Dud

Except for the sad news of Dolly Parton’s death, this has so far been a humdrum week.

The highlight of the week was supposed to be the start of the “economic D-Day” the Trump administration threatens against Iran. On the day of this “D-Day” – touted as an operation that will collapse the regime in Tehran – no details were announced.

US Treasury Secretary Scott Bessent appears to be the key person in this new strategy, replacing the incompetent “Secretary of War” Hegseth. Bessent has his hands full containing a blooming crisis in US Treasury bonds. He is busy printing dollars to influence the yield levels on long-term bonds, a matter that in all of financial history the market determined. This maverick experiment could end in grief.

Bessent named no country and identified no company to be subject to ruthless sanctions in what is supposed to be a grand strategy to isolate Iran from the rest of the world. The major financial institutions enabling the transfer of oil revenues from buyers of Iranian oil to the vault inTehran, Bessent tells us, could not be named to avert collapsing the international financial system. If they could not be named, they could not be sanctioned.

The unnamed country is obviously China. The Asian superpower relies heavily on Iranian oil. Beijing, however, indicates they will pay no heed to US sanctions, warning that this strategy will accomplish nothing and only serve to heighten tensions everywhere.

There and then, the threatened “D-Day” hit a stone wall. China, like Canada, is resolutely standing up to America’s bullying. Other nations will join this chorus of the unintimidated.

The first casualty of any additional sanction will be the Iranian people. They will bear great economic costs because the Trump administration, unable to win the war, chooses to scorch the earth.

The next biggest casualty will be the economies of East and Southeast Asia. They are dependent on energy flows through the troubled Strait of Hormuz – the vital waterway the US aspires to seal with its clunky navy. One aircraft carrier, beset with a deeply demoralized crew, is being sent home.

The last carrier guarding the Pacific theater is being deployed to the Arabian Sea to replace it. The once mighty US military discovers it does not have the weapons and the ammunition to sustain its war efforts. Escalating its economic blockade while short on ships is an invitation to further humiliation.

In a word, the “economic D-Day” against Iran is quickly revealing itself to be a dud. Iran, already the subject of intense economic sanctions for the last 47 years, will not roll over and play dead in the face of Trump’s empty threats. The Iranian people have a demonstrated capacity to accept pain that Trump underestimates.

Iran’s strongest weapon at this stage is time. They have lots of it. Trump has none. Xi Jinping is due to visit Washington next month. US midterm elections happen shortly thereafter.

Maharlika’s view

Rafael Consing of the Maharlika Investment Corporation (MIC) wrote us to make two points regarding this column’s discussion of the dispute that has erupted among the joint venture partners of a mining venture the corporation seeded with what has been described as a “bridge loan.”

The first point Consing’s letter takes exception to is my mention that the MIC loan “heightened the infighting among the venture partners.” He says “this characterization is not supported by the facts known to MIC at the time of its investment.”

Of course, there could have been no such infighting before the funding materialized. The infighting was not a fact when the MIC was considering its investment. It happened after. Before MIC’s funding, there was nothing to fight over.

The MIC did not anticipate the legal mess that erupted. In which case, this is a Know-Your-Customer (KYC) issue.

The second point Consing makes in his letter concerns the amount of the MIC loan. The column, quoting the prospectus of joint venture partners, mentioned the amount of US$76.4 million. Consing says this is incorrect. MIC exposure per the executed loan agreement is only US$10 million.

The letter admits that an earlier loan sheet “contemplated the possibility of two separate loan facilities aggregating to US$76.4 million.” Only the first loan facility of US$10 million was approved, documented and funded. No second loan agreement was executed. Consing maintains the MIC has “fully exited the financing transaction.”

Joint venture partners seem to understand things differently. As of late February, Celsius Resources Ltd. announced that its Philippine affiliate Makilala Mining Company “signed a binding term sheet with Maharlika Investment Corporation which outlines the key terms of a bridge loan facility of up to US$76.4 million to fund CLA’s flagship MCB Project.”

The announcement, used to help raise market capital for the venture, generously quotes Consing: “Our investment decision reflects a shared commitment to the sustainable, inclusive and regenerative development of the MCB Project. We envision the MCB Project as a benchmark for the Philippine Government’s call for ‘beyond responsible mining,’ setting a new standard for resource development in the Philippines.”

Consing says that after MIC assigned its rights, title and interests to Equinaire Holdings Ltd., the government-administered fund has “fully exited” the deal. Tell that to the Balatoc indigenous community in Kalinga who are expecting this project to improve their lives.