Decades ago I had heard, “Thugs have a common interest ‘make
money’. They cooperate, facilitate and protect each other, though they may appear
to the world, the deadliest enemies”. This was confirmed after the US President;
Donald Trump announced, “We are ready to talk to Iran without any preconditions”.
I was curious about this change of heart and probed a little
deeper. I instantly found a reason, “trillions of US dollars invested in financial
derivatives”. The Bank for International Settlements said last year that the
“notional amount outstanding for derivatives contracts” was US$542
trillion, although the gross market value was put at just US$12.7 trillion.
Others suggested it was US$1.2 quadrillion or more. A person with ordinary wit
may ask, what derivatives have got to do with US-Iran animosity?
The reply is simple, bulk of the derivatives are based on
energy products, mainly crude oil. Therefore, it all has to do with the Strait
of Hormuz. Blocking the Strait could cut off oil and gas from Iraq, Kuwait,
Bahrain, Qatar and Iran – 20% of the world’s oil. There has been some debate
on whether this could occur – whether the US Fifth Fleet, which is
stationed nearby, could stop Tehran doing this and if Iran, which has anti-ship
missiles on its territory along the northern border of the Persian Gulf, would
go that far.
According to those privy to information, a series of studies
hit President Trump’s desk and caused panic in Washington. These showed that in
the case of the Strait of Hormuz being shut down, whatever the reason, Iran has
the power to hammer the world financial system, by causing global trade in
derivatives to be blown apart. The information was duly circulated to France,
Britain and Germany, the EU-3 members of the Iran nuclear deal (or Joint
Comprehensive Plan of Action), also caused a panic.
Oil derivative specialists know well that if the flow of
energy in the Gulf is blocked it could lead to the price of oil reaching US$200
a barrel, or much higher over an extended period. Crashing the derivatives
market would create an unprecedented global depression. Trump’s former Goldman
Sachs Treasury Secretary Steve Mnuchin knows it better than any other person.
And Trump himself seems to have given the game away. He’s
now on the record essentially saying that Iran has no strategic value to the
US. He really wants a face-saving way to get out of the problem his advisers
Bolton and Pompeo got him into. Washington now needs a face-saving, Iran
is not asking for meetings, but it is the sole surviving super power, United
States.
They also link it to non-scheduled stop of US Secretary of
State Mike Pompeo in Switzerland, just because he’s a “big cheese and chocolate
fan”, in his own words. Yet any well-informed also say, “He badly needed to ease
the fears of the trans-Atlantic elites, apart from his behind-closed-doors
meetings with the Swiss, who are representing Iran in communications with
Washington. After weeks of ominous threats to Iran, the US said “no
preconditions” would be set on talks with Tehran, and this was issued from
Swiss soil.
