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Cato Podcast: Iran: Schrodinger’s War

Laura Bondank-Harmon: On February 28th of this year, the first American missiles struck Iran during an operation codenamed Epic Fury, triggering a waterfall of strikes, counter-strike attacks, and trade blockades. Since the start of this conflict, at least 14 U.S. service members have lost their lives and hundreds have been wounded. We’ve spent at least $40 billion, oil prices have skyrocketed roughly 50%, and all attempts at peace deals have so far been unsuccessful. And despite Trump’s promises that the war was going to be a quick victory with very limited costs, almost half a year later, the conflict continues. Was there ever any justifiable reason to attack Iran? And is there any reason now to keep the conflict going? I’m Laura Bondank-Harmon, and this is the Cato Podcast. I’m joined today by Justin Logan, Director of Defense and Foreign Policy Studies at the Cato Institute. Justin, according to your bio, one of your primary areas of research is, quote, the limited relevance of the Middle East to U.S. national security. Got to say, that’s not the message we tend to get from government officials. Why do you think the Middle East is not as relevant to U.S. national security as they’d have us believe?

Justin Logan: Yeah, I mean, the basic argument has three parts. It starts with, and I had a sort of snarky opening to this paper that I’ll crib from liberally, the Middle East is a small, poor, weak region of the world beset by a lot of problems that the United States military can’t fix. And the best thing we could do accordingly is to leave it alone. As you pointed out, that’s not what you generally tend to hear in Washington, D.C., particularly up and down Massachusetts Avenue. But in that paper, which I wrote, I think, before I came back to Cato in 2020, I go into, why are we in the Middle East? What are the things that we’re trying to produce in the Middle East? And honed in on three basic concerns or issues. Oil, Israel, and terrorism are the basic three arguments. And the oil argument is that there’s something witchy about the amount of oil that the Middle East produces relative to the overall oil market globally. It’s about 20 percent. And without U.S. military doing various unspecified things in the Middle East, that oil might go offline. So in a sort of paradoxical way, the current war has done that, has precipitated the nightmare scenario that the U.S. presence in the Middle East is supposed to be insulating us against. And it’s hurt. Certainly, regular people are feeling every time they fuel up their gas tank, a little bit more money being sort of sucked out of their debit cards. But we’re in the nightmare scenario right now in terms of the oil rationale for the U.S. presence in the Middle East. And again, while it is costly and politically costly, which we may want to later, it’s not something that has caused life in America to change in a sort of fundamental way. The concern about Israel is longstanding, right? We don’t want Israel to be overrun by some agglomeration of regional countries or terrorists or whatever it may be. And I think if you take a sort of detached look at U.S. policy in the region over the past 20, 30, even 40 years, we don’t have a great batting average over there. We haven’t done a lot to sort of soothe the worst parts of the Middle East. And in fact, in some cases, we have precipitated some of the worst parts of the Middle East. Famously, the United States supported the Mujahideen in Afghanistan. That didn’t go great, as we now know. The United States invaded Iraq, which produced an actor called Al-Qaeda in Iraq, which later took on the moniker ISIS or ISIL, the Islamic State in Iraq and the Levant. So our policies in the region, if what we’re trying to do is to sort of simmer things down and amplify the voices of the least bad actors in the region and tamp down the worst forces in the region, we haven’t been doing a great job of that. And furthermore, there’s this sort of weird dual view of Israel in Washington that on the one hand, it’s supremely vulnerable and therefore needs the United States as a backstop. Otherwise, it could be overrun by, I don’t know, Syria and Egypt. You don’t hear the specificity in the claims about who these actors are. So it’s at once uniquely vulnerable and it’s at once uniquely powerful. It has the largest, or most capable I should say, military in the region, et cetera, et cetera. I think Israel is basically a grown-up country. It has 70 or 80 nuclear weapons. It has dolphin-class submarines in the Eastern Med that nobody can touch. So if anybody took a big swing at Israel, they could take a nuke in the teeth, which has a certain persuasive capability all on its own. So I view Israel as a sort of grown-up country that in any plausible set of scenarios can handle its own business. And on the terrorism front, I’m indebted to our colleague John Mueller’s work on this subject, but the terrorist threat emanating from the Middle East vis-à-vis the United States just, A, doesn’t warrant the amount of expenditure that the American military has focused on the Middle East, and B, isn’t amenable to being fixed by the U.S. military. If anything, our military interventions in the Middle East have produced a lot of terrorist groups, to include ISIS, which I just mentioned. So to sort of break it down and simplify it into those three groups, oil, Israel, and terrorism, those three interests, I just don’t see the case for what we’re doing over there.

Laura Bondank-Harmon: And with that background, what do you think the administration’s goals were when they started the conflict with Iran? Was there ever a good reason to attack?

Justin Logan: It’s never a good sign when we have to ask ourselves, what were the administration’s goals in starting this conflict? It is paradoxical because after the June strikes, the Midnight Hammer campaign last year that took place, the administration was almost in a weird sort of Soviet way—multiple actors in the administration came out and said the Iranian nuclear program has been totally obliterated. They used that phrase, totally obliterated. And I, this sort of think tank dork, was looking at this and saying, well, hang on, totally obliterated. A lot of it’s underground. We’ve hit the entrances to some of the tunnels, but they still have the enriched uranium, they still have centrifuges hiding. Totally obliterated. It doesn’t seem totally obliterated, but they were insistent, totally obliterated. Okay. And then fast forward to February 28th of this year, when the president still insists to this day they were two weeks away from a nuclear weapon. Well, you know, my math ain’t no better than my English, but if you look at totally obliterated in June of last year and two weeks from a nuclear weapon in February of this year, something’s off there. And so what was the administration doing? Iran wasn’t two weeks from a nuclear weapon. It’s not a defensible claim. So if a U.S. administration makes a case for a conflict on something that’s facially indefensible, it’s reasonable to sort of try to smoke out what is actually going on there. And so I—one other thing, as somebody who was around during the bad old days of the Iraq war—the Bush administration, starting in the fall of 2002 and running through February of 2003, made a concerted effort to make the case to the American public about the threat Iraq notionally posed to the United States, why a war was necessary. They got UN Security Council resolutions passed. They got an authorization for the use of military force passed in Congress. It was a sort of barnstorming campaign. Now, I thought at the time this is a stupid idea, I don’t care what they say. But they made the case. In the case of this Iran conflict, Epic Fury, they didn’t even go through the motions of making an argument to the public about why this was important. So if you take seriously the admonitions of the so-called Powell or Weinberger doctrine—that if you’re going to use military force, you have to make sure you have the support of the American people, you have a clear, discreet military objective that you’re going to pursue, you’re going to use overwhelming force to achieve that objective, and then you’re going to remove U.S. forces at the end of that—this just violates all of those precepts in a sort of flagrant way. So, to get back to your question after that long-winded non-answer, why did they do this? I don’t know. I mean, I think there were various forces moving the president. The New York Times reported that Netanyahu was here earlier this year saying there’s a generational opportunity to produce political change inside of Iran. And so I think the president may have been tantalized by that prospect. He has this sort of Rushmore syndrome. He wants to do big historic things. And then I think one thing that also bears pointing out is that they really thought, after the Venezuela campaign—which seems like it was 10,000 years ago, it was earlier this year—they’ve told themselves a story that they had figured out this problem of military power, right? That they had achieved some huge breakthrough by snatching Nicolás Maduro and his wife Cilia and bringing them to the United States while leaving the dictatorship in Venezuela intact. Now again, think tank dorks like me were saying at the time, well, hey, wait a minute, you still have this regime there. The regime has not changed. So maybe you figured out how to apply very, very narrow military violence to a very, very narrow problem and get away with it, but they sort of told themselves the story that they had figured out how to use the military in a targeted way to achieve huge breakthroughs. And so I do think that the regime-change, sort of historic-breakthrough argument was lingering there, but unfortunately, because it’s been so opaque, their own internal rationalizations and internal arguments—it’s going to be for historians to tell us why they actually did it. And even historians, as we know, don’t always agree.

Laura Bondank-Harmon: Tell us a little bit of how Iran reacted to the attacks and were you surprised by their reaction or did you find it mostly predictable?

Justin Logan: They reacted in very predictable ways, which the president said were surprising, which is itself kind of surprising because the United States has been war-gaming Iran conflicts for over two decades. And in every single game—whoever plays red, if you’ll forgive me a little bit of BS Pentagon war game speak, red is the bad guy and blue is the good guy, so if you’re playing red, you’re playing Iran in this game—red always goes to move to close the Strait of Hormuz, because that’s the sort of path of least resistance. It’s the obvious play. And that’s what Iran did here. That’s what Iran did. And the president said, well, who could have thought that they would do this? Why would they do this? The other thing that Iran did—if you’ll forgive me, now that I’ve done Pentagon BS, I’ll do some political science BS—there’s so-called vertical escalation and horizontal escalation. Vertical escalation would be going from sort of conventional conflict to the nuclear level, going up in terms of the severity of the tools used. Horizontal escalation broadens a conflict and brings in other actors. And the Iranians took advantage of horizontal escalation by whacking the U.S. partners in the Persian Gulf, where the United States has facilities, which we now know some of the attacks on Iran were launched from. So they hit Qatar, they hit the Emirates, they hit Saudi Arabia, they hit Oman, they hit Kuwait, in order to impose costs on those countries that they saw, in some cases rightly, as having facilitated the conflict. So for anybody to say that they were surprised by the choices Iran made in retaliation strains credulity.

Laura Bondank-Harmon: Now, one thing that’s been really interesting about this conflict is there’ve been several moments in which the war looked like it was close to an end. And just this weekend, President Trump posted on Truth Social that he was canceling strikes, saying that a deal was imminent, but an Iranian news agency called Trump’s claims that Iran and other Middle Eastern countries called for this deal nothing but a lie. What do you think is really going on here?

Justin Logan: It’s Schrödinger’s war, actually. It’s at once ending and starting up again at the same time. Look, how much cynicism should we take advantage of here? And, you know, probably a lot in this case. It’s quite clear that if you see a pattern emerging, Sunday evening President Trump starts saying really dovish-sounding things. And importantly, a cynic might note that markets open on Monday morning, and depending on the markets’ sort of animal-spirits read of where the conflict is, could go up or down. I think one of the weird things is that markets seem to keep biting on Trump’s head fakes that happen Sunday afternoons, in the sense that—recording on Monday morning—Brent crude is down 5%, because the markets keep listening to Trump, even though he keeps not accurately characterizing the conflict. And, you know, you mentioned the Iranian response to this. The Iranians have a lot of cards to play. I mean, they have a lot of leverage. And so that’s part of the reason—I’m sure you’re going to ask me about how we got to this point in terms of the blow by blow—the conflict, the Iranians know they have cards to play. They’ve suffered considerably and they’re not terribly inclined to give up those cards cheaply. So that’s the kind of fundamental underlying bargaining dynamic that’s going on here.

Laura Bondank-Harmon: Now there was also a memorandum of understanding outlining a 60-day framework for negotiations over Iran’s nuclear program and regional security that was signed on June 17th. What happened to that plan and how have things developed since?

Justin Logan: Also seems like a lifetime ago. Yeah, about a month, though. So the administration—I think, I’m not trying to be too smart-alecky here—they were desperate to get this toothpaste back into the tube and drew up a memorandum of understanding. As legal documents go—you’re the legal expert, I’m not—it left a lot to be desired. It was more penumbras and emanations than clear prose. And so there’s this paragraph five, which has been the downfall of the memorandum of understanding, which specified that Iran would use its best efforts to make arrangements so that commercial traffic could resume going through the Persian Gulf. And so “make arrangements” and “best efforts,” as you might imagine, could be interpreted differently by different parties. And that’s precisely what happened. So in July, there were—mostly Gulf—three vessels, I think one Qatari-flagged, one Saudi flag and the other one, I don’t remember—that Iran shot at as they were transiting the Gulf. And, you know, they said, well, hey, wait a minute, doesn’t this violate article or paragraph five of the memorandum of understanding? And the Iranians responded by saying that these tankers were taking routes that had not been authorized by Iran and did not respond to Islamic Republic Navy directions, if you will, and therefore they were in violation. The Americans say, well, hey, wait a minute, no, we were supposed to go back to the status quo ante. And the Iranians said, no, we’re making arrangements using our best efforts. We control the strait right now. And so this difference of interpretation among people around a very underspecified and murky document—in international relations, one difference, but international relations to the domestic legal scene, maybe you’ll tell me, and now that I’m saying it out loud, it’s not that different—the law just doesn’t really constrain in a meaningful way. It’s about power, it’s about what you can get away with. And now that I say it out loud, sometimes the law doesn’t constrain as much as we might like in the domestic scene either. It’s about power and how much you can get away with, but in international politics, it really is about that. And so I never put a lot of hope in the MOU. It’s a sort of epiphenomenon above all the power dynamics that are actually driving things. But that’s how the brief period of a ceasefire went casters up.

Laura Bondank-Harmon: Now, Americans are obviously feeling a lot of the burden from this war. Both the human and economic costs of the war keep rising, partially because Iran has controlled the Strait of Hormuz since the conflict started. How important is the Strait of Hormuz for oil and international trade more broadly?

Justin Logan: So it’s important, as we are learning the hard way. I think it was Ambrose Bierce who said war is God’s way of teaching Americans geography. So this is teaching us a lot about energy economics as well. About 20% of world oil supplies come through the Persian Gulf, and a significant amount of LNG as well, out of particularly Qatar. But what we’ve figured out—again, as I said earlier in the discussion—the nightmare scenario is that you have this sort of light switch, you just flick the light switch off and nothing’s going. Now, it’s not zero—everybody says, well, it’s closed, it is closed, but there are also certain actors that are still transiting out—but it’s a fraction, it’s a single-digit percent of what was coming and going before the war happened. So what we’re discovering is it hurts, but to me—and there are a lot of energy economics people who were saying oil would be at $150 a barrel, oil might be $200 a barrel—but there’s been a combination of inventory drawdowns. There was a lot of oil already in tankers, particularly that under the ceasefire, when the MOU was signed, tankers that were already loaded then came out of the strait, and that takes several weeks for them to get to their ports and for that energy to get to consumers. But cards on the table, I’ve been surprised that it hasn’t been worse than it already has. And again, if this is the nightmare scenario, getting it from a hundred percent of what was transiting to seven or eight or 9% of what was transiting before the war, this is about as bad as it could get. And so again, there have been inventory drawdowns to try to catch up. A big part of the story is how much reserves China had before the conflict began, and the extent and rapidity with which the Chinese have been electrifying, particularly their auto fleets, which is creating downward pressure on demand, which is salutary in this context. But it is bad. And I will say, if this continues in a sort of straight line, there’s a chance that you could go from sort of linear growth to exponential growth in terms of the price of energy, because we’ve been drawing down inventory so significantly over the past several months. It could be that you reach so-called tank bottoms, if you want to use the oilman’s argot, and then you don’t have any reserves to draw on, and then you’re dealing with 80-ish percent of overall world supply that happened before. And then there’s a question of how high do prices have to get to depress demand, and that I’ll leave to the economists to figure out. But it hurts pretty bad, and it could start hurting exponentially worse at some unknown and hard-to-discern inflection in the near future.

Laura Bondank-Harmon: So what I’m hearing is the longer this conflict goes on, the harder it’s going to hurt Americans. And potentially in a non-linear way.

Justin Logan: Yes.

Laura Bondank-Harmon: Well, you wrote for The American Conservative that there’s little reason to continue the conflict with Iran, and that the logic of the war as it stands is either A, take the off-ramp, or B, expand the mission to regime change. What would those scenarios look like and what are their consequences?

Justin Logan: Yeah, unfortunately that article has also been overtaken by events, because it was before Iran closed the Strait of Hormuz. So now the administration, again, went in with a nuclear logic. I mean, it’s really bizarre in these conversations, the extent to which the ostensible casus belli is bracketed away so that we can deal with the problems that the conflict created, bringing us back to the status quo ante so that we can get to the problems that the war was originally supposed to solve. So in that piece, I basically wrote that, look, Hegseth gave a speech, I think on March 2nd or 3rd, where he said we’ve degraded Iran’s ballistic missile inventory, we’ve degraded their ability to produce ballistic missiles, we’ve set back their nuclear capabilities, and we’ve sunk their navy and air force. And I said, hey, that’s as good a logic as any for saying we did something here, let’s wrap it up, declare victory and come home, as they said during Vietnam. But unfortunately the administration didn’t read my piece, or if they did, they didn’t agree with it. And now we’ve gone to a place where Iran has successfully, again, more or less closed the Strait of Hormuz. So they now have to deal with that problem to bring us back to these questions again, which I think were mostly chimerical or phantasmagorical about the proximate Iranian nuclear threat. So, again, they should have listened to me, they didn’t, and here we are. But the Iranians are really, again, feeling their leverage and feeling like they need to use it. The other thing I will say in this context—it’s going to be very, very difficult—is the Iranians have almost no reason to trust the United States. The Iranians signed an agreement with the Obama administration called the JCPOA that the first Trump administration ripped up in 2018, which, you know, the Trump people will say, well, it wasn’t a treaty, they didn’t go to the Senate, it wasn’t ratified, it was just sort of a handshake deal with Obama, then we weren’t constrained by that—which is, in legal terms, fine as far as it goes, but in political terms causes the other side to say, hmm, what reason do we have to believe that when there’s some other change of government in the future, they won’t just pull the rug out again? Then you had last June, under the pretext of negotiations with the United States, a bolt-from-the-blue strike in the form of Operation Midnight Hammer. And then again, this year in February, also under the pretext of negotiations, another strike in the form of Operation Epic Fury. So any agreement that’s reached with Iran, they’re going to have a lot of resistance—there are going to be people in their system who are going to be saying, are we stupid? Why would you trust the paper that this is written on? And they’re going to be looking for a transformation in the balance of power rather than a sort of legalistic way out of this thing. Now, if they can’t trust that we’ll be honest and uphold our end of the bargain in any sort of ceasefire that’s agreed to, what incentive does Iran have to actually end this war? I mean, everything that we’ve been doing has been making the problems worse—from the conflict itself to the lack of a public case, the lack of a sort of scrutable, tractable political end for the conflict. Again, in war games, sometimes you play red, and if you were playing red right now, you’d be saying you have to have your head examined to bank that any agreement will bind, in a context where you’ve seen total erratic, incongruous, volatile policies from the United States. So we’re all hoping and praying, but hope and prayer is not a strategy.

Laura Bondank-Harmon: And the U.S. has a long history of starting conflicts, promising we’ll be in and out quickly with the mindset of achieving a few specific goals and then retiring. Has that ever been the case? And if it hasn’t, what lessons do you wish we would learn?

Justin Logan: You’re quite right that we have a long history of talking ourselves into conflicts that we tell ourselves are going to be quick and sharp and decisive, and then they turn out not to be. I mean, if you want the archetypal example of the opposite, it would be the first Persian Gulf War in 1990, 1991, where, in fairness, we picked an unfair fight—these guys could not go toe to toe with the American military, sort of immediately going into the post-Cold War period American military. And that was, to an extent, the Powell Doctrine in its apotheosis: we came in huge with an overwhelming amount of force, we made the case publicly to the American people, and we withdrew. Now, a cynic might say, well, hang on, wait a minute, that roped us into a containment program vis-à-vis Iraq and Iran, dual containment, if you want to go back to the 1990s term, where we were still kind of trying to micromanage the balance of power in the Middle East, which was bad and also helped lead to the second Gulf War. But in narrow, sort of military terms, that was the short, sharp application of military violence at a tractable problem that was achievable and achieved at a limited cost. But that’s the exception that proves the rule.

Laura Bondank-Harmon: Well, this has been extremely informative. I want to thank you for being here and joining us today. And I guess we’ll see if we have to do a second part, depending on how long this conflict lasts. God willing, thank you for listening to today’s episode of the Cato Podcast. If you’ve enjoyed today’s discussion, please subscribe and leave a review wherever you get your podcasts. To learn more about the ideas and research discussed in this episode, visit Cato​.org. The Cato Podcast is a production of the Cato Institute, dedicated to advancing individual liberty, limited government, free markets and peace. Join us next time for more insights and conversations on the issues shaping our world.