The Nuclear Option

Is President Trump about to open a can of worms?

Alas, the risk is that any usage of tactical nuclear weapons would permanently change the world. While MAD would be avoided immediately after the tactical first strike, wars would be likely to become inherently more destructive because tactical nuclear weapons would become 'standard military issue', and as a result, the threshold for an all-out nuclear war would become permanently lowered. This quite straightforwardly implies that the first (battlefield) use of tactical nuclear weapons would greatly increase the likelihood of MAD in the longer run.

Strategical asymmetry and symmetry in a game-theoretical model of a tactical nuclear first strike

I naturally followed the Iran-Israel conflict intensively during my illness. I found two excellent (reliable) accounts from Iran, which reported very timely and accurate information on the Iranian strikes. For instance, they were the first to report that Iran is now using two-stage missiles. I reported this also to X. The first one was reportedly shot down by a THAAD (Terminal High Altitude Area Defense) missile.

This Sejjil-class missile was added to the arsenal of Iran in 2009, which means it is just ‘semi-modern.’ I wrote “reportedly” above because the censorship of Iranian strikes has been heavy. There are even reports of journalists being arrested for reporting on the successful Iranian strikes. There’s a wild video of a Turkish journalist team being stopped from filming while on live broadcast. Regardless, Iran has been bounding Israel and its capital, Tel Aviv. Yesterday evening, Israeli PM Benjamin Netanyahu came out to note that Israel is suffering “many losses, painful losses.” This Iranian strength is something I already warned about in my 10-point worst-case scenario for the Iran-Israel conflict. There I noted that

First, the lack of quick response of Israel and the efforts of the Biden administration to downplay and de-escalate the situation (to which the narrative on the “success” of countering Iranian missiles is probably aimed at) hints that they are somewhat rattled by what took place. The (likely) hypersonic strikes, which seem to have penetrated most of the defence capabilities of Israel, the U.S. and their allies, are the likely reason for this. There are also (uncorroborated) reports that the U.S. contacted Iran to allow a symbolic strike on Israel to save face. The tactic of the Biden Administration first was scare-mongering, with President Biden vowing for ‘ironclad’ support to Israel, yet at the same time, the Biden administration asked China to convey a message to Teheran not to retaliate. Now, the Biden administration made clear that it will not take part in any of the retaliatory attacks of Israel on Iran. All this implies that the U.S. sees the threat posed by Iran as non-negligible.

Secondly, there is historical evidence indicating that Iran has build a formidable missile and drone striking capabilities. For example, there was a “show of force” missile strikes by Iran on the Ayn al-Asad U.S. military base in Iraq on January 8, 2020. Regardless of an advance notice of several hours (to move people away or in the shelters), air defences were unable to counter the strikes.

The reports of Israel’s success in Iran are highly conflicting. Some, like the U.S. president, argue that “they” would control the skies over Iran, but still reported strikes are in low numbers. Moreover, I have yet to see videos of Israeli aircraft operating openly over, e.g., Tehran. However, I have seen many videos of drones that are alleged to be Israeli. Some argue that Israel/the U.S. would be actively destroying Iran’s capability to launch missiles, but I see zero indication of this in the accounts following Iran’s launches. Reports have surfaced that Israel would have hit the heavy water reactor in Arak, Iran. This implies that Iran could soon hit the Dimona nuclear facility. Alas, we are steadily climbing the ladders of escalation.

Moreover, many analysts claim that Israel has just maybe 10 days of interceptor missiles left if Iran keeps the current pace of missile barrages launched into Israel going. This puts us into a timeline with an inflection point. If (when) Israel runs out of interceptor missiles, Iran can destroy, e.g., Tel Aviv at will.

NATO assets are gathering in the Middle East to provide additional support to Israel. The latest such entry was HMS Queen Elizabeth passing the Suez Canal on June 19. What makes this passage interesting, according to analysts, is that this was an unannounced transit. This implies that she is heading to the Red Sea (with the other option being the Indo-Pacific region).

Based on the above, we can conclude that Israel’s stealth attack on Iran has failed to bring the regime to its knees. This also implies that a ‘checkmate’ is approaching Israel. The options to escape this are limited. Effectively, there are just three:

1. A ceasefire is brokered between Israel and Iran by the U.S. (which would be stronger if backed by China/Russia).

2. The U.S. joins the war (possibly with nukes).

3. Israel resorts to its nuclear weapons.

The first one would naturally be the best option. The overwhelming majority of Americans do not want a war with Iran. The opposition is likely to be smaller but more damaging to President Trump within the MAGA movement.

Source: Glenn Diesen.

Even the MAGA crowd would be extremely difficult to appease if U.S. assets in the Middle East were to come under missile fire and oil prices were to rise to $130 (or higher). This is highly likely if the U.S. enters the war.

We at GnS Economics warned of the possible failure of President Trump in the Middle East in Weekly Forecasts 11/2024.

If the above are President Trump’s picks for the secretary of state and national security advisor, they carry two implications:

1. There will be a genuine push for negotiated settlement (peace) in Ukraine.

2. There will be a push for a wider war in the Middle East.

They would emphasize the policy lines we envisaged past week, and increase the likelihood of a policy/judgement error we warned about.

In the Weekly Forecasts 10/2024, we had warned that:

So, a judgement failure in the Middle East leading to an eruption of a regional war and to the collapse of the global economy is probably the largest possible Black Swan risk in President Trump’s second term.

Now, it seems that President Trump is drifting towards this “Black Swan.” His comments on “unconditional surrender” and killing Iran Supreme Leader Ayatollah Khamenei are childish but probably reflect the seriously biased information that is being fed into him. It is clear that he is under extreme stress, and in those conditions mistakes happen.

Iranian leadership has warned of devastating strikes to U.S. assets in the region if the U.S. joins the bombing campaign. Moreover, Maria Zakharova, the Russian foreign ministry's spokeswoman, has warned that it "would be an extremely dangerous step with truly unpredictable negative consequences." And it gets worse.