By Rajan Philips –

Rajan Philips

Now in its third week and still no end sight, Trump’s Iran’s war is showing a tedious pattern of tragic-comic episodes. The human tragedy continues under relentless aerial assaults in Iran and under both aerial and ground assaults in Lebanon. Israel, now in a hurry to destroy as much it can of its enemy assets before Trump lapses into war withdrawals, is picking its spots at will; three of its latest scalps could not have come at higher echelons of the Iranian regime. Within two days, Israeli has targeted and killed Ali Larijani, the powerful, versatile and experienced secretary of the Supreme National Security Council; Gholamreza Soleimani, head of the Basij paramilitary force; and Iran’s Intelligence Minister Esmail Khatib.

Yet there is no indication if the continuing hollowing out of Iran’s decision making apparatus will produce the intended effect of encouraging the people of Iran to come out on the streets and topple the regime. People cannot pour on to the streets, even if they want to, until the American and Israeli bombing stops. That may not happen till the US military finishes its list of asset targets in Iran and Israel finishes off the list of Iranian leaders who are tagged on by Mossad’s network of Iranian moles. They are so widespread that last year after setting up a special task force to expose the internal informants, the National Security Council found out that the person whom they had selected to lead the task force was himself a spy! Disaffected citizens are also becoming informal informants.

The comical side of the war is provided by President Trump in the daily press court that he holds at the White House, taking full advantage of the presidential system in which the chief officer is not required to present himself to and take questions from the country’s elected lawmakers. There has never been and there likely will never be  another presidential spectacle like Donald J. Trump. It is shocking although not surprising to find out daily as to how much he doesn’t know about the war that he started or where it is heading. The ghost of Donald Rumsfeld, the Defence Secretary of the Iraq war and the coiner of the ‘unknown unknowns’ phrase, would tell you that Trump is the epitome of one of the known knowns, the predictable bully. For all his misjudgements and bad calls over the Iraq war 23 years ago, Rumsfeld now looks like a giant of a professional in comparison to Pete Hegseth, the bigmouthed charlatan who parades as Donald Trump’s Secretary of War.     

Asymmetric Advantage

For its part, Iran appears to be reaping the worst and the best of an asymmetric warfare. Iran is getting pummelled in all the metrics of conventional warfare and there should be nothing surprising about it. It is rather silly for the American and Israeli military spokespeople to crow about their aerial strikes and their successes. On the other hand, the US and Israeli forces combined have not been able to answer Iran’s ability to establish areas of war where Iran sets the term and scores at its choosing. Quite astonishingly, President Trump has said that Iran was not supposed to attack its neighbours and no one apparently told him that such attacks might happen.

“Nobody. Nobody. No, no, no. The greatest experts—nobody thought they were going to hit,“ Trump responded to a leading question by a Fox News reporter whether the President was “surprised nobody briefed you ahead of time” about the likelihood of Iranian retaliation against America’s Gulf allies. Prevarication is second nature to President Trump and it is the same explanation for the Administration’s strategic gaffe over the Strait of Hormuz.

Iran has imposed a blockade over the narrow waterway between the Persian Gulf and the Gulf of Oman that provides vital passage for about 20% of the world’s oil shipments. Again, no one told him that Iran might do this. That is also because Trump has gotten rid of all the people in government capable of providing advice and is surrounding himself with sidekicks who will not challenge him on his misrepresentation of facts. As well, by keeping Congress out of the loop the President and the Administration tossed away the opportunity to deliberate before deciding to go to war.

True to form, Trump trots out another bizarre argument that the US does not have any shipment through the Strait of Hormuz and, therefore, it is up to countries, including China, that depend on the Hormuz route to come to his party in the Persian Gulf. The US would be there to help them out and he went on to invite his erstwhile allies and fellow NATO members to join the US and help the world keep the Strait of Hormuz open for its oil shipments.

Trump’s calls have been all but spurned. No US president has suffered such a rebuff. Other presidents did their consultations with allies before starting a war, not after. “This war started without any consultations,” said Germany’s Defence Minister Boris Pistorius. He then  queried incredulously: “What does Donald Trump expect from a handful of European frigates in the Strait of Hormuz that the mighty US Navy cannot manage alone?” I The UN and NATO countries are reportedly considering new initiatives to ensure safe passage through the Strait, but details are unclear. ran has let it be known that it will block passage only to its enemies and allow others to cross the strait by arrangement. Chinese, Indian and Pakistani ships have been allowed to navigate through the strait.

While the official American endgame is unclear, scholars and academics have started weighing in and calling Trump’s misadventure for what it is. Three such contributions this week have caught the media’s attention. Muhanad Seloom writing online in Al Jazeera, has presented an unsolicited yet by far the strongest case for Trump, arguing that “the US-Israeli strategy is working” because Trump’s war against Iran is accomplishing a “systematic, phased degradation of a threat that previous administrations allowed to grow for four decades.” A former State Department staffer and now a Doha and Exeter academic, Seloom seems overly sanguine about the impending demise of the Iranian regime and underplays the political implications of the war’s externalities and unintended consequences for the Trump presidency in America.

The comprehensive degradation of virtually all of Iran’s hard assets is not in question. What is in question is whether the asset degradation is translating into a regime change. The additional questions are whether the obvious success in asset degradation is enough to save President Trumps political bacon in the midterm elections in November, or will it stop Iran from controlling the Strait of Hormuz and impacting the global oil flows. Firm negative answers to these questions have been provided by two American scholars. Nate Swanson, also a former State Department staffer turned academic researcher and who was also a member of Trump’s recent negotiating team with Iran, has additionally highlighted the martyrdom significance of the killing of Ayatollah Khamenei both within Iran and in the entire Shia crescent extending from Lebanon to Karachi.

Robert Pape, University of Chicago Historian, who has studied and modelled Iranian scenarios to advise past US Administrations, has compared President Trump’s situation in Iran to President Johnson’s quagmire in Vietnam in 1968. Pape’s thesis is that asymmetric conflicts inherently keep escalating and there is no winning way out for a superpower over a lesser power. The main  difference between Vietnam and Iran is that Vietnam did not trigger global oil and economic crises. Iran has triggered an oil crisis and the IMF is warning to expect higher inflation and lower growth as a result of the war. “Think of the unthinkable and prepare for it,” is the advice given to world’s policy makers by IMF Managing Director Kristalina Georgieva to a symposium in Japan, earlier this month.

Oil Crisis and Sri Lanka

According to Historians, denying or disrupting oil flows has been an effective tool in modern warfare. The oft cited examples before the 1973 oil embargo are the British oil blockade of Germany in World War 1, and the stopping of Germans accessing the Caucasus oilfields by the Soviet Union’s Red Army in World War II. The irony of the current crisis is that until now the world was getting to be more energy efficient and less oil dependent as a result of the technological, socioeconomic and behavioural changes that were unleashed by the 1973 oil embargo. Post Cold War globalization streamlined global oil flows even as the turn towards cheaper and renewable energy sources increased the use of alternative energy sources.

What was becoming a global energy complacency, according to Jason Bordoff and Meghan O’Sullivan, American academics and National Security advisers to former Presidents Obama and Bush, suffered its first disruptive shock with the Russian invasion of Ukraine in February 2022. Market reaction was immediate with crude oil prices increasing by over 50% and exceeding $135 per barrel. Russia cut its natural gas supply to Europe by half leaving western Europe the worst affected region by the crisis. In contrast, Asia is the worst affected continent by the current crisis although market reaction was not immediate apparently because the US was deemed a far more reliable actor than Russia. It is a different story now.

In the unfolding uncertainty, the only certainty is that Sri Lanka’s options are limited. The challenges facing the country and the government involve both politics and economics. For the country, even the political options are limited – perhaps as limited as the economic options available to the government in the short term. The incessant political critics of the government start with extrapolating Aragalaya and end with anticipating another government collapse like the Gotabaya Rajapaksa government. But anyone looking for political alternatives to the NPP government should look at the press photograph showing a recent news conference of opposition party leaders announcing the formation of “a common opposition platform to resist the government’s anti-democratic actions.” Missing an action and absconding per usual, like Julia Roberts in Runway Bride, is once again Sajith Premadasa, the accredited Leader of the Opposition.

Talk about democratic priorities when the economic engine and the energy generators will soon have no oil or diesel to run on. Among the assembled, there is no one equipped enough to head a government ministry with the possible exception of Champika Ranawaka. And it is rich to talk about constitutional dictatorship for a group that was associated with the extended one-party government from 1977 to 1994, and a second group that tried to perpetuate a one-family government between 2005 and 2022. It is virtually imperative to argue that for the sake of the country the NPP government must successfully navigate through the impending crisis. Whether the government will be able to live up to what is now a necessity, not just expectation, we will soon find out.   

There is no minimizing or underestimating the magnitude of the crisis. Crude Oil and petroleum products account for nearly 20% of the total import bill. Rising oil prices will impact the balance of payment and forex reserves, and could potentially siphon off the currently accumulated $7+ billion forex balance. Rupee devaluation and inflation are likely, but not necessarily to the absurd levels reached during the ultimate Rajapaksa regime. Economic growth will slow and the $1.5 to $2.0 billion FDI targets may not materialize. The current arrangement for debt repayment may have to be revisited, even as relief measures will need to be undertaken to soften the rising price effects throughout the economy and among the less privileged sections of society. Restricting consumption has already been started and the country may have to brace for further restrictions and even power cuts.

In the short term, renegotiating the current EFF (Extended Fund Facility) terms with the IMF will be unavoidable. Equally important are long term measures. The low storage capacity for oil and petroleum has made price fluctuations inevitable. The government has announced storage capacity expansion in Kolonnawa and fast tracking the construction of a jet-fuel pipeline from Muthurajawela to Katunayake – to facilitate the Bandaranaike International Airport (BIA) becoming a regional aviation hub. The current shipping problems present a new opportunity for the utilization of the expanded terminal facilities to increase transhipment operations at the Colombo harbour.

At long last, after 78 years, there is some action to upgrade the storied 99 oil tanks in Trincomalee. But the bulk of the upgrading depends on the trilateral agreement between Sri Lanka, India and the United Arab Emirates to create an energy hub in Trincomalee. This might run into delays because of the current situation involving the UAE. Already delayed is the construction of the $3.7b Sinopec Oil refinery in Hambantota, the MOU for which was signed more than an year ago. The NPP government has been adept in keeping good relationships with both India and China. Now is the time to try to expedite the deliverables on their commitments.

Another not so long term necessity is to expand electricity generation through renewable sources and minimize its dependence on thermal generation based on imported oil, not to mention coal. Thermal power contributes to just under 50% of energy output at about 80% of total generation costs. In contrast, just over 50% of the output is generated by renewable sources, including hydro, at 20% of the total cost.

The contribution of hydropower is weather dependent and its uncertainty has long been the pretext for persisting with thermal power and not encouraging the development  of solar and wind energy sources. There is no more urgent time to stop this persistence than now in light of the oil crisis. The government must cut through the cobwebs of vested thermal power interests and make clean energy a central part of its Clean Sri Lanka initiative. China is in the forefront of renewable energy technology and expansion and has timed the unveiling of its new five year renewable energy expansion plan to coincide with the current oil crisis. Many countries are emulating China and Sri Lanka would do well to join them.