America can't end the war in Iran unilaterally, says CFR's Richard Haass
Summary
- The US military strikes on Iran have reached a point of diminishing returns, having destroyed many ballistic missiles but leaving asymmetric threats like drones and mines intact.
- The conflict cannot be ended unilaterally by the US; both Israel and Iran must be willing to stop, which currently appears unlikely.
- Iran's nuclear capabilities and enriched uranium stockpile remain physically intact despite the recent military actions.
- The global economy will not return to normal as long as this geopolitical instability and nuclear threat persist, necessitating eventual diplomatic negotiations rather than relying solely on military force or regime change.
Trade Ideas
"Militarily, we're up against diminishing returns. We've gotten, I gather, most of their ballistic missiles. They'll always be some drones... they can always rebuild." The destruction of Iranian ballistic missiles means the US and its allies have expended significant munitions that now need to be replenished. Furthermore, Iran's ability to rebuild and its continued use of drones necessitate ongoing investment in missile defense and counter-drone technologies, directly driving revenues for prime US defense contractors. LONG major defense and aerospace contractors who supply the US and Israeli militaries with interceptors, munitions, and defense systems. US defense budget cuts, political gridlock preventing foreign aid packages, or a rapid de-escalation of the conflict.
"I haven't seen that anything has changed to the physical status of the nuclear materials. They've obviously got a large amount of somewhat enriched uranium... we've not taken care of the nuclear challenge." The combination of an active, multi-front war, a new hardline Supreme Leader in Iran, and intact nuclear materials creates extreme tail-risk for global markets. When geopolitical tensions involve nuclear threats and military solutions are exhausted, institutional capital naturally flows to non-fiat safe havens to hedge against sudden, catastrophic escalation. LONG gold as a primary safe-haven asset to protect portfolios against severe geopolitical shocks and nuclear uncertainty. A successful, verifiable diplomatic negotiation that permanently caps Iran's nuclear program could reduce safe-haven demand, causing gold to sell off.
"I don't see how the world economy goes back anything remotely like normal, so long as we have this situation... they'll always be some drones. There'll always be some mines." Iran retains asymmetric warfare capabilities, specifically naval mines and drones, which are historically used to disrupt shipping lanes in the Strait of Hormuz. Because the conflict is ongoing and the global economy remains disrupted, a persistent geopolitical risk premium will remain priced into global energy markets, benefiting crude oil and major energy producers. LONG oil tracking ETFs and major energy equities as a hedge against prolonged Middle Eastern supply chain and shipping disruptions. A sudden, unexpected diplomatic breakthrough or a severe global recession could destroy oil demand and erase the geopolitical risk premium.
