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It may turn out that the worst thing Donald Trump ever did was hire John Bolton as his National Security Advisor.

Trump was already deranged on the subject of Iran, possibly because Jared Kushner is his son-in-law, and Jared is having a (presumably) platonic love affair with Saudi Crown Prince (and de facto ruler) Mohammad Bin Salman Al Saud. Saudi Royals both hate and fear Shia Islam, in part because the regions of Saudi Arabia with the oil are Shia.

So Trump unilaterally left the nuclear weapons treaty with Iran, and the Treasury department has made it illegal for any country to buy oil from Iran. Since almost all finance in the world goes through US banks, the Treasury can do this. Only firms which don’t use the SWIFT system can avoid the Treasury’s grasp.

These sanctions are having a terrible effect on Iran, and one which will grow even greater as the final waivers expire. There will be smuggling, but even so, Iran will be starved of foreign currency.

The US has also declared the Iranian military to be a terrorist organization, the first time part of a foreign government has ever received that designation.

And a carrier task group has been sent to the region, specifically as a warning to Iran.

It is well known that the NeoCons, of which Bolton is a prominent member, want a war with Iran, to remake the Middle East. (This is part of the same project which saw Iraq destroyed, and which fuel US-led regime change aspirations in Syria. A little further afield, Libya, while not in the Middle East, was similarly dealt with.)

The issue, as Escobar points out, is that a new alliance is rising. Its key members are China and Russia, but Iran is part of it as well. The Chinese Belt and Road Initiative is meant to create routes to Europe and a Chinese-led trade zone. It is meant to bypass the straits of Malacca (which the US can shut down at any time to strangle China), and the land parts will be a lot faster (though not cheaper) than sea transport.

Iran is a key part of this system.

Because other countries aren’t cooperating with the US when it tries to stop the B&R system (indeed, Italy just signed on), the US needs to actually destroy part of it.

Thus Iran.

This isn’t the only reason, needless to say, the NeoCons have wanted to destroy Iran for far longer than the B&R system has existed, but it is now an important consideration.

But what if Iran survives the sanctions? No one except the US is happy about the sanctions. Others may submit, but they don’t like it. The Chinese will do a huge end-run, as with the Russians. Even the Europeans are angry, and have created a “special vehicle” to avoid sanctions. (Consensus seems to be that it doesn’t do a good job and that if they’re serious they need to improve it.)

Because no one is happy, there’s going to be a lot of oil still sold. It may be enough to keep the Iranian government in power.

Then what?

Well, war, maybe.

The problem with that is that Iranians can shut down the Strait of Hormuz. There is no situation, short of nuclear glassing, in which the US can keep it open. That spikes the price of oil to hundreds of dollars a barrel, because, at that point, a quarter of the world’s oil cannot get to the market at all.

And that causes an economic and financial crisis, likely even larger than 2008, because it involves economic fundamentals.

So the question is whether or not Bolton, who is a true believer, can talk Trump into it.

And the answer is… I don’t know. Just don’t know.

But that’s a serious precipice on which we’re walking.

Even without war, this is a serious situation. The US’s continued abuse of its privileged position in the world payments system to sanction countries like Iran and Venezuela, even when other great powers disagree, means that the loss of that privileged position through the creation of alternatives is inevitable. It is already happening and only a matter of time before they become viable enough that major countries will simply be able to ignore the Treasury’s sanctions.

This is also true because other markets are large enough that access to the American market is no longer required. Especially if the EU comes onside with this, the ability to sanction is basically finished if the other great powers (and especially China), don’t agree.

This is, for the US, a late Imperial period. Don’t mistake it as anything else. And remember, very few countries manage to regain their pre-eminence or Empire. Britain lost one Empire and gained another, but it is an exception, and driven by a specific situation (first mover in the Industrial revolution) which has no modern parallel (no, the information revolution is not even a rounding error on the industrial revolution.)

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