Transcription
Checking in on the latest with regards to the Iran war, the negotiations, are they on? Are they not on? What is the vice president of the United States saying? We are joined this morning by our friend Treata Parcy of the Quincy Institute. Great to see you, sir.
>> Good to be with you guys.
>> So, let me first get your reaction to these comments from JD Vance that caught a lot of attention where he seems to indicate that they are using this moment of a pause in hostilities to quote unquote refill the oil market. Let's take a listen.
>> There are a few things that we want. We want durable commitments that are verifiable and backed up by inspections that Iran will denuclearize their entire country. Okay, we're going to see how we get there. Uh number two, we want to see um what kind of an arrangement actually exists in the Middle East between not just Iran and the United States, but the GCC, Israel, Lebanon. We're going to play that situation out. And then on the Strait of Hormuz, I mean, I think you actually said it well, which is that the the Strait is open in the sense that to oil traffic, we're seeing more oil come out of the Strait of Hormuz. And some some days actually more oil coming out of the Strait than came out before the war even started. So there's this element of the um you know where where the world oil economy is kind of getting back into gear. That's going to take a little bit of time, but you've already seen the prices come way down. Now, what the cynics will say is, well, if you look at the number of ships that are trafficking, that's actually down from the pre-war start, but they're mostly talking about cargo ships and other vessels. At least so far. What we've seen is the oil traffic has reached its its pre-war its pre-war height. So, I think what the president has told us to do is use this MOU to sort of refill the world's oil economy. Yeah.
>> To refill some stocks and then to see where the hand is. And you know, if the, as I've said this repeatedly, if the Iranians are willing to make the commitments that we would like them to make and are willing to back those up with verifiable milestones, then we are going to change our relationship with Iran. And if they don't do that, then nothing has really changed except for what we've already accomplished from the military campaign.
>> So he says though, the president wants to use the MOU to refill the oil market and then see where the hand is. Um, what did you make of that?
>> I'm frankly not terribly surprised. What I see this being is essentially that the administration has a plan B that they're trying diplomacy. I think there's some people in the administration that are probably not that excited about this diplomacy and they have a plan B in case it doesn't work out and they want to pursue their plan A in a manner that ensures that their plan B is stronger. I think the Iranians are doing exactly the same thing. This is part of the reason why they're insisting on their position on the Strait of Hormuz. Part of the reason why they're insisting on their position uh in Lebanon. It's very much in case there is no plan A, there is no deal that they will be in a position to be able to uh face the United States in another war if that is what it comes to. Um so in and of itself, I I'm not particularly surprised. Perhaps it was formulated in a way that gives the impression that the plan B actually is the plan A, that this whole thing is all about making sure that you restock the uh uh the storage of oil uh in order to make sure that you can go to war again. I'm not under that impression that that is actually what the administration is doing. I do think however there's a significant risk that that is where we will end up not because the intent is to go there but because either diplomacy doesn't work or because diplomacy is sabotaged. Also want to point out one thing part of the reason why oil prices never went out up as high as they could have during this war was because by pure happenstance the inventory of oil globally was extremely high. So if the idea is to go back and in some ways improve on that situation, I think it might be actually difficult because it was extremely high in the first place and we still had a major major oil shock and increase of prices. And again, the Iranians never went after the infrastructure of oil in the Persian Gulf states in a manner that they could have, which was one of the cards that they kept uh uh to their uh close to their chest. They could have played it if there was further escalation. So if the idea is that some way somehow because of the MOU the United States is going to be in a much better position to launch a war that militarily will be more successful than the previous one. Color me skeptic I don't think the US has that option even if the inventory of oil is restocked.
>> And this is exactly what we wanted to ask you about next. We can put B2 up on the screen. Uh Treata, professor of the University at the University of Terance, Ed Morandi responded to the Michael Nolles interview that JD Vance did. You just watched that by saying Iran is rapidly rebuilding its civilian infrastructure, stockpiling critical supplies, advancing new weapon systems, replacing thousands of destroyed decoys, fielding emerging technologies, and expanding its network of underground bases and command and control centers. From your understanding, is that an accurate description of what's happening right now?
>> I suspect so. Uh this is also exactly what the Iranians did after the June war and they did it much more successfully than I think uh US intelligence and Israeli intelligence expected because they were quite ready for that war that came later on. So again, I think it's very important to understand both sides are taking a bet on a plan A that diplomacy could work. But neither one of them are walking into this situation thinking plan A is so solid, so likely to succeed that there is no need for a plan B and for a plan C. Both of them are investing heavily in those as well. The question is, does it mean that the plan A is fake? That there actually isn't a real intent to make it work? At least when it comes to what I've seen so far, given how far the administration has gone in, for instance, pushing back the Israelis, uh, the progress that is made at the negotiating table, the signals they are sending about a new relationship and how the Iranians are responding and receiving those, I do think that there is a serious plan A from both sides. I'm more worried about that there may be elements who are trying to sabotage this, whether it is the Israelis or whether it is some of these recent things that have happened. So for instance, the MOU that the US side um uh mediated between Israel and Lebanon to me looks very much like an effort to sabotage the MOU altogether and that was done by a different part of the administration.
>> Let's talk a little bit more about that. Put B3 up on the screen. This was your analysis over at your Substack, which guys, if you aren't subscribed to Treata's Substack yet, I don't know what you're doing. The headline here is why Iran believes Israel will attack again before October. The recent Israeli Lebanese agreement and Hezbollah's unreported role in the previous war is leading Iran to this conclusion. So break down your analysis here and why you think that deal with Lebanon is such a problem.
>> So the deal with Lebanon puts forward a completely different approach on how to deal with Israel's presence in Lebanon. It makes a um a condition for the Israelis to leave Lebanon and that condition is the disarmament of Hezbollah. The disarmament of Hezbollah will not happen unless there is some sort of a civil war that breaks out in Lebanon in which against all odds Hezbollah loses. So it essentially ensures that Israel will stay in Lebanon for a very long time. The entire document is read as if the Lebanese government is partnering with Israel, who is occupying Lebanese territory against Hezbollah, as if Hezbollah is a common threat to both of them rather than Israel being a threat to Lebanon's sovereignty and territorial integrity. This is completely different from the MOU. The MOU essentially suggests that the Israelis have to leave all of Lebanese territory by the end of the MOU. uh it does not make a condition for that being that Hezbollah has to be disarmed. But although there's going to be part of the negotiations on whether Hezbollah will move further up uh north in Lebanon uh north of the Litani River or other things, but nevertheless, there is no suggestion that Israel will stay in Lebanon for as long as Hezbollah is not disarmed. So this completely flips the entire uh equation there. Part of the reason why this is now uh really worrying the Iranians is because they believe that the Israelis have managed to do this because they're currently holding certain positions in Lebanon that were held by Hezbollah during the war and were critical for Hezbollah's participation in that war which has been highly underreported. The Iranians tell me that they've only used about 40% of their offensive capability against Israel during the war because they didn't need to because Hezbollah was so active.
>> And this diverted Israeli forces and defense uh um uh capabilities because they had to face that front from Hezbollah as well. By now having taken those positions, Hezbollah's ability to participate in the next war is compromised. And this gives the Israelis a very significant advantage. Not a decisive one according to the Iranians, but a significant advantage in which they can launch a war again without having to worry about Hezbollah having the same potency that it did during the war. And incidentally, we never heard about any of Hezbollah's activities or at least the extent to which they were affected because of this near complete Israeli um uh censorship of what was going on during the war inside of Israel. You mentioned that the Hezbollah part of the agreement was being negotiated by a different part of the administration. I'm assuming that you're referring to Rubio State Department versus Vance Witoff world. Is is that what your understanding is of the dynamic here between what's being negotiated with the Iranians on uh the Strait of Hormuz and and other territorial Iranian questions versus what's happening with the Lebanese negotiations.
>> I think there's a very common perception that uh Rubio is not particularly excited about the nuclear deal about the MOU uh and now suddenly he got very active in the region which he had not been before and spent most of his time uh focusing on Cuba and Venezuela.
>> And then you had this agreement as well as a joint statement by the GCC states that took a very um pro-American position when it comes to the Strait of Hormuz. So there was a flurry of activities by Rubio suddenly in the region. The perception you know regionwide not just on the Iranian side is that um this is done in a way that undermines the MOU because there is a struggle within the administration. I can't claim that I can confirm that that is true or not, but if you're standing on the outside, it certainly does look this way. And I find it very difficult to read the MOU and the Lebanese agreement in a manner that makes them compatible with each other. They actually seem to be almost designed to be incompatible. The time frame, the conditions, everything is different. And this also tells you why it was so important for the Iranians to make sure that Lebanon was a red line for them because it meant that if it wasn't, if Israel could remain in Lebanese territory if they were not pushed out as part of the MOU the Israelis and the US would be in a much stronger position to attack Iran again, which goes back to what I said earlier on. Obviously, the Iranians have been working on their plan B and their plan C just as much as the US administration has. And this contradicts their plan B. If the Israelis remain in in Lebanon, it means that Iran's ability to defend itself if Israel attacks again which the incidentally the Iranians believe is now inevitable because there's another aspect that comes into play here which is by October the Israelis are going to have their elections and Prime Minister Netanyahu is already in a bad shape as a result of the MOU as a result of him not being able to deliver the United States. He's being attacked by all sides for this failure from their perspective. And if he loses that election, he just doesn't lose his political career. He will then also lose his immunity when it comes to the corruption charges that he faced and as a result may end up in jail. So he has all the incentives in the world right now, both political, personal, and strategic, to launch a war, and keeping those positions in Lebanon makes it much easier for Israel to do so.
>> Let's talk a little bit more about the economic realities. Uh if we go back to the first clip we played there, Vice President JD Vance saying basically like, yeah, we're we're getting the oil market back to normal. We're refilling it. Certainly, the administration wants to project a lot of economic confidence. At the same time, can put B4 up on the screen. There was a declaration of emergency and authorization for temporary duty-free importation of phosphate fertilizer from Morocco. It is not just the oil markets that are impacted by disruptions in the Strait of Hormuz. Fertilizer, we've all learned, is also a very important uh you know commodity that flows through that area and um comes from that area. So what did you make of this announcement? Does it indicate that there is perhaps more economic pressure and strain continuing on the US and the global economy than what the administration wants to project?
>> Well, there certainly is much more because there is the oil impact, it's the fuel impact, and then it's all of the different secondary impacts. And one of the most important secondary impacts is fertilizer for which a lot of um oil products of course are needed for. Uh and the fertilizer of course are tremendously important because it feeds all of our agriculture which means that it feeds our food. Uh and if we don't have food, we have a completely different crisis rather than just people having to pay a little bit too much at the oil uh at the gas pumps. So, we always knew that there was going to be these repercussions. Now, if this repercussions coincided with a continued closure of the Strait of Hormuz, obviously it would have been much worse, but this is at a minimum reducing it, but it doesn't mean that we're completely out of the woods or that these secondary impacts are not going to occur. They're going to occur, but they're likely going to be less impactful or um uh detrimental than they would have been, of course, had the Strait continued to be closed. But this is part of the reason why I'm very skeptical about the idea that just restocking these um the oil inventory is going to make sure that everything is going to be fine and the next war is going to be fantastic. I think that's a highly optimistic view from uh from uh the perspective of anyone in the administration who would think that and I'm not really sure that that is what they're thinking.
>> Do you think the Iranians and the US have a slightly different conception of the pressures on the oil market? I was reading one analysis that said effectively what the Iranians are really watching is the strategic petroleum reserves which continue to go down. So even as there is, you know, more flow into the oil market that there continues to be uh a pressure that is mounting over this time period because I know one of the internal arguments in Iran is whether or not they should have even moved forward with this MOU whether they are losing some leverage in the meantime. Um what's your understanding of those arguments?
>> No, I think the strategic reserves are tremendously important and first you're going to see um the rest of the global economy uh being able to absorb this oil before you will see the strategic reserves being restocked and that again is going to make is going to take some time before you have that type of a full restocking. That would bring us back to the previous situation. There is obviously an argument on the Iranian side that says that they should have gone further. They should have attacked the GCC states more aggressively, particularly the UAE. They should have kept this going longer than they did in order to get the strategic reserves to go down even further. Um and the question is at the same time there is a flip side of that argument which is if you wait too long you will also then make it more difficult for the administration to have the time needed to be able to provide the sanctions relief that would come through a deal that you're trying to achieve. After the midterms uh most likely the Republicans are not going to do that well at least in the House. Trump is going to have less leverage than he did before. He's going to walk into becoming more of a lame duck. His ability to provide and deliver on the sanctions relief that would be agreed upon in a potential starts to get compromised and as a result it actually weakens Iran's ability to be able to get a good deal. This is part of the problem that was happening during the JCPOA. The JCPOA in many ways was overnegotiated. It took them way too long to get to that deal. And as a result, by the time they got the deal, the administration had very little time left to make sure that the implementation was solid enough to protect it from any future presidents trying to walk out of it. And as a result, it became weaker than what it otherwise could have been. You don't want to repeat that mistake now by allowing the negotiations to take way too long time. And then by the time the deliverance of the different uh agreements is supposed to take place, uh the US side is going to be too weak to be able to fulfill that those promises.
>> Wanted to get your take on this big New York Times piece as well. We can put the next element up on the screen about US Saudi relations. Uh kind of going under the radar this week is that the Saudi foreign minister is in China. The Times's headline is how the Iran war ignited a clash between Trump and the Saudi crown prince, which is sort of a remarkable headline of course given the close ties between Trump, certainly between Jared Kushner, his son-in-law, and the Saudi crown prince. Reading a bit from the piece here, it reports since the US and Israel attacked Iran on February 28th, Saudi Arabia has tried to chart a middle course to protect its interests. It gave military and diplomatic support to the US and was attacked by Iran. But the kingdom has also opposed Mr. Trump at critical moments flexing its muscles when it sensed greater dangers resulting from American and Israeli aggression. The piece also asserts that the Saudis are seeing the US increasingly as a less reliable partner. Uh does this story resonate with you Treata? Does this sound like an accurate rendering of what's happening behind the scenes and what could the consequences be of that, if so?
>> I think the overall picture absolutely resonates that you're seeing first of all that the Saudis at at first were actually in favor of this war. They did provide military support. But I think they were deeply disappointed. They thought the US was going to be much more effective in this war. They too had underestimated the strength of the Iranians. They had overestimated the impact of the protests when it came to the fragility of the Iranian theocracy. So they were disappointed in seeing how this whole thing went down and then were questioning many of the different decisions that the US made going forward and did not want to see meaningless escalation that only would lead to the Saudis and the other GCC states suffering more without really changing the strategic picture. And that's part of the reason why they stood up in a few couple of occasions against this. But they had also struck their own deal most likely with the Iranians. Part of the reason why the Saudis would were or did not get the brunt of the attacks. In fact, got a very little amount of attacks from the Iranians in comparison to other states such as Kuwait, Bahrain, and the UAE. So, I think at least relatively early on in the war, the Saudis realized this is not going the way they thought. This is not going the way the US thought, and they started to look at their options instead of blindly following the United States, realizing that the US didn't know where it was going. And the fact that they are now coordinating with the Chinese, that they're looking for further diversification is going to be a pattern that we are very likely to see not just with them, but with many of the other GCC states as well, including the UAE. The UAE may very well double down on its relations with Israel and Saudi Arabia. But it is simultaneously striking deals with Iranians. He struck a deal with Iranians just in the last couple of weeks, which is part of the reason why when it came to the last round of exchange of fire between the US and Iran, the Iranians retaliated against Kuwait and Bahrain and did not strike the Emiratis because they had already struck a deal. So, you're going to see a lot of double play, a lot of countries making deals with many of the different actors instead of just simply putting all of their eggs back into one basket. That's what they did before. It didn't work. They're going for diversification now.
>> And lastly, what is your understanding? Are talks happening this week? Are they not happening this week? Do we expect another market-timed resume of bombing campaigns here over the weekend? What do you think?
>> I mean, talks did occur uh in Doha. Whether they get renewed or not remains to be seen. Um, you know, I think we should also remember we've seen a tremendous amount of drama and tremendous high decibel of all kinds of statements, even threats, etc. Nevertheless, with some delay, talks have gone forward and I think it is a reminder of the fact and in fact on on top of just you know high decibel we also saw attacks from both sides. I think it is a reminder that at the end of the day neither side really wants to go back to a full-scale war. It is not to their benefit. They need to get to uh uh some sort of diplomatic arrangement. It is to the benefit of both of them as well as for many others as well. So there will and unfortunately a lot of snafus and a lot of uh elements of escalation but so far we have not seen the talks collapse altogether. Could they absolutely you have a couple more of these type of exchanges of fire between the US and Iran. It's very difficult to see that this MOU will collapse but it will not collapse easily. I think that's the lesson we should learn from the last two three weeks.
>> All right. All right. Well, that's a hopeful note to end on. Dr. Treata Parcy of the Quincy Institute and also of the Treata Parcy Substack. Great to have you, sir. Great to see you again.
>> Thanks so much for having me. Appreciate it.
>> My pleasure.
>> Hey, if you like that video, hit the like button or leave a comment below. It really helps get the show to more people.
>> And if you'd like to get the full show, ad free and in your inbox every morning, you can sign up at breakingpoints.com.
>> That's right. Get the full show, help support the future of independent media at breakingpoints.com.