Iranian Supreme Leader Ali Khamenei and US President Donald Trump. Photo: Reuters
Iranian Supreme Leader Ali Khamenei and former US president Donald Trump were bitter rivals. Photo: Reuters

Six months ago, no one could have predicted US President Donald Trump meeting with North Korea’s supreme leader Kim Jong-un to discuss nuclear disarmament. Trump came at the North Koreans with all guns blazing, telling Kim (and the Chinese) that there was a new sheriff in town.

As it turned out, Trump was preparing the battlefield for a diplomatic offensive. Iran will be a tougher nut to crack, but indications are that he is using the same high-stakes poker game with the ayatollahs in Tehran.

Trump, crazy like a fox, understood that the road to Pyongyang ran through Beijing. He invited Chinese President Xi Jinping to his estate in Florida, where Xi apparently gave him a history lesson. He will have told Trump that China lost 180,000 soldiers defending the North during the Korean War, and that the Chinese public would not accept surrendering North Korea to the South and allowing US military bases at the Chinese border, and that the 38th Parallel is the mother of all red lines.

“Let’s make a deal and discuss how we can rein in Rocket Man. He is also getting on our nerves.” Xi subsequently had a father-son talk with Kim using his considerable leverage. After all, China accounts for 90% of North Korea’s external trade and Kim’s country is virtually an economic province of China.

Verbal shock-and-awe

Fast-forward a few months. Trump shocks and awes the world again by withdrawing from the Iran nuclear deal despite massive international pressure. European leaders traveled to Washington trying to convince Trump that the nuclear deal was working, Iran was living up to its obligations, United Nations inspectors had unfettered access, all other parties, including Russia and China, supported the agreement, and blowing it up would lead to untold problems.

In public, Trump repeated the mantra that the US had made a “bad deal,” had given Iran “$150 billion in CASH,” and that Iran was supporting terrorism. He could also point at reports that Iran was adhering to the spirit but not the letter of the agreement.

Trump listened to the European leaders but his playbook had already been written. As he had done with North Korea, Trump slapped Iran with new sanctions to increase the pressure. The international media went ballistic, condemning Trump’s decision with sensational headlines along the lines of “This means war.” Iran put its diplomacy in overdrive and sent its top diplomat to China, Russia and the European Union – the unlikely allies united in their opposition to Trump’s decision.

Follow the money

If North Korea is a high-stakes gamble, Iran seems like betting the farm. Saudi oilfields are within striking distance of Iran’s Red Guard. Sinking a few ships in the Strait of Hormuz could send the global economy into a tailspin.

North Korea is irrelevant in the global economy, but Iran and its neighborhood are pivotal. The only region in the world that has more US military bases than the Middle East is the continental United States itself. It is the result of a deal made between the Saudis and the US when president Richard Nixon decoupled the dollar from gold and in effect tied it to oil. America’s military ensured that Arab oil moved freely and that it is traded only in US dollars.

In an unprecedented step, the EU announced that European companies doing business with Iran would be compensated if they incurred losses from US sanctions. Some European governments have already begun implementing measures for European and Iranian firms to bypass US law

In an unprecedented step, the EU announced that European companies doing business with Iran would be compensated if they incurred losses from US sanctions. Some European governments have already begun implementing measures for European and Iranian firms to bypass US law. In January, France’s state-owned investment bank Bpifrance announced a plan to offer dedicated, euro-denominated export guarantees to Iranian buyers of French goods and services, bypassing any US links.

Italian authorities worked out a similar deal in early January. But, as geopolitics and strategic intelligence expert Caroline Galacteros has argued, the US pullout gives the EU “a big opportunity” to come up with a unified response to a system that has long rankled European powers.

Galacteros said: “It’s up to us to decide in the end if we really want to accept this extraterritoriality of US law. That’s the big issue, in my opinion. It can be a real shift in the balance of power. If Europe sticks to the deal, and the Iranians are cautious and won’t hit back – because that’s what Washington is probably expecting from them – then we have Europe and Iran sticking to the deal, as well as Russia and then China.… It all transforms the balance of power.”

The gradual shift in the economic balance of power is inevitable, but the US still holds most of the cards. All global companies with a significant presence in the US are vulnerable to the extraterritoriality of US law. It enables Washington to punish foreign companies operating in Iran if they have business dealings with the US or use dollar transactions. In 2014, the US hit France’s largest bank, BNP Paribas, with a fine of nearly US$9 billion for circumventing sanctions.

China, even more than the EU, can shape events. Chinese firms are less vulnerable to US sanctions than their European counterparts and China is the largest importer of Iranian oil. China also has experience in circumventing US sanctions, making it a formidable opponent.

Creating fact on the ground

After the fall of the Soviet Union, the US was the world’s sole remaining superpower. Militarily and economically it still reigns supreme, but Trump knows that the EU, China and Russia combined are a strategic opponent the US never had before.

This big chess game plays out against the backdrop of the Belt and Road Initiative, the massive Chinese-led infrastructure project that will ultimately connect more than 60% of the global population from Beijing to Rotterdam and the Middle East. It includes the “Red-Med” rail project connecting the Israeli ports of Eilat and Ashdod to complement the Suez Canal.

Trump, the international billionaire businessman, must know that the days of dollar hegemony will come to an end sooner or later. He is rattling the Iranian cage, while telling the Arabs to pay for their own security.

Moving the US Embassy to Jerusalem may be shock therapy for the intractable Israel-Arab problem that a soft-touch approach has not been able to resolve. Hamas and Fatah are engaged in a civil war, making the people of Gaza hostage and giving the hardliners the upper hand in Israeli politics. The conflict is religious in nature and can only be solved by “religious means.”

The American futurist Larry Taub, who in the 1970s predicted the reunification of Korea and the religious revolution in Iran, also predicted that Israel would be a founding member of what he called a “Pan-Semitic Federation,” with Jerusalem as its symbolic religious-spiritual capital.

Trump’s undiplomatic no-holds-barred approach to Iran and the Jerusalem issue may be an attempt to move the dial forever and lay the groundwork for an overall solution of the conflict in the Middle East.  That may be giving Trump too much credit, but the smart money in this high-stakes power game would have to be on a deal being reached to modify the existing agreement with Iran.

Despite what we read in the media, only Trump knows what his real intentions are. A meeting of minds between the mullahs and Trump may seem improbable today, but regime change in Tehran or blowing up the Atlantic Alliance are inconceivable.

Jan Krikke

Jan Krikke is a former Japan correspondent for various media, former managing editor of Asia 2000 in Hong Kong, and author of Leibniz, Einstein, and China (2021).

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