On the latest episode of GoodFellows, senior fellows John Cochrane, H.R. McMaster, and Niall Ferguson, as well as moderator and distinguished policy fellow Bill Whalen, dive into the recently-signed 14-point “Memorandum of Understanding” between the United States and Iran, suspending hostilities and initiating a new round of diplomatic talks.
What does this deal mean for the United States, its allies, and the world economy? And will the agreement to hold additional talks on key issues like Iran’s nuclear program and the Strait of Hormuz actually lead anywhere?
The GoodFellows are well equipped to grapple with these questions. Below are some of the key moments and insights from their analysis of the deal, its prospects for success, and the current state of American power and influence in the world.
Quote of the Day
Looking at economic and political instability in Cuba, Bill Whalen anticipates a possible change in government on the island and asks John Cochrane, “How would you help [a newly non-Communist] Cuba get back on its feet?”
The Grumpy Economist has a simple, yet powerful prescription:
“Simple. Get out of the way. Let people run businesses, let them use cash, real cash. It’s pretty much all you have to do, and [then] you can have it grow tremendously.”
The Central Issue: Is the MOU a good deal with Iran?
Niall Ferguson explains why, in his view, the deal as it has been reported in public outlets is “dreadful.”
Why is it dreadful? Well, it’s dreadful because it’s obviously been agreed in order to get the Strait of Hormuz reopened, first and foremost. And even the wording there is strangely asymmetrical. It’s kicked the nuclear issue into a 60-day process. You know it’s not going to get done in 60 days. And I think most importantly, there are four out of 14 points offering the Iranians sanctions relief and the unfreezing of their $100 billion worth of frozen assets. And some of that is right up front. The waivers for Iranian oil exports. This is a far cry from what the administration set out to achieve when it launched Operation Epic Fury, and the operation headline is likely to be “Operation Epic Fail” if this is it. It might not be. Maybe [there will be] a twist in the tale, but judging by what I’ve seen so far, these sure ain’t Woodrow’s 14 points.
To which H.R. McMaster responds:
I agree. Let’s just be succinct. I agree completely with Niall. It’s a disaster.
John Cochrane also agrees, but for the sake of argument tries to discern a plausible strategic explanation for the MOU. It is possible, he suggests, that the Trump administration has something like the following in mind:
We’re going to spend hundreds of billions of dollars propping up our sworn enemies [and] hold our noses, open the Straits of Hormuz through the [November US] midterms, hold down the amount of missiles going back and forth [across the Middle East]. . . to an amount that can be called something quiet, get through the midterms, and [hope for a] hail Mary, the Democrats don’t win the midterms. . . [Then we] come back and do something serious afterwards.
Concludes the Grumpy Economist:
It’s the only optimistic scenario I can see. Otherwise, we have thrown in the towel and been defeated by the Iranians and God knows what happens after that.
Key Takeaways
Remember, Peace Requires More than a Signed Document
Tempering his own critical appraisal of the Iran MOU, Niall Ferguson reminds listeners that wars have consequences even well after the fighting stops; and these consequences can, in the end, matter more than the terms of the deal that initially settled the conflict. As he says, “Peace isn’t just a piece of paper. The outcome is often the second and third order consequences of the war, rather than anything that gets written down and signed. . . So bad though this document looks today, and I think it looks bad. . . There are things that we can’t foresee in the weeks and months ahead. . . And in that sense, I don’t think we should be too critical, nor should we with too much confidence dismiss this as an epic fail.”
What’s Going on in Lebanon?
Former National Security Advisor H.R. McMaster cautions US leaders against leaving Israel and its security threats from the Lebanon-based militant group Hezbollah out of an Iran deal. He says, “Don’t forget Lebanon because Israel will not hold back. . . And what you’re also going to see is really, I think the case made by Prime Minister Netanyahu and others directly to the American people and to Congress to say, “Hey, listen, I mean, how’s this possible? We’re not even mentioned in this agreement, except to constrain our ability to defend ourselves against Hezbollah.” I mean, that’s another aspect of what’s in the future here.”
What Might Happen in Iran After the War Concludes?
Niall Ferguson sees the conditions for another grassroots uprising of the Iranian people, even if the exact timeline can’t be predicted today. He explains, “Remember, this is still a hated regime. Perhaps one in 10 Iranians is still supportive of the regime. Everyone else hates it and wishes it ill. And that’s the best hope that President Trump has, that when the shooting stops, the fundamental antipathy of the Iranian population towards the regime starts to come back as a force. And I think it will. I don’t think that repressive regimes can simply keep on shooting their own people. So that’s the key issue. I can’t predict it, but I think we’d be unwise to rule out that this regime is actually holed below the waterline, but we just don’t know how quickly it’s going to sink.”
Has the United States Lost Military Supremacy in the Middle East?
H.R. McMaster sees in the MOU more of a US choice to step back from escalation, than an inability to compel Iran to cease firing on the Strait of Hormuz: “We just decided to not do it. So this is not an irretrievable situation in my view, but it certainly is a setback in terms of US influence in the Gulf.”
John Cochrane adds: “Yeah, clearly a lack of will rather than a lack of means, but now we’ve shown the lack of will.” But soon after, Cochrane also emphasizes that this is a fluid military and diplomatic situation, noting, “Something new will happen next week.”
As those new developments in the Middle East take shape, the GoodFellows will be back to analyze their impact on the United States and the world.
Recommended Reading
H.R. McMaster recommends The Face of Battle by John Keegan (1976)
Niall Ferguson recommends Fever Pitch by Nick Hornby (1998)
Parting Wisdom ⚽️
Niall Ferguson, in honor of the World Cup currently taking place across North America, reflects on the nature of his and other fans’ attachment to the game known in the rest of the world as football:
The thing about football is, it’s an addiction and it really mostly consists of pain. You spend most of the games you watch, if you’re really supporting a team, in an agony because it’s either nil-nil (so nobody’s winning) or you’re one-nil up, but that’s still not very secure; or they’re one-nil up, in which case you’re in real agony. Football is pain. The great author, Nick Hornby put it very nicely. So you’re probably wise to avoid it, Americans, because you think life is the pursuit of happiness. Trust me, if you follow football the way I follow football, it isn’t the pursuit of happiness, not really.
That wraps up this GoodFellows conversation guide. If you like this companion to the show, or have any recommendations for future conversation guides, please let us know in the comments below.
John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution, Stanford University. An economist specializing in financial economics and macroeconomics, he is the author of The Fiscal Theory of the Price Level. He also authors a popular Substack called The Grumpy Economist.
Niall Ferguson is the Milbank Family Senior Fellow at the Hoover Institution, Stanford University. He is the author of sixteen books, including The Ascent of Money, Civilization, and Doom; columnist with the Free Press; founder of Greenmantle; and co-founder of the University of Austin.
H. R. McMaster is the Fouad and Michelle Ajami Senior Fellow at the Hoover Institution, Stanford University and distinguished visiting fellow at Arizona State University. He is author of the bestselling books Dereliction of Duty, Battlegrounds, and At War With Ourselves.
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