In Ernest Hemingway’s 1926 novel The Sun Also Rises, a character named Mike, when asked how he went bankrupt, says: “Two ways: gradually and then suddenly.”
Hemingway’s six-word description of financial collapse is a masterclass in concision and not without insight.
The processes that lead to collapse often happen slowly, can even go unnoticed, until a tipping point makes them seem abrupt.
The Iranian regime has been “gradually” disintegrating for decades but are we watching the “suddenly” phase of its political bankruptcy? Or is there another chapter for this brutal theocratic dictatorship.
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Even by the standards of dictatorship, the regime is extremely unpopular. Surveys suggest less than 20 per cent of population support it.
Its recent suppression of pro-democracy protests was as bad as any of the Stalinist or Maoist purges of the 20th century with an estimated 20,000 – 30,000 killed in the space of two months, suggesting authorities have no moral parameters when it comes to retaining power.
Being a dictatorship doesn’t exactly make it unique in the Middle East but its economic performance is exceptionally poor relative to its neighbours.
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When the Islamic revolution toppled the Shah of Iran in 1979, one US dollar (€0.86) was worth 70 Iranian rials. That figure has soared to an astonishing 1.4 million rials for a single dollar.
The exchange rate remains the most potent illustration of the regime’s economic failures.
Despite holding of some of the largest oil and gas reserves in the world – it is estimated to hold 9 – 13 per cent of global oil reserves and 15-17 per cent of natural gas reserves – the economy periodically suffers energy outages while inflation is running at over 50 per cent. Western sanctions have played a big role in this.
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Goaded by Tehran’s local enemies Israel and Saudi Arabia, the US appears to be seizing the opportunity to push Iran over the edge.
But regime change via air strikes has never been achieved plus there is no obvious Iranian opposition waiting in the wings. A power vacuum in such a multi-ethnic state evokes nightmares of Iraq.
Iran’s response to the US-Israeli led attacks seems to have evolved significantly from the de-escalatory stance it took to the attacks last year.
This time, it has attempted to widen the conflict, drawing in multiple countries in the region presumably to maximise the political and economic fallout.
It also appears to be retaliating in a more sporadic fashion, in many instances using lower-grade munitions and cheaper drone attacks.
[ Iran’s most potent weapon: energyOpens in new window ]
This has led to speculation that it may be trying wear down the interceptor resources protecting US assets and allies in the region before striking with its bigger weaponry at a later point.
Israel has referred to Iran’s counterattack as a “drizzle tactic”.
The calculus in Tehran might be to stoke a more prolonged energy price shock given Trump’s sensitivity to higher gasoline prices.
A key plank of this strategy appears to involve disrupting tanker traffic through the Strait of Hormuz. Several tankers have already come under attack.
“Any effective closure of this key chokepoint (whether due to Iran’s actions or shippers avoiding this waterway due to geopolitical risk) will translate into elevated oil prices and a spike in US gasoline prices ahead of the US midterms in November and run counter to Donald Trump’s consistent focus on lower oil price,” Philip Lambert, head of Lambert Energy Advisory, wrote in a blog.
Working out what’s going on inside the Iranian regime, which seems simultaneously defiant and desperate, is no easy task.
Which way Iran’s Islamic Revolutionary Guards Corps (IRGC), which operates in parallel with the army and has to date defended the theocracy with an iron fist, turns is a big variable.
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There’s a conspiracy theory that Ayatollah Ali Khamenei, who was old and reportedly ill, deliberately put himself in harm’s way to martyr the regime and rally the population. It does seem extraordinary that he held such a public meeting given the penetration of Israeli intelligence.
Washington’s war aims are also difficult to pin down.
Is it hoping to create a subjugated, US-friendly Tehran while keeping the regime largely intact, the Venezuela template?
Initially, Trump urged Iranians to “take back your government,” which seemed to suggest a regime change motive.
[ In maps: Five days of war across Middle EastOpens in new window ]
But now, in the face of no uprising and Iran’s tactic of provoking a wider war, US officials say their objectives are to destroy Iran’s nuclear programme and/or its ballistic missile capabilities without mentioning what Iran’s future might look like.
Trump has also given contradictory statements about the scope of the war with estimates ranging from “four to five weeks” to “as long as it takes”.
Might the US be falling into what political theorists call an escalation trap?
This occurs when the aggressor’s attack unifies the country, creating a more coherent response, necessitating either deeper military engagement (an escalation) or a politically embarrassing climbdown.
This is how protracted wars start.
