On Tuesday, hours before the cease-fire between the United States and Iran was due to expire, U.S. President Donald Trump unilaterally extended the pact. But Tehran was quick to call an extended American blockade of Iranian ports “an act of war.” Regardless of what each side calls the status quo, it is a punishing economic reality for billions of people, especially in regions like Asia, which receive most of their oil from the Persian Gulf.

To understand where things stand and where they might be headed, I spoke with Iran expert Karim Sadjadpour on the latest episode of FP Live. Sadjadpour is a senior fellow at the Carnegie Endowment for International Peace. Subscribers can watch the full discussion on the video box atop this page or download the FP Live podcast. What follows here is a lightly edited and condensed transcript.

On Tuesday, hours before the cease-fire between the United States and Iran was due to expire, U.S. President Donald Trump unilaterally extended the pact. But Tehran was quick to call an extended American blockade of Iranian ports “an act of war.” Regardless of what each side calls the status quo, it is a punishing economic reality for billions of people, especially in regions like Asia, which receive most of their oil from the Persian Gulf.

To understand where things stand and where they might be headed, I spoke with Iran expert Karim Sadjadpour on the latest episode of FP Live. Sadjadpour is a senior fellow at the Carnegie Endowment for International Peace. Subscribers can watch the full discussion on the video box atop this page or download the FP Live podcast. What follows here is a lightly edited and condensed transcript.

Ravi Agrawal: Let’s start with the status quo. What’s your understanding of where things stand between the United States and Iran right now?

Karim Sadjadpour: We’re in between a cold war and a hot war. Neither Trump nor the Iranians want to go back to a full-blown war. Trump has somewhat unrealistic expectations that this Iranian regime, whose senior leadership has been decapitated, is going to be able to come to a quick decision on such a monumental set of issues.

RA: We’ve all understood that Iran is holding the world hostage by blocking ships from the Strait of Hormuz, and our listeners know this, but a fifth of all crude and natural gas goes through there, in addition to many other important commodities. But Karim, what’s interesting over the last week or so is that Trump has now blockaded the blockade. In other words, he’s essentially telling the Iranians, “We can take the pain, but maybe you can’t take the pain.” Who has a higher threshold now for economic pain?

KS: On one hand, Iran is in a very difficult economic situation. This was a country which, even before this war, was teetering on insolvency. The protests last January were about the country’s dire financial straits, and the regime has probably incurred tens of billions, if not over $100 billion, in damages during this war.

For the United States, on the other hand, the economy has been better than expected in some ways. Iran pays close attention to U.S. public approval for President Trump and the war, in the hopes that limited popular support for this war will restrain President Trump’s ambitions to continue it. There was a perception in the first round of negotiations—having spoken to one of the American negotiators in Islamabad—that this is a regime which, despite its public bluster and confidence, is in desperate need of cash, sanctions relief, and of getting its assets unfrozen. That’s the advantage that authoritarian regimes always have when they’re fighting democracies: They don’t care about their public opinion in the same way.

RA: I’m curious how the nuclear issue is playing in negotiations right now and in the coming days and weeks. And I ask this question mostly keeping in mind that the regime now has this other weapon, the ability to disrupt the global economy. For the Iranian leaders, does that change its need for a nuclear deterrent? How do you expect them to approach the nuclear issue when it becomes a sticking point in talks?

KS: I don’t see Iran altering its nuclear ambitions.

You’re absolutely right about their discovery over the last five weeks that Hormuz enrichment is a far more potent tool than uranium enrichment. Countries like Israel, Iran’s neighbors, and the United States are certainly deeply concerned about Iran’s advancing nuclear weapons capabilities, but most citizens around the world are not really impacted by Iran’s nuclear program. When the Strait of Hormuz is blocked, and a fifth of the world’s oil, natural gas, and fertilizer are locked up, citizens all over the world feel that impact. That is what Iran wanted: something which would impact citizens the world over.

But given how much they’ve invested in the nuclear program over the last 25 years, when you consider both the sunk costs of the program and the opportunity costs and sanctions, the tally is perhaps north of a trillion dollars. That’s not something that they are willing to give up. They’ve gone to war twice now rather than compromise what they see as their right to enrich uranium.

One of the lessons that’s been plain for all to see is that countries that have given up their nuclear programs have made themselves vulnerable to external intervention, whereas countries who have nuclear weapons have given themselves a cloak of immunity.........

© Foreign Policy