Iran war has reached crisis point for U.S. economy

OPINION:

The war with Iran has reached a crisis point for the U.S. economy, and President Trump must act decisively to save it.

The United States must end Iran’s nuclear weapons program, limit its missile, drone and other weapons industries to self-defense purposes and end its support for regional terrorist groups.

These are unacceptable to Tehran, which has demanded war reparations, the exit of the U.S. military from the region, control of the Strait of Hormuz, and the right to charge tolls.

Nothing will change unless the United States just leaves — essentially capitulates — or imposes its will by knocking out or crippling the regime it leaves behind.

Minimally, that would require taking Kharg Island and Iran’s port facilities on the Gulf of Oman, landing forces in other critical areas to destroy the missile and drone launching facilities and special operations to dismantle Iran’s nuclear program.

That will require much more than the 17,000 U.S. troops already dispatched. In March 2003, 150,000 were sent to Iraq.

The $200 billion in additional war funding proposed would only be a down payment, and federal finances are in a tougher spot with a  deficit of 6% of gross domestic product, compared with 3.3% in 2003.

However, the economic costs of ceding control of the Persian Gulf, the Sea of Oman, the Red Sea and the Suez Canal would be much greater than the cost of not continuing the war until we prevail — if we spur nation-building.

The urgency of the situation has been increased, and the likelihood of success has been diminished by Mr. Trump’s setting and extending successive deadlines for airstrikes on energy assets, electrical generating capacity and other civilian infrastructure.

Owing in part to the prolonged war, Persian Gulf allies and Israel are running low on interceptor missiles.

To win, we need a strong economy to generate new tax revenue, political will among Americans to bear the human and financial costs, and perhaps more support from our allies than for the use of bases and other logistics.

The president didn’t need public approval to start the war, but he should have explained his rationale.

Americans aren’t trigger-happy and wisely shun the human costs of conflict, but Mr. Trump gave Congress and the public only the vaguest notions of why he acted and didn’t articulate clear objectives or a realistic strategy.

He didn’t explain the threat posed by Iran to the public or adequately confer with Congress or allies. He later alibied that he needed the element of surprise.

Two weeks into the campaign, the peril posed by Iran to freedom of navigation, oil markets and gasoline prices should have been obvious.

Yet only 40% of Americans saw Iran as even a minor threat, and 15% viewed it as no threat at all. It had become obvious that troops on the ground would be necessary, but only 7% supported the idea.

Misadventures in Afghanistan and Vietnam have a lot to do with that, but the stakes for America are much greater if we cede the Gulf to Iran.

This would mark the end of America as a great power, creating a void for China to fill. Also, the decline of the dollar as the global currency would critically undermine our ability to finance U.S. debt and maintain living standards.

China would be more likely to try to take Taiwan, and that’s where Nvidia’s chips and the guts of America’s competitive advantage are manufactured.

Despite tariffs, deportations and most recently the war, forecasters expect the U.S. economy to grow 2.1% this year.

However, if the war drags on and oil prices continue up, those bets will likely change, because consumer spending is propped up by wealthy consumers and the stock market.

On March 27, the day after Mr. Trump announced yet another 10-day delay for the bombing of Iran’s energy facilities, oil prices rose and stocks cratered.

Mr. Trump must act decisively now or risk losing market confidence.

We should not try to replace the regime with a democratic order.

Many places in the Middle East are happy with their monarchies, as long as they deliver prosperity.

Nonexistent is an acceptable term to the West for the organized domestic opposition to the Islamic republic. Most of the opposition leaders have been eliminated or exiled for too many years.

Like many former empires, Iran’s borders were drawn arbitrarily, especially regarding ethnic populations.

Perhaps 60% of the Iranian population is Persian. Large minorities, including the Kurds and Azerbaijanis, live in border regions adjacent to brethren in neighboring states.

It might be best to simply destroy Iran’s nuclear facilities, weapons-making capabilities and oil industry — export terminals, wells, the works — declare victory, leave the chaos to sort itself and let Iran fragment.

It’s not a nice choice, but even many of Iran’s neighbors want us to eliminate the current regime before we leave.

• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.