The Trump New Deal
The barbaric logic of Trump's imperial madness.
The George HW Bush has arrived in the Middle East, and Centcom has in position three of the United States’ eleven aircraft carrier strike groups. Despite the ceasefire, America’s airbridge to the Middle East continues, and America has now assembled more firepower than it had before the war commenced on February 28th. China has warned its citizens to leave Iran immediately, and the last time that China issued such a warning was on February 27th. Eighteen nations have told its citizens to leave, including the United States, Germany, France, and the United Kingdom.
Perhaps peace is possible. Trump has extended the ceasefire, and has sent his envoys Jared Kushner and Steve Witkoff to Islamabad, where they might hopefully run into Iran’s Foreign Minister Abbas Araghchi, who will also be visiting.
Unfortunately, Trump and the Israelis have consistently used negotiations as a cover for a sneak attack, and there are three subtle signs that this war will become both protracted and global.
The United Arab Emirates has asked for a currency swap line, and the United States Treasury Secretary Scott Bessent has told a Senate hearing that this would benefit both the UAE as well as the United States. The UAE currently has $120 billion in US treasuries, and a loan means that the UAE would not have to divest. This begs the question: The UAE is suffering the most from this war, and so why not sell US treasuries to put pressure on Trump to end this war?
From a game theory perspective, the UAE cannot afford for the United States to walk away. Dubai’s miracle was in conjuring up a mirage of a millionaire’s paradise. Since 2014, Dubai’s millionaire population has doubled to 81,000. The twenty billionaires and 237 centimillionaires who moved their wealth to Dubai are now moving it out. Only a humbled Iran can make Dubai great again. As well, a United States defeat would mean Iran could force UAE to pay reparations with a Strait of Hormuz toll.
By borrowing money from the United States, the UAE aims to incentivize the Americans to continue the fight:
One major reason that the United States entered World War I is that it could not afford for the Allies to lose. By 1917, American investors had bought $2.3 billion in war bonds from the Allies, and $40 million from the Germans. By borrowing heavily from the United States, the UAE hopes to become “too big to fail.”
Borrowing from the United States is a way for the UAE to finance this war against Iran without incurring the wrath of the Muslim world. Trump has said that he wants the GCC to pay for the war, and he cites as precedent the 1990 Persian Gulf War when Kuwait, Saudia Arabia, the UAE, Germany and Japan covered 88 percent of the war cost ($54 billion in total).
We can expect this war to cost trillions, and by creating the template the UAE hopes to build a “coalition of the willing” to finance this war. We can assume that Saudi Arabia, which wants the Unites States to humble Iran, is working behind the scenes to ensure the UAE gets American financing to withstand this war. Bessent wants to extend currency swap lines to all the economies that are suffering the most from this war, primarily those of the GCC and East Asia.
The second subtle sign that this war will be protracted and global is that the Indonesian Finance Minister Purbaya Yudhi Sadewa, speaking at a symposium, made an off-hand suggestion to impose tolls for using the Strait of Malacca: “If we split it three ways between Indonesia, Malaysia, and Singapore, that could be quite something, right?” He had to walk this back after the immediate backlash.
Eighty percent of China’s imported crude oil traverses the Strait of Malacca, and it’s so crucial to China’s global trade that President Hu Jintao coined the phrase “Malacca Dilemma” to describe this strategic vulnerability.
It is hard to imagine that an Indonesia high official, always sensitive of the US-China rivalry, could be so careless in a public setting. Was he testing the waters on behalf of the Americans?