US President Donald Trump's contradictory positions on the Iran-Israel conflict are undermining America's global standing while making China appear comparatively more mature, according to Jefferies' GREED & fear newsletter written by Christopher Wood, the firm's global head of equity strategy.
Wood said the past week had seen a "bizarre cacophony" of mixed messaging from the Trump administration, highlighted by the President's April 1 address. In the speech, Trump claimed the United States had "obliterated" Iran's nuclear programme, while also outlining a three-week timeline for possible US military action.
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"This is damaging America's prestige in the world while China, by essentially doing nothing, is looking more and more like the adult in the room," Wood wrote.
He added that the speech was emblematic of what he described as a "growing attack" on NATO allies for not supporting the US militarily against Iran.
"While it is true that Europe, and indeed Asia, are more vulnerable to higher energy prices triggered by the partial closure of the Strait of Hormuz, it is also the case that NATO partners were never consulted prior to the attack on Iran and, in GREED & fear's view, would not have agreed to it," the report said, adding that the action "makes no sense from their standpoint."
Wood described blaming NATO as a "useful diversionary tactic" aimed at a US domestic audience, arguing that it does not address the fundamental issue that the Strait of Hormuz was closed in response to what he termed the US's "ill-advised" attack on Iran.
"On this point, Iran has responded exactly as it said it would - by closing the Strait and attacking US military bases in the Gulf, regardless of the collateral damage to the relevant Gulf states," he wrote.
Wood added that while Gulf states have publicly blamed Iran for the damage sustained, "it has to be questioned what advice they were privately offering Washington prior to the attack."
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Looking ahead, Wood said the Trump administration's best-case scenario would be a "sudden implosion" of the current Iranian leadership - a possibility he said could not be ruled out given the targeted assassinations of senior Iranian figures by the US and Israel.
However, he warned that this would also reduce Washington's ability to negotiate.
He further cautioned that deploying US ground troops in Iran could lead to significant losses due to the country's geography, potentially further damaging American global credibility. Wood compared such a move to Britain's failed military campaign during the 1956 Suez Crisis, which marked the end of its status as a global superpower.
Wood also cited a CNN opinion poll showing that 66% of Americans disapprove of the war, adding that public sentiment could act as a deterrent.
"Hopefully, the latest opinion polls will restrain the administration, as they are not showing meaningful public support for the conflict," he wrote.
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