00:00And for more on the escalating sanctions and what they could mean for the global economy, I'm joined by Trey
00:05de Parsi, co-founder and executive vice president of the Quincy Institute.
00:11Great to see you. So the Treasury Secretary details Economic D-Day on Monday but stopped short of the secondary
00:17sanctions that Besant warns could blow up the global financial system.
00:22So what would those secondary sanctions look like?
00:26Well, if he wants to blow up the global economy, then obviously those sanctions will be targeting China.
00:33But I find that very unlikely. It is very much thanks to China that oil prices are not above $200.
00:39And it's because the Chinese dramatically reduced their demand for oil, the demand for Persian Gulf oil, and as a
00:46result, managed to keep oil prices roughly below $100.
00:51And the Chinese didn't do this to help the United States or to hurt Iran.
00:55They did it so because they wanted to save the global economy from a major recession that would be devastating
01:00for all.
01:01So if the U.S. at this point then starts to challenging China, targeting its financial transactions with Iran,
01:09then I think it would essentially be asking for a big fight with China at a point that it absolutely
01:13cannot afford it.
01:14So I find it very unlikely. And as a result, these sanctions do not appear to amount to much in
01:20terms of changing the picture.
01:21Will they add pressure on Iran? Yes. Will that change the picture? Undoubtedly.
01:26But how serious could the economic fallout be for those who have business ties with Iran, apart from China?
01:34Well, for those countries that have little way of resisting the United States, it could be quite problematic,
01:40not because the trade necessarily is so massive, but because the margins of those countries are so limited
01:47and that they are somewhat dependent on Iran at the same time.
01:50So some of the neighboring countries that are trading with Iran in non-dollar trade, Iraq, for instance,
01:57will probably be quite squeezed. And Iraq simply doesn't have any margins to be able to resist any additional such
02:04pressure.
02:05So the U.S. is really, again, taking measures that puts most of the cost of these measures on the
02:14regional states,
02:15most of which did not want to see this war in the first place.
02:18And Iran said it is a fully prepared retaliate. So how do you expect Iran to retaliate?
02:26What measures do you think Iran would roll out?
02:28It very much depends on how biding these sanctions or these measures end up being.
02:34If they're not particularly biding on the Iranians, then it may take some very limited steps.
02:41But if it actually ends up becoming quite problematic for the Iranians,
02:44then we have seen a very clear pattern in the past in which the Iranians will retaliate back in 2019
02:51when they were faced with maximum pressure sanctions.
02:54Eventually they started attacking tankers in the Persian Gulf and eventually also struck at Saudi oil fields in order to
03:01raise the cost of that policy for the United States.
03:03Now you have a leadership in Iran that is much more willing to take risks, far less restrained than it
03:10was a couple of years ago.
03:12And as a result, it seems quite clear that economic targets inside of the region itself,
03:18potentially all the way in the Red Sea, will likely be how the Iranians respond if these sanctions end up
03:23becoming very biding.
03:25Yeah, as you said, compared to 2015, the new leaders are more than willing to take risks.
03:30So how do you view this conflict in the long run?
03:33What, if any, are the paths to really de-escalation?
03:38Well, both sides simply need to go back to the MOU, hopefully without any side really trying to renegotiate it.
03:45It will need to be some clarifications because Article 5 in terms of how the strait is going to be
03:50managed was not entirely clear.
03:52I suspect that if the issue over the strait is resolved, the conflict will immediately then shift towards Lebanon
03:59because that's another area in which the two sides sign something and it's not being implemented.
04:05And in fact, what the U.S. did in terms of signing this other agreement between Lebanon and Israel does
04:11contradict the MOU.
04:12And as a result, I think that one will have to be solved as well before they really can get
04:17to the core of the issue,
04:19which is the nuclear issue and sanctions relief.
04:21Well, thank you very much for your insight.
04:23That is the Traitor Parsi co-founder and executive vice president of the Quincy Institute.
04:29Thank you so much.
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