{"text":[[{"start":7.05,"text":"A decade ago, when then US president Barack Obama cut a deal with Iran, he knew he would face criticism for failing to stop big Chinese banks from helping Tehran."}],[{"start":16.4,"text":"So he ruefully admitted the obvious: such banking sanctions could be an own goal. “To [really hurt Iran] . . . we would have to cut off countries like China from the American financial system,” Obama observed. “[But] since they happen to be major purchasers of our debt, such actions could trigger severe disruptions in our own economy and . . . raise questions internationally about the dollar’s role as the world’s reserve currency.” "}],[{"start":43.099999999999994,"text":"Quite so. In recent months, US President Donald Trump has repeatedly slammed Obama for that Iran deal. But the irony is that Treasury secretary Scott Bessent is now grappling with the strategic trap Obama highlighted — which illustrates the nature of the new world order. "}],[{"start":59.699999999999996,"text":"After all, as economists at Stanford, Yale and Columbia universities argue in an IMF essay, the key to understanding geopolitics today is to recognise that the US and China each want to wield hegemonic power (ie bully others)."}],[{"start":74,"text":"China has hegemonic power because it controls key industrial supply-chain nodes like rare earth minerals and pharmaceutical inputs, while America controls the dollar-based global financial system. Meanwhile, energy and tech hegemony, in my view, are still being contested."}],[{"start":91.1,"text":"Right now both sides are trying to break the others’ hegemonic power, but neither is likely to succeed soon. Cue grinding instability as proxies, like Iran, are sucked in. "}],[{"start":102.5,"text":"This week illustrated that. On Monday Bessent announced an “economic D-Day” against Iran, and threatened “the single greatest financial offensive ever marshalled against an adversary” with “secondary sanctions” on any entity doing money laundering for Iran, or trades in digital assets, technology, gold, aviation and shipping. "}],[{"start":124.9,"text":"Washington is doing this because it has failed to win the war by military means. But just as Bessent’s efforts to calm bond markets last week with aggressive buybacks seem to have backfired, his Iran campaign could undermine his credibility too."}],[{"start":138.5,"text":"Yes, some economists like Robin Brooks consider this “an important step in the right direction” given that Iran is now in a state of “economic collapse”. And, yes, countries like the United Arab Emirates (hitherto a crucial trading partner and banking centre for Iran) have joined the US embargo. Turkey, another key player, may yet follow suit."}],[{"start":161.05,"text":"However, China is the elephant in the room: as a Congressional report notes, it is “Iran’s largest trading partner . . . despite US and multilateral sanctions on Tehran”, and has pledged $400bn of investment there. It has also been buying 90 per cent of Iran’s oil exports. "}],[{"start":179.5,"text":"And while some Hong Kong tiddlers have been targeted, no sanctions were presented against big Chinese banks — even though Congress members like Republican Darin LaHood begged for this, to “send a clear message to China”. Or as Daniel Tannebaum, Oliver Wyman partner and sanctions expert, tells me: “Unless they sanction a Chinese bank everyone has heard of, this will fall flat.” "}],[{"start":203.85,"text":"Why the miss? Bessent probably wants to avoid derailing a planned summit between Trump and Chinese President Xi Jinping next month, which is supposed to produce trade deals. Indeed, Beijing has already threatened to “take all necessary measures” to retaliate if it is hit with anti-Iran sanctions. This means using its own hegemonic weapons, say stopping rare earth exports, which the US can ill-afford. “I don’t think China wants to help, [with Iran]” says Nicholas Burns, former US ambassador to Beijing. "}],[{"start":235.79999999999998,"text":"Then there is the dollar. To understand this threat, it is worth watching a five-minute propaganda film released a few months ago on Chinese state TV, in animated Jianghu (martial arts) style. This is not as sharp as Iran’s “Lego” posts that mock Trump. But it is “pleasingly poetic” for Chinese viewers, says the scholar Philip Cunningham — and geopolitically significant. "}],[{"start":259.75,"text":"It features a mad “eagle” (aka Trump) that attacks a kingdom of small “cats” (Iran), which successfully fight back. Then other animals shun the “white eagle gold tickets” (dollars), leaving the eagle looking foolish, while wise camels (China) look on from a distance. Is it just a Beijing martial arts fantasy? Bessent would argue so. After all, the dollar remains “the backbone of global finance”, accounting for 89 per cent of global foreign exchange trade, and US capital markets continue to soar, never mind geopolitics. "}],[{"start":294,"text":"But this dollar dominance is also quietly “eroding”, says Seb Murray of Stanford Business School. Or to cite Luke Gromen, a market analyst: “Every other weaponisation of the US dollar over the past 14 years has [driven] ever-greater volumes of trade and global trade finance into the Chinese yuan, via China’s [payment] system.” "}],[{"start":315.2,"text":"Hence Bessent’s dilemma: events in Iran not only show the limits of Trump’s military power, but the potential limits of Washington’s financial power too. Investors and US voters should re-read Obama’s 2015 speech and watch that Chinese eagle-versus-cat film if they want to understand the grim reality of geoeconomics and geo-finance today. "}],[{"start":345.8,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787912964_1119.mp3"}