A Nobel-winning economist shared a sobering warning on Sunday after President Donald Trump demonstrated an "incredible weakness" in the war in Iran.
On Saturday, it was reported that the Trump administration had already relaxed sanctions on Iranian oil at sea. The deal accounts for roughly 140,000,000 barrels of oil and was announced at a time when the Trump administration is attempting to address the sharp rise in energy prices since the war in Iran began in late February.
Similarly, Trump threatened to attack Iran's power plants if the country did not allow U.S. ships to begin passing through the Strait of Hormuz again. Iran has effectively blockaded the passageway, which accounts for 20% of global energy trade, since the U.S. and Israel began bombing the country.
Paul Krugman, who won the Nobel Prize in 2008 for his work on trade theory, said in a new video on his Substack on Sunday that Trump's moves make it look increasingly likely that the U.S. will lose the war in Iran. He argued that the U.S. is giving Iran significant leverage by allowing it to dictate trade through the Strait of Hormuz.
"That’s an admission, implicitly, of enormous weakness," Krugman said. "It’s an admission that the Trump administration is not willing to accept sustained pain as part of this war. They’re willing to drop bombs and all of that, but they’re not willing to accept economic pain in the United States, even enough to shut off the revenue flow to the Iranian government."
"And this war is fundamentally about who can stand the pain," he added. "It’s the United States doing lots of damage to Iran, but the Iranian government seems to think it can handle that. And the Iranians trying to inflict enough pain through hurting the world’s supply of oil that the United States ceases and desists."
