The Long and Winding Road to OK

 Some news items from the past couple of days:

U.S. Navy fires at some ships, Iran fires at others.

JD Vance and buddies are getting on the plane to meet the Iranians in Islamabad.

JD Vance and buddies are NOT getting on the plane to meet the Iranians in Islamabad.

The cease fire ends Wednesday!

The cease fire will continue indefinitely!

Is there some way to make a some sense out of the confusing buzz of the news without being an expert in Iranian or U.S. politics?

Some prosaic things I've heard or said in the past couple of days:

Setting up a lunch date with a friend -- which day works for both of you?

"If you call before midnight we'll add a second set at no additional cost!"

"If you do that you'll be sorry!"

Do they have anything to do with understanding the important news of the day?

These are very different situations but they’re all examples of a basic and universal human activity: bargaining. It can be as significant as diplomats gathered around a table in a formal negotiation trying to find a way to end a war or almost invisible as two friends decide when and where to meet for lunch. But all bargaining is a process with some common elements. Knowing that can make it easier to understand what's going on.

The Three Stages of the Bargaining Process

Laying The Foundation

access and agreement to bargain

agenda and procedures

Finding the Bargainable

opening offers

counter offers

The End Game

reaching an agreement

ratification

implementation

This outline is NOT a checklist one might follow, completing one step and moving on to the next. For example, as I write this the United States and Iran seem to have gone from the stage of exchanging opening positions last week in Islamabad back to the initial stage, with the U.S. claiming there is another round of talks in a day or two (or all hell will break lose) and Iran claiming they have not agreed to any more meetings. The bargaining process can be recursive, moving forward, going backward (looks like the U.S. and Iran have gone from agreeing to negotiate to bargaining over whether to talk) or even stagnating (the two Koreas and the United States have never moved beyond the armistice agreement of 1953 to officially end the war.)

Although they follow the same underlying patterns, international negotiations are more complex and nuanced than domestic bargains and not just because the stakes are usually higher. Domestic bargains, from the trivial like agreeing on a lunch date to the life changing like buying a house, take place within a shared set of cultural and social norms and a legal framework. Shared values and institutions can even make some parts of the process automatic. A casual "let's do lunch" takes care of laying the foundation phase because everyone understands what it means and how to follow up. But with rare exceptions, even getting started in international relations requires bargaining.

Laying the Foundation

Especially in a conflict, for one or both sides getting access to bargain can be an issue. Do you really want to be seen as talking to those S.O.B.'s you're fighting against? That's where the role of back channel communications (secret, "unofficial" deniable messages) and intermediaries comes into play. In the current U.S. - Iran war, Pakistan and particularly the chief of the armed forces, Asim Munir, has made talks possible.

No one is interested in any bargaining that does not offer some prospect of making them better off. The technical term is a hurting stalemate. Just as it takes two to tango, it takes two hurting parties to bargain. But the level of pain varies. That should mean that the party hurting more needs an agreement more and so should be more willing to make concessions. But since neither side knows how much the other really needs a deal, neither is eager to make the first concession because that implies weakness. So Trump and other U.S. officials both boast of how much damage they have inflected on Iran and downplay the war's effect on Americans while Iranian state radio trumpets the resilience and valor of Iranian citizens.

Once the sides agree to talk about talks, emphasis shifts to agenda and procedures. THE AGENDA AND PROCEDURES ARE NEVER NEUTRAL. If we forget that, we cannot understand why both sides don't stop nit picking and bickering and get down to the real business.

Let me use two examples of agenda setting. The first is from a meeting at LMU that involved a student delegation, a faculty delegation, and some administrators and was meant to settle on next year's tuition rate and faculty salaries. The leader of the student delegation colluded with the administration to get the student proposal for a lower tuition increase as the first agenda item because a lower tuition increase meant lower faculty salaries. The faculty delegation preferred to settle the salary increase and set the tuition level to match it. The students and administration pushed through the low tuition number and took money out of the faculty's pockets (not that I'm bitter.) As we walked out of the room, the student leader reminded me that he had been in my class and I had stressed the importance of setting the agenda. I've never been quite sure if I should be pleased that he felt he learned something important from me or embarrassed. The second example is when your partner has done something irritating or untoward and you call their attention to it. Their response often is to bring up some small failing or peccadillo on your part and make that the agenda.

Procedures can bias the outcome. Who will be involved in negotiations: for example, when the Trump administration met with the Taliban to talk about the future of Afghanistan, the government of Afghanistan was notably not invited, making it effectively a negotiation about the terms and conditions under which the United States would withdraw; where will meetings be held (if they won't come to our capital we'll have to find some neutral turf because we are certainly not going to go their capital), and many other procedural details that need to be carefully arranged lest the devil be hiding in them. Fortunately diplomatic protocol and custom has evolved over several centuries of international negotiation so there is a thick playbook of procedures.

Finding the Bargainable

This is the usual back and forth of proposals with both sides trying to reach a win-win settlement that leaves each side better off but their side doing a little better than the other. This stage raises two issues: which is better, a maximum or minimum strategy and the question of credibility.

Let's go for the maximum: we'll ask for everything and if we have to, we'll make some concessions and settle for less. BUT as TACO (Trump Always Backs Out) suggests, asking for the maximum means you'll have to make concessions and once you start to concede it can be hard to convince the other side that this is really and truly, no kidding, your bottom line. The bargain you end up with may be less than you might have achieved.

OK, let's cut to the chase and ask for exactly what we need to make a deal. There are two problems here. The first is that the other side may happily accept your offer because it asks for a lot less than they were willing to give. The second problem is that if that really is your bottom line and the other side won't meet it, the negotiations fail and you're stuck with the hurting stalemate that motivated you to bargain in the first place.

Looking at offers and counteroffers also raises the question of credibility.

Credibility, like beauty, is in the eye of the beholder. As the ancient philosopher said, "a lie is as good as the truth if you can get someone to believe it." People seem to assess three things as they try to figure out whether to believe someone else: capability, proportionality and reputation.

Capability is usually straightforward -- do you have the ability to carry out a threat or promise. That's usually pretty clear but the "eye of the beholder" can come into play: it is not what you've got but what they think you've got. For example, for the last 60 years Israel has flatly denied having a nuclear weapon and for the last 60 years the rest of the world has firmly believed that Israel does have nuclear weapons.

Proportionality is a subjective element. Does the size of the promise or threat match what you're asking the other party to do. In the 1950's America's policy was initially to threaten massive nuclear retaliation against any hostile act by the Soviet Union. It didn't take long for us to have second thoughts ... are the Soviets really going to think that moving troops around or selling weapons to India or supporting anti-colonial forces in Africa are going to trigger nuclear war?

Reputation is the sense that you are someone who keeps their word, carrying out your threats and coming through on your promises. Fool me once, shame on you; fool me twice shame on me. The United States has a major credibility problem. This is a major factor in any Iran - U.S. negotiation. After two years of hard bargaining, in 2015 Iran, the P5+1 [The 5 Permanent Members of the UN Security Council: China, France, Russia, the U.S. and the UK plus Germany, and the European Union] agreed to the JCPOA [a very useful abbreviation for the Joint Common Plan Of Action] that traded severe restrictions and intrusive inspections on Iran's nuclear program for relief from economic sanctions. In 2018 Trump withdrew the U.S. from the agreement and in place of the promised sanctions relief announced new, harsher sanctions. A year later Iran announced that it would no longer be bound by the terms of the agreement.

Last June a U.S. delegation led by Trump's good buddy Steve Witkoff and his son in law Jared Kushner was in the Middle East holding informal talks with Iran when Trump and Netanyahu unleashed the massive bombing campaign of the Twelve Day War. And the same two were back at it in February when Trump started the current war. JD Vance may be leading the current team but Witkoff and Kushner are again major players. Are these serious negotiations or just a side show while the U.S. prepares for a surprise attack?

As something of a side note, Trump supporters tout his negotiating style as the "Mad Man" theory ... being unpredictable and irrational means the other side can never be sure what he will do so they have to give in. However there is no evidence that a crazy person gets more concessions than a rational actor and lots of evidence that a crazy person's friendly gestures or promises have no credibility.

The End Game

If negotiations do result in a win-win solution, sooner or later there will be an agreement. In international settings this is often a framework or broad outline, with the nuts and bolts to be negotiated by technical teams and career diplomats. At other times the order is reversed and the details are hammered out and agreed to by career diplomats or technical experts and the meeting of principals is a photo op. (The people who do the hard work of negotiating the therms and conditions are often referred to as "Sherpas" who do the grunt work to get the big shots to the top of the mountain.) Without the hard work of dotting the i s and crossing the t s, an agreement can end up worth less than the paper it is printed on. The much ballyhooed Board of Peace, which lacks any details or institutional specifics, is not the feared rival to the UN Security Council but an item for a pub trivia night.

As the man said "it ain't over until its over" and reaching an agreement is not the end of the story. An agreement needs to be ratified, that is, sold to the folks back home. In the current situation, the first step is selling the agreement to President Trump and the Iranian leadership. And that first step can become part of the process much earlier. Many a diplomat has told their counterpart that their offer is really fair and reasonable but they couldn't sell it to the head of state so they have to have a better deal. If the U.S. and Iran do meet in Islamabad one can imagine JD Vance telling the Iranians that Trump would never accept something or the Iranians explaining that they have to convince both the Supreme Leader and the hard line IRGC (Iranian Revolutionary Guard Corps) leadership. Right now the leadership on both sides faces major political problems that greatly limit the range of agreeable outcomes. As part of the process, participants often try to underplay how much they need a bargain, hoping to convince the other side to make concessions.

If the most basic rule is that a bargain must be better than the current hurting stalemate, it may be impossible to find one.

Implementation is the last piece of the bargaining puzzle. Some bargains are self-implementing. A buyer and seller negotiate a price, buyer hands over money and seller hands over the goods and that's the end of the story. But especially in international politics, bargains are not self-implementing and getting each side to do what it has agreed to do may be problematic . Claims that the other side is cheating or dragging its feet or breaking the agreement are all too common in international relations and can even lead to the collapse of a poorly crafted agreement.

International negotiations are usually protracted and complex. A real estate deal is relatively simple: the initial stages of the process are well defined and routine, the major issue is typically price and the whole thing is over as soon as money changes hands. The Art of the Deal is not a useful introduction to the reality of international peace talks.

There are, I think, three core issues that Iran and the US. will have to resolve: freedom of navigation in the Straits of Hormuz, defining the scientific and technical limitations on Iranian nuclear activity, and settling on which U.S. economic sanctions will be ended. Reaching an agreement that can be sold to the key players in the Iranian government, President Trump and the hard line Iran hawks in the U.S. Congress, and Prime Minister Netanyahu and his far right cabinet members will take time, persistence, and creativity. President Trump called the 2015 agreement with Iran "the worst deal ever" as he blew it up in 2018. It may look like a great bargain compared to what we end up with in the weeks and months to come.

TRUMP'S RECKLESS WRECKING BALL FOREIGN POLICY

 

Inspired by video games and action movies, the wannabe cowboys in the White House and the Department of Defense planned and executed the armed kidnapping of Venezuela's President Maduro. But there was no real plan for what to do after the whooping, hollering and chest thumping. Hoping the major U.S. oil companies will invest the billions of dollars over several years necessary to repair Venezuela's oil infrastructure and working with a state apparatus in Caracas that is the Maduro regime without Maduro and Chavistism without Hugo Chavez is about as realistic as pretty pictures of a Gaza fantasyland "development."

Venezuela, Greenland, the "Board of Peace" and all the other odd moments in foreign policy in the past year are symptoms of a much greater problem.

U.S. foreign policy today

Trump's foreign policy proclivities, like the rest of his life, reflect an overwhelming drive for immediate material or psychological gain. Trump lives by the old hippie mantra, "if it feels good, do it" with an emphasis on NOW. The supposed master of deal making does not seem to understand the difference between a one-off exchange and a continuing relationship. You treat the jerk who cuts you off in traffic more abruptly and rudely than your friend who irks you because you want to keep the relationship with the friend going.

Moreover the supposed master of deal making does not understand bargaining strategy. While his MAGA true believers hail his genius in always starting with a maximum position, in the real world starting with a maximum demand as a tactic means that you will often have to make concessions or risk getting nothing. That undermines your credibility. Greenland has to be an American territory, or else! Then it turns out we'll settle for some agreement that looks very much like what we already had with Denmark. Not only is the maximum demand untenable in most negotiations, but the bargaining is public and everyone can see that you weren't really serious about what you claimed you absolutely had. In short, always demanding too much leads to TACO [Trump Always Chickens Out] Tuesday.

The real issue?

One of the most important features of the world today is that for the first time since the first homo sapiens family lived in Africa, there is a global political, economic and social system that involves virtually every one of the 8.3 billion humans on the planet. At the heart of that system is a network of governmental organizations like the United Nations system of agencies, regional alliances like NATO and the OAS, and hundreds of non-governmental organizations. Some are devoted to the peaceful resolution of conflicts, others to a market driven global economic system with as little governmental interference as possible, and still others to tackling poverty, disease and promoting human rights. The goal has been a rules based international system in contrast to a world in which "the strong do what they will and the weak suffer what they must."

Cooperation requires leadership and support to turn short term loss into long term gains and providing that leadership has been the role of the United States. The basic institutions were designed in Washington reflect such basic American values as capitalism and democracy. The central role of the United States in financing and supporting the international order has meant that many rules for state behavior and strategies for cooperation coincide with American interests.

Until recently American foreign policy has been heavily influenced by the loosely defined community of scholars, professional diplomats and consultants, sometimes referred to as "The Blob", that developed a broad consensus that defined the mainstream analysis and discussions of foreign policy. It's worth noting that with the possible exception of Marco Rubio, no one involved in making policy in the White House today is a member of the Blob or has any experience with foreign policy.

The foolish assumption that international organizations undermine U.S. sovereignty and the tired and repeatedly debunked myth that foreign aid involves huge sums of money given to foreigners for which the U.S. receives nothing in return have led Trump and his amateurs to take a wrecking ball to 80 years of effort to create a rules based international order. The international system today is very much a work in progress that has, among many achievements, contributed directly to America's prosperity and security. The foreign policies of the United States have never been guided by naivete but by enlightened self interest.

Bombing Iran, invading Venezuela, raising and lowering and raising and lowering tariffs, coveting Greenland and all the other unilateral adventures and diversions of the past year that reflect amateurish immediate gratification tactics have damaged America's international reputation and position in the world, Some of them can be shrugged off by the rest of the world as aberrations unique to Trump. But the damage to the institutions of the international system, to America's status as a reliable ally and to America's image as a humane and caring society and land of opportunity may be irreparable.

A New Middle East?

 Yogi Berra "It's tough to make predictions, especially about the future.

The balance of power in the Middle East has fundamentally changed in three ways.

1) Over the past fifty years Israel has relied on military superiority and a sophisticated and remarkably capable intelligence service to confront its enemies with powerful deterrent threats, including nuclear weapons. (Israel has consistently denied having nuclear weapons since 1967. Deterrence, like beauty, lies in the eye of the beholder and everyone in the Middle East believes in Israeli nukes.) But after the brutal Hamas attacks in October 2023 Israel launched a determined effort to destroy Hamas that has resulted in the death and suffering in Gaza and increased pressure and assaults on Palestinians in the West Bank.

Even as that war in Gaza dragged on, Israel expanded it to include a major assault on Hezbollah in Lebanon demonstrating the prowess of both its conventional military and intelligence services (remember the exploding pagers?) and an air war that destroyed almost all of Iran's air defenses. That allowed Israel to undertake twelve days of systematic bombardment of Iran's ballistic missile capability, kill many nuclear scientists and top security officials, and paved the way for the United States to enter the war with 30,000 pound bunker buster bombs. Israel is now the unchallenged dominant military power in the region.

2) The United States has portrayed itself as a potential "honest broker" in Middle East conflicts. Everyone understood that the U.S. was deeply committed to Israel and was hardly an even handed mediator but there was always the hope that the U.S. could thread the needle and find a solution both Israel and the other side could live with. Beginning with the largely symbolic move of the American embassy to Jerusalem and culminating in the coordinated assault on Iran, American policy and actions have become aligned with Israel's.

3) Iran has been seriously weakened. The air war has given Israel and the U.S. unchallenged control of Iran's air space. Nuclear facilities have been damaged to an uncertain extent both by the bombings and the assassination of senior scientists. Iran's allies, including Hezbollah and Hamas have been severely damaged. The coup in Syria that chased Assad into exile in Moscow has eliminated a critical supply line for arming irregular forces in Lebanon, Iraq and Gaza.

The most important decisions that will define the new contours of Middle East politics

Even I am not foolish enough to predict the future. But I think we can identify some key decisions that will be made by the major players that will determiner the outcome.

Israel will be making the most important decisions. The current polices of using overwhelming military force against real and perceived enemies and eliminating the Palestinians as a factor is unachievable and unsustainable. The Netanyahu government is being held hostage by the most hardline extreme right wing factions in its tenuous coalition government. [The small ultra-Orthodox parties that insist on Great Israel, a strictly Jewish state in all of biblical Israel, "from the river to the sea"] And Netanyahu has been able to use the response to the Hamas attack of October 2023 as a tool to delay the corruption trial against him. The extremist cabinet ministers insist that the war in Gaza cannot end until Hamas is eliminated as both a military and political factor. The government seems enamored of Trump's idea of getting rid of all the Palestinians in Gaza and has herded some two million people into a narrow strip in the very south, from where they (perhaps) be easily transported to other countries.

But the mounting human cost of Palestinian death and suffering and Israeli casualties and the drain on Israel's economy will become an intolerable burden. The alternative would be seek accommodations with its neighbors and the Palestinians, adopt a more defensive posture, and act to preserve stability in the region. In the short run, such an abrupt change in policy could, I think, only come about through the active and persistent involvement of outside parties who could be portrayed as forcing concessions on a reluctant Israeli government.

In the longer run, I think, there are two possibilities. The first is that an aggressively militarized Israeli foreign posture in human and economic terms will trigger a countervailing movement either in Israeli politics or Middle Eastern countries like Saudi Arabia, Iran and Syria, perhaps even Egypt, who will try to form a counter balancing coalition by promoting a greater role for China as a source of weaponry and influence.

The second possibility is that Israel finally faces the existential crisis. Thomas Friedman, among others, has pointed out that the original Zionist vision was an Israel that was a Jewish state, a democracy, and occupied the biblical land of Israel, including the area conservative Israelis and evangelical Americans refer to as Judea and Samaria and the rest of us call the West Bank and Gaza. Israel could annex the West Bank and occupy Gaza but that biblical state could not be Jewish or it could not be democratic. Israel could be a democratic Jewish state only if the Palestinians had their own state in the West Bank and Gaza. Or Israel could be a democratic state in the biblical territory but it would not be a Jewish state. The history of the last 30 years and the policies of the Netanyahu government suggest that Israel is moving toward becoming an undemocratic Jewish state in the biblical borders.

The United States is clearly aligned with Israel. The Biden administration made some halfhearted attempts to affect the war in Gaza; the Trump administration has whole-heartedly backed Israel (except when the President is momentarily distracted by something he saw on TV.). The proposals it has put forth for cease fires in Lebanon, Iran and Gaza have been skewed toward Israeli demands. Trump's shifting positions on everything from the war in Ukraine to tariffs, his open admiration for dictators, disdain for America's long time allies, and his grandiose rhetoric have destroyed American credibility.*

*Trump's bluster and braggadocio are seen by his followers as brilliant negotiating tactics but making threats and promises that you do not carry out renders them useless because they are no longer credible. The TACO (Trump Always Chickens Out) meme captures the effect nicely.

The United States is not in a position to play a positive role in the emergence of a stable peaceful Middle East. It is easier to see Trump and his acolytes throwing up their hands and ending any attempts at dealing with the situation than making a powerful and enduring commitment to engineering a new order in the Middle East. But it is also possible that the very Trumpian focus on trade and investment and fascination with the ruling aristocrats in Saudi Arab and Gulf States would lead to a policy of indirectly supporting a coalition to balance Israel.

Iran There are two things that I think are quite certain. First, the current regime is not going to collapse nor will it be replaced with a pro-Western, cooperative government. Second, Iran has consistently claimed the right to enrich uranium to non-weapons levels, guaranteed in the Non-Proliferation Treaty of 1970. It has in fact never violated that provision, (despite having both the technical and, until recently, the physical capacity to produce weapons grade fuel) and has long defined its ability to fuel its own reactors as a point of national pride. The nature and extent of the damage done to nuclear facilitates by the U.S. and Israeli bombing raids of June 22 is still unclear but there is no doubt that they were not "obliterated" The question is whether it will take months or years to rebuild the crucial systems. The idea that Iran can be coerced or persuaded to give up the capacity to enrich uranium seems like sheer fantasy.

I think there are two critical choices facing Iran. The first is whether to commit to developing a nuclear weapon. Since Trump withdrew the United States from the 2015 agreement to limit Iran's nuclear capability in exchange for sanctions relief because it was "a horrible one-sided deal that should have never, ever been made" Iran has practiced strategic ambiguity: citing Supreme Leader Ali Khamenei's fatwas declaring nuclear weapons un-Islamic but enriching uranium up to 60% -- far more than civilian reactors need but less than weapons-grade, and developing both the equipment to machine enriched uranium into a nuclear warhead and ballistic missiles capable of carrying a warhead anywhere in the Middle East. The inability to prevent the sustained aerial bombardment of the so-called Twelve Day War with Israel and the U.S.,the Libyan example (Muammar Gaddafi agreed to scrap his nuclear weapons program in exchange for an end to sanctions from the West and two years later the U.S. and NATO intervened in a civil war to oust his regime), and the North Korean example (no one has even threatened to attack since Pyongyang successfully tested a nuclear weapon) would be powerful arguments for Iranian elites to commit to weapons development. The fact that Israel has nuclear weapons [Israel has flatly denied this since 1967, wink wink nudge nudge] is also an argument for going forward.

The second choice is how much effort to put into salvaging the network of allies like Hezbollah, Iraqi militias, Hamas, and some Syrian groups who have been seriously weakened by Israeli attacks. Iran could try to rebuild the network or it could pivot away from championing Shi'a minorities in these countries and the Gulf States and seek to join with Saudi Arabia in leading a coalition to counter balance Israeli dominance.

A powerful limiting factor in Iran's future is the combination of serious economic hardship and waning revolutionary fervor that undermines the regime's legitimacy and long term prospects for survival.

That Was Then, This is Now

The Hamas attack of October 2023 and the Israeli response fundamentally changed the politics of the Middle East. In the old system Israel relied on deterrence and occasional punitive attacks to keep its enemies in check. In the old system most of Israel's neighbors tacitly accepted Israel's existence and some were ready to normalize relations to capitalize on ecomic gains through the Abraham Accords. The status of the Palestinians in the West Bank and Gaza was not a stumbling block for the oil rich Gulf States and not a major convener for Iran, Lebanon or Syria, nor for the United States and Western Europe. And Israel had a deep well of support in public opinion in the U.S. and Europe.

Now Israel is seen as a potential threat by its immediate neighbors, there is a real danger that Iran may try for a nuclear weapon and Saudi Arabia may be tempted down that path. The United States cannot play an in effective role in managing or resolving conflicts and Western Europe is not longer reflexively sympathetic to Israeli positions. The Palestinians are front and center of international attention and any Middle Eastern government that seemed to be accommodating Israel at all would face a powerful backlash from its citizens.

There are powerful forces at play and it will take some time for a new equilibrium to emerge.

A Quick Look at the Origins of the Islamic Republic of Iran

 

For Iranians, the relationship with the U.S. began in 1952 when the CIA cooperated with the British in instigating a military coup that overthrew the democratically elected government of Prime Minister Mohammad Mosaddegh and transformed Shah Rez Pahlevi from a largely symbolic figure into a powerful ruling monarch. The new regime played heavily on Iranian nationalism rooted in the glorious heritage of 2500 years of the Persian Empire. The Shah was determined to modernize Iran economically and socially while suppressing any political development. Particularly in the cities, oil revenue was used to create a more balanced economy, a wealthy aristocracy, and an increasingly well educated and westernized middle class. Resentment over the abandonment of traditional social and religious values (westoxification*) in the rural areas and among recent migrants to cities and over the harsh repression of any political dissent among the growing middle class led to widespread unrest and resistance in 1979 and when the military and security forces deserted the regime, the Shah and the regime collapsed.

*a term coined by an Iranian intellectual critical of his countrymen's fascination with Western culture and society and dismissal of traditional values

Much of the opposition was led by religious clergy; Shi'a mullahs have a long tradition of providing secular as well as religious leadership. Shi'a clergy (mullahs) played a leading role in channeling popular discontent with the regime. Capitalizing on the Shah's failing health and disarray among the ruling elite, the mullahs launched a revolution that called for a return to traditional religious values. The new regime emphasized Persian identity as opposed to minority groups, with a central, charismatic figure (the Supreme Leader) and strongly authoritarian style. Ayatollah Khomeini could have dubbed his movement MIGA, making Iran great again.

The foreign policy of the new regime stressed the importance of coming to the aid of oppressed Shi'a minorities in majority Sunni Arab regimes*, combating global imperialism (exemplified by the United States) and combating Israel (a Jewish outpost of Western colonialism in the very heartland of Islam.) Iran damned the United States as "The Great Satan" and the U.S. responded by defining Iran as an enemy.

*Shi'a Islam emerged during a conflict over who was Mohamed's rightful successor. The conflict had more to do with secular issues of Arab versus non-Arab communities than it did with theological questions or the details of prayer. Iran is the only country in the Middle East with a Shi'a majority; elsewhere Shi'a communities were discriminated against.

A good example of the convergence of those themes is Hezbollah which originated as an armed oppositon group in Lebanon's shi'a community. Lebanon's Christian and Sunni Arab elites have historically not only dominated the country but more or less actively excluded the Shi'a minority. When Hezbollah emerged as a powerful counterweight to a pro-Western government. dominated by Christians and Sunni Muslims and willing to cooperate with Israel, Iran saw a natural ally to be supported and encouraged. It is intellectually lazy and very misleading to reduce Hezbollah, Hamas, the Houthis in Yemen and other Iranian-backed groups to mere proxies or tools of Teheran. They are indigenous groups with local issues and grievances who are allies, not puppets, of Iran.

The JCPOA

The new Islamic Republic's hostility to modernity led to an early exodus of professionals who had trained in the U.S. or Western Europe. In addiditon,the purge of the Shah's supporters in government and business spurred an exodus of the wealthy upper class. In the face of crippling economic sanctions from the West, the regime came to embrace the remaining engineers and scientists who could develop Iranian technology and manufacturing systems. The nuclear energy sector, perhaps ironically in an oil rich nation, became not only a point of pride in Iranian know-how but an increasingly important component of electricity generation.

Thirty years after the revolution, perspectives among decision makers in the United States and Western Europe had shifted enough to make it possible to contemplate negotiating with Iran to forestall nuclear weapons. (Russia and China did not regard Iran as an enemy but were not happy with the idea of a nuclear armed Islamic Republic.) After a number of false starts, increasing western sanction and credible evidence that Iran was developing a nuclear industry that could develop the resources to create a nuclear weapon, a new round of talks started in 2013 The result was an interesting mix of interlocutors (the U.S., the UK, France, Germany, Russia, China and the European Union) who negotiated the Joint Comprehensive Plan Of Action (JCPOA) with Iran. The JCOPA offered Iran significant relief from crippling economic sanctions in return for limits on nuclear technology and a srict inspection regime. (Back in the day I tried for a more thorough analysis of the JCOPA negotiations. See https://www.blogger.com/u/2/blog/post/edit/4398193451691859469/6127416897469986096 and https://www.blogger.com/u/2/blog/post/edit/4398193451691859469/6127416897469986096)

Supporters of the agreement either accepted Iranian assurances that there was no intent to produce weapons or believed that the inspection and limitations regime would delay an actual weapon for years. Opponents argued that Iran could not be trusted to live up to any agreements and its increasingly sophisticated ballistic missile systems and bad behavior causing terror and chaos around the world made it an existential threat to Israel and a major threat to the Untied States and Western Europe. The skeptics won out when Trump replaced Obama in the White House and loudly and proudly withdrew from the agreement,replacing JCPOA with "maximum pressure" on Iran. I think it is fair to say that in the seven years since the U.S. withdrew, Iran has gone from being a few years away from a full weapons capability to a few months before the recent bombing. Except for the triumphalists in the Trump administration, very few observers believe that Iran's nuclear capabilities have been "obliterated." Assessing the damage is very difficult without physical inspections of a large number of sites but some speculative estimates see delays of as little as a few months while others think Iran is now several years away from a nuclear weapon.

Regime Change?

Israeli politicians and analysts have been very clear in their belief that the Iranian regime must be replaced because its core ideology includes the destruction of Israel. The U.S. policy makers who negotiated the JCPOA believed that Iran could be contained and the regime would ultimately either morph into a "normal" regime or be replaced by internal forces. The Iran hawks who blasted Obama for pursuing the JCPOA and urged Trump to withdraw from it want regime change to be the primary goal of U.S. policy.

The regime is increasingly unpopular. The economy is suffering from the effects of U.S. and European Union sanctions. The excesses of the religious police and the level of repression from the security forces have sparked protests. And the ideology underlying the Islamic Revolution of 45 years ago has become stale and irrelevant in a country where over half the population was not even born then. Regardless of how noble and inspiring the ideology that underlies a regime (including liberal democracies) sooner or later the question becomes, "What have you done for me lately?

But bombing campaigns by hostile powers are notoriously ineffective in undermining support for a government or forcing a surrender. Instead of people thinking that their suffering is due to the policies their government is pursuing, bombing victims blame the (bleeping) foreigners who are dropping the bombs. The Israeli and U.S. assault has resulted in an upsurge of Iranian nationalism and anger and at least short run support for the regime.

YOU CAN'T TELL THE PLAYERS WITHOUT A PROGRAM: THE MOST IMPORTANT INTERNATIONAL FINANCIAL GROUPS

 

In the past month three significant international groups have met: the G7, G20 and BRICS. For most of us the "G this and the G that" " could just as easily be Gee Whiz and Gee Willikers and BRICS might as well be the Pink Floyd lyric, "all in all, you're just another BRICS in the wall." But these groups actually do matter because they affect the international economic system and over time can affect the prices we pay for everyday goods and the jobs of many Americans.

In this blog I'll focus on who these groups are and what they are trying to do. In another entry I'l try to shed light on the structure of the international economic system and the forces that may lead to major changes in the next decade or so.

 

T he Group of Seven  (a short enough name you'd think they wouldn't really need an acronym) is the "Big Rich Guys" club -- the seven largest advanced capitalist economies: Canada, France, Gernany, Italy, Japan, the UK and the United States -- and the European Union as a "non-enumerated member." Since 1975 the G7 has held two meetings a year, one with heads of state, and the other with finance ministers. The major goal is to coordinate economic policies to try to stabilize the international, economic system. It has been a major force supporting economic liberalization, the spread of open markets and liberal democratic values. For example, the G7 played a major role in preventing the 2008 international financial crisis from becoming a global depression. The G7 members (other than Japan and the non-enumerated EU)) were present at the creation of the contemporary international order and remain its strongest advocates.

The G7 accounts for over half of global net worth, 35-40% of Gross World Product, and 10% of the world's population.

 

In the 1980's and 1990's sustained economic development fueled in part by international borrowing moved several large countries from the ranks of the less developed into middle income status. But the reliance on loans to kick start growth led to problems that threatened not just the debtor countries but the wealthy G7 group. The problems of excess debt and sporadic economic crises led to the creation of an organization that included both the very rich and large middle income countries in hopes of coordinating policies and stabilizing the global economy. The group started with 19 countries and the European Union in 1999 and then added the African Union (perhaps because all the stationary and business cards and email accounts said "G20" it seemed easier to leave it at that rather than re-brand everything as the G21.)

The G20 meets once a year in a three day session featuring heads of state and finance ministers. The emphasis of the meetings has typically been reforms to the international economic system to improve terms of trade and access to international finance for the middle income members of the group. Recent meetings have also addressed climate change and some global political issues. The meetings have typically ended with a consensus joint communique that more often than not offers lip service to shared values and goals but no concrete commitments to specific changes. This year's meeting chaired by India's Prime Minister Modi was more contentious than most, in part because of the Russian invasion of the Ukraine. The 2022 joint communique condemned the invasion and expressed support for Ukraine but this time Russia and China strongly opposed any statement and several members, including host India, Turkey and the African Union were ambivalent. This year's final communique avoided explicitly criticizing Russia while proclaiming support for territorial integrity of states and expressing a desire for peaceful resolution of conflicts.

The G20 accounts for 80% of the Gross World Product, 75% of international trade and two-thirds of the world population

 

Was initiated by diplomats from Brazil, Russia, India and China who met during the UN General Assembly session in 2006, taking its name from an article by an American economist about large emerging economies. It held its first summit in 2009 and added South Africa (making BRIC into BRICS) the following year. BRICS countries account for about 27% of the Gross World Product and 42% of the world's population. The group has become increasingly tight knit and aspires to serve as an alternative to the dominant international financial institutions like the IMF and the World Bank which are seen as biased against them as well as the rest of the global South.

Using "North" to refer to the advanced capitalist countries-- all of whom are in the northern hemisphere -- and 'South" to refer to everyone else, or sometimes just the leas developed countries, not all of whom are in the southern hemisphere, is more of a rhetorical device implying good guys and bad guys than a useful categorization of stages of economic development.

The International Monetary Fund (IMF) and World Bank are at the center of "the liberal international order" created by the United States and Western Europe after World War II. An analysis of the current state of the global economic institutions will have to wait for the next blog.

China and Russia have been the most vocal advocates of creating a powerful counter weight to the dominance of the G7 and Western capitalist, liberal democratic values but the other BRICS share the sentiment. In an attempt to bolster the power of BRICS, the 2023 summit in South Africa invited six emerging market group countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) to join the bloc.

So What?

The G7 has been the most successful of the three blocs in coordinating policy and actions among its members. The 2008 financial crisis could have been much worse if the G7 members had focused on their own narrow and immediate self interest. Instead they managed to coordinate their responses and avoid the worst potential damage to the global economy. In a host of more mundane and seemingly trivial ways, the G7 have synchronized and coordinated policies to prevent problems. Cooperation that prevents bad things from happening does not make news nor does it make us feel good. (An example of the broader principle that the satisfaction from a gain is less than the pain from a loss.)

The G20 has been far less successful in getting the already rich global actors and the middle income, rising powers on the same page on any key issues. That is in part because of dissatisfaction with the way the IMF, World Bank and other institutions like the World Trade Organization make decisions and in part because the non-G7 members are quite diverse and often have conflicting interests. It is nonetheless, I think, useful for two reasons. First, it provides a venue for the developing nations to articulate their interests and be heard. For example, its meetings have been an opportunity to advocate for compensation and assistance in coping with the consequences of climate change for less well off countries that have not been emitting tons and tons of CO² for the past two centuries. Secondly, it is an opportunity for national leaders to meet on the sidelines for private discussions and negotiations without the glare of publicity and extensive preparation that a state visit or summit requires.

BRICS has an ambitious long range goal of creating a set of new international financial institutions to rival the western dominated IMF, World Bank and the central position of the U.S. dollar in trade and finance. As the BRICS see it, the world today is bipolar -- the global North (the rich G7 countries) on one side and the global South (everyone else) on the other. The BRICS, particularly Russia and China, aspire to a multipolar world in which the rising middle income countries are the third side in the global economy. In particular they would like to see currencies other than the dollar used as the international standard in trade, loans for development projects that don't come with environmental or social strings, and less emphasis on capitalist and democratic values. Optimists see the addition of six more members next year as a major step toward a multipolar world, comparing it to the Bandung Conference of 1955,* Skeptics point to the great disparity of national interests, economic systems and international trading patterns that would make actually implementing a new scheme extremely difficult.

*The Bandung Conference was the first meeting of post-colonial Asia and African countries that launched the non-aligned movement as a counterweight to the Cold War US-USSR conflict. It is doubtful that the non-aligned movement had a significant impact.

The international financial system is not something we think about every day (at least I don't, perhaps you do) but it impacts our lives every day. For example, the IMF is central to world trade, using the U.S. dollar as the basis for setting prices for imports and exports. So when a store in California wants to order blouses form Bangladesh (taka), jeans from Viet Nam (dong), tv sets from Samsung (South Korean won), or Polish hams (zlotys) it does not have to worry about how much a taka or zloty is worth in "real" money or come up with a big wad of dongs to pay for the goods. The factory in Bangladesh or Korea sets its prices in dollars and accepts dollars in payment. That makes the imported goods less expensive than if buyers and sellers had to go physically exchange one currency for the other and pay an exchange fee. The impact on the price of a car, with parts produced from several countries around the world would be even more noticeable.

For us in the United States, the fact that the current system rests on the dollar as the common currency means that there is a large and consistent market for U.S. Treasury bonds which funds the national debt.

The current system does at times impose our values on other countries. The G7 countries dominate the World Bank and often insist that loans for development projects include environmental protections or promote educational or economic opportunities for women and girls.

That is not to say that this is the best of all possible worlds or that there are not some valid points raised by critics of the current system. We will try to look at some of those in a future blog post.