THE ECONOMIST: A month of bombing has achieved nothing. Will Donald Trump escalate, or talk?

Even by his chaotic standards, Donald Trump has just presided over an unusually wild week in his misguided war on Iran. The president had threatened imminent, punitive bombing of Iran’s civilian energy infrastructure.

Though Iran didn’t quail, markets did. So a U-turn followed. Mr Trump sensationally moved the goal posts twice. First pushing the deadline back five days. Then, claiming negotiations are progressing, Mr Trump granted Iran 10 more days to April 6 (local time), making an announcement “as per the Iranian Government request”.

But escalation is still a possibility. Amid such uncertainty, Iran’s regime seems unfazed. Remarkably, it now has a strategic advantage over its opponents.

True, the Islamic Republic has suffered dramatic blows. Many of its leaders, and hundreds of civilians, are dead. Its air defences are in pieces; its navy and missile launchers are largely gone. And yet the regime endures. As we warned when this war began, its mere survival counts as a victory of sorts.

At home the regime’s grip is not easing, but has if anything been strengthened by the onslaught from America and Israel. The hardline Revolutionary Guards are in control. Domestic opponents, whether ethnic separatists or urban protesters, are deathly quiet. Iran’s stocks of highly enriched uranium, some 400kg, remain untouched, probably still under rubble.

Most strikingly, Iran has established a chokehold over the Strait of Hormuz, blocking exports of oil and gas from the Gulf that account for a fifth of the global supply.

For decades American military planners have prepared for this obvious risk. But the war has proved both that Iran can strangle the strait, and that it would be agonisingly hard to loosen its grip. Iran’s asymmetric warfare, with missiles, cheap drones and perhaps mines against shipping, is keeping the superpower at bay.

Meanwhile, even though its proxies are weaker than before, Iran still has cards to play abroad. Because the Houthis in Yemen have held off shooting missiles at tankers in the Red Sea, some Saudi oil, pumped to the coast and bypassing Hormuz, reaches world markets. A lid remains on global oil prices, though they have still hovered around $US100 ($145) a barrel in recent days.

But the Houthis may now be incentivised to demand a high price — such as international recognition of their control over north Yemen — to hold their fire. In Iraq, Shia groups aligned with Iran are turning against Kurds (and Americans).

And Hezbollah, Iran’s client in Lebanon, may regain some local legitimacy as a “resistance” outfit, as the country comes under attack from Israel. An Israeli attempt at occupation could intensify that conflict and strengthen the group’s position.

In the Gulf, America’s allies did not wish for war, but now fear that a wounded, defiant Iran may emerge as an even bigger threat than before. Their security systems — air defences and costly interceptor rockets — are imperfect. Their economies look hostage to Iranian threats.

One option is to go all-in with America on the war. The United Arab Emirates has warned against talks with Tehran, saying that Iran is committing “economic terrorism” in the region. The Saudis reportedly want America to deploy ground troops.

Nor is Israel really any safer than before. Benjamin Netanyahu is thrilled by the sustained attack on Iran. Yet Iranian missiles have penetrated Israeli airspace, killing civilians. The nuclear threat from Iran has not been eradicated. Without regime change, the ballistic-missile threat will return, requiring Israel to strike Iran every few months.

Most worrying for the Jewish state, its long-standing ties with America may be under strain. The war is already unpopular with most Americans. If casualties mount, petrol prices soar and markets slide, who will they blame?

Already some on the Republican right are pointing to Israel. Voters, especially the young, have grown more hostile towards it; pro-Israel lobbyists in America are struggling.

In short, for all the power and sophistication of the military onslaught from America and Israel, Iran feels it has the upper hand over Mr Trump. It has shown that it is more capable than America of both inflicting pain and withstanding it. Mr Trump launched his war, unforgivably, without offering a strategic rationale for it.

Despite operational successes and his nonsensical claim of having already changed the regime in Tehran, he has yet to win any substantive gains from the fighting. As the political costs mount, Mr Trump will come under growing pressure. His choices are to escalate, or talk.

He may be tempted by dramatic escalation, inflicting damage on Iran’s civilian infrastructure and oil industry in the hope of compelling it to reopen the strait. Marines could grab Kharg Island and its oil infrastructure, take slivers of coastal territory or occupy islands inside the strait.

That might bring limited military benefit. But none of those gambits looks like a potential knockout blow. Iran could still fire missiles and drones from inside the country, or try to mine the strait.

Occupying soldiers would quickly morph into sitting ducks. Mr Trump, having yearned to banish the memory of Jimmy Carter’s military misadventure in Iran in 1980, would risk repeating it. Shifting large-scale resources to the region would leave America’s military forces weaker elsewhere, notably in Asia.

Full metal straitjacket

The less bad option, therefore, is to seek serious negotiations. Pakistan’s government stands by to mediate. Mr Trump says he has offered a 15-point plan to Iran, though officials in Tehran deny talks are under way.

But America has previously entered into negotiations in bad faith, using them as a ruse before attacking. Iran will thus be sceptical.

So Mr Trump must agree to a full ceasefire, and compel Israel to abide by it. Talks on reopening the strait and steering Iran away from its nuclear programme will be bitterly difficult.

And any eventual deal will be worse than what could have been struck before the war began, because Mr Trump has unwittingly strengthened the hand of hardliners and made clear the leverage they have over the strait. The result is that for now, at least, the advantage lies with Iran.