Firepower Is Not a Strategy

Hello listeners, welcome to the podcast.

Hello listeners and welcome to another episode of the Jacob Shapiro podcast, doing things

a little bit differently today instead of bringing on a guest.

I just want to talk to you one-on-one about the third goal for the US-Israel-Iran War.

I'm not sure what we're supposed to call it yet, but I'm seeing some things that are

really making me question my analytical framework here and I wanted to share my thoughts with

you.

Now, if you've been listening to the podcast or if you've been listening over geopolitical

cousins, you know that I did not think the United States was going to attack Iran.

And my reasons for that were relatively simple.

Number one, even though Israel in particular, but also the United States embarrassed Iran

last June in that 12-day war and wiped out a significant amount of Iran's military

and defense capacity.

It also showed a weakness in Israel's strategy, an asymmetric advantage for Iran.

So while missile defense allows countries like Israel and the other Gulf states to protect

themselves from Iranian rockets and things like that, it costs a lot of money, many millions

of dollars for each interceptor that is launched.

Every Iranian rocket and drone does not cost that much and Iran has many more of them.

So the Iranian strategy is to try and soak up as many of those interceptors as they can

and then still have drones and rockets, maybe even sophisticated ones left over in order

to push the conflict.

Now Israel showed that it could hang in there for a 12-day war, but most media reports

said they were close to running out of interceptors.

And roughly six to nine months is not enough time to replenish your supply, let alone have

supply for a conflict that is much longer than the 12 days that the Israel-Iran war last

year was.

So I thought that was sort of a physical constraint on a protracted conflict at least.

Number two, and this is more important, is the domestic politics and the economic situation

inside of the United States.

Most Americans can't even identify where Iran is on a map, let alone support yet another

U.S. military adventure in the Middle East.

And now the United States does not depend on the Middle East for oil.

This is not 2003, this is not 2001, it's not the late 1990s, much to my chagrin.

The United States is relatively energy self-sufficient, but that doesn't mean that

energy prices in the U.S. won't go up if the straight of Hormuz is closed and if all

those other countries that are dependent on Middle Eastern oil and LNG can't get to it.

This is Iran's other asymmetric advantage, its geography.

Iran can close the straight of Hormuz, and the straight of Hormuz is what 20% roughly

of the world's oil LNG fertilizer goes through.

Now Iran doesn't need anything sophisticated to do that, it doesn't even really need

a functioning regime.

All it has to do is scare ship captains enough that they don't want to go through the

straight of Hormuz, and you can do that again, with relatively unsophisticated drones

or rockets or things like that, and that is exactly what Iran has been able to do thus

far.

Now, President Trump's approval ratings on the economy in the last couple of months have

started to reach the lows that Joe Biden's approval ratings on the economy were looking

in general.

Besides that, most Americans couldn't even point to where Iran is on a map, let alone

want to encourage the United States government to go into another war in the Middle East.

This is not 1999, much to my own sugar, and the United States does not depend on access

to the Middle East, but everybody else in the world does.

And President Trump even campaigned on not being the type of president that would start

wars in the Middle East.

Now, the thing is, even though the United States is not dependent on the Middle East for

the energy that it's actually consuming on a daily basis anymore, if the straight of

our moves is blocked, energy prices everywhere are going to go up, and that's before we get

to fertilizer and food in some of the secondary effects.

And the thing about inflation numbers, I would be the first to tell you, I was wrong about

inflation last year.

I thought the prices were going to go higher as a result of tariffs and some other things

happening in the macro economy.

But by the end of the year, last year, we were starting to see the numbers start to creep

up a little bit.

One of the things that has kept headlines CPI lower has been extremely low energy prices.

And here we have to give some credit where credit is due.

President Trump's policies have helped this.

President Trump has released the animal spirits of the U.S. energy industry.

He also pressured Saudi Arabia to keep pumping, even though oil prices were relatively low.

It does not make sense with the Republicans going into midterms, having to change the

narrative about the economy and to engage in a war or a conflict that is going to raise

energy prices and is going to make inflation and those CPI prints look really bad by comparison.

And this is a big deal for President Trump because if the Democrats take the house, then

they can send articles of impeachment whenever they want and they can gum up his legislative

agenda.

What if the Democrats also take the Senate?

What if and stay with me for a second enough Republican senators see the economic damage

that is being wrought and want to jump off this Trump ship and are willing to cross the

aisle and consider voting for those articles of impeachment.

I know that that's an out there scenario, but the worst this gets and the longer the war

goes on, the bigger the effect to the global economy.

And the more I think that that political logic for even Republican senators to turn against

the president starts to become operative.

Last but not least, and this is a fairly unimportant one, but the administration's own

self-stated goals were not to be so interventionist.

Look at the national security strategy that they published just last November.

Marco and I did a whole episode about this.

They were talking about a predisposition to non-interventionism.

They were criticizing previous US governments for being too heavy-handed.

I thought that what President Trump was doing with Greenland, the way that he decided

to do it was nuts, but he wasn't crazy strategically.

When you think about a hemispheric strategy of asserting US primacy from Greenland to

Argentina and a multipolar world that makes a lot of sense.

So even though if I would disagree with some of the tactics the Trump administration

was articulating, there was a strategy there.

And some of the tactics were, frankly, completely successful.

What the United States did to Venezuela and to Nicolas Maduro was a foreign policy coup.

You don't get much more successful than that.

To pivot away from that, to pivot away from Cuba, which seems to be ripe and ready to

be next, to go again, and adventuring for a war in the Middle East does not make a

whole lot of sense.

Now, obviously I was wrong about that, and the United States with Israel decided to fight

a war against Iran.

Now, that was surprising to me, but it wasn't completely out of my frame of reference.

I could understand that Iran has nuclear material, and I didn't believe the Trump administration

that they had obliterated the nuclear program in general.

So maybe that's an operative threat.

I've seen a lot of other conspiracy theories and 4D dimensional chess theories about how

this is really all about China, et cetera.

I wrote a whole essay on my sub-stacks, sort of debunking that if you want to see that,

you can go there.

I won't bore you with that.

But when the war started, I said very clearly, I think this has to be a three to four-week

conflict.

I'm kind of surprised that they went this far, but I think now that it started, it has

to be three to four weeks, because after you get to that point, all of those constraints

that I laid out, the interceptor capacity, the domestic politics and inflation, the self-stated

goals, all of that begins to become an advantage for Iran.

The United States and Israel have all the cards at the beginning of the conflict, but

the longer that the conflict goes on, the more the pressure begins to shift to the United

States and to Israel to bring the war to some kind of conclusion that they can say has

been successful.

Now I've been doubting this a little bit over the past couple of weeks, but sticking

relatively to it, but things have accelerated here in the last couple of days that have

made me question whether my initial analytical framework is broken, and I want to run through

some of them with you right now.

First of all, the Trump administration has sort of made light of this, but they've talked

about how they've killed so many different levels of Iran's leadership.

They don't even know who they're going to negotiate with.

That's a big deal, because some of the people that they're killing are, and they're not

moderates in the sense of you and me in the West, but they are relative moderates.

The latest assassination is of Ali Laranjani, who has basically been serving as the de facto

Supreme Leader since the protests broke out in January, and the now erstwhile Supreme

Leader Ali Khamenei took a step back and basically started preparing for his own martyrdom.

Ali Laranjani was a guy who was, who could, yes, he was a complete and total die hard for

the regime, but he was also fluent in communication with the West.

He could speak our language.

The more you get rid of these types of figures who have experience in the system, who are

able to talk with the West on its own level, the more you are actually empowering some

of the hardline voices inside of Iran, which brings me to point number two.

I was absolutely stupified that Moshtabah Khamenei was named the new Supreme Leader.

The one of the whole points of the Iranian Revolution in 1979 was to get rid of the hereditary

monarchy, to no longer have the shot in place, and it was a principle that the Supreme

Leadership would not pass from family to family.

That's why the original Supreme Leader, Khomeini, I know it's all very confusing, did not

pass the Supreme Leadership to his offspring, and Ali Khamenei, by all reports, did not

want this to come to Moshtabah, his son, but it did, and that tells you that the hardliners

are in control, that they wanted continuity, that they wanted somebody that was a symbol

of defiance and resistance to the West in the context of the war that is going on right

now, and that to me tells me that we have hardline, increasingly conservative, maybe even

religious zealots who are in charge here, who see this as an existential battle, not

just for Iran, the civilizational nation state, but the religious mission of this state

and this religious revolution that goes back to 1979, going to be very, very hard to negotiate

with those types of people, the people that you could negotiate with, it sounds like

you killed them, and these hardliners, you've just radicalized them more.

Moshtabah's entire family basically was just assassinated, and he apparently is also not

doing so well from a health perspective too, we don't know exactly where he is.

Number three, we are seeing the United States make the same mistake, it is made over and

over and over again, I cannot believe that we can't learn this lesson, we are mistaking

firepower for strategy.

Every time I see Pete Hegseth, aka Crystal meth-Rumsfeld, go up there and praise the lethality

and awesomeness of the US military, I feel like I'm watching a coked out version of Bob

McNamara from the 1960s talking about the Vietnam War and kill ratios, and this is how many

Vietnamese we killed, and how many of their arms that we confiscated, ammunition that

we blew up, things like that, it doesn't matter, you cannot mistake firepower for strategy.

The Trump administration said this in their national security strategy, strategy means

talking about the goals that you want to achieve, and then you create the tactics to get

to the goals that you need in general.

Just blowing everything up is not a strategy, you can blow up every single ship and every

single plane and you can assassinate supreme leader after supreme leader, but unless you're

going to deploy hundreds of thousands of US soldiers to Iran to secure the Western Iranian

coast from the Strait of Hormuz and take over all the oil infrastructure and govern it

like it's some kind of colony, and this is a country that is extremely large, is mountainous,

is hard to control, 80 million plus people, lots of different ethnic groups, unless you're

willing to go into it, from that point of view, you will not get rid of their asymmetric

advantage of geography with the Strait of Hormuz and these cheap rockets and drones that

they can use to affect not just the Strait of Hormuz, but regional energy infrastructure,

as we're talking about in general.

I cannot believe we're talking about ground forces in the Middle East, but that's exactly

what we're talking about, President Trump deployed a Marine Expeditionary Unit to the region

to be on hand, roughly 2500 Marines, they're based in Japan, it's going to take two weeks

for them to get there.

So that could be a PR stunt trying to show that the US is serious about this, but he's

at least now starting to build up a small group of military forces that he could deploy

on the ground with troops on the ground there in general.

We have only seen rumors that the United States is going to maybe restrict energy exports.

One of my more out there contrarian takes is that I actually fully expect future US

governments to do that.

I think as our energy demands go up, as you start to get depletion in some of these things

on shale wells, we'll go back to the same situation we were in the 70s when we ban oil

exports.

But I didn't think we'd be seeing that for five to 10 years, at least those are also

just rumors.

What has happened though is that we've gotten rid of sanctions on Russian oil, so great,

we're helping Vladimir Putin out in his war against Ukraine and keeping his regime together,

and we're also allowing foreign tankers more use of US ports to try and help that flow

of oil all around the world in general.

Trump's penchant for bullying and asking for help from NATO countries, from China, from

all sorts of other countries to keep the straight open.

That's another sign that maybe this is a more protracted conflict, and that maybe President

Trump doesn't appreciate the situation that he's gotten himself into.

Moreover, you cannot govern with policy the way that Trump has over the past 12 months

and expect your allies, let alone your adversaries, to come and do the things that you want them

to do when you call.

This was reportedly negotiating directly with Iran about getting a passage for its ships

through the strait.

We know India has done that.

We know Pakistan is doing that.

Italy has denied that, but there were FT reports about that out there as well.

China just seems willing to ignore the request from President Trump to help.

They basically just said, we think the fighting should stop, and the shipping should be open.

Nothing about sending ships there in general.

Also, the cognitive dissonance of asking China to come police, the global shipping lane,

and that is the source of US power in the world over the past 50, 60 plus years.

That's a whole discussion for another time.

About China.

The postponing of the summit with Xi Jinping next month, that was another red flag for

me.

This is one of the things that Trump administration has been building to since the beginning

of its administration, making a big grand deal with China.

In some ways, this would be more important for taming inflation and for having normal

sea in the economy than anything else.

This is also something that I was fairly skeptical of.

This is something that Marco and other analysts out there were talking about of potential

US-China rapprochement.

I said, hey, even if the spirits are willing, and I'm not sure the spirits are willing,

I think the flesh will be weak because all it takes is one thing to happen that puts

the United States and China on completely different sides of an issue and suddenly poof

it all blows up.

I don't believe for a second what Scott Besson said that this is logistical.

I think probably the trade talks in Paris last week didn't go particularly well.

If I had to guess, I'm just guessing here, this is inference, I don't have any data,

but I bet the United States was asking China to do something like buy more US oil or put

pressure on Russia or maybe even put pressure on Iran to try and bring the war to the close

to which I assume the Chinese would have said, this is your war.

You chose to do this.

We're not helping with you about this at all.

We have a whole other thing of tariffs that we need to talk about.

If you're going to start throwing in non-secretaries, well, maybe we all need to take a break.

Because obviously this is not ready for Xi Jinping and Donald Trump to shake hands yet

and eat chocolate cake over if we're not there in general.

The last thing though, and this happened last night was the Israeli attack on the South

Parse gas field.

This is part of one of the biggest natural gas reserves in the entire world.

It's a field that is shared with Qatar.

Iran responded by retaliating against cutlery, LNG infrastructure, and President Trump came

out with honestly unhinged tweet even for him about how he didn't know that Israel was

going to do this.

That's probably not true.

Even Pete Hegseth said that the United States probably knew that that was going to happen

in a press conference earlier today, but that's not there here nor there.

Also that no more attacks will be made by Israel pertaining to this extremely important

and valuable South Parse field, and that if Iran continues to go after Qatar and other

energy infrastructure in the region, they will see an amount of strength and power that

Iran has never witnessed before, and he doesn't want to authorize this level of violence and

destruction.

I'm guilty of doing a bit of psychoanalysis here, but I read that, and that was the first

time in the whole or the President Trump seemed out of control to me.

Even when reporters were asking him, well, are you going to deploy ground troops?

Is this going to be a long conflict?

He was basically saying, I can't tell you that, yes, I could deploy ground troops, yes,

it could be a long, protracted conflict.

Even if those things weren't right, I couldn't tell you that reporter, but what I can say is,

oh, it's an excursion, and we're winning, and they wanted to go shit, and we're getting

everything we want, we're blowing up.

That tweet yesterday was the first sign that I saw a President Trump actually maybe getting

afraid, maybe realizing what he's gotten into, and that he's over his skis a little bit.

And I said this on, on X, I got a little bit of flag for it, but that's fine, I'll take

the flag.

Usually the flag means I'm on the right path.

If you are in the IRGC, and you read that tweet from Trump yesterday, you're thinking

we're finally getting to him.

We are finally beginning to get a US President to see, oh, you came at Iran, we blocked

the straight of Hormuz.

Okay, this is what we can do when you do this, and we have to impose even more pain here.

So you don't think you can just give us some kind of negotiated settlement, and we're

just going to walk away, and everything is going to be just fine.

That's not the way that this is going to work from Iran's perspective.

So if I'm the IRGC, if I'm Mosh Taba Khamenei, if he's alive, this is where I press the

advantage.

Even if President Trump does want to wind this war down here over that three, four-week

time period, you don't do it now.

The asymmetric advantage is just now coming over to the Iranian side, and that means that

we could be in this for a little bit longer in general.

So is my analysis broken?

No.

Not quite yet.

I've got another week, roughly seven days before we have to say the analysis is completely

broken.

And the one saving grace of everything that I just said is that maybe things are getting

real enough for the White House and for the President that they are looking for that

exit strategy.

Now, by killing all the moderates with Mosh Taba in charge, with everything that's happened,

there's now a question of, well, is there even anybody to taco to?

Is there even anybody to negotiate with?

Maybe we're in this for a couple more weeks.

Whether President Trump is ready to get out of it or not.

But you could make the argument that things had to get this bad before Trump was eventually

going to taco.

So my analysis is not necessarily broken.

And part of the thing, and this goes to forecasting methodology in general, if you haven't read

Philip Tetlock, super forecasters, or if you haven't read Isaiah Berlin on foxes and

hedgehogs and things like that, there's basically two types of analysts.

There's a hedgehog, the person who knows one thing and continues to say it no matter

what, whether they're right or wrong in any single context or foxes, who change their

minds, who are kind of ambivalent, who use lots of different methodologies and things

like that.

And what Philip Tetlock found was that self-described foxes are usually more accurate than hedgehogs

are.

But ironically, they're listened to less because it's hard for them to communicate in a way

that is understandable because a fox, one day, will say, I think this and then the next

day will change their view.

And that's really hard for listeners or for commentators to anchor on because you want

someone that is willing to stick to what they're talking about.

So I'm taking a risk here by telling you that I think that my analysis may be broken.

It's not quite broken yet.

But there is enough evidence pointing against a three to four week conflict that I'm revisiting

everything from the ground up.

And frankly, it's no longer the base case.

I have to start thinking about, well, what does a protracted conflict look like for the

global economy?

What level of economic disruption are we talking about here?

What does this mean for US politics?

I already shared with you some of my out there thinking about that earlier when I was

talking.

But really, what does that mean if we get to this type of scenario?

I was also incredibly struck by a quote from Politico that they got from a senior White

House official.

And about the communication strategy for the Trump administration.

And I'll just quote with the senior White House official said, he said, we're over here

just grinding away on banger memes, dude.

Okay, dude, I feel like I'm, you know, I've brought a geopolitical measuring stick to

something that looks like a game of flip cup inside the White House.

My geopolitical methodologies and frameworks can be as brilliant as possible.

But I might have just completely overestimated, which is saying something because I didn't have

a lot of overestimation in me for this administration's foreign policy chops when it comes to

them at least.

But maybe I overestimated even what they think they know.

And maybe they really diluted themselves into thinking that this was going to be a quick

thing.

And now they are in a situation that there really is no exit out of certainly not in that

three to four week time horizon that I was talking about.

So the three to four week time horizon, it's still in place.

I'm not willing to throw it out with the bathwater just yet, but it's no longer my base case.

And I'm now seriously thinking about what does it look like if this becomes a protracted

war on a lot of different levels.

I strive to be the type of analyst, you know, when I'm right, I will say it.

I enjoy saying I'm right.

I think I'm right.

A fair amount of the time.

But when I'm wrong, I want to beat you to the punch.

I want to be the one that raises his hand and says, you know what?

I was wrong about this.

I need to revisit everything.

I had that spidey sense last night.

I was looking at everything that was going on.

I was looking at the South Park field attack.

I was looking at the communications back and forth.

There's a spidey sense going up and down my spine that says, you know what?

Maybe you were wrong.

Maybe we need to revisit this.

And even if there is still a possibility that your initial analysis could come through,

a lot of things have to go right in the next couple of days.

You have to get pretty lucky for that analysis to come through.

So here I am.

I'm raising my hand.

I think my initial framework might be broken.

I'm trying to sketch out for you what I think the alternative framework starts to look like.

And frankly, it is pretty grim.

It is pretty grim for the global economy.

It is pretty grim for U.S. foreign policy, and it is pretty grim for the Republicans going

into the midterms.

And all of those have a lot of different secondary and tertiary effects that we need to spend

a lot of time thinking about.

So I hope I'm wrong.

I hope the war is over soon.

I hope global supply chains can get back to where they are soon because the more worst-case

scenarios that we're entertaining here, they're not going to be good for the world.

The one that particularly scares me, and in some sense, this is already in the car, this

higher food prices.

The fertilizer at this point is probably not going to get where it needs to go.

And so we're going to have to revise some yields down in general.

And I've always said this, higher food prices is always going to lead to global disruption.

And you can never...

It's not a one-to-one thing.

You can't say, oh, higher food prices, therefore disruption here.

I can draw a straight line between higher food prices after the 2008 financial crisis to

the Arab Spring and the rise of ISIS in the Middle East.

One of the reasons that you had the Arab Spring was because you had a lot of young, angry,

disenchanted young men who couldn't afford the price of food or who were dealing with

drought.

And some at that point, jihadism or other ideologies or even protest and revolution started to

look like better than just waiting around for food prices to continue to increase and

not providing for your family.

So when you get those increases in food prices and it's going to take months for that to metabolize

through the system.

And if this war goes on even longer, I mean, gosh, if we get to another planting season,

it can't even imagine what that's going to look like.

But that's one of the first ones that I'm thinking about in general.

So sorry for the downer.

If you haven't subscribed to my sub stack, I put a lot of work into an essay laying a lot

of the sub.

Go ahead and subscribe.

It's free.

I may turn on a charge for it at one point.

But right now it's free and a lot more of my thoughts are there.

Otherwise we should have an interesting episode next week, hopefully on the economy of Scotland

because I feel like I need a palate cleanser from this war and everything that's going

on.

I'm sure that some of you do as well in the meantime.

You can always email me at Jacob at Jacob Shapiro.com.

If you have questions, comments, concerns, want to hire me for speaking at an event, anything

like that.

And yeah, I think that's all I got.

See you out there.

Thank you for listening to the Jacob Shapiro podcast.

If you enjoyed today's conversation, you can find more episodes, essays, a link to our

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Take good care of the people that you love, cheers, and we will see you out there.

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