Diplomatic negotiations do not work in the US-Iran conflict. Simply because Iran has two layers of power structures; an elected Government, the more amenable of the two layer, to a diplomatic solution, and an unelected power structure represented by the IRGC, the Islamic Revolutionary Guards Corp., which has the guns. The IRGC is an army created to protect the Islamic republic system. Not for protecting the country; for that, there is another army, called Artesh, but it is not properly armed.The head of the Islamic Revolutionary system is the Supreme Leader. After Ayatollah Ali Khamanei was killed on the first day of the current conflict, his son, Mojtaba, who was also severely injured, was appointed the Supreme Leader. Since he has never since appeared in public, not even (ostensibly for security reasons) during the funeral of his late father, it is possible he is no more, and that someone in the IRGC is passing written (hence unverifiable) orders in his name.

In this potpourri of governance, it is well nigh impossible to have a negotiated settlement of the conflict.

In fact Iran uses such deals (which lift the blockade and permit it to sell its oil) to evade the blockade and raise funds. When the last peace deal was signed, and the US lifted it’s blockade, Iran shipped and sold over 80 million barrels of oil, in 26 days, for $ 6 b.

Then, as depicted in the image above, Trump had mistakenly eaten the stick, allowing Iran to take advantage of the fake peace deal. Iran has no intention (not yet anyways) of negotiating a peace deal; it uses these as a way to get relief from sanctions/blockades and raise money by selling that oil.

So the only way forward is a combination of military and economic pressure. Trump seems to have reached that conclusion, too. He has threatened Iran that each time it attacked civilian vessels in the Strait of Hormuz, he would bomb a bridge or a port.

Economic pressure would include a blockade of the Strait to block commercial vessels from loading or unloading cargo, further attacks on islands like Kharg, which handle 90% of Iran’s oil export, to curtail evacuation of crude oil by sea, attacks on bridges, highways and ports to curtail evacuation overland.

Military pressure would include using the 30000 lb. bunker busting bomb, the GBU 57B, to try and destroy the stockpiles of enriched uranium buried there at depths of 80-100 metres, in Pickaxe Mountain. These bombs don’t detonate on impact with the mountain but travel deeper into it before detonating.

Iran has been clever in planning for asymmetrical warfare with more militarily powerful adverseries. Knowing it cannot match the awesome capabilities of American airforce or navy, it concentrated on unmanned drones and missiles which impose an asymmetrical cost. USA has developed new weapons such as Leonidas, which uses high power microwave pulses to fry the brain of a drone, and laser weapons, to counter the asymmetry. Iran has also used its geography of mountains and tunnels to ward off aerial bombardment.

It is to be seen whether the bunker busting bombs will be successful in destroying the centrifuges, or whether US would need to rely more on economic pressure.

The threat of a major military escalation has pushed crude oil prices up, to $100/ barrel. Sustained high oil prices would lead to inflation and to bunker busting high interest rates for equity markets.

Stock prices of Alphabet and of Tesla collapsed after they declared Q2 results. On the surface the results of both showed huge increases in Profits After Tax, and both raised their capex plans. The collapse of stock prices was due to the inclusion of unrealised gains. USA allows companies to mark assets to market even before selling them, in fact, requires them to.

Alphabet’s PAT increased from $ 28b in Q2 of the previous year, to $ 112 b. in Q2 this year, up $ 84b. This was after a $99b. marked to market unrealised gain. Of Tesla’s $ 1.1 b. PAT in Q2, $1 b. was because of unrealised gains on it’s SpaceX holdings.

Personally, I believe the Indian system of accounting only for realised gains, is better. Unrealised gains can be declared in the notes. Allowing unrealised gains to be declared results in a yo-yo of profits.

Last week the BSE Sensex closed at 76059 , down 2092 points over the week.

India is witnessing student and public protests on various issues, particularly the leaked NEET ( National Eligibility cum Entrance Test), a test for medicine, dentistry and nursing. These are highly aspirational fields. In 2026 a whopping 2.3 m applied for it. They had been leaked in 2024 also. Corrective action was taken, and the test was taken again, in time for the academic year.

But it is high time exemplary punishment is meted out to those guilty of leaking the papers. Such acts recur because (a) punishment is weak or non existent and (b) the judiciary is slow and doesn’t intervene.

This is why Ponzi scamsters are emboldened to swindle people repeatedly; the risk:reward ratio is hugely in their favour. The NSEL scam remains unresolved for 14 years. The investigative authorities did nothing. Faith in the judiciary has evaporated. Ultimately, suffering victims, in helpless frustration, signed a one time settlement in March 2025, taking a big haircut; even that settlement between consenting parties came under judicial scrutiny (why???) and payment under it is still pending.

Last week the Bombay High Court released a Chandigarh property that had been attached by MPID, an investigative agency, in the NSEL case as having been acquired via proceeds of crime. The attachment occurred in 2012 and the release in 2026.

Simple question. Should it take 14 years for a court to determine this? Simple follow up question. If the property was not connected to NSEL, should MPID not be hauled up? And if it is connected, should the Bombay High Court judgement not be stayed, and investigated?

In short, thanks to the Government going easy on investigation of crime, and a judiciary which delays justice, unmindful that justice delayed is justice denied, India has several structural problems:

> a poor education system, in which test papers are leaked
> a woefully wanting investigative system which has no empathy for victims
> a failed agricultural policy – witness 50% of people dependent on agriculture earn 17% of national income, an unfair terms of trade. Witness 80 million people, over half the population, need to get free food rations 79 years after Independence.

The protests are manifestations of unease. This unease will grow as AI disrupts more industries and displaces more jobs.

Simple conclusion: the people have lost faith in the judiciary and investigative agencies to deliver speedy justice.

Simple analysis: it is tough for India to become Viksit Bharat (a developed country) without fair and speedy judicial and investigative systems.

Mr Modi, India, too, needs more stick and fewer carrots.

India has the talent and the fire in the belly. It needs the discipline of stern action against crime, the basic provision, in any society, of speedy trials and impartial justice and dropping of bunker busting bombs on the corrupt.
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Comments may be sent to: jmulraj@asiaconverge.com