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Chapter 1: What is the main topic discussed in this episode?
Unhedged listeners.
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The thing about that Donald Trump is the guy sure loves doing a deal.
Chapter 2: What promises has Trump made regarding a deal with Iran?
He certainly loves talking about doing a deal. Since his war against Iran started, he has stated that a deal to end it is just around the corner, about 40 times, 4-0. And do we have a deal? We do not. We supposedly have had a ceasefire for weeks, and for what it's worth, markets have kind of moved on.
But the latest is that the two sides are still tearing strips out of each other to say nothing of the role of Israel. Today on the show, seriously now, what is actually going on? This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at FT Towers back in London, where summer has officially been cancelled. And I'm joined...
By professional triathletes, the sporting specimen that is Mr. Robert Armstrong in New York. Rob, say hello.
Hello. I think you exaggerate slightly. I have not recovered. And I finished exactly in the middle of my age group.
In the triathlon, were there any walruses? Because I think I may have mentioned before that a walrus can run faster than a man and swim faster than a man. So you've really got to nail the cycling section.
If there had... If there had been a walrus, it would have been way in front of me, so I never would have seen it.
Apart from the cycling bit. We digress. But also, we have been trying to get him on the show for ages and he keeps saying no and claiming to be busy. But with me in the studio today in London, we have Andrew England, the FT's Middle East editor and generally a good egg. Andrew England, you have been a busy man, have you not?
It's been a little bit busy, yes.
He's got a thousand yard stare going on.
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Chapter 3: What is the current status of the ceasefire between the US and Iran?
And again, he's got to speak to his base and the hawks. As soon as the helicopter shot down, he says, I have to respond. So he responds that the U.S. military fires strikes Iran. Iran then has to respond because it doesn't want to be seen to be caving to US pressure. So it attacks US bases in the region, in Jordan, in Kuwait, in Bahrain.
Because the Iranians respond, then the Americans respond again. And so then the Iranians respond again. So the pattern was repeated overnight on Wednesday, Thursday. And so you're in this escalatory cycle all the time. There are still negotiations going on. So Wednesday, a Qatari team was in Tehran to try and finalize this deal that Trump said was close to being finalized.
They would only have gone if they had American assurances that one, Tehran was about to get bombed and two, the U.S. was still serious about a deal. And so they were there. Now, I was told this morning that they came out. So this morning being Thursday, I was told that they came out and they made good progress. They had breakthroughs.
And then Trump issues his true social post saying, we're going to bomb them again. And we're going to take over Clark Island, which is where 90% of Iran's oil is uploaded in the near future. So now I'm wondering, okay, so is there progress? Was there progress? I trust my contacts. And so there was progress. But once Trump makes these threats, how does Iran respond?
Because, again, neither wants to be seen to be caving to the other's pressure.
No, exactly.
And the last thing Iran will want to do is being seen to capitulate. And this is the thing that Trump hasn't understood from the very beginning. If you remember before the war started, there were nuclear negotiations. And Steve Witkoff, his envoy, said the president surprised... that Iran hasn't capitulated to all this military pressure.
And that just shows a fundamental lack of understanding of the enemy, of the party they're dealing with.
They may as well be speaking like Martian. Exactly.
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Chapter 4: Who is mediating the negotiations between the US and Iran?
The context here being... The oil market continues to be quite comfortable with this whole situation, as Katie mentioned before. And I don't think the oil market is made up of fools and Panglossian morons. I think they have some story about why we can muddle through. Do you think that's a realistic expectation I just laid out? Yeah, I think you've got a job going as a mediator.
I think there's a couple of things just to start. One, you know, oil prices are still far higher than they were in the beginning of the war. And I think one of the scary things is that what we're seeing today is almost being normalized. So you've had, you know, for the last... 48 hours, you've had strikes between Iran and America, the US, and no one's jumping up and down about it.
That's kind of scary. And then before that, you had strikes between Israel and Iran, which again, hadn't happened, direct strikes before 2024. So that's...
part of the issue and it's i don't think that's a positive thing but even now you know still like energy people i've got a note in front of me right here from jeff curry at carlisle saying about the abundance illusion right we're just chewing through all of these energy reserves that we
all over the world.
Those energy reserves are designed to be reserves. They're designed to provide a little bit of kind of security in emergencies. They're not designed to be drawn down for weeks and weeks and months and months at a time. So there remains this danger that we just get to the point where the reserves are too depleted and we still get that shoot higher in oil prices to $140, $150 a barrel.
Absolutely.
And there's also the question of just even if the war stops today, how long will it take to get everything back online? You know, if you've had wells in Iraq that have been mothballed, how much damage has been done? How long will it take to get back on?
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Chapter 5: What are the economic implications of reopening the Strait of Hormuz?
But you have just described, Andrew, the reasons why both sides would like a break of a couple of years. Iran to lick its economic wounds, maybe replenish its missile supplies. The U.S. to take the political pressure off that is... emanating from gasoline prices.
There does seem to be some overlap in motivations here, and they can put whatever rhetorical flourishes on it they like, but they get to that overlap, and we at least get the straight open and stop the... kinetic part of the war and we go to a kind of cold.
No, but what you're saying, I mean, I was being slightly facetious, but you're exactly right. And this is what the mediators are trying to do. Now, what they've done by doing the deal they're trying to negotiate is to get the straight open first, which is the crucial thing for global energy for obvious reasons. You push the nuclear negotiations back to the second phase.
And then whilst the straight is being reopened, you have the nuclear negotiations. But the key first step is... Reopen the Strait of Hormuz, get the oil and gas flowing, the helium, the urea, fertilizers, et cetera, and you lift the U.S. blockade.
Now, in the second phase, what you would see is then where you get to the nuclear nitty-gritty, which is kind of what they've been discussing, things that you've been talking about, a moratorium on uranium enrichment. Now, Trump wants their stockpile diluted. You know, the Iranians probably agree to that. They agreed to it with Obama in 2015, the JCPOA. Okay.
The key question is what happens to the stockpile of highly enriched uranium? That's a big stumbling block because the Americans want it offshore. Will the Iranians allow that to happen? Then there's a question about what happens to the enrichment of facilities, whether they're dismantled or not, as the Americans want.
So these are the kind of the technical details, if you like, they got to fresh out. Those negotiations are always going to take longer. And that's part of the reason you push them back, but you get the straight open. And Iran, everybody knows Iran will only do a nuclear deal if there is some kind of financial incentive. And like you say, it's how you dress it up. Is it sanctions relief?
Is it a waiver on oil exports? Is it unfreezing some of the frozen assets which they've got around the world? You know, some people have estimated up to 100 billion, which is essentially their oil money, which they can't access in various central banks. So, yes, there are. And this is what the media is hoping for. The media is hoping that you get this initial extension done.
You get the Strait reopened. That calls tensions. It reduces the risk of hostilities in the Strait of Hormuz or around the Strait of Hormuz, where you've got two competing blockades, the Iranian and the US one. And that provides a better environment for nuclear talks. Now, they've been having nuclear talks with the Trump administration since Trump came back in.
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Chapter 6: What challenges exist in achieving a nuclear agreement with Iran?
And the best case scenario is they get this preliminary deal, the strait opens, and then they get some kind of nuclear agreement, which reduces tensions. It doesn't mean necessarily that Iran's going to give up its entire nuclear capacity. They've got research and development know-how, which you can never reverse, right?
But as they did in the 2015 deal, they agreed to reduce the level of enrichment drastically to levels that were insignificant. They had caps on their stockpile. The rest was taken offshore. And in return, they got the sanctions relief. So they complied with that deal until Trump pulled out of it in 2018.
And that pushed them way back from being able to have the capacity to develop a nuclear weapon. So you could see kind of a deal like that Now, the question is, how do you frame it? What kind of economic dividend does Iran get? It's much harder to give. Iran's sanctions relief today than it was in 2015 after everything that's gone on, both internally and externally.
And how do we make it look like everybody's a winner? This is the big kind of conundrum. Listeners, if you think you know, they're unhedged at FT.com. Let us know. You might do Andrew a favour. We are going to have to leave it there. Can I just say one thing? Yeah, you can.
The good thing with Trump is he can spin anything. I mean, yesterday he was asked about inflation. He said, I love inflation.
Yeah.
So, I mean, you know, there's hope.
There's hope. There's hope and there's spin. That's all we've got to go on at the moment. We are going to be back in just one second with Longshot.
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Chapter 7: How does Trump’s rhetoric affect negotiations with Iran?
About a third of the run in this triathlon I did extremely slowly was on a beach. And let me tell you, I will never run on a beach again. I may never walk on a beach again. I may never go to the beach again as a result of the experience of trying to go fast on sand at my age.
It's that scene in one of the Rocky movies where they're running around in very short shorts on the sand.
What I was doing did not look anything like that. Let me just tell you.
It's a mental image I'm nonetheless going to take with me. I may need therapy. Andrew England, thank you so much for sharing your wisdom about what on earth is going on in the Middle East. I'm still not sure I'm any the wiser, but you've tried your best. Listeners, we are going to be back in your ears on Tuesday. So listen up then. Unhedged is produced by Jake Harper and edited by Brian Erstadt.
Our executive producer is Jacob Goldstein. We had additional help from Topher Forehead. Special thanks to Laura Clark, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free and a 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.
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