With the eyes of the world watching on, US Vice President JD Vance and the leadership of Iran held a marathon 21-hour long peace negotiation in Islamabad, Pakistan, over the weekend – and both sides emerged empty-handed.
“We’ve made very clear what our red lines are,” Vance said. “What things we’re willing to accommodate them on. They have chosen not to accept our terms.”
With the clock ticking on a shaky ceasefire in place between the US, Iran and Israel (although that country continues to target Lebanon), and the world’s fuel market reeling from the closure of the Strait of Hormuz, the stakes couldn’t be higher.
To show just how bad things could get, new modelling by Deloitte Access Economics found that almost 1 million Australians could be out of work, and inflation could pass 6.5 per cent, if the crude oil price spikes to $US150 per barrel.
A price of $US175 a barrel (only likely if the Middle East war drags on) would plunge the Australian economy into deep recession. Unemployment would climb beyond a million people to about 6.8 per cent, while inflation would hit 7.5 per cent.
While these scenarios are worst-case outcomes, they nonetheless demonstrate the dire consequences if a peace deal can’t be hammered out between the opposing sides.
Crude oil was below $US60 per barrel this year but spiked to more than $US110 per barrel after the US and Israel attacked Iran, preventing the flow of cheaper oil through the Iran-controlled Strait of Hormuz. The price fell below $US100 after the announcement of the ceasefire last week.
The Iranians, in their own description of the meeting with Vance, put the reopening of the strait first among their list of issues discussed. “In the past 24 hours, discussions were held on various dimensions of the main topics, including the Strait of Hormuz, the nuclear issue, war reparations, lifting of sanctions and the complete end to the war against Iran,” the Iranian Foreign Ministry said in a statement.
Reacting to the failure of the first round of talks, Foreign Minister Penny Wong expressed disappointment and warned any escalation in the conflict would create a greater human cost and cause further hits to the global economy.
“The priority now must be to continue the ceasefire and return to negotiations,” Wong said in a statement on Sunday. “We continue to want to see a swift resolution to this conflict.”
Her assessment is spot-on. While a quick outcome for peace talks was unlikely, some voices were hoping for a miracle. It’s worth bearing in mind that the last time the US and Iran undertook negotiations on the Middle East nation’s nuclear ambitions, an outcome was only reached after months of talks.
Hopefully, given the awful human and economic consequences if the ceasefire deadline expires, both sides will quickly resume negotiations and make some progress on the path to lasting peace.
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