The U.S. has just announced that it will remove any company or country caught servicing Iranian-owned aircraft from the U.S. dollar system. But these sanctions don’t target the IRGC or regime; instead, they impact everyday Iranians in the hope of stirring up a rebellion against the regime.
While regime change is unlikely, the effectiveness of these sanctions will largely depend upon Chinese adoption. Without Chinese goods, Iran would be in quite the pickle. And we might even find out China’s stance in the coming days, as Trump and Xi Jinping meet in Washington.
Hey everybody. Peter Zeihan here, coming to you from Colorado. Today is the 22nd of September. You’ll be seeing this on the 23rd. The news today is the U.S. Treasury Secretary Bessent, has just announced new sanctions on not specifically Iranian aircraft and airlines, but anyone who might do business with them. Basically, if an Iranian owned aircraft lands anywhere in the world, anyone who provides assistance with ticketing, with boarding, with air traffic control, with fuel, with maintenance, anything is immediately purged from the US dollar system.
The intent is basically to deny all access. Now, this is not a sanction that is designed to pressure the regime because the regime can always, you know, jump on somebody else’s aircraft Chinese, Russian, whatever. And most of them don’t leave the country anyway because….they’re not nice people. This is about targeting the population. We’ve seen a lot of measures like this over the last couple of months, as the Trump administration has come to the conclusion that pretty much everything that can be sanctioned on Iran has been sanctioned for the better part of the last 40 years. And they’re coming up dry with efforts to find other ways to put pressure on Iran overall. So the theory now is let’s try to make life as difficult for the Iranian population as possible so that they will rebel and overthrow the government. That’s a very tall order. Not only has it failed so far this year, with several attempts, complete with the Iranian government killing several tens of thousands of their own people as a result. But the stack is really high. The Iranian military combined with the IRGC, which is the paramilitary arm of the government, has well over a million people under arms, and it’s not designed to invade their neighbors. It is designed to occupy their own country to prevent the various groups of Iran from rising up. Keep in mind that even after thousands of years of ethnic consolidation, only about 50% of the Iranian population is actually Persian. The rest is Kurds and Balochis and other things. So internal security has always been first and foremost the concern of the Iranian government and Persia before it going back to antiquity. We’ve only had a half a dozen regime changes in human history in this part of the world. And to trigger another one is going to be really, really difficult.
We’ve seen lots of other measures that the US government has done in the last couple of months. My favorite one is graduate standardized testing. You can’t take the GRE in Iran anymore, but it gives you an idea of how few levers there are if you actually want to change the government.
Anyway, the real open question here is whether or not every country in the world is going to agree to do this. So far, most companies and most countries have already signed on, maybe grudgingly. But the real outside question is, of course, China, which is the primary source for most of the manufactured goods that flow into Iran. Up to and including the parts that they need for their drones.
Now let’s see, I’m recording this on the 22nd. You’re going to see it on the 23rd. On the 24th. Chairman Xi Jinping of China is going to actually be in Washington for bilateral talks with Trump. And the technical term for what’s going to happen here is a shit show. On the American side, the Trump administration has systematically gutted all of the institutions that helped the president make decisions. So whether it’s the CIA or the State Department or the NSC, their staff was gutted last year. They were never rebuilt. And so all of the normal things that the American president would get on economics and culture and the political maneuvering within China, he’s not getting. Keep in mind that this is not just a China thing. Over half of the world’s country don’t have an American ambassador right now. China does. But the point is that Trump is coming into this as the least informed president for any summit in American history, and that will obviously color what comes out of it. But don’t get overly excited because Xi is not in much of a better position. Because Xi purged all of these systems a decade ago and has been operating in the dark in most international affairs, basically just working off of propaganda. So we’re going to get two of the most powerful people in human history who are also among the least informed leaders in human history, trying to hash out the details when they don’t have any of the details in Washington in 48 hours. It’s going to be a delightful negotiation, which means that the Americans are roughly unaware of what’s going on in China. The Chinese are roughly unaware of what’s going on in the United States. And if you happen to be someone in the middle like Iran, you might just manage to slip through unnoticed because it’s not up to the teams, because there aren’t teams. It’s just these two really arrogant and increasingly isolated men, pretending that they know what’s going on.
Wow. There’s going to be a show.
