iran and the US finally just says, no more. Eventually the bodyguard realizes he's the one with the broken nose and the bruised ribs.
Sadly, the more likely scenario is that no one on Capitol Hill, Tel Aviv, and London got the message and are now using this exchange as cover to secure more war funding for Israel for 2025 and beyond.
Gods help us all.
As always, my entire exchange with Sputnik is below for the sake of transparency.
Iran's missile and drone strike on Israel is unlikely to prompt dramatic sanctions action on Iran's oil exports from the Biden administration due to worries about boosting oil prices and angering top buyer China, Reuters reported. Shortly after Tehran launched its weekend attack - retaliation for Israel's suspected April 1 strike on the Iranian consulate in Damascus - House Republican leaders accused President Joe Biden of failing to enforce existing measures and said they would take up this week a series of bills to sharpen sanctions on Iran.
We'd be happy and grateful if you could share your opinions on the following:
Could you provide your analysis on oil prices dynamics after Iran's strike on Israel? How significant was the strike's impact on prices? What developments do you anticipate?
With the announcement that the Biden administration is approving yet another release from the US's Strategic Petroleum Reserve they are clearly concerned over rising inflation for real people. As I've pointed out previously in the post COVID-19 environment domestic inflation is tied directly to the wholesale price of gasoline futures.
With RBOB Gasoline futures trading above $2.80 per gallon I expect 'hotter than expected' CPI prints will continue through the election in November. Inflation is just starting to come back.
So, Biden's team is working hard to keep a lid on escalation in the Persian Gulf. The strike by Iran sent the perfect message, in my view. It was strong enough to test the limits of Israel's air defense systems but not overwhelming to the point of providing Israel a clear escalatory path with the world at its back. The response from the world has been, enough is enough. It may have been enough to finally scare Israeli citizens into pulling their support of the campaign against the Palestinians.
Oil prices are currently not pricing in escalation, they seem to take the position that this conflict will settle down from here. But that may be a dangerous mistake. Israeli Prime Minister Benjamin Netanyahu has no way forward politically but to continue his aggressive stance, otherwise his career, at a minimum, is over.
The advantage is with the oil-producing states who can continue slowing production and make up the lost barrels with higher prices. Wars are too expensive to fight with the trifecta of high interest rates, high inflation, and high energy prices.
FOMC Chair Jerome Powell reiterated his stance today that he sees no reason to consider cutting interest rates in this environment. The bond markets are finally starting to believe him, having now priced out nearly all the rate cuts priced in at the beginning of the year. In fact, I am raising my odds of a rate hike before year-end to a coin flip. I believe Powell will be happy to maintain 5.5% and continue drawing down the Fed's balance sheet, leaving it to Congress to fix the fiscal side of the equation. All of this is weighing on Biden's team to withdraw support from Israel at this point.
Several regional analysts said they doubted Biden would take significant action to ramp up enforcement of existing U.S. sanctions to choke off Iran's crude exports. What's your opinion on the matter?
They are correct. No one wants what happens if Israel and Iran go to full-on war. The US is more than capable of making Iran pay dearly for shutting down the Strait of Hormuz, but that is something the Pentagon does not want to have to deal with.
The way this attack unfolded told me that there are still (thankfully) grownups in the US and Iran working to keep this thing contained. Sadly, Netanyahu and his allies in the British Foreign Secretary's office are the wild cards here. The EU will make noises about further sanctions on Iran while at the same time trying to show support for the Palestinians.
What is missing from all of this analysis are the religious imperatives of both the Iranians and the Israelis here. And that is why, I think, we're not done with the violence yet. And if this is the case, then Saudi Crown Prince Mohammed bin Salman becomes the pivotal player as he can bottle up Israel denying them his air space. Even Jordan's King Abdullah wants a cessation of hostilities.
What are the options for Biden, in case he doesn't sharpen sanctions against Iran? What measures can he still take?
Not very many good ones for him. He's taking the tack that he has available to him, pressure Israel to back down, declare victory and pull out of Gaza. It's the typical US response to being beaten. Despite the reports of the Israelis pulling back I don't trust it. There's an existential dimension to this that raises the probability of continued violence.
The other dimension to this is the Israeli lobby in Congress and the Senate who want war with Iran and they are going to put Biden in a real bind if they pass new sanctions legislation for him to sign. Politically it would be suicide for him either way.
As we watch the Russian army make mince meat of the Ukrainian army, we still wake up every few days to a spastic attack on Russia's assets deep behind the line of contact. The same thing will occur even if Israel backs off on Netanyahu's plan to wipe out the Palestinians.
So, to remain in power I fully expect Biden to apply as much pressure as possible to get through the election while I expect Netanyahu to get the war with Iran he's wanted his entire life.
What role does the "China factor" play here and why?
China has a massive investment in Iran as it is the terminal point for their Belt and Road Initiative. The attacks last week on the ports in Southern Iran, Chabahar in particular, got my attention. China wants that investment protected, of course, but they will not intervene overtly here. They will support Iran financially, if need be, but it will be the Russians who give Iran both the military and diplomatic support it needs to get through this as long as the Iranians don't look like the aggressor at any stage of the conflict.
Reprinted with permission from Gold Goats 'n Guns.