Opinion
Donald Trump has given himself a birthday present. He’s stopped hitting his own thumb with a hammer.
“Let the oil flow!” he wrote on Monday (Australian time). He announced that the US and Iran had agreed to allow commercial shipping to resume through the Strait of Hormuz.
Trump called it a “peace deal”. It is not. It is, at best, a 60-day reopening of the strait and a ceasefire while negotiations on the big issues can take place.
The agreement begins to restore the status quo ante before this avoidable and pointless war. Or, as the prominent Australian strategic commentator Mick Ryan puts it: “Let’s stop shooting and give ourselves 60 days to get back to where we were with the [Obama-era nuclear deal, The Joint Comprehensive Plan of Action] JCPOA, except that it’s cost us a lot more to get here.”
“How necessary was this war in the first place? It appears not to have been. The US was negotiating with Iran when they started bombing on February 28,” Ryan says.
But even this limited easing is the most positive news for the world economy since the day Benjamin Netanyahu pitched the war concept to Trump’s inner circle and Trump responded: “Sounds good to me.”
In one of the most reckless decisions of this reckless war, Trump rejected his military’s advice to anticipate that Iran would close the Strait of Hormuz. Because the oil interruption was “indeed the biggest crisis in history” for the global energy supply, said the head of the International Energy Agency, Fatih Birol, in April.
Brent crude oil was around $US70 a barrel before the war launched and peaked at $US120 during. Growth started to slow immediately in two-thirds of the world’s countries, according to the World Bank. Inflation jumped. Central banks raised interest rates. Some 14 million workers worldwide had lost their jobs by the end of May as a result.
Those still in work lost about 1 per cent of the purchasing power of their pay, making workers poorer by a combined global total of $US1.1 trillion, according to a broadly accurate scenario modelled by the UN’s International Labour Organisation.
While it was a hammer-blow to the world economy, Trump also hammered his own thumb. The president who’d promised no new wars and lower prices delivered a major new war and fast-rising inflation.
The US petrol price leapt from a national average of about $US3 a gallon ($1.13 per litre) prewar to $US4.15 by last week. Annualised inflation was announced last week to have risen to 4.2 per cent, the highest in three years.
Even Trump’s usual blowhard attempt at reality inversion didn’t work in the face of public anger: “I love the inflation,” he attempted, before later claiming to have been taken out of context.
Nearly nine out of 10 Americans say that the war is bad for the cost of living, according to a poll last month for the Chicago Council on Foreign Affairs.
Yes, you might say, but it never seems to hurt Trump’s standing with his fanatical fan base of MAGA, does it? It’s true that he retains the support of most Republican voters, even on the issue of economic management. And he remains the kingmaker in Republican congressional primaries.
But his near-infallibility among MAGA has cracked. Some prominent MAGA voices have turned decisively against him over Iran. “Absolutely disgusting and evil,” said Tucker Carlson of the decision to wage war. Megyn Kelly, like many of Trump’s MAGA critics, blames Israel’s Netanyahu for “bamboozling” Trump to launch the war: “He was too weak to say no”.
Candice Owens said, “it may be time to put grandpa up in a home”.
Most consequentially, the inflationary pain from the war has made the demographic core of his voting bloc reconsider his credentials as economic manager. The Iran war is proving to be his political kryptonite.
For a decade, working-class white voters overwhelmingly approved of Trump to manage the economy. But, as the New York Times put it a few days ago, “that once-deep reservoir of goodwill has largely evaporated”.
Trump doesn’t face re-election, but his congressional allies do. They’re anxious about the Trump effect on their midterm elections due in November. Like the global economy, they want the war over.
After Trump’s announcement on Monday, Brent crude fell to around $US80. The pernicious cycle should now reverse, giving rise to a virtuous cycle of lower inflation and higher growth over the year ahead. The flows of fertiliser, LNG, helium and plastics should also resume. Trump fervently hopes that his political pain eases too.
But that’s all on condition that the new ceasefire holds, and that Tehran allows the oil to flow. And, even so, this deal, if signed by both parties on Friday as planned, has not settled any of the outstanding differences.
“It’s not over yet,” cautions Mick Ryan. “We shouldn’t be doing the old ‘phew, it’s over’ routine.” Two intractable problems stand out.
First is Tehran’s 440 kilograms of highly enriched uranium, held deep underground in a vault buried under vast quantities of rubble – detritus from Israeli and US bombing last year. There are signs that Tehran, before making any concessions on the uranium, is demanding the return of billions of dollars in Iranian assets held frozen by the US and its allies.
Trump excoriated Obama for agreeing to do just that in his 2015 nuclear deal, from which Trump withdrew in 2018. Can Trump, politically, get away with doing a similar deal?
Second is the status of Israel in any agreement. That, according to Ryan, is “the big one – how will Israel react?” Not well, based on early political responses. The deal is “total victory for the ayatollahs” in the words of Avigdor Lieberman, former Netanyahu ally, now leader of an opposing party.
Tehran insists that any peace deal with the US must also bind Israel – Netanyahu must stop attacking Iran’s proxy militia forces, notably Hezbollah in Lebanon.
But Netanyahu has no interest in calling off his forces. He faces his own election this year. His political incentive is the opposite of the US president; the war is bad for Trump but good for Netanyahu.
After all the pain, the hardest part for Trump is still ahead. Happy birthday, Mr President.
Peter Hartcher is both international and political editor. His political column appears on Saturdays.
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Peter Hartcher is political editor and international editor of The Sydney Morning Herald and The Age.Connect via email.From our partners
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