When Will The War End?

Mapping possible off-ramps

We are 7 days into the Iran war. The Strait of Hormuz is effectively closed and increasing number of oil & gas companies along with various industrials are triggering force majeure clauses. Prediction markets are increasingly pricing in a prolonged conflict:

As I said in my recent post on X, the situation is getting more dire by the hour:

All theses on a quick deescalation hinge on Iran being a rational actor. I assure you they are not. They are ready to collapse the global economy if they have to.

So the key question is not wether the US can bomb them into oblivion. Of course they can, there is zero doubt regarding US military might. The question is at what cost and how quickly can this happen.

As we enter day 6 of the conflict, the cascading effects of the Strait effective closure are getting exponentially worse by the hour; some of them we won't know until it's too late.

Thus both sides are racing against time. Victory and defeat - not military, but political - are not well defined. At the same time Iran burnt a lot of bridges. Any diplomatic offramp in case of continued resilience of IRGC would need to offer them meaningful concessions; it is unclear wether either the US or Israel are ready for that.

This is a very delicate situation that could easily spiral out of control and chances of that increase by the hour.

While most analysts are counting on TACO, they fail to provide a single off-ramp for both sides of the conflict. It’s time to seriously consider what can happen in the next few days and weeks. Especially since both sides are issuing statements suggesting they are ready to fight for a long time.

I’ve been critical and about this conflict and based my rationale for No strikes in large part because of what we are seeing right now. What’s more, the US is still relentless in pursuing its maximalist goals of total military capability obliteration and regime change.

However, if the conflict is to end fast, the only solution is a diplomatic one. This article is an exercise in mapping out these solutions, assessing their viability in the current context and assigning odds to them. If you’re tired of seeing mediocre armchair analyses on X, this is a piece for you.

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Context

The effective closure of the Strait proved to be easier than anticipated. Iran used fear to make insurers pull out of providing coverage, utilizing global financial markets as a weapon against the US.

The key issue to understand is both sides’ goals and incentives. We need to game theorize scenarios that even with significant drawbacks for both sides, offer some kind of a win. Some believe that a unilateral cease of strikes by the US would end the conflict. It is not a given, however. At this point Iran is in an existential fight and thus has escalation control as well.

So first step is to define political goals of both sides. Then we can proceed to grade them by importance. Only then we can start to theorize off-ramps.

Iran