TANVI RATNA: Iran war isn’t a distraction from America’s problems, it’s where they lead

Iran war would complete US decline, warns New Delhi policy analyst

Muhammad Asghar | GlobalBeat

Tanvi Ratna told an Indian security conference that American military action against Tehran represents the logical endpoint of Washington’s domestic dysfunction, not a temporary diversion from it.

The New Delhi-based policy consultant argued that mounting social inequality, cratering trust in institutions and a $36 trillion federal debt have left the United States with “fewer non-military tools” to manage global challenges, making bombing campaigns appear as the last readily available policy lever.

“War with Iran isn’t a sideshow to America’s problems, it’s the main stage where those problems play out,” Ratna said at the Observer Research Foundation on Monday. She pointed to the 2003 Iraq invasion, which she said cost $2 trillion while yielding a Tehran-aligned government in Baghdad, as proof that kinetic options deliver the opposite of stated aims.

Ratna, who advised India’s finance ministry during the Trump administration’s 2019 sanctions on Iranian oil, warned that a fresh Middle Eastern conflict would accelerate dedollarisation as China and Russia offer alternative payment rails to energy buyers. “The moment US bombs fall on Iranian nuclear sites, New Delhi will be asked to choose: keep buying discounted Russian crude or stick with the dollar system,” she told reporters after her speech.

Her comments landed hours after President Donald Trump posted on Truth Social that “all options are ON THE TABLE” if Iran enriches uranium above 90 percent. Tehran announced last week it had reached 83.7 percent purity at the Fordow plant, a threshold diplomats say leaves the country weeks from weapons-grade material.

Indian foreign ministry officials privately share Ratna’s fears. Two senior diplomats told GlobalBeat that ships carrying Indian basmati rice and pharmaceuticals already face 10-day delays at Bandar Abbas because insurers demand war-risk premiums. “A single missile strike on a commercial tanker would send those costs through the roof,” one diplomat said, requesting anonymity because Delhi maintains formal neutrality.

The analyst’s biggest worry is oil. Iran produces 3.6 million barrels per day; Ratna predicted the price of Brent crude would spike to $150 within a week of aerial attacks, pushing India’s import bill up by $30 billion annually. That equates to 1 percent of GDP, enough to wipe out the fiscal headroom Finance Minister Nirmala Sitharaman needs for pre-election spending.

At the Pentagon, planners modelled a 2024 scenario in which closing the Strait of Hormuz for 30 days would shave 0.8 percent off global growth, according to a briefing slide leaked to Foreign Policy. Ratna called the estimate “optimistic” because it assumed China would release strategic stocks; Beijing has instead hoarded a record 1.1 billion barrels since October.

She reserved special scorn for Washington’s sanctions architecture. Over-compliance by European banks has already severed channels that Indian importers used to pay for Iranian crude via UCO Bank in Kolkata. “You can’t sanction a country into submission when you’ve already sanctioned yourself out of leverage,” she said, pointing to Iran’s 2023 weapons exports worth $1 billion to Moscow as evidence that blacklists fail.

Republican hawks disagree. Senator Lindsey Graham told Fox News on Sunday that “a few weeks of precision strikes” could set back Iran’s programme by a decade without US boots on the ground. Ratna countered that Israel’s 2024 attack on Natanz merely dented centrifuge halls that were rebuilt within six months. “The Iranians buried the new cascade 80 metres deeper. That’s the definition of doing the same thing and expecting a different result,” she said.

Energy traders are already positioning for upheaval. Data from the Commodity Futures Trading Commission shows net-long Brent positions rose 18 percent last week, the fastest weekly jump since Hamas attacked Israel on 7 October 2023. “Markets are pricing a one-in-three chance of conflict before the US election,” said Helima Croft, head of commodity strategy at RBC Capital Markets.

India’s government has begun damage control. Petroleum Minister Hardeep Singh Puri held a closed-door meeting last Tuesday with state-refiner bosses to review alternative suppliers, according to two attendees who asked not to be named because the session was off the record. Ratna predicted Delhi would secure extra shipments from the UAE and Iraq but warned the discount Iran offers, around $10 per barrel, is irreplaceable.

The domestic politics cut both ways. Prime Minister Keir Starmer faces pressure from Labour backbenchers to back US action, while Chancellor Friedrich Merz told the Bundestag that Germany “will not participate in offensive operations,” exposing NATO splits. Ratna said such fractures embolden Tehran. “Every public disagreement is read in Tehran as proof the coalition will crack under first blood,” she argued.

Background

The 2015 Joint Comprehensive Plan of Action capped Iran’s enrichment at 3.67 percent and shipped 98 percent of stockpiled uranium abroad in return for sanctions relief. President Trump withdrew from the deal in May 2018, reimposing banking and oil embargoes that shrank Iran’s crude exports from 2.5 million barrels per day to under 400,000 by mid-2020. Tehran responded by breaching limits each subsequent year, reaching 60 percent enrichment by 2021 and installing advanced IR-6 centrifuges at Fordow, a facility originally built secretly under a mountain to shield it from aerial attack.

India, once Iran’s second-largest customer after China, cut imports to zero under threat of secondary sanctions but never endorsed the policy publicly. Delhi kept the Chabahar port project alive with a rupee payment mechanism, allowing wheat and medical supplies to reach Afghanistan. The workaround angered Washington yet preserved India’s only deep-sea gateway to Central Asia, underscoring New Delhi’s balancing act between strategic partnership with the United States and energy realities.

What’s Next

Diplomats expect a crunch moment when the International Atomic Energy Agency issues its quarterly report on 15 May. If Iran crosses 90 percent, President Trump must decide within 72 hours whether to seek UN snapback sanctions, a move Russia and China promise to veto, or green-light Israeli-led strikes that could drag US assets into the fray. Ratna predicts India will publicly call for restraint while privately urging Tehran to freeze enrichment at current levels, a message Foreign Secretary Vikram Misri is scheduled to deliver during a 2-day visit to Tehran starting 8 May.

The bigger gamble is whether Washington can still wield economic statecraft once bombs drop. Ratna notes that Iran’s non-oil trade with China hit $33 billion last year, almost triple 2019 levels, giving Beijing the leverage to cushion Tehran from Western bans. “If the dollar loses its veto power over Persian Gulf oil flows, the post-1945 order ends not with a treaty but with a tanker convoy,” she warned.