Arnaud Bertrand

The war on Iran isn’t over yet, but it looks like we might in fact be staring at the one of the single biggest losses in the U.S. and Israel’s history.

As Ben Rhodes, the US’s former Deputy National Security Advisor, put it: “It’s hard to lose a war this short this comprehensively.” Yair Lapid, Israel’s former Prime Minister and Head of the Opposition, said there had “never been such a political disaster in all our history” and called it a “strategic collapse.”

Rhodes and Lapid are right. The amount of damage that the U.S. and Israel have done to themselves in such a short time - and the amount Iran gained - is genuinely stunning.

I mean, how crazy is this: JP Morgan calculated that, as per the new Hormuz toll arrangement (which Gulf states have confirmed is allowed in the ceasefire plan), Iran may get $70-90 billion in additional annual revenue, representing a stunning 20% of its GDP, in extra revenue. Hilariously, Trump commented on Truth Social that the arrangement means “big money will be made” and “Iran can start the reconstruction process.” Damn right: they gained the single most valuable geographic rent on earth, by a huge margin. For comparison, the Suez Canal earns Egypt “only” $9-10B/year, and the Panama Canal about $5B.

Stunning.

Stunning too is the sequence of events. On Tuesday night Trump was - seemingly - on the edge of nuking Iran, posting that “a whole civilization will die tonight”, only to essentially surrender a few hours afterwards, agreeing to negotiate peace on the basis of Iran’s 10-point plan (which he called a “workable basis”) - a plan which makes just about zero concession to the U.S. and represents near-total victory for Iran. To be fair, this being Trump, it’s unclear if he even understood what Iran’s 10-point plan is but he has since confirmed that he accepts the principle of an Iranian toll on Hormuz (although he now says he’d rather it be a "joint venture" with the U.S.).

What led from that to this is anyone’s guess - mine being that he tried one last massive bluff, and Iran still didn't blink. The why doesn’t matter much though, what matters more is the message this sends: as Jennifer Kavanagh, the former director of RAND's Army Strategy program (the most influential defense Think Tank in the U.S.), puts it: by “raising the stakes so high beforehand, he maximized the damage to […] global perceptions of U.S. power.” She added: “this is a clear strategic defeat for the U.S.”

There is a famous poker saying: “Don't bluff someone who can't fold.” Yet it’s exactly what Trump did. Iran literally couldn't fold. Their very survival as a state depended on not capitulating. So Trump's threat was the worst possible kind of bluff - maximum stakes, against an opponent with no exit. When it didn't work, he found himself - foolishly, entirely through his own doing - stuck between two impossible options: carry out the threat and become the most reviled figure in modern history (even more than he already is), or fold. He folded.

The geopolitical implications are almost too large to contemplate.