By Michael Every of Rabobank Summit...
then 'summit' worse? “TOTALLY UNACCEPTABLE,” was President Trump’s response to Iran’s belated reply to his peace proposal, which they have rejected as a “surrender.” Tehran thinks the US must do so instead: rather than handing over enriched uranium, pledging to never build a nuke, reopening the Strait of Hormuz, and dropping ballistic missiles and support for regional terror proxies, Iran wants a permanent US retreat, reparations paid to it, and control of Hormuz.
More war, where the US takes control of the Strait and/or bombs the regime harder to encourage it to sign a deal, seems inevitable if one rules out a 1956-style retreat.
Indeed, Israeli PM Netanyahu gave a TV interview to 60 Minutes where he stated the Iran war, while having achieved a lot, is “not over.” Markets are not going to enjoy the prospect of greater and longer disruption to global energy supplies.
However, new fighting may not be seen until the weekend.
First, Second, as militarily to strike harder and for longer.
Third, where the focus will be on Iran as well as broader US-China relations.
As postulated since the early days of this war, its resolution may run through Beijing.
China, like Russia, has influence on Iran via supplies of key military goods.
In that regard, some see Trump going to China with Xi holding all the cards (because Iran holds a Strait.) Yet others think a sustained war that pushes global energy markets and the economy past a terrible tipping point might see Beijing offer to lean on Iran rather than supporting it like Russia vs Ukraine.
Naturally, that opens up chatter of a potential ‘Grand Bargain’ around the core interests of China, the US, and Russia (where President Putin presided over a deflated Victory Day parade and said the war with Ukraine may “be coming to an end.”) If you aren’t at this week’s table, you might be on it.
In short, the focus should be on this summit and whether it leads to ‘summit’ better or worse for you.
Equally naturally, political dramas around the world mirror those in geopolitics.
Following a local election drubbing and the collapse of two-party politics, the ruling UK Labour Party will see a stalking-horse leadership contest against deeply unpopular PM Starmer.
His potential rivals Streeting (in the cabinet), Miliband (in the cabinet and a former unpopular Labour leader himself), Rayner (not in the cabinet due to a tax scandal), and Burns (not in Parliament due to Starmer’s team) must decide if they will make their moves.
Starmer is determined to cling on and will give a major speech today seen as determinative for who joins the fray.
Financial....
