Long Term Outlook and Conclusion

Hi everybody Thank you for joining us. It's another episode of Asskalvive Anything, and this time, Rich Goldberg is with us from the Foundation for Defense of Democracies We're going to talk about Iran about the possible deal that the president might be reaching. what's in it, what's not in it. There's obviously a whirlwind of rumors and concern and anxiety and support and opposition and whether Iran's sheer willingness to suffer People who follow this podcast will remember episode ninety three, where We took a little bit of a deep dive into the Mukawama ideology that gives this regime. a kind of martyrdom complex, a capacity to suffer massively, which is a huge advantage in any battlefield and in any negotiation Whether that ability will actually leave them in the end with control of Hormz when the dust settles. Rich Goldberg is a senior advisor at the Foundation for Defensive Democracies. He previously served as senior counselor for the White House National Energy Dominance Council Senior advisor to the Secretary the Interior, Director for countering Iranian weapons of mass destruction For the White House National Security Council As Deputy Chief of Staff, senior Appropriations associate and foreign pololicy addviser to former U. S. Senator Mark Kirk of Illinois. He served as Chief of staff and headad of Lgislative Affairs to former Governor Bruce Ronner of also of Illinois and as a Navy reserve intelligence officer with experience on a joint staff and in Afghanistan And Rich was I mean, this is awesome. All the other stuff's awesome, but this is truly awesome. He was sanctioned by Iran in August of twenty twenty. You know people in our line of work, we fantasize about the day we become Cool and awesome enough to be sanctioned by Iran. Rich got there. I'm going to be asking him how I get on that list U Before I do that, I want to tell you we have a sponsor for this episode, Israel beccame. The startup nation by turning talent into strength by turning ideas into industries For more than a century, the Technon has trained the engineers, scientists, and entrepreneurs who transformed Israel into the startup nation and delivered breakthroughs that changed the world Now teechnon scientists are advancing the next wave of innovation power Israel's next chapter Israel, engineered by the Tefnon Join us. visit ATs. org slash Thank you so much L Tnon for that sponsorship for dedicating this episode to Our entrepreneurs are high tech ecosystem. These people are amazing. They continue to grow even in times of strife and war and concern and fear I would also like to invite everyone to join our Patreon and subscribe to the sububstack that's connected to our podcast. If you're interested in asking the questions that guide the topics we talk about That's where you ask those questions. You also get to take part in monthly live streams where I answer your questions live. Join us at wwW. patreon. com slash ask Hib anything or Kabib Gur. sostack Com those links are in the show notes Rich, how are you I'm great, thank you for having me Thank you so much for joining me. Many people have asked about Iran. I've been following you, reading you, learning from you So couldn't think of anyone better We have one overarching enormous question and we're going to follow through sort of an arc of questions to get there The big question is, does Trump have Or does the American political system have political stamina to break Iran. Who is going to blink first, but we're going to do it systematically. This isn't coming for Trump criticizing, you know, this isn't coming for the left or the right So I want to do this systematically and just start out with a baseline. basasically what's the military situation? Where do things stand? What's possible to achieve militarily right now as far as you understand it in the Strait of Hormuz and visa V Iran So I think that's exactly the place to start. And I caution people with comparisons of where we are to past negotiations or what a deal could look like compared to past deals. you do have to start with that context of What is the military situation today? What's the battle damage assessment from Operation Epic Fury or Operation Roaring Lion top of what was accomplished last year and then sort of look at the compounding factors of the blockade. and then you see I think a clear picture of what is on the table, what is not on the table So from my perspective, I mean, the counterfactual of a world in which Iran reaches this force field of production capacity of ballistic missiles And the tens upon tens of thousands being churned out at such a high rate they are able to create a defensive posture, a deterrence posture from any vulnerability. to then give cover to reconstituting and racing forward with the nuclear threshold question still being able to hold hostages a straight of Hormuz at any time, obviously with their short range capabilities, but now deterring the United States of America and anybody else who would who would think to try to do something Given just the sheer volume of missiles, conventional missiles that they have now giving cover to their race to the nuclear threshold. All of those sort of counterfactual ideas of narratives of what could have happened are no longer possible today and probably not for several years at this point. Why is that? And you combine the battle damage assessment from last year's operations and now This year's operations you have a nuclear program that's very much in tatteratters. You know, if we came into twenty twenty five with the Iranians on the one yard line and he was an American football metaphor crossing the nuclear threshold U they haven't just been pushed back to their side of the field. They're not even on the field at this point they have no uniforms. The coach and all the people in charge of the team have been killed. The stadium was destroyed. Uh and u and so when you look at the sort of supply chain of the nuclear program Today, they can't enrich uranium. It's not clear they could take raw uranium and make it into enriched uranium. And so What is left of their nuclear program right now? Well, there's a lot of rubble of different parts of it There is trapped. technology material in some of these places that have rubble. That's what's a lot in the news right now, especially the enriched uranium that they still have and We sort of know what they had before Operation Midnight Hammer last year from when the International Atomic Energy Agency had Las been in and seen stockpiles and takaking measurements We only have leaks of what may be from intelligence sources of what we think might still be down in the tunnels of Isfahan or elsewhere of all levels of purity of enriched uranium. But you know, there's no centrifuge manufacturing that has at least at this point restarted that we're aware of There's no enrichment itself that's possible at any site that we're aware of They have sites U For instance, Pickaxe Mountain. This is near the old Natons facility, deep underground farther underground more hardened than Florida was has not been touched last year, was not touched this year. brings into mind the question of whether we think we could degrade that site from the air or sea likely means we don't think we can this is a site that was clearly intended to be They breakthrough, their're crossing the threshold site impenetrable for military strike to house enrichment and go to weapons grade uranium at some point. That still stands and that's a concern The enriched uranium right if they don't have enrichment capabilities today, they can't go from sixty percent high en rich uranium or twenty percent higher en rich uranium or five percent low enrich uranium up to ninety percent today. doesnn't mean they couldn't in the future But that's not a threat today. And then on the missile program As far as we understand today, while I'm sure they're trying to look at reconstituting and expediting certain things and what they can fix Doesn't look like they can make a ballistic missile right now Um So, you know, the rate of production in the hundreds in the thousands per week of where they were where they were heading is devastated back to square one of having to rebuild the actual manufacturing base for their missiles, which is which is not so straightforward drone manufacturing a little more straightforward. That obviously got hit hard in the conflict, but They can work on rebuilding that rather quickly. It's a little more basic technology On the missile side, they're going to have to spend a lot of time and effort to rebuild their industrial base for the missile program and upstream A lot of the industrial sites that feed into the missile program which we'll talk about in compounding with the blockade have also been devastated. So the steel industry and the petrochemical industry in other places we're hit we're hit pretty hard. So You know, as in milit goo ahead. Can I just interrupt this was all great news and great news makes me very suspicious. And because the enemy surprises, it's in the nature of the enemy. In other words, you will devastate and devastate and devastating. the enemy finds the way around. That's every war, every conflict. Sun su wrote about that and warned about that. That's not That's not news What could we be missing? In the specific case of Iran, we missed CM for a decade and a half or whatever it was. I mean entntire facilities went unnoticed. Now, we know the scale of Israeli intelligence penetration of Iran. We've seen some of the capabilities Could we be missing a very great deal that'll surprise us on the battlefield? Or how confident is that What you're saying that assessment, that's what we're hearing, That's what's in the, you know studies that have been done. Yeah Should we be worried that maybe that's not compleplete Or how worri We should always be worried in a regime like Iran, one hundred percent As you say, we didn't know about You know, Natons until we knew about Netons. We didn't know about Fordo until we knew about Fordo So when you look at the clandestine side of their nuclear weapons program through a very secretive IRGC controlled organization called SPND This is where they do the actual nuclear weapons work and where we had seen leaks going back to the Biden administration that Israeli intelligence was assessing They were starting to move to actual weaponization work once again and doing computer modeling on a weapon in certain places. This is the range of sites that we started discovering from the nuclear archive that was brought out by the Mossad in twenty eighteen with a whole bunch of different places that nobody'd ever heard of There are still mysteries in Iran that we may or may not be aware of. I'll give you an example late twenty eighteen, you'll recall Prime Minister Netanyahu revealed through satellite imagery, a site. called Torkuzabad. that was some sort of a warehouse uh for u the parts of the nuclear weapons program of old, the Amad plan that had continued on in certain ways. And suddenly when the Iranians had realized this site was revealed, Cmerercial satellite imagery started seeing Things happening, trucks moving containers being moved out of the facility, ground being turned up and down to try to conceal for inspectors. Inspectors ended up going to that facility In twenty nineteen, twenty twenty and collecting environmental samples that tested positive for uranium, they went to a few others as well that the nuclear archive led them to And, um We don't know where those containers went We don't know what was in those containers We know that the site tested positive, stuff got moved and it's somewhere What was it? Was it nothing? Is it just part of their cover upp of what they did in the past? Is it connected to something that's still going These are actually unanswered questions. So You're asking a very important question of what we know and what you can therefore assess of capability particularly on their Long range projection of force which is different than you know, a Candestk dyinuclear program or Maybe a Candestine advanceced missile program. Um, when we you think about hypersonics and other other things that they work on. Uh We can assess that They're in their sort of upstream Midstream of their capability has been devastated. And that's hugely costly. That's a setback of many, many, many years of investment And that's real Do doesnn't mean that they don't have missiles today. It doesn't mean they don't have drones today. doesnes't mean that they don't potentially have enriched uranium buried somewhere their sort of total picture of a forest and forest projection and deterrence of the United States I would say also of Israel is largely diminished We did see a lot of mysterious hits by the way, during Operation Epic Fury on the Israeli side and Rowing Lion There are universities that got hit with much, you know, disinformation, outrage and you know, from the Iranian side and Al Jazeera and all that What do you think they were hitting there? I mean, to me just knowing what the universities were and what the sanctions list looked like for those universities tied to SP and D. The Israelis likely had some sort of intelligence on labs and testing and where that computer modeling was going on and things of that nature. And hopefully a lot of that work was destroyed. The computers and the labs, etcetera Do they get everything you know, do they know everything? We don't know It's a good point. And so The one thing I'll flag is and we're sort of skipping ahead a little, but it's an early preview There is one fundamental error in all negotiations with this regime over its nuclear program focususing in on enriched uranium, focusing on this site or that site And that is your basic point of Disclosure and completeness and verification of disclosure. It was skipped in the JCPOA It's being skipped in conversation now If you don't mandate a complete declaration of all past and current activities to then go verify And you can verify it. The IAA can actually help verify because there's changes of custody. There's Samples that were taken here, there's things here and if the answers don't add up, then we know you're lying Once you were to get that, you would know they have abandoned the nuclear weapons ambition The fact that they won't give that Always, you know, keep in your mind that you know they are going to try again. however they can Okay, so u We work from the assumption that they want to build nukes. Everything that for the rest of this conversation flows from that assumption because look The anti Israel analysts are saying the same thing. They're just blaming Israel. Now that you' bombed them, of course, they're going to a nuke as opposed to up until now when they were just totally hunky doory not having that, you know, building that random program for I don't know, what medical research. Um we operate from that assumption. and we know that their conventional military and air defenses are deeply degraded, Trump, you know praised The U.S. Navy for taking out the Iranian Navy, essentially wiping it out except for small boats But we're no longer in that era of war. We are now in a new era of you know missiles, drone swarms that threaten hormuz. that allow Iran to extract payments from ships that pass through or to prevent ships from passing through and drive up the gas prices know in the run up to a U.S election. if the U.S can't neutralize that asymmetric threat from the air. If the U.S. can't destroy launchers, etcetera. because they're hidden in that very rugged coastline that Iran has and because they're incredibly easy to produce Can this end in anything other than a stalemate? I'm asking militarily, I'm not talking about negotiations. We'll get to the negotiations Is there right now a stalemate in the Strait of Hormmz? or can the U.S Navy open it up if Trump gives the decision? Can this threat be neutralized was capability and will capability wise, I remain pretty confident that we can open the straight Um That does not mean it is without risk That does not flesh that out. what would it take? Yeah So Russia, Ukraine, this is the thing in the war that gives Ukraine such a major advantage. The Houthis shutting down the Saudis. This was what gave them that advantage. These drones, these missiles Hezbollah in the North at this moment. This is their great advantage, their only advantage, they have no other strategy We don't seem to have a solution to these threats. Is that not true? Can this Is this something that do We do have a solution. We've demonstrated a solution. Let me back up one second. I'm going to come right back into it because I think it's a logical setup. I started with all the good news There is a different side of this and that is Why did we end combat operations? Why did we go into a ceasefire U what exactly is going on here When we say we achieved eighty five percent of our target bank or ninety percent or things that you know, you've heard from senior administration officials or the military that We didn't continue just pounding away There was a point, I think, in my own just assessment of the open source analysis and talking to people that we clearly assessed diminishing returns of a military operation conducted only by air and sea That which is above ground and vulnerable is laid waste pretty easily That which is below ground in a shallow way can also be severely degraded, if not destroyed However The Iraniis have been preparing for decades R? They are at war with the United States And they have been building underground facilities and masse for their missiles not just for their nuclear program, for their own command and control deep underground Imagine Fordo or Pickaxe Mountain as a missile city, as they call it, or as a command and control bunker And it is highly possible that we overestimated our ability to destroy underground facilities We being both the U.S and Israel. And at some point, when you see the open source of B two bomber runs over and over again And then you combine that with the reports of missile cities just not being destroyed, Iran retaining You know, half its missiles still in storage to me means we tried We hit things over and over again. The Israelis likely hit things over and over again. We didn't penetrate And so in those certain circumstances, we went for degrading the immediate capability to wage war by denying their ability to move missiles out of these underground facilities, maybe the commommand of control not being able to move around, disruption of military capability. That's why you now see reports of them digging out of these facilities now able to access more missiles. We didn't destroy the sites, the missile cities 're not blown up. So at that point, you need to say, okay wasting away all these munitions. in furtherance of a target that' is not being destroyed after reattacks is not a good strategy The Iranians know that They could just sit in their bunkers and let us keep bombing all day. And if we can't penetrate, we can't penetrate without a ground operation, which there's no political will for And so u You then have to say, okay, what's next Let's transition to something else What's next could be an know all out of attack on their critical infrastructure energy sites, refineries, oil power plants, the bridges, all the things that Trump threatened before the ceasefire that I do think the regime does fear I do think they live in fear of that escalation However, they have also proven their ability to respond with precision. On demand, in any sort of proportional way across the Gulf. So if you're in Saudi Arabia, if you're in the UAE, if you're in Kuwait, as you just saw with the attack on the airport Um if you're in Qatar or anywhere They can just go after the energy infrastructure hard, Not that they haven't already. but now in a much more focused way. They can go after power plants, they can go after refineries. They can go after water desalination plants and forced the Saudis to evacuate Riyadh with no water These are therefore legitimate concerns that the president has to take into account of what escalation He's willing to take Now the Iranians then, to your point see O unwillingness to escalate in that way out of fear of their willingness to potentially to escalate. correspondingly And so we have this bizarre situation where on one hand, the Iranian regime is afraid of this escalation and doesn't want to see the bombs continue to drop because they know where those bombs would go if the bombs restart and it's not to sites we can't penetrate. It'll be to that infrastructure And at the same time stay below what they believe is President Trump's pain threshold is his escalation threshold little taps here and there. not trying to precipitate a major escalation but trying to continue to pressure and trying to show that they're in the fight still because they have assessed that the president doesn't want to go back to major military operations either. So what are you left with there Okay You're either in stalemate As you say and have to end up in a situation where You trade The Strait of Hormz for the blockade essentially. Yeah. You have to examine one last military contingency and that is a military effort Just focused on the Strait of Hormuz and defending tankers and other commercial cargo coming in and out Persian Gulf So this now comes down to the question of Do we have the military capability? to reopen the strait. Forget about sites inside of Iran except those that threaten The Strait of Hormuz or the Persian Gulf and tanker traffic But I'm talking about like, you know, major command centers and and the missile cities and You may have to think about those if that's where the targeting comes in from. If you were sayate a central command to Admiral Cooper I want Operation Epic passage notot epic theurory What does that look like How do we start that as a defensive operation in the name of freedom of navigation And if we see an attack on commercial vessels or the US Navy, we respond. and we respond intelligently against all targets that you think need to be neutralized and an ongoing way provide Dynamic targeting air Anasy to defend commercial navigation, to defend our own forces and to inflict Maximum damage on however the Iranians are coordinating and attacking the flow of commerce We saw this for about thirty six hours what I just described And it was called project freedom and The Iranians fired a lot of missiles and a lot of drones and we had a lot of airplanes in the sky. We had a lot of naval destroyers focus on the threat And we destroyed every threat that came at both the US Navy and at commercial tankers and we got a few tankers through And then we stopped inexplicably. you know, on a surface with a lot of different reasons behind the scenes being offered. mostost notable that the Saudis supposedly denied airspace rights They got spooked that the Iranians would escalate in response to this in a disproportionate way and go after their water desalination and their oil infrastructure and refineries, etceta. And they felt that was too big of a risk. and so they pulled the plug Maybe. Um, That's disappointing because if you keep the blockade and we should talk about what the blockade means and the pressure that builds on that regime from the blockade which is not nothing. it's real. That leverage is real and building every day against what we also know to be their leverage of the Strait of Hormz, building If you keep that blockade, and find a way to defeat their threat to commercial navigation long enough to make them understand that they've lost their options and actually degrade their attack capability on a rate of Hormuz along the way so that they have fewer options That's checkmate if you can achieve that. If you don't think you can achieve that The military says Mr. President, we could lose a destroyer You know, we got we got really lucky in thirty six hours. We defeated all threats, but We had a couple of close calls I don't think the American people can stand seeing a couple of destroyers hit Pretty bad. We shouldn't do this. I have no indication that that ever happened. I have no indication that discussion has occurred Everybody talks about the Saudis pulling overflight, but if that happened, Or if the president didn't have the will to execute the capability, thenen you are correct You are in a stalemate and you are in a battle of timelines Our timeline in the global economy stocks coming down in the in the oil sector around the globe starting to get to concerning levels and what can be done to mitigate that behind the scenes and we could talk about that because it's there there is a lot that's going on to mitigate And there are things that the market might do naturally. to take away this leverage and there are things that will happen certainly over the next year or two Eliminate this leverage, in my opinion. This is a diminishing asset for the regime, the Strait of Hormz Pled the card They won't have it very long The Gulf will will adjust, the world market will adjust, infrastructure will adjust And on the other side is the regime And their pain tolerance to your point earlier, but not just their pain tolerance. fine, they have pain tolerance But their assessment of the domestic situation, their hold on power, theirir handle on the people the frustration within their ranks. People not getting paid, peopleople not filling up on gasoline people who can't get their money out of banks because the banks don't have liquidity That is a real thing happening right now And and I'll pause and and turn it back to you with this one last thought is that in the absence of bombs dropping. in the absence of major military operations in the absence of them being able to bait the president into escalation in different places. the price of oil remains with a downward pressure not an upward pressure, giving the presresident more flexibility And the internal dynamic, as I understand, from multiple sources, on the Iranian side is one of maximum disagreement and confusion and tootal loss of what to do next I know that sounds weird based on the propaganda and the cognitive warfare that they display every day But from people who are looking at this very closely, bothoth the United States and in Israel, What I understand is that this sort of Sphinx like approach of just These are the red lines This is the deal on the table We haven't restarted military reions. We could hit your infrastructure. We haven't You want to do a deal, blockade is getting worse for you is causing a lot of infighting of what to do next And so the bottom line is the president may say that's actually the best option for now I do have more time on the global oil market more than Speculators would say I don't think that they have as much time and I see their discussions. I see their confusion. I see their disagreements. It's building And every time we get a message back They're starting to discuss more of my terms Maybe this is working for me This is a point that's very important that I am very confused by. On the one hand The Iranian position seems very strong. They need very little to shut down Hormuz U The only leverage they have is stopping the oil. And when you and were you to push through the kind of military operation that would end that capability U they threatened to burn everybody down around them. They threatened to, you know, the immaratatesis and the Kuwaitis and the Saudis And that's it. That's all by the way, this regime has only ever destroyed inside Iran, only ever gutted the Iranian economy, only ever prevented, you know, the IRGC owns half of the Iranian GDP basically, not basically literally And so this regime is basically functions like a Stalinist regime and the country is utterly impoverished despite being one of the energy wealthiest countries on Earth And all of that is true, but that's also you know when it comes to pain threshold. That suggests a lot of huge advantages. For example, this is a regime willing to murder hundreds of thousands, maybe millions of its own people to stay in power. because it is this kind of regime with this kind of ideology. That's a huge advantage. This is a regime willing to burn the world to the ground because it is a great divine revolution in history, and so it's legitimate to burn everything to the ground. This is a regime that can only ever threaten to destroy. It has never built anything. It doesn't have a constructive bone in its body. It's literally achieved nothing in forty seven years. Forgive the rant. It's ending very shortly. except staying in power, except oppressing its own people. And that's, again, militarily short term, a huge advantage because the pain threshold is through the sky, you actually have to literally gut it. Now evenven if the military operations you suggest would be possible. and you know, if Admiral Steridis thinks they're possible, I'm not going to argue against him. but inssurance Iran only has to threaten enough to drive insurance up to the point where shipping through Hormes isn't worth it. And it's already there's so many advantages that it brings to the table. At the same time, I have seen analyses or news reports of analyses that Iran has cororrect me if I'm wrong, three to six months of economic survival before a kind of collapse, not just of the currency, but complete collapse of the regime's ability to pay a living wage to any of its fighters that allows them to feed their families. Um, and I read that and I thought and everybody was saying, look, they can last six months, these guys. I mean, we're going to have to suffer for six months if we don't give them what they want. And I'm looking at that and I'm saying, wait, So if I just wait six months, That's it Like the Iranian like we have a chaotic future for Iran. We have some new future for Iran. I'm going to go ahead and say something deeply irresponsible. It can't be worse than this regime cannot be worse than a regime that holds the entire Gulf at gunpoint that demands the annihilation of my people is willing to destroy Lebanon and Syria and Iraq and Yemen on the altar of this great revolution, religious revolution that How could it be worse than this regime And there could be so much better. There are some indicators of some parts of Iranian society that there could be a serious development happening in this country if it wasn't ruled literally by this mass martyrdom cult. So many reasons there's so many data points pointing to the strength of this regime, its ability to push through to take vast levels of pain And that's something that that's a reason to negotiate with them. That's a reason to back off. And also All of these reports and all these indications that maybe they really are on the precipice. mayaybe a little bit more damage to infrastructure, maybe the kinds of infrastructure that the IRGC makes money off of, like the energy infrastructure, maybe just literally holding the cap on this blockade will'll do the work and Trump doesn't to have to do all that much more Can you walk us through that balancing act Can they be brought down? I'll just ask really bluntly. Can they be brought down if you just hold the blockade of Hormuz? I mean, my view would be, first of all, it's obviously unknown because in the history of things falling, you don't actually have good predictive analysis, things sometimes just fall. I mean, the only predictive analysis is when People ordered to shoot, stop shooting at the people Im That has not happened And so u absent Armed. Three. or groups of people Um and I'm not talking about Kurds or things like that, but but Persians, maybe Azerres. that are willing inside the country to take up arms alongside buuckling of the regime and popular support to overthrow the regime O something just massive of those just just sheer numbers, just millions upon millions of people coming out and just overwhelming security forces and just being that, you know, sort of moment where it's just it's a flash and it's and it's and it's done Um, I wouldn't bank on it That doesn't mean that the leadership hunkered down their bunkers, reading the reports and getting calls from the Central Bank of Iran and cting calls from President Pesti and other people saying, do you understand what's happening out there We don't know at what point the population will break We don't know at what point, you know, two million people will come back out into the streets all of a sudden by surprise That is a risk And I think they spend more time thinking about that risk than probably any others in all of the potential pain points Um, and so that is an advantage. When you think about any sort of deal making for the straight of ourr moves to open up. Now There's a couple of interesting things to unpack in what you said Um T two interesting points and then one, I think people to understand the state of the oil market and energy markets in the state of Hormz Number one, the CIA assessment you talked about, saw that as well. the Washington Post ran that Everyone I've talked to who has seen it. and is actually able to comment on it. say that they can comment on it a little bit because Most of it was actually unclassified. and was simply CIA economic analysts reading public analysis and then making extrapolations based on what consulting firms had already said and published. a lot of them Who knows if they're right U notot to do with actual intelligence of what is going on, which I think the White House likely puts a lot more weight into If the central Bank of Iran goovernor says I can't make payroll in the following sectors or we are running out of the ability to pulled up the following five banks And there could be a run on the bank any day probably carries more weight than some open source analysis of a bunch of consulting firms on how long they can last in different pieces U to It's interesting there is a contradiction here where there is On one hand the Iranian ability to get everybody in the Gulf to be afraid of their willingness to escalate against their infrastructure At the same time holding in your mind a contradiction, which is that the regime fears and an escalation against their infrastructure One would then have to wonder whether or not there is a bluff to be called if The side that starts shooting is the Iranian side, not anybody else and to make it very clear to them, This is going to be like a mosaic strategy. You hit a refinery, you hit a water desalination plant, perhaps, you hit oil It's just going to happen very fast You're going to lose the bridges. You're going to lose the power plants. You're going to lose the refineries If you open up that can of worms That could be a deterrence That could neutralize that threat and then open up the pathway to restart Project Freom. I'd be surprised that hasn't happen yet Now the bigger picture here It does look like there is like some sort of quiet, silent project freedom going on beneath the scenes right now. Wh is a little bit of a tit for tat This attack going on right now is caused by something. I I actually don't think it's just the Iranians wanting to show that they're willing to test and to escalate and create pressure. Maybe there's some of that. But If you look at what's happening right now with more and more ships getting out along the Omani cooast through the Strait of Hormuz their what's called AIS. It's, you know, basically their signal put out turned off, very much like how the Iranians and the Russians, these ghost fleets have operated for many years it would appear that the US is helping guide certain ships there signignals turned off In the middle of the night through a passageway and providing cover if they are attacked And I don't think the IRGC is unaware of this happening And I think they don't like it And I think they are reacting to it. And when they react to it We are responding by hitting targets that we would like to hit that are contributing to their ability to reach out and touch these tankers I can't prove this is happening, but there has been some reporting on this. Last week, we saw the Wall Street Journal first try to have a screeching headline that we've started Guiding ship through again, Central commommand denightited immediately The journal didn't really back away from its reporting later in the week, you see that there's somebody laying mines And it was like,h, if they're laying ms in the middle of negotiations, that's crazy. Maybe they're lay minds for a reason right now because they're responding to something Then we see reports that they've launched missiles at the U.S. Navy out of the blue. Is it out of the blue Are they responding to something So So I think the president may actually be testing right now to see what the art of the posossible is without a deal and without a very flashy project freedom to get more product out to market while keeping the blockade in place And that is having a major effect on the regime as well Keep that in the back of your mind. But what is happening in the global market right now Um, We did not see one hundred and fifty dollar a barrel price or two hundred dollar a barrel price throughout this entire conflict. evenven though that is what The majority of analysts and speculators had claim would happen We have in fact stayed in this you know, between eighty five to one hundred tens u for for the price for the price of oil at least on the West Texas, maybe a little bit higher on Brent crude That is, of course Uh twoo reasons for that A big reason is The risk premium here is durational. because people see that Structurally, oil still exists in the Gulf This rate of Hormuz is still there There's nothing actually blocking this rad of Hormz. It hasn't formally closed physically and the war could be over America could surrender, Iran could surrender At some point this all opens and the world is awash with all the built up. oil that's ready to go out to market And so the future price remains pretty low compared to existing price, and you don't want to bet on a high price. That's a big factor. and that's why the president's been able to manage prices just by talking about Oh, I think we're going to get this wrapped up soon, et cetera Because if you're if you're trading billions of dollars on oil, And the president says it might wamp up soon. and it might You don't know Are you going to risk losing all that money So that keeps the price intact from a trading perspective. But there's also an actual market reason And a lot of the traders And you talk to them they'll say You know If we believe in markets, Markets aren't just lying Markets will price correctly. That's why we have a market. And you can say like, oh, the market's wrong. They're betting wrong. They're not really accounting for all the inventory problems. And a lot of the traders say, no, we think they are And we start looking at the ledger They say, okay, well, the Saudis have about seven million barrels per day flowing right now through their east west pipelines to the Red Sea to Yanbu That's a third of what typically moves out of the Strait of Hormoz right there. done Now you're at a two thirds loss to the global market from the war The Emiratis have one point seven million barrels that goes out through their other pipeline through Oman south of the Strait of Hormuz. at Fujya You have some increases in exports just because of the demand in the United States and in other parts of the Western hemisphere, A couple of million, maybe three million barrels per day added on there. And then in addition to like the onesy Ty increases you see in other places around the world where where there's oil production, high demand can get you squeezed out a few hundred thousand barrels per day more You have a very, you know, the other side of the ledger that nobody looks at and that is demand and the Chinese demand has cratered by by some accounts, six million barrels per day They are destroying their own demand U because of the high price and going into their own reserve, which they have built up over these many years on cheap illicit Iranian oil and Russian oil and Venezuelan oil. And they're doing that now. how long will that continue? I don't know. But The Chinese pulled back from the market and other demand destruction that is happening in Asia and Europe. Not to say demand destruction from a GDP perspective is a good thing That is something that economists need to take into account. It can boomer rain back the U.S. economy. and that can weigh on the presresident and his analysis But from an actual oil market perspective Y actual gap now in shortfall is a lot smaller than you think it is And so when the and the Eiratates announce out of the blue that they are building a second pipeline bypassing the State of Hormoz, which will add another two million barrels per day ready next year Now they've left OPac and or not bound by any production limits. And any export limits That's another big signal to the market if the Saudis were to all of a sudden unveil a second East West pipeline under construction That would be devastating to the Iranian hold on the stit of hormes. Now is all that Tod, no We still have a shortfall. Stocks are still being Um around the world, including the United States you may come to a point where the market just doesn't hit equilibrium And you're running low on your reserves and something has to give there The Iranians and their playing this out in their chess board are reading news coverage and analysis and thinking, o, this is coming really soon. You know, the CEO of Exon or Chevron says We might see a price shock in the next few weeks in June or July because of the shortages that were coming up against as stocks run too low. Wh the Iranians are reading that They say, oh, okay, maybe we do have the timeline Maybe Trump is going to have to blink Um, it's incumbent to me in my view on the administration in the United States to counter that and to produce alternative data that is reflective of what they see in the market not what somebody who thinks they know what's going on in the market. D there's no alternative facts. ' extxtraordinary. That says the America's position may be much, much stronger in this face off And not only that, China eating into its reserve that's an immense reserve, a strategic reserve. China has this reserve goal of being able to sustain itself for a hundred days just on just on the reserve and it filled it up with sanctioned oil because it was very cheap oil, right? So eating away at that is not a bad thing for the United States, Forcing Arab countries of the Gulf, especially to build alternative transit routes. That's a fantastic piece of news for ten years from now. Never mind for right now. That's not a bad thing, right? So there' There's more oil coming out of the market than we thought. There are more pathways to get that oil out that doesn't go through war moves and it's susceptible to Iran. The market is more robust than it looks like. So Is the administration aware of that? and are they going therefore let's pivot, it's a perfect pivot to the negotiations So what is happen aware of negotiations Sos my m negotiate. So they know they can stare down the Iranians is Trump in a cave? is is he going to hand them control of Hormz just for the reopening of Hormz? What Where do you see that standing right now and where iss it going to go? I have here listed like ten rumors. I'm not going to bother with them. What do you know? I've heard all of them, don't wor U some are worse than others the u The starting point in my view is, um A unknown and that is the Iranian nuclear infrastructure todayod is nothing like it was just a year ago Um And certainly nothing like it was in twenty thirteen, twenty fourteen, twenty fifteen during both the interim and then final nuclear deals of the JCPOA And so comparisons between offers and deals and statements that mean nothing today to the JCPOA days when they meant something. to me are wrong. There's just no way to exam what do I mean by that? what do I mean by that Satan I want to cent freeze on enrichment. things like that. Okay. ye, we'll settle for a ten year freeze on enrichment. fifteen year freezo. That's exactly what the JCPOA bas. It is with sunset cllauses and everything. Yeah Yeah Well, first of all They can't enrich uranium today They are they are frozen. They are suspended by military action Now I don't know how long it will take them to restart that capability in the future But it's not today And so if If the regime needs some sort of when that they have a freeze or something What matters is whether or not they have the capability to reconstitute and what the timeline for reconstitution really mean, And if we're going to tolerate reconstitution or if we're going to require dismantlement of remaining capabilities that would allow them to reconstitute, that's what matters. and ait, I'm sorry'orry, future Democratic administration They sign some kind of deal that contains some of those JCPOA elements. A future Democratic administration is not going to hold the line militarily. I not. Every time I do this, I throw out there. I come from a country with universal health carere. I get why I'm not arguing people should vote According to my particular analysis of democratic foreign policy, okay? I'm just saying they're definitely not going to have a military option on the table. They're definitely not going to pressure on this going forward. It's going to be Obama minus, not Obama plus in any way So whatever Trump agrees to now, it isn't Trump who going to be managing in the future So what even by the way, isolationist Republicans, even sort of half isolationist like JD Vance. will not be aggressive on this point like Trump. So if they agree, for example, to sunset provisions about centrifuge production, centrifuge enhancement, you know, producing the R and D to produce the more advanced centrifuges, that is something that could very well be implemented, even if under Trump, it's just a fake concession because he won't let them get away with it. But here's the difference. hereere's the difference Um The fundamental flaw of the JCPOA was not the sunsets The fundamental flaw of the JCPOA was the lack of dismantlement of capability And so all the JCPOA did was say, you can keep everything you've built You just have to limit its use to some extent. Right, But in twenty twenty five oversight disappears And concurrently you can build more on the side via R and D so long as you don't roll it out yet until sunsets kick in That's not setting back the nuclear program That's in fact enshrining the nuclear program All that which was allowed under JCPOA has been destroyed militarily with the exception of some amount of stockpile of enriched uranium that they prodrouced in the last many years at different purity levels What do they have left? What do you need to dismantle need to ensure that underground facilities are dismantled and can't come back And you have to ensure you get all the enriched uranium out so they can't have some sort of crash program you know, with with centrifuges they get a hold of or they've reconstituted or they've manufactured to go try to move At least what they have to weapons grade and then use that as an extortion threat If you can get those two things and I come back to my initial comment, which is I think it should start with declarations and disclosures and verification that we know everything about the program That would make total sense that you actually have confidence that they've abandoned the ambition for nuclear weapons If at the very least, the redlines as reported from the president are, I want all the enriched uranium And I want dismantlement of underground facilities enrich uranium And they don't have centrifuges and they don't have the ability to convert uranium And they don't have multiple parts of the supply chain and SPN D's been either assassinated with the personnel or labs destroyed What does it mean to have a fifteen yearar freeze on enrichment? It doesn't even make sense. It's detached from the reality on the ground. It's a bumper sticker that somebody's trying to sell as propaganda detached from the actual denial of capability. That's what's to focus on So if the redlines are abandoned and we don't get the erged uranium out, we don't dismantle, we don't get disclosure. I would agree We have not ended the nuclear program. They will seek to reconstitute. It will still be a threat. It is not the threat today that it was a year ago We shouldn't confuse that. It could be a threat in four years in five years. And as you say with a different president certainly, who's not willing to use force But that's not the today issue. Now the other side of the ledger is a gap in our knowledge of what is real and what is not real in the economic. assessment of the global market right now If the president looks at the numbers and looks at stocks and looks at timelines and he believes He is on the clock that something is going to break and it's not clear if it's in six weeks or six months The strait doesn't open and everything I said about the good news and the potential mitigations and all that are not materializing enough to prevent the, you know, the actual shortfall and shortage that then creates massive price spikes And then the economic damage that can create in other ways He is going to push to get this rate of hormz open one way or the other whether that is military. and if he doesn't want to do military, then there's only one other thing to do and that is pay the regime's price Um And so the fear here is and I think the real Um, challenge to avoid for the president is not setting himself up into a permanent or at least an indefinite extortion racket for the straight U certainly not paying for things that will never materialize in the future There could be an argument for a partial lift of blockade for a partial or total lift. of the closure of Hormuz to bring relief to the global market without giving enough relief to the regime and keep them hobveling along But some relief. It I mean, it would be a quid pro quo. It would be some kind of Just the blockade lifting is billions upon billions of dollars for them. If you have a president willing to go back to war, that would be a president willing to now degrade infrastructures far more than whatever the sanctions relief might have been for such a deal. If you don't have such a president, then it's not. In other words, as far as I can tell, whatever Trump doesn't get out of them is what Iran has going forward into a future Israel Iran war, I want to just end with one big question that really has occupied my thoughts and get your sense of it. The Israelian American timelines are very, very different here. The Israelian American understanding of what is happening is very different. The Israelis look at Iran and they say, know, it's a shame the regime didn't fall. Well, I'll just have to do this again in two years, three years, five years, ten years This looks to the Israelis like the Old warar against Nocerism. Which was the fifty six War and the sixty seven War and the sixty nine to seventy one War of attrition and the seventy three War. The war against Pan Arabist Nocerism was twenty years. And each war was really a battle. and each country, each side, which the other side with many countries tried to constantly maneuver and correct and fix And it wasn't clear at the beginning who would emerge victorious I think that that's how the Israelis understand this Iran thing. It wasn't a june twenty twenty five war and it wasn't a war now. These are battles in what is potentially a twenty year war. The ideology underpinning the Iranian regime won't allow Israel to exist. won't It will demolish nations on the altar of destroying Israel because of a grand religious vision which People can go to episode ninety three to hear some of the details of that and get a reading list But, um, It's a long, long war And America came in thinking there's a problem, let's solve it. let's move on with our lives. We don't do long wars in the Middle East anymore That timeline gap to me is fundamental Can America stick it through Should the Israelis think that they're going to go it al loone? If they're lucky a year and a half from now, they begin to go it a loone. If they're not lucky, in two months they begin to go it alone. But There's a gap here that I think is fundamental to understanding what's happening. Israel iss existentially threatened by this regime. America, certainly not now, now that their nuclear weapons are degraded, now that their missile, they'll have to rebuild so much of their missile production capabilities. So there's a gap in a sense of danger. there's a gap in a sense of timeline. There's a gap in the sense of whether or not you are forced into this war. The Israelis think they are the Americans largely think they are not We're going to diverge on this very, very dramatically It's an interesting question U to me, It would not make sense for the United States to enter a prolonged conflict like this. when you have a very empowered including by the United States empowered. Um highighly sophisticated, highly technological military ally. with extensive covert capabilities inside the country we can't imagine to to be able to compare to And so What is the job of the U. S. military at that point to as you say a major adversary that is building existential threats that we would need to care about U to provide our model ally moreore time to continue degrading and eventually destroying that adversary of ours that is sort of more Um already imminently an existential threat to that ally The ability to cross the nuclear threshold Denied That would have been something that was the game changer and game overver for not just Israel, but for the United States and the West the ability to cross the threshold of a zone of immunity on missile production Now denied by the United States along with Israel Our job in my view is to extricate the United States providing as little relief as possible to this regime and setting up that next chapter that you're talking about If the regime had fallen, As a result of this operation, it would have been amazing. By the way, it was worth trying the operation was not Um dependent on that outcome. The operation strategic objectives have enabled the next chapter and likely brought that conclusion into shorder relief um For now, how do you ensure you don't take a step backward How do you continue to move forward And yes, the world does need energy relief. The United States consumers need energy relief. The economies need to be strong We need to be able to restock And we need to deny as much as possible. the ability of that regime to reconstitute and instead keep them on their back heels, keep them buckling keep them worried about the people and then actually having something that operationalizes to help those people Is it fair Is it fair to say that the Israelis have a two year window But they don't get done by then, not only will the Americans not be behind them The Americans will actively prevent and disrupt and hold them back and give the Iranians the breathing room. to reconstitute the regime and rebuild I had a f worry I have a bigger worry and that is You might have no window if the deal goes bad Um, And the reason I say that is you could think you have the best intended trade. of blockade for Hormuz, knowing you're never going to get the next piece because the relief won't come You know, the relief is provided up frront. you're not getting the uranum you're not getting You're not providing anymore for it, but that alone is the relief to get or moves open if that were to be the conclusion Prom is is that you would enter the potential where the Iranians have assessed that you were afraid to use military force to reopen the straight you will not endure a rec cllosure of the strait and you will not resort to military action once again in the future if they cllose the straight again. And then the question is, just like we had nuclear extortion and a racket of the JCPOA. where I remember supposedly No, Obama said, nothing will stop us from imposing sanctions for terrorism or curbing their missile activity. It's not in the JCPOA are we're just portrading sanctions reallyief for limits on their nuclear program. But in reality, what it means is that the regime has you over a barrel And they say, you want us to hold to this deal? You're afraid of us on the nuclear side You can't impose terrorism sanctions on us? You can't. allow the Israelis to go after Hezbollah and our proxies We're going to close this straight again J just like in the nuclear sense. And so in fact, we did not as the United States, while we were in JCPOA, do anything to curb their sponsorship of terrorism. It exploded with the money they got out of the deal. We did not curb their missile program. It advanced dramatically holding back the Israelis on Hezbollah because of that Iranian leverage So in the short term, tactically, that could be good and I can make that argument But In the long term If the result is we handcuff ourselves for fear of the shutdown of Hormz across the board It's not just relief for Hormuz It's relief across the board and potential immunity. to reexand and reassert all that they have lost over the last two years as a result of combined military action of Israel and United States. That is something that the United States cannot allow to happen I think the president knows that confident of that And so in the end, we may haveave one option left and that is project freedom or whatever is going on right now behind the scenes, the quiet project freedom. And if that can bring relief without giving up our Ace card. Then the pressure' on them, the clock's on them And people should breathe a sigh of relief that you're watching a lot of a show right now. keep oil prices down and to keep the pressure building on the regime Rich, thank you. I learned a lot. justust last sentence. Are you optimistic with how this is going? and and how it'll turn out. The negotiations, the situation Hormz in general. I'm optimistic because I know the Israelis are actually committed because this is actually existential from the American side are you optimistic I am optimistic because in a worst case scenario that we trade that ends up being sort of a Hormz racket The one caveat to everything I just said is that nuclear weapons are permanent And the Strait of Hormuz as an asset for this regime is not and Uh, those pipelines get built The market adjusts suppliers moved to the United States, you know, where buyers moveved to the United States for supply. U is a year w years But once Hormuz is not what it was That leverage is gone. playled the card They don't get it back. and they lose it. So My hope would be We moved to check mate Project Freedom with the bllockade In a worst case scenario where we're in some sort of a temporary racket for Hamuz I amm at least comforted by knowing that it is temporary and Hormuz will not be theirs. indefinitely Rich Goldberg, thank so much for joining me. this was fascinating ?