No Easy Option for the US

There are enough indications from the West Asian battlefield that the United States is trapped in a war that is not its own. It is a war that it can neither win, nor stop, nor even walk away from. The US is being bled by Iran, not just militarily, but financially too. The Pentagon burnt out $5.6 billion in ammunition in just 48 hours. It is costing the US public exchequer a billion dollars a day. The tomahawk missiles that require years to build, are being consumed in a matter of hours. But the irony is much starker: the cost of stopping the war will be more than continuing it.

The US cannot countenance Iranian demand to pull away from the bases in the Middle East. Any such military decision will amount to economic suicide. The American economy runs on what is called the petrodollar. The moment the US decides to leave, the security cover for the Gulf states would vanish. This leaves the American client states in the Gulf at the whims and fancies of the regional power Iran. This will leave them with no reason to keep selling the oil in dollars and there would be zero reason to recycle profits into American markets.

Death of petrodollars would be the death knell for the foundations of the American economy which already faces a $40 trillion debt and has no mechanism to service the debt. It will not be a recession, it will be a collapse. The message it signals to Japan and South Korea will be much more serious: If the US cannot handle a mid-tier power like Iran, what guarantee is there that it can protect them from China and North Korea? The answer will obviously be a big NO. They will remilitarize themselves to protect against the threat from China. Aversion will grow against buying American weapons and funding American military infrastructure.

It will be the collapse of the second pillar of the American financial system. This will only incite European nations to ask If America is retreating from Iran, why they must fight America’s proxy war against the Russians in Ukraine, and at a catastrophic cost? It will only provide a fillip to make peace with Russia. This will be the unraveling of NATO, an 80-year old alliance. With the petrodollar gone, Asian allies pulling away and NATO fractured, there would be no reason for all of them to bestow upon the dollar the reserve currency status.

The demand for the dollar will evaporate. This will further render the prospect of serviceability of the $40 trillion debt remote.  It is exactly why the US cannot leave the battlefield. The cost of staying is enormous, the cost of stopping is extinction. The option that remains is escalation which means a war forever. The talk is now about landing ground troops. The moment the marines land, Iran will open a barrage of artillery, missiles and drones. The point most likely for the possibility is the island of Kharg, the terminal from where Iran exports 90% of its oil.

Moreover, it is one of the most brutal terrains. Americans must remember Vietnam where the war began with only 3,000 Marines but four years later, the troops numbered half a million. Escalation will also mean escalating the daily cost which currently hovers around $1 billion. The US must now realise that a war being fought at the behest of Israel is not a military crisis. It is a financial crisis from which it can extricate itself only with a huge loss of face and a financial crisis of unimaginable proportions.