Trump's Iran Conflict: A Lobster Pot He Can't Escape From
Donald Trump finds himself trapped in a war with Iran that even his notorious retreat instincts cannot extricate him from. The president, often praised for his business acumen, is supposed to recognise when to cut losses and withdraw. Yet, as Operation Epic Fury grinds on, his options are narrowing dramatically. This situation presents a stark contrast to his past behaviour, where markets and observers have learned to expect "Trump Always Chickens Out" – or TACO.
The TACO Principle Tested
For investors, TACO has become an article of faith, based on Trump's observed tendency to pull back from brinkmanship when confronted with significant wealth destruction in capital markets. This pattern was evident in tariff disputes and the aborted invasion of Greenland, where he retreated under pressure from allies, rivals like China, or market turmoil. "In TACO we trust" has almost become a modern motto, so ingrained that it could adorn dollar bills. However, in Iran, Trump appears caught in a lobster pot: he found his way in but cannot find an exit.
The conflict escalated when Israel attacked Iran's massive natural gas fields, triggering Iranian reprisals on adjacent Qatari fields, the world's largest. Trump has declared there will be no further Israeli operations of this kind, but his ability to enforce this remains uncertain. It is increasingly clear that Israel's interests diverge from those of the United States. For America, the destruction of global natural gas and oil supplies would be catastrophic, as would a civil war in Iran or the pulverisation of Tehran akin to Gaza.
Diverging Interests and Global Stakes
There is a reasonable assumption that Benjamin Netanyahu may have duped Trump into this war. The question now is whether Netanyahu can skillfully keep America bombing Iran even when it no longer serves American interests – or those of Gulf states, Europe, and East Asia. Trump has stated he wants to preserve Iran's oil industry for the Iranian people and the global economy. In contrast, Israel prioritises breaking Iran to eliminate threats, a short-sighted but understandable war aim for its government.
For America and the wider world, excluding perhaps Putin, this conflict risks tipping the globe into an economic slump. While America could eventually pressure Israel to scale back, as seen with Gaza, Trump now depends on Iranian cooperation to exit the war. He needs Iran to cease attacks on Israel, stop missile launches at Qatar, Kuwait, Dubai, and Saudi Arabia, and reopen the Strait of Hormuz to shipping. This requires Trump to negotiate concessions, a challenge for a leader who dislikes being perceived as a "loser."
A Path to Resolution?
Bombings and assassinations have so far failed to force the Islamic Republic into peace or collapse. Iran requires little to persist, and its potential failure as a state would hardly constitute a victory, except perhaps for Israel. This trap is precisely the kind Trump criticised his predecessors for falling into. His initial proposition involved deals for withdrawal, but he now faces Netanyahu, who prefers peace through enemy annihilation.
Trump, with his naive cunning, should recognise the moment to cut losses. He has eliminated the old ayatollah, decimated leadership, destroyed Iran's navy and air force, obliterated nuclear projects, and weakened the regime – leaving Iran ready to talk. The time for a deal and a strategic retreat is now. Mr President, leverage your talent for declaring unprecedented victories and refocus on making America great again.
