Economic Warfare w/ Aslı Bâli, Esfandyar Batmanghelidj, Nicholas Mulder

This episode of The Dig is brought to you by our listeners who support us at patreon.com and by University of California Press. Publishers of the book Ethnic Studies at the Crossroads by George Lipsitz. Ethnic studies is more visible than ever, but not without political and legal threats. This book takes a look at the current state of the field, examining its painful contradictions as well as its potential. Critical yet optimistic, this book upholds the promising wider role of Ethnic Studies in social transformation. Learn more about Ethnic Studies at the Crossroads at ucpress.edu. Welcome to The Dig, a podcast from Jacobin magazine. My name is Daniel Denver, and I'm broadcasting on the road from a studio into Koma Park, Maryland. The U.S. Israeli illegal war of aggression on Iran has quickly become fundamentally an economic war. Iran, outgunned by its enemies, has leveraged control of the straight of her moves in its capacity to attack oil and gas infrastructure across the region. Its deployed relatively cheap drones and missiles against expensive interceptors and radar equipment. The asymmetric strategy aims to impose massive economic costs on the U.S. in Israel, and also on Gulf states that aren't directly participating in the war on Iran, but who are, more generally, key allies in the U.S. Israeli Geostrategic Project. Indeed, Iran's economic warfare aims to force the whole world to reconsider the liability of acquiescing to U.S. imperial power. This episode is a deep analysis of economic warfare in its many dimensions. My guests are Oslo Bali as Fandier Batman-Gallagher and Nick Mulder. Next week, we'll return to Nusantara, our series on the history of Indonesia. And if you want more context in what's going on in Iran in the Middle East, check out our multi-part series on Iran and another multi-part series on the history of the 20th century Arab East, or are many episodes on U.S. imperialism. Before we get started, I'm constantly trying to figure out how to best balance deep histories with rich contextualizations of the present conjuncture. In order to take effective action to transform the world, we need to understand everything about what's happening and also about what's happened. That's what your contributions at patreon.com/thedig make possible. We put everything into this podcast and put out every single episode for free with no paywall because this is first and foremost a political education project and we are dedicated to every single person who might want to listen to any episode doing so. If you've been meaning to contribute, please take a moment to do so now. That's p-a-t-r-e-o-n.com/thedig. There's a link in the show notes. Okay, here's Oslo Bali as Fandier Batman-Gallagher and Nick Mulder. Oslo Bali is a professor of law Yale Law School who focuses on public international law and has published essays and op-eds in such venues as The New York Times, Boston Review, The London Review of Books, Jacobin, and Descent. Before joining academia, she worked for the UN Office of the High Commissioner for Human Rights. She's the past president of the Middle East Studies Association of North America, co-chair of the Advisory Board for the Middle East Division of Human Rights Watch, and a non-resident fellow at the Quincy Institute for Responsible State Craft. As Fandier Batman-Gallagher is the CEO of Borsen Bazaar Foundation, a research foundation dedicated to economic development and economic diversity in West Asia. He's also a professor at the Johns Hopkins School of Advanced International Studies, where he teaches on the effects of sanctions. Nicholas Mulder is a professor of history at Cornell University. He's an economic historian who focuses on the intersection of geopolitics and economic history, and is the author of The Economic Weapon, The Rise of Sanctions as a tool of modern war, and the forthcoming, the age of confiscation, making and taking property in the creation of the modern world. Asla Bali, As Fandier Batman-Gallagher, and Nick Mulder, welcome to the dig. Thank you, Dan. Thanks for having us at that. Nice to be here. Great to be here. Dramatic things will have likely happened in between now, this moment when we're having this discussion, the morning of Wednesday, March 25th, and whenever listeners are listening to this episode. So we should keep our analysis at a level of abstraction higher than the hour-by-hour of vertigunist twists and turns of this truly unfortunate catastrophic war, but it seems safe to say that no matter what happens, this will end in some sort of major strategic defeat for the United States, and also maybe in a more medium or long-term sense for Israel, whose action since the onset of the genocide in Gaza have just continually eviscerated the popular consent for the longstanding U.S.-Israeli alliance. And what seems most remarkable to me, I think, is that this strategic defeat, the precise the contours of the structural features of the conflict that make that defeat inevitable, were evident from the very first moments of the war, just to start out before we get into a lot of different facets of this, particularly the geoeconomics and economic warfare at work. What's your assessment of the overall strategic dynamic that we're seeing unfold? So I think there are several dimensions to the question that you just asked then. On the one hand, there's like literally the war itself, and I think that the decision to escalate did put this war on the path of a strategic defeat, because escalation in the place of diplomacy, and particularly escalation in the midst of diplomacy, has a greatly harmed the possibility of returning to any kind of a meaningful negotiated path, but be shifted this conflict into a domain in which the United States and Israel are going to be at a disadvantage because the logic of escalation entails regional disruption and global economic spillover that particularly the United States doesn't want. And of course, and I'm sure we'll get into this, the US and Israel have increasingly divergent interests here, and so it's also a matter of saying to define a strategic defeat. You have to have a strategy or be able to define what goals you're pursuing. Israel's able to define those goals to my mind. Their goals are not even just degradation of Iran, but actual destruction of the state, regime collapse, but also destruction of the material capacity to reconstitute a functioning regime in state. But that is always going to be something that requires a sustained, ongoing level of coercion because you produce a dynamic in which the harm that you have inflicted produces a kind of enemy you can't live with having in the region. And so that escalatory logic is deeply problematic, is really a dead end for a state like Israel, which simply can't in terms of size, population, position, sustain, and open-ended and indefinite project of collapsing and destroying much larger states all around it. And so while it may pursue maximalist goals of greater Israel in its immediate neurobride, seizing territory from weaker adversaries, the idea of crushing a very large and distant, relatively speaking, adversary and then keeping it down is unattainable and therefore is a path to strategic defeat. For the US, it's not clear what the strategy is, but whatever it is, the level of regional destruction and global economics bill over has already produced harms it can't justify and it can't manage. So there are those kinds of strategic defeats. But then you also implicitly in your question said, isn't this also eroding the basis of consent domestically in the United States A for the US Israel partnership? And B, just for Trump's self-presentation as a political figure in our political landscape who claimed to be the person who would get us out of the Middle East, who would not produce more wars, who wasn't economic manager, etc. All of those narratives are undermined almost instantly on the day that the war begins. And so it's a strategic defeat in terms of just basic political strategy domestically in the homerina. So basically this war is not going to fail because Iran wins by some important metric, but rather because the structural conditions of the war from the outset immediately play to the particular kinds of asymmetric strengths that Iran has by virtue of the character of itself as a state of it, society and a civilization, while at the same time connecting both of these actors, that is the US and Israel, to strategic postures that are both untenable and diametrically opposed to several long-term interests they themselves have. YAR. I mean I think that was it. and break down by Osla, there are a few things I'll build on. I mean, the first is to say that those structural factors that led the war to play out this way, in particular the asymmetries in terms of power between the US, Israel and Iran, and the fact that Iran was able to sort of turn those asymmetries on its head and push this conflict into an attracional war, I think it's correct to say that there isn't a victory at hand for the US and Israel, but at the same time, if we're going to say that, you know, the US and Israel are facing a strategic defeat, I think it's also important to acknowledge, and it may be banal to acknowledge this, but it is important that Iran is also facing a kind of strategic defeat in this conflict. I mean, there really are no winners here, and I think that's the really profound feature of this war, is that in some ways that should have been completely foreseeable for the United States and Israel. I mean, they certainly believed in their capacity to kind of create material destruction within Iran. And although I agree with Oslo that they probably don't have the stomach to go the full way of trying to really degrade Iran's capacities completely, or to try and change the regime, at the end of the day, they are creating significant disruptions for what was in the context of the Middle East, an unusually prosperous, functional country with a high degree of state capacity. There's a big question mark around whether Iran can continue to be those things in the aftermath of this war, and so that represents a kind of strategic defeat on the Iranian side. But ultimately, what we're dealing with now is the difficulty of trying to find a formula for a ceasefire and a durable piece to follow in a conflict where no one has won. And that is actually sometimes the hardest thing to do, because if it was very straightforward for one side or one party in the war to declare that it had succeeded in its aims and had become sort of the victor of the conflict, and there was an obvious loser, the terms of the piece would be sort of easy to understand. But I read today that basically every day the President Trump is being shown or kind of highlights real of the biggest airstrikes that the US has achieved. And officials have told journalists that they are not able to give Trump context around those airstrikes. So it's very deliberately meant to be like a rosy picture of what's happening in the war. But in some ways, you can see the US system trying to convince itself a victory when that victory is certainly not at hand. And a rosy picture that looks like a video game. Exactly, yeah. Unreal, an unreal picture of a war that is very real. Nick. The analogy historically that I've been resorting to a lot to think through this conflict, and particularly the difference between the military events and the overall strategic outcome, because I think that's a really glaring gap here, right? And part of the difficulty on the US and Israeli side is the inability to yoke their use of violence and the decision to go to war two a feasible strategic outcome, which now seems really out of reach. But the analogy I've been resorting to is Suez in 1956. And without wanting to immediately predict too much, that there will be a turning point in US. So Germany, I don't think we can say that. But what we certainly can say is that it is an operation, a war that was designed, premeditated war, an attack, basically, which was also very much the case of Suez. It was multiple countries, Britain, France, and Israel, conspiring to take back the Suez Canal. And there was actually a plan, also, to march on Cairo and replace NASA, hopefully, with someone better if he didn't yield immediately, if he didn't undo the nationalization, then it was an operation that could have gone into full regime change. And the rhetoric that you heard in 1956 out of London and Paris also was very much-- this is a kind of Hitler on the Nile that was Ravel Darons' phrase, or a Muslim Mussolini. So there was a big regime change aura around it, but it became very clear that despite the initial military success at the beginning, because the British and the French did actually seize a whole bunch of the Canal Zone, they weren't able to translate it into major economic pressure. And as the weeks went by, the economic pressure, in fact, became much stronger on the countries that had launched the attack. Now, the United States played an important role in that. And there isn't really yet that larger power that is able to bring that sort of pressure to bear. But I think in terms of military success at the tactical and operational level, failing to produce any kind of strategic success, and in fact, backfiring at a strategic defeat, I think that's definitely something that we can resort to to understand the current situation. With a Suez analogy, what's interesting there is how do you get out of the loose, loose dynamic that Yard described? And the answer there was that there was another actor aligned but outside that was capable of delivering basically a decision about how that sort of quenmyer was going to be brought to an end. And there was able to announce itself as a new hegemonic power. And China's not their VCVP US for some reason. No, we don't have that. So the analogy is excellent. And then even further underscores the dilemma that Yard raised. And then the other thing I would say is that, yes, it's true, of course, everything Yard said about the catastrophic character of this war for Iran itself in every possible respect. But there's only one way I think one could describe it as a strategic defeat because, of course, this is not a strategy of Iran. This is a war of choice being conducted by the US and Israel. But the sense in which it's a strategic defeat that I thought we should also just mention is that this is a defeat of deterrence. And that is going to have incredibly important implications for Iran. So Iran's strategy in response to truly astonishing levels of provocation over the last couple of years has been restraint, restraint, restraint. And also, disavowing publicly the pursuit of a nuclear weapon and systematically returning to a table, despite the fact that its interlocutors were committed to a path, an obvious path, and not just confrontation, but actively seeking to kill the negotiators. I think what's happened here is that you have a complete breach of that logic on the part of Iran. But then that really raises another question. I mean, who's at some level-- that is, of course, a strategic-- I mean, no one will absorb costs on anything like the scale that Iran is at the moment as a consequence of this entire dynamic. So that defeat is immediate and very, very consequential. But what is the purpose that's being pursued by the US and Israel ostensibly amongst other things to deter Iran itself from pursuing a nuclear weapon? And the strategic defeat of its deterrence posture until now conveys a message, not just Iran, but to every state that is in anything like an adversarial or even uncomfortable relationship with the United States, that it needs to very seriously and immediately accelerate in the direction of a much more convincing deterrent, namely a nuclear deterrent. And we immediately see France change its nuclear posture essentially overnight. And while Saudi Arabia is not going to announce a change of nuclear posture in quite the same way, or Turkey, or Egypt, or any other actor, they're not missing this message. And nor are any range of others globally. So I mean, just thinking about what it means to understand Iran is suffering a strategic defeat, I think, also has global implications. Iran's hybrid military economic warfare has abended the global economy, energy markets, food production, missile and drone attacks aimed at, on the one hand, degrading US and Israeli missile defense and radar systems, on the other hand, threatened or directly hitting, energy infrastructure, and of course, most dramatically, all but closing the strait of Hormuz to shipments of oil, gas, fertilizer, petrochemicals. Warfare has always been fundamentally an economic conflict. But have we ever seen an asymmetric military strategy against an imperialist aggressor, or really, have we ever seen any sort of military strategy in whatever context? So definitely exploit choke points in the entire global capitalist economy like this. Does this novel and does what we're seeing change the way we think about warfare going forward? So maybe just to kind of react to that, I mean, it is both novel and actually something that Iran has been developing as part of its playbook for a long time. And I think this is what is most striking about the lack of preparedness on the part of the US and Israel to manage the economic spillovers of this conflict is that although the speed with which Iran escalated to target a wider range of civilian infrastructure in the Gulf to really try and decisively put pressure on maritime shipping. So the escalations that Oslem mentioned at the top, I think that happened faster and more intensively than people had expected. But the actual capabilities there were very well known. So if you go back to the Defense Intelligence Agency's publicly available assessment of Iran's armed forces, which I believe was published for the last time in 2019, they talk about the fact that Iran doesn't have a conventional military in the way that other Gulf states. or Israel has that conventional capability and has instead had to develop its ballistic missile program, its use of drones, both drones that basically have been used against targets in the UAE and Qatar and elsewhere, but also naval drones that can interfere with shipping. And the assessment was that, in the event that Iran comes under the conditions of war, it was going to use these capabilities asymmetrically and that one of the targets would be energy infrastructure or maritime shipping. And it's no coincidence that in 2019, when Iran was dealing with kind of the the maximum pressure sanctions that the Trump administration had imposed after the withdrawal from the Iran nuclear deal, the Iranian authorities basically undertook two very kind of carefully selected attacks, one targeting tankers off the coast of Fujera, and then later in the summer of that year, an attack on Saudi-Ramco infrastructure that took a significant amount of the refinery capacity of that facility offline. What's interesting is that they demonstrated the capability seven years ago, basically, and even more recently, if you look at the success of the Houthis in interfering with global shipping during the Red Sea crisis, which lasted around two years, this was all stuff that I think was known to be within the Iranian capability set and also a likely response to the kind of conventional attacks that Israel and the U.S. have undertaken. What I think is unprecedented in that regard is not so much the asymmetric warfare that Iran is undertaking. I actually think in order to be analytically sort of find something interesting here, the thing that is unprecedented is the country that is meant to be ostensibly the steward of the global economy, the United States, embarking on a war without any consideration for managing these possible spillover effects. And even when the war, even if we make an argument that it was a strategic necessity at the highest levels to preserve national security interests, the fact that there was seemingly no game plan for even trying to sort of mitigate some of the blowback and that everything seems to be an ad hoc solution that the treasure department is trying to put out there at the moment, that's what I think is really unprecedented. And I don't know if Oslo and Nick have any examples, but I'd be very curious, you know, is there any other moment where global Hedgemont has done something that was so destabilizing for the global economy when it was so foreseeable? Well, maybe there's two things to say. One is that we need to develop some kind of account of why this war was launched in spite of the longstanding analysis of the American national security state that exactly this would occur, right, in case of a war with Iran. This is not by any means a bolt from the blue. It's not a black swan event. It was one of the most foreseeable ultimate cards of Iran to play. And the question that we need to answer, I think, is why the resistance of that deep state was overcome, why the plans by the military and joint chiefs of staff were not heated and no preparation was taken for this. And there's three things that I've kind of hit on myself thinking a little bit about that. One is that, of course, there was a big economic spill over from the Russia Ukraine war in energy markets, commodity markets right four years ago. The last few years, the United States and its allies have essentially been devising techniques to deal with those spillover slowly, putting pressure on Russia by, for example, having a price gap rather than trying to push all the Russian oil off of world markets, trying to make it clear that they're not putting sanctions on Russian food exports and fertilizer while still striking in ways and helping Ukraine strike in ways that undermine the Russian economy. So they've been very careful about not pushing this too far whilst trying to still have maximum pressure given those constraints. And what you saw last summer was that during the 12-day war, there was a much smaller oil spike than expected. And I think this was the beginning of a hubris that emerged in the Trump administration, that it was possible to fight a quick war in the Middle East, given the results of the shell revolution in 2010s, which has made the US and huge net exporter of energy, given the expectations all around the world that this was going to be a year of an energy clut, an LNG clut, an oil clut, right, very soft market conditions, basically, price expectations of between $50, $60, $70 a barrel, a maximal. And Chris Wright, the US Energy Secretary, said this last summer after the 12-day war, we actually barely noticed a sustained price spike. And I think that that gave people the idea that it was possible to do this, but now with much more ambitious aims, right, that was only a war that Israel initiated, and then there was a 12-day exchange of air strikes and missiles. But it didn't spill over out into the rest of the regions in the same degree. And the US wasn't a party to it. And I think here the US became overconfidence. And then the final bit, of course, you have a long-term degradation of American state capacity, where the national security state, which is still very competent in many of its domains, was being purged by the second Trump administration, too. Many capable people in the last year were being fired. Those people's advice was not reaching policymakers. I think what Yard just said right about the kind of information circuit that has been constructed around the White House, that's very troubling news. But if you take all of those factors together, the people who supposed to plan for the Hormuz contingency can't get their message through leading figures in the administration believe that war is actually now relatively costly on the energy market. They have found some ways with Russia Ukraine, right, the SBR, to manage this and releasing barrels and these sorts of things. And then they launch an attack on Venezuela in January that also goes very rapidly and quickly. And you have all the ingredients for a real overcoming of all of the internal constraints within the Hegemon that Yard identified, right, that would normally hold you back from doing something as risky as severing 20% of the world's oil and gas supply as a result of a war that you willingly start. So I think we need to think of structural and contingent factors, but I think that is what comes into it. And one final thing I just want to mention about Venezuela, that I think is easy to understand as a regime change operation that then made Trump overconfident that it was possible to decapitate the Iranian leadership right in the early stages of this war. But I actually think that what's striking the more we understand what took place in Venezuela in January, the more it actually looks like it wasn't a regime change operation, but a regime disciplining, right? It was remarkably unambitious. It left everything in place and just dealt with one leader. It's almost a kind of ultra-Trumpian, right? The apprentice style, you're fired as dictator, but no one else, I'm not going to invest any of the resources in the nation building or even doing a full war to overthrow the regime. They found someone within the regime who was willing to step up, DLC Rodriguez. So in that sense, it looks a lot more actually like the 1953 coup against Mossadek where the US and Britain found the Iranian military and the Shah willing to simply out the Prime Minister who had gone against Western policy preferences. So I think that actually, again, Venezuela is a very treacherous case to base one strategy on, but that's clearly what it seems to have gotten to their head to some degree. I do think that added element to next account is the protest, of course, in Iran in January that created the belief that it was ripe for this kind of a change. And I would say, I mean, the apprentice model, your fired model is a great way to describe it as well. Another way to think about it is a kind of hostile takeover where you preserve the structure of the corporation, you just take ownership of it. And that's essentially, I think, how Trump is thinking of this. And it's very striking that there must be a very significant gap in the level of policy or intelligence that is making its way to the president for him to think that a hostile takeover model, Al-Maduro would work in Iran that you would keep this corporate structure and somehow nonetheless be able to own it. And it's a complete category error, of course, but it is those factors. I agree with you, but returning to your core question, Dan, have we seen something like this before, etc? Another dimension of what's happened in Hormuzat's worth noting is that, of course, trope points have always mattered, but they haven't mattered in the way they matter today in the 21st century because we haven't had the degree of integration that we have now. So part of it is, I mean, like the story we were just hearing about was, you know, gambling around how can we address energy shocks? But of course, as you pointed out in your setup, this isn't just an energy shock. This is a shock that is energy, insurance, shipping, food supply chains, fertilizer, etc. simultaneously. So first of all, you have the integration meaning that you have supply chains that are dependent in ways that can't easily just be replaced one for one in the way that we might think of oil markets standing alone. But secondly, you have a context in which local leverage can produce global effects almost instantly. And of course, here, Iran, Geostrategically, is located in a way in a place that really emphasizes this reality. But how could you do otherwise? I mean, this is a question, right? If you're going to have a globalized interdependent world economy and you're going to have a United States or other actors serving as the kind of glue that hold that system together in the center of its global financial infrastructure. And then you have that same resorting increasingly to coercion, to pursue its strategic ends, that is simply structurally unsustainable. Why? What would be the alternative, for example, to choke points? There are alternatives, right? It's not necessary that one place be the sole place that 20% of oil infrastructure travels through. The alternative in the region would have been pipelines, and in fact there are several pipeline projects that have been undertaken for that purpose. But they carry about, I think it's something on the order of 10% all told of the amount of oil that actually travels the streets. And that's because in order to have oil pipelines serve the same role, you have to have transnational cooperation, meaningful integration, and strategic alignment across a multitude of borders and sovereignities that all agree that they're committed to the same project. This was a logic of European economic integration. The idea is European economic integration or any form of economic integration facilitates peace because it creates a system in which everybody loses when you defect from that system. So everybody has an incentive to remain committed to the sort of increasing of the size of the pilot's say. So the Middle East is a particularly inhospitable place at the moment for coming up with a full regional integration that would sustain an alternative structure to the choke points that would distribute risk and produce the kind of maze of pipelines that you would need to physically transport the same kinds of goods without having to pass through a single narrow channel. But on top of that, even if it could have that regional integration, it's the United States, the very guarantor. And now I'm just coming back to where you are began of a system that depends upon a degree of stability and a willingness to forgo that kind of coercion for its stability to be sustained. It's that actor that's supposed to be the guarantor that's decided that it's best tool and it's arsenal to achieve its policy ends is pure coercion. And in that model, you know, Iran again, it's like that it goes back to the answer we gave in the first question. It's a strategic approach that internalizes its own defeat. It simply cannot succeed. It's not that Iran came up. It's true, of course, as Yara has said that Iran has had these plans developed them. They've been well known and so forth, but Iran is in this position for two reasons. One, the region as a whole is not capable of integration in part again because of the conditions and terms of Pox Americana in that region, the kind of enmities and adversarial lines that have become entrenched over the last 75 years as a consequence of how the region is organized, which has been overseen by the United States. But secondly, Iran has the benefit of being able to resort to the trope point and stop because the government decided that it was going to use maximum coercion in a way that undermines the conditions that make global economy possible, that is to say stable integration. So if you have your basic economic model dependent on that degree of global integration and then you bring coercion into the equation, you empower the actors that are in these asymmetric positions. We haven't seen something like this before because we haven't had this degree of integration before combined with a hegemonic actor willing to resort to coercion and create the asymmetric conditions for any actor to want to incur the costs of triggering the trope point. I want to return to this matter of how surprising it was for me that the US was so taken by surprise when Iran did, as you have all described, did the very obvious thing of asserting control and all but shutting down the straight of Hormuz. And I wonder how deep this myopia runs because thinking back to last year when Trump tried to ramp up the trade war on China and seemed absolutely shocked that China had an economic weapon of its own to use, which was tightly restricting the export of rare earths, which are absolutely critical to so many facets of the US single global economy. And the Trump administration was apparently caught by surprise because they very quickly backed down. Why has the Trump administration more generally been unable to understand that adversaries slash enemies like Iran and China have economic weapons of their own and that they're capable of using those weapons. And this is this myopia particular to the maga right or is it perhaps symptomatic of a deeper more bipartisan rot in the in the US imperial imagination, the an almost inability to understand that other states have capacities and agencies. I think that there is definitely a broader problem within the American elite when it comes to understanding the strategic imagination of other countries and for a long time in the sanctions space, particularly the last 10, 15 years, you would hear justifications for the use of sanctions that oftentimes invoked the fact actually that Russia was weaponizing gas and oil. That China had been playing unfairly and was also heavily intervening in its economy. So there was always a kind of projection from the United States that other countries were weaponizing the economy in reality, however, the US was really very clearly dominant when it came to financial sanctions. And so other countries waited for a very long time before they actually did so and I think even with Russia, right, which had used against Ukraine, gas cutoffs in 2009 and at some other points to try and influence Ukrainian politics, the Russians were very love to cutoff gas supplies and they only really did it once the war in Ukraine again and Europe massively swung behind sanctions against Russia. And so, right, there's still Russian LNG coming into Europe all the way until next year and potentially much longer if Europe's LNG supply remains cut off. So the degree to which other countries were willing to go was always quite limited, but that was always premised on what Asla was just talking about. The fundamental assumption that the United States despite its overreach in certain areas was still willing to create the conditions for the reproduction of a sort of integrated and stable and predictable system of globalization. And I think what we've seen in the second Trump administration is that all those assumptions about predictability in the foundations of globalization are out the window now. And that really changes the equation. The Chinese had used rare earth controls to against Japan in 2010, but they had used them very specifically without talking about it. It was really something that the CCP forced Chinese companies to do under the table and that hit the Japanese companies involved hard. They had done a ban on the import of Australian coal in a few years ago that to backfire it did not mean that Japan and Australia keeled over immediately. But the big factor there, why did they not concede was that they of course drew closer to the United States. They had the US as a superpower to fall back on when that pressure is now directed against the United States, however, it becomes very different. And their China has shown that big parts of American industry of American industrial supply chains, including at the deepest level of the defense industrial complex are relying on Chinese rare earths. China certainly has a position where it can exercise some degree of control over how fast the US replenishes some of its ammunition stocks right now with tungsten and other rare earth materials. And I think that by becoming so unpredictable, the United States eventually opened the door to the Hormuz Bloket to a rare earth weapon that China deployed, which was not only aimed at the United States, right? It also really scared the Europeans who became clear for them that China really has a powerful degree of control. But I think that this is a result of the US becoming so unpredictable and launching this broke trade war that they resorted to means that they hitherto had used only in a very specific and kind of suggestive way. So now I think we're in a much higher level of mutual economic weaponry. I agree with, I think how Nick has just laid that out, but then I want to go back to this question you ask about whether you know this failure of political imagination or this failure to kind of anticipate things is problem that we see only in sort of mega policy making circles or whether it's a broader issue. I would say it is a broader issue and I think actually the story that Osla just set out around the importance of integration in the Middle East is a really strong example of where there has been a blind spot for US policymakers and it has meant that the US has failed to create space for the creation of a kind of regional security architecture that would help us avoid situations like we're in right now. And concretely, I think what I would point to here is that the Biden administration had an opportunity after the first Trump term to recognize the ways in which the exercise of US power in the Middle East was actually counterproductive for US national security interests. And at the level of rhetoric Biden on the campaign trail and then senior members of his administration were kind of making promises that they were going to do a better job of ensuring security for US partners in the in the golf in particular. And again, this goes back to the incidents I described earlier where in 2019 you know Iran struck these UAE and Saudi civilian infrastructures and the Trump administration really didn't come to the defense of the golf states. And the Trump ended up escalating on his maximum pressure sanctions towards Iran. He later did also assassinate Joe Biden. General Glossum Sodomani, which was a very escalatory move. But as Osla put it, those were just instances of further pressure and coercion. They didn't ultimately address this question of, how is the isolation of Iran economically in the region basically counterproductive or antithetical to the economic integration that would be conducive to a kind of more durable piece? And what's really striking is that the policy response from the Gulf States after those incidents in 2019 was the pursuit of economic integration with Iran. So Saudi Arabia and the UAE, which had cut diplomatic relations in 2016, the same week that the nuclear deal was implemented, actually began a security dialogue with Iran immediately after those incidents. And that began a process of diplomatic engagement that ended up with the normalization of ties with Iran. And in the case of Iran and Saudi Arabia in 2023, an actual formal agreement around mutual security concerns that was sort of enshrined in a meeting in Beijing. And underneath all of that, there was a rebound in economic engagement between Iran and the Gulf States. Mainly the UAE, but there's some structural reasons why that's the case. But trade between the UAE and Iran basically tripled in that period from its relatively low base. And you had the makings of a kind of win-win formula for the region whereby mutual promises around security and management of threat is conducive to greater trade and economic growth. And that in turn sort of stabilizes the situation further. The outlier here was Israel, actually. And I think this is where the Biden administration, just that the myopia was like, I mean, I still have difficulty understanding it. But their version of the response to the Iran incidents in 2019 when they finally came into office was basically to take forward the project of the Abraham Accords. And they had some success in fostering diplomatic exchange, particularly between Israel and the UAE, although I think there are other drivers there that aren't really related to like the US having a great idea for the region in the form of the Abraham Accords. But the one example that I sort of tend to bring up is having spoken to Saudi officials about this last year, they in private settings at least have are very critical of the inability of Biden administration officials to just simply hear what they were saying in meetings about kind of dynamics in the region. So the Saudi Arabia has been quite forthright at this point and increasingly so about the fact that the Abraham Accords are not going to happen for them. We have to see whether the war changes those calculations. But up until the war, I think that was clearly the decision that had been made. A lot of that had to do with dynamics after the genocide in Gaza, but it also has to do with this recognition that Israel is a sort of revanchist and increasingly sort of extremist force in the region, not exactly a country that you can engage with with any kind of accord. And the consequence of this was that, whereas the Biden administration had an opportunity to create a kind of regional security architecture that at least solve the mutual threat perception between Iran and the Gulf. And that would have been profoundly stabilizing in the region. They were so committed to finding a way to actually continue to isolate Iran fundamentally. That was their disposition. Find a way to keep Iran relatively isolated and instead try and bring Israel into the center. And that was never going to be tenable and it didn't hold. And so I think to round out my thoughts here, the striking thing for me about the outset of this war is that in a sense, the one country in the region that had not actually embraced a policy of integration at any level and had not moved towards the kind of economic integration or political exchange that is kind of conducive to the post-war moment that we saw in Europe, that country being Israel was ultimately the one that in its isolation from that regional political and economic project felt that it had both the latitude and the reason to engage in this escalator activity, to think very zero sum. And I think ultimately that's the diagnosis we have to make. And whether it's Trump administration or Biden administration, the US doesn't seem to see, connect those thoughts and I may be missing something, but I think that's the obvious picture that they should be seeing. I mean, I think there's a narcissism that flows from the jingoism of hadgemonic imperial power that's not so different from an individual narcissist who actually can't understand the interior subjective life of other people being a reality. And then add to that a narcissist being president and then you just compounded the problem. Yes. A narcissistic president of a narcissistic imperial hadgemon yikes. Vasala. Just thinking generally speaking about like what is how do we explain shock in the presence of something that is entirely predictable? And one of the ways I think about this is just the US is itself so idiosyncratic in so many ways. That even if it wasn't narcissistic, its capacity to place itself in the shoes of countries that face actual existential threat or actual lived experience of war on their own territory is so limited by just the reality of the experience of all Americans and American leadership of being a continent that is surrounded motestyle with much, much smaller neighbors that are incapable of presenting a military threat of any kind, et cetera. So in a sense, it structurally set up for a problem of perceptions. And this is especially heightened. And I mean, to my mind is connected to the relationship between geo-economics and economic warfare. So I'm just going to pivot us in that direction. But I mean, I'm just began with the point on US policy makers. They tend to view the forms of pressure that they're imposing, whether it's sanctions or threats or direct strikes even. As part of a sort of cost-benefit calculation that's going to trigger economic rationality, risk of version, preferences for short-term loss of weight, et cetera, ways that they themselves are in the habit of thinking when confronted with a policy challenge that does not involve because they never do experience anything like meaningful existential threat that triggers a completely different set of scripts in response to real coercive conduct that bespeaks a willingness to continue to go further. They may not even, I think, American policymakers understand not only the escalatoric character of the logic they're triggering, but their own appetite for escalation. In other words, they, in fact, engage in kinds of escalation that they have a self-narrative about their own restraint. That in fact, it's always the counterparty. Someone else is driving the escalation. But in fact, it's the United States that introduces the quantum coercion to begin with and continually is willing to go up a ladder of ratcheting. And all other actors that are confronted with that reality, of course, have a completely different set of scripts and entrenched assumptions when they're confronted with even the first instance of the willingness of the United States to resort to coercion because the US has produced a demonstration, in fact, over and over and over again, particularly in this region. Destroying country after a country, Afghanistan, Iraq, Libya, in the name of a variety of different kinds of pursuits always presented in a kind of self-justificatory manner in terms of like the, you know, incredibly, the benevolence that the US is bringing to the populations that they're receiving out of its bombs. But, you know, the counter parties understand this in a way that intrinsically the United States fails to for a variety of reasons, including just its own structural position. So there are habits built up over decades of thinking things like sanctions work if you apply enough pressure against the backdrop of literal empirical record of zero instances in which sanctions have had that effect. But nonetheless, a continuous belief in the cost-benefit calculus underlying sanctions that we can just increase the pain point enough, we can just go after the like tendons of the system effectively enough that they're going to cry on goal. Like the continuous belief in that, that shows a force restored deterrence every time, the belief in that. And of course, like as we've discussed in the earlier period of our conversation, examples like the assassination of Kha'z and Sunni Mani, the decapitation of Maduro, these just only lend to this belief set, right? They're overvaluing the so-called successes of that logic of Shosa Force for Storage Atturrence and completely discounting all the gazillion examples in which instead what they've done is entrench and deepen conflict and draw them into a never-ending cycle. Okay, so how does this connect them to the geo-economics and economic warfare question? And this goes back to your China example, not just the Iran context, is these are actually ideas that are on a single continuum. Geo-economics is the broader use of economic tools for strategic ends. Economic warfare is the coercive and adversarial edge of that using those tools coercively to weaken or compel an adversary. If you're the United States willing to resort to coercion as not the last resort, but the first resort, your counterparts are confronted with a world in which there isn't a distinction between geo-economics and economic warfare. That all of these moves are forms of economic warfare and it's easy to understand why that's the case. I mean, China is a perfect example. The US is saying on its own. We're going to impose export controls on semiconductors. We're going to restrict investment. We're going to decouple our de-risk and presenting this to itself and to its own population as protecting national security, managing strategic competition, whatever it is, explaining it in geoeconomic terms. But from China's perspective, totally understandably, it's an attempt, first of all, explicitly to slow technological development and constrain the rise of that state, which is, of course, an attempt to coercively compel an adversary to be degraded, which is economic warfare. And that, so China's interpretation of this as a form of economic warfare, then means that it's going to go to countermeasures for whatever reason the United States has discounted previously, in part because of its own narrative about what it's up to, what it believes it's intentions to be. So of course, they're going to restrict where exports, of course, they're going to leverage dominance in key supply chains. And this is also the logic that Iran is going to pursue because they understand themselves as pursuing defensive measures against a powerful actor that is engaging in a form of warfare, coercive threats to the nation and sovereignty protection. So that targeted coercion that the United States imagines it's using for economic leverage is in fact, altogether, differently understood. And honestly, because, as I said earlier, the US doesn't seem to appreciate its own appetite for escalation. The counterparts are the ones that are reading the picture more accurately. I mean, indeed, the United States is engaging in economic warfare and then outright warfare, and failing to present it in those terms to itself, I mean, to its public, but also just internally, I think, not policymakers, not the deep state that Nick spoke of earlier, but the senior level elected officials have a self-narration in which they genuinely are shocked when they applied massive coercion and they're met with resistance. And I mean, that story itself, I think, points to something reasonably idiosyncratic about the United States when it's acting as the headroom on in the system, which is its own geostrategic position means it never experiences, has never been confronted with the actual risk portfolio that every other state that it is engaging with, comprons. Nicklet, let's put this all into the longer history of economic warfare, the topic of a book you wrote called, called the economic weapon. What, what's new about the sanctions regime that the US has developed, has developed over recent decades in, and what aspects of economic warfare are far older, even ancient. And then to follow up on Oslo's point there, how does the rise of geoeconomic competition over the last decade, the sort of compulsion upon all states to merge national security and economic strategy resulting in significant part from the US's new Cold War on China, the attempt to deny China access to high value added semi-conductor technology? How does this rise of geoeconomic competition fit into the outright economic warfare? Are they neatly separable into distinct categories or is all of this in this long sweep of history all one big continuum of economic warfare? So the very short answer to that is that they are connected and they feed into each other. But I think it's helpful to think historically in terms of periods where economic integration which always has distributional effects, which always has political implications, which is never geopolitically neutral, even when we all believe that there is peace in the world and globalization is only leading to the equality and good feelings between all peoples. And then there are of course always major differences in power, but there are certain periods where most countries buy into those integration projects and that can then cohere into a larger or form of openness. Interestingly, if you look at the last four or five hundred years of capitalist history or the rise of capitalism and then the birth of modern industrial capitalism and the modern system globalization that we have, those open systems have been the exception rather than the norm. And the norm has been something that in the early modern period was called mercantilism. The idea that the interests of the nation must be defined economically and defended by the state in the interests of the people and that there is no such thing as an apolitical participation in the economy. But nowadays we call that geoeconomic. So one way of thinking about geoeconomics is just it's a modern day version of mercantilism. Some people call it neo-mercantilism now. I think that that works just as well. But there are a bunch of interesting differences if you look at it over time. A lot of the period from the European conquest of the Americas all the way to the post-Napoleonic era when Britain became this free trading power in the 19th century was a period of overt coercion, company states, monopolies, trade routes, wars being fought over trade routes and for commercial reasons. So economic reasons to go to war in a very overt way. And the rise of free trade in the 19th century is the first kind of regime, right, packs Britannica, the British empire that potentially changed that calculus somewhat. But that broke down very quickly because by the end of the 19th century already we're in an era of imperialism, protectionism again, everyone wanted all states really desired maximum territorial control to extract resources. And so that was already the second era, if you will, of mercantilism and of geoeconomics. And if you read sources from the late 19th century, particularly the kind of observers of global competition, Lenin, Hobson, right, that's the world that they're describing. And then that continues all the way through the interwar period, which is the period when you get the breakdown of the world economy, a really deep retrenchment into protectionist blocks. And it's only American and Germany and Pax Americana after 1945 that again inaugurates this period of open integration in which there are sanctions being used. Of course, sanctions were an essential instrument of the Cold War, but they did not really interfere most of the time with the booming growth of the capitalist core in the global north. They were mainly directed at the socialist bloke and at countries in the global south, with which there were disputes over foreign policy or where the West felt that its interests were being harmed. And it is that order that we're witnessing the breakdown of. That doesn't mean that America will cease to be a powerful and even dominant country, but it means that the assumptions that the United States brought into the world in the 40s and 50s and that it reinforced in the 90s with the WTO have broken down. So that's where I think we are now and it's interesting that geoeconomics, it was a term that Edward Lutvock, this geopolitical analyst who has written some good books about the Roman Empire, but has also gone very much off course with a lot of his predictions, recently including doubting that around the closest trade of Hormuz. He coined this term in the 90s and he said, well, now that the Cold War is over, we're not going to have kinetic military warfare, we're just going to have commercial rivalry. So for him, this was actually a sort of sublimation of rivalry of military power. Now we see that obviously now that's not at all the world, right? We see that economic rivalry is feeding in to escalation. So they are very much connected and the one thing I will say about the US controls on Chinese imports of semiconductors is that they are a very important turning point in how we understand this. So what us love is talking about just now, the inability to see this as escalatory is a really big part of the problem. Part of that is essentially habituation, I think, on the part of American policy makers of all stripes. Sanctions were a disciplining tool for a long time used against post-colonial countries, used against communist adversaries, none of whom constituted a major and important part of the world economy. There were some economic pressure instruments brought to bear on allies, notably Suez that we talked about, right? Then they were very important, but they were quickly used and then taken off again. The US definitely did threaten allies with all sorts of pressure, but oftentimes it was precisely the threat that worked and they didn't have to be actually imposed. Now what makes the 2022 Biden administration restrictions on semiconductors as export controls so important is that for the first time the United States started to roll out an export control regime, not against the Soviet Union, against a relatively small economy in the global capitalist system. That was trying to stay out of it, but against a very large, quickly growing, rapidly integrating and also very fast innovating part of the economy. That moreover had an enormous amount of human capital, of technological resources, with which to indigenize and try and develop this technology itself. China is now devoting more than half a percent of its GDP to investment and R&D in the chip and semiconductor industry, broadly speaking, which is already more than the US devoted to the Manhattan project. This is a all-hands-on-deck national effort by the Chinese party states and the entire innovation ecosystem that they have created and the Chinese private sector, which benefits from this, to overcome restrictions that have been leveled against China as a nation as Asla said, the rhetoric being used by American officials has been so callous about this sometimes. I've heard people describe this in literal terms as throwing sand in the gears, right? A very petulant kind of child-like behavior that can only, I think, anger the people that are exposed. to it. And moreover, that because China is in fact not a small meat country that has no ability to retaliate or even overcome these constraints at the long run as it seems they are doing at a much faster pace than expected, the result of this is that we're in a world where in the next few years China will probably have all the domestic production capacity here that it needs. The US will be largely shut out and its companies, including Nvidia, will be largely shut out and losing a lot of market share, not part of that innovation ecosystem. And a lot of the Chinese will now know that the United States has tried to essentially trip them and will feel less inclined to trust the United States when it then tries to improve relations and meant things. So the credibility of Datant, right, of a kind of economic peace agenda, which one would have expected perhaps the Biden administration to pursue precisely as a response to relative decline in American power. In fact, this escalation of the of the chip export controls, I think we're going to look back on it as a major moment. And the question is really at what point the Chinese decided that this was the main challenge for them. I've heard some people in China who have pointed to an even earlier date that it wasn't October 2022 when the Biden administration rolled out these chip controls. It was actually when Canada arrested the daughter of the Huawei founder in Vancouver in 2018 in the first Trump administration, which was a rubricle moment for Chinese tech executives when they realized all parts of our supply chain can be interrupted by the United States and our board members can be arrested in the West. We must at all costs get rid of this dependency. And that's already eight years ago now, right, almost seven, eight years ago. And so they have devoted tremendous effort to getting out of this. And I think that that's going to be a major moment where a lot of structural leverage for the US was lost. I'm just going to say one quick thing and then turn it over to you are. But that was again, such a generative intervention. And it points to one thing that I think is is overwhelmingly missed about sanctions. So on the one hand, there are important things to say about sanctions as compared to kinetic warfare. For example, there's no distinction at all in the context of economic sanctions between civilian and military objects and so on. So like oftentimes they impose much greater costs on civilians and really produce a miseration in ways that were at least theoretically when the old woke rules of engagement are being applied is intended not to do right in the kinetic warfare context. But what you know, there are those kinds of arguments about sanctions and how does it lie in the spectrum between forms of on a continuum of coercion. But another thing that is really clear in what Nick just said is that sanctions actually are not a way for the country imposing those sanctions to directly control outcomes, which they believe they can do it right. They can impose economic coercion in order to compel a particular kind of behavior. That's the essential logic. But rather they induce a reconfiguration on the other side that's entirely outside of the control of the sanctioning party. So you see this in Iran in space, right? Iran basically you have a revolution and almost immediately I think one could argue that the current moment is just one of many moments where an ongoing half-century old Cold War that is essentially a continuous war from the day that Iraq invades Iran with western support and declares its military project against Iran in the United States declares an emergency in the wake of the revolution for IEPA purposes and then resurrects that emergency annually as a basis for imposing crippling economic policies against Iran. But from the Iran-Iraq war through the containment strategies of comprehensive embargo in the 1990s through the Iraq war actually of '91 and then 2003. And you've had an American approach of using both kinetic and economic coercion to configure the political economy of the Gulf with essentially the idea that they can control Iran. And the response to that has been an Iran that precisely produces a regime that's not amenable to hostile takeover as we were discussing earlier that is resilient, that is multi-scaler, that is designed for endurance very specifically and is relatively speaking for the region, a tarqic in the sense that it depends on itself for building human capital as an example rather than importing human capital from elsewhere or sending their students necessarily abroad exclusively for training etc. Builds an incredible higher education sector domestically, build the scientific capacity domestically to, you know, engender its own meat, its own technological needs and so on and produces exactly as you are described. Under the most punishing conditions, a prosperous country with significant human capital that is not just a rival to but actually exceeds from the pure perspective of internal investment, its Gulf rivals until very recently. And therefore regional integration becomes attractive etc. Those are the generative reconfiguring consequences at some level of sanctions in war that's been targeting Iran from the day of the revolution and of course it's on a much bigger scale what Nick described in the Chinese context. So the idea that the sanctioning power is purely able to engage in this kind of cost benefits logic in which it imposes high cost and induces behavioral change not only fails just empirically almost no record of success on sanctions but also logically fails to appreciate what sanctions are inducing which is real significant reconfiguration on the other side that makes the other side both more resilient, more autonomous, more capable of responding and enduring whatever that cost is that's attempting to be imposed and ultimately putting it in a strategic position that then as Nick described means that in the next round I mean we're talking about repeat players that regime is going to be in a far stronger position actually even when it's asymmetrically a much smaller regime to withstand the ongoing escalatory logic that the United States versus not don't mean this you know at the very far end of the continuum if you're going to go to outright war on the scale that we see in Iran that strategy meets its like ultimate test right and we discussed earlier what whether Iran had a deterrent strategy or whether it had a capacity to prevent or avoid the path going in the direction that it ended up going I'm not clear on that because as we've already discussed both Israel and the United States are have adopted a posture that makes little sense internally with respect to their own interests and so avoiding having your adversaries act irrationally is very difficult to do when you're you know coming up with a deterrent strategy but nonetheless I mean it's obviously war is the final sort of test point of can you withstand coercion but even under these conditions Iran as it has demonstrated has built a regime in response to sanctions in response to continuous war context it's found itself in whether economic or kinetic in which there are so many layers of regime control such a decentralized structure of governance in the in the territory that they are able so far at least to preserve the regime and maybe even deepen the control that the regime exerts over the territory in the face of massive coercion. Yarr you wrote a fascinating article on the the Shahed 136th drone for phenomenal world and I want to ask a bit about the the military dynamics of the conflict the military dynamics more more narrowly construed because we've been talking about the economic warfare at play especially in terms of the direct impacts on the global economy through tightly restricting traffic through the straight-up form moves targeting energy infrastructure across the Gulf but but there's also an economic dimension to the military dynamics with Iran's use of relatively cheap missiles and drones to target very expensive radar systems and to use up very very expensive interceptors is this new this this asymmetric economic warfare dimension of an asymmetric military conflict in terms of I guess the relative value of the the deployment and destruction of military hardware or is that kind of thing always fundamental to these sorts of wars so I don't think asymmetry as something that the US is confronting in a war is very new I mean the US has faced a number of adversaries that have fought wars against it asymmetrically at the US doesn't have a particularly good track record in prevailing in those wars so you know you can look at the kind of insurgency tactics in Iraq and Afghanistan you can look at the tactics used in a place like Vietnam you can look even at the asymmetries let's say in the Korea war where you know it was really about manpower against more advanced equipment and weaponry but generally speaking I think what's interesting about Iran's approach to an asymmetrical asymmetric kind of warfare is how it connects to what also was just describing as sort of the nature of Iran's economic composition and Iran's level of economic development so this is a country that you know has actually produced the significant amount of economic development since the Islamic Revolution so it's you know important to kind of put this into context because I don't think Iran's economy is often well understood but from the end of the Iran-arach war until the real intensification of the sanctions in 2012 the Islamic Republic was about as good as any other kind of middle income upper middle income country at producing greater prosperity for its citizens so Iran was tracking with Turkey and actually Poland in that period now You might say that Iran has oil and the other countries' don'ts, but Turkey and Poland were kind of connected to the economic engine of the European Union and had benefits of being in sort of a more definitive Western block in a way that Iran was not. And so on face with whatever capacities or qualities that it had in its economy, Iran was producing a pretty significant level of economic development, industrialization and economic diversification being kind of the cornerstones of that project. And so you had the things that I'm sure a lot of your listeners have read about the creation of a large middle class in Iran, you know, also mentioned the fact that access to education was significantly expanded. You had a relatively large welfare state in the country by, certainly by regional standards. And all of this was sitting alongside the reality of a regime that continued to engage in very strong rhetoric, anti-Western anti-imperialist rhetoric, and also pursued a sort of strategy of forward defense. So Iran, given that it was under basically arms embargoes and was not able to develop a conventional military, you know, it could not produce a fighter jet, it could not produce current generation tanks, things of that nature, which every other country in the region had in spades, it basically invested in ballistic missiles, drones, and support for proxy groups like Hasbola, Hamas, the PM use in Iraq. And, you know, what's interesting for me about the nature of that capacity for asymmetrical warfare is that in a way, this is the first country that the U.S. has waged war against that has a large economic base in the sense like it has a large industrialized economy, you know, Iran produces a million motor vehicles per year that not many countries have industrial capacity on that order. But at the same time, the U.S. is forced to fight a war against kind of capabilities that are far cheaper than what it's using in the course of the war and against an adversary that has a much higher tolerance of pain despite the fact that it is a relatively developed country. And I think it's that particular combination that makes Iran a formidable adversary because if we're talking about Iran's capacity to continue the war persist in the war as a function of its economic means. So does it have the wealth and does it have the actual industrial base, the factories, the raw materials, and so forth to continue to produce the weapons it needs to sustain in this war. You know, the strange thing about this is that actually Iran is able to cause a lot of harm with relatively cheap and rudimentary systems and relative to the size of its economy, it's going to be particularly easy to sustain the production and deployment of those systems. So to put some numbers to this, you know, if you're using data from C-PRI which looks at military expenditures globally, converting this figure into dollars is a little bit misleading and I always sort of put that caveat out there. But it's I think it's the best thing that we can do at the moment. Basically, Iran's military expenditure in purchasing power terms will be larger than what the figure I'm about to say indicates. But I think generally speaking, it's still an interesting number to keep in mind. Iran's military expenditure for the year where we have the most recent data in the C-PRI database, 2024, was about $8 billion. Now if you imagine like $8 billion relative to the size of the Iranian economy also converted into dollar terms using the same conversion factor, then we're talking about a military expenditure that's, you know, around 3, 4% of GDP. That is a relatively small amount of military expenditure. When you imagine that in the Western imagination, Iran is a highly militarized country that has basically thrown everything it can at posing a threat to the West. Secretary of War Pete Hexeth said recently in a press conference that Iran has been spending money on missiles and instead of spending money on its own people. And that is a kind of fiction ultimately because the real analytical takeaway, if you look at the combination of factors in Iran, is that it is almost surprising it has chosen the asymmetric form of warfare. I think it has done that knowing its adversary very well, knowing that that would be the weakness for the U.S. That is not a reflection of, you know, a lack of economic means. It's actually a reflection of the fact that Iran has been pretty thrifty in its development of a defense industry and in its ability to project a threat beyond its borders. And that's ultimately what we're dealing with here. So I think that connects back to what also was describing. That's the unique feature here is that, you know, this is an adversary like many others the U.S. has faced, which is having success with the relatively cheap and rudimentary systems and tactics. But it is still a significant power in a regional context and also in a sense by global standards. And, and, Yara, I've got to say it seems to me that on some level, the asymmetry and military power somehow, and this maybe gets back to the myopia discussion we were having. And somehow, in some sense, facilitates an inverse asymmetry in strategic acumen. That's, I mean, I think the question there becomes like, what is the goal of the military industrial complex of the United States? And if the goal of the military industrial complex of the United States is to win wars, then yes, arguably I think there have been many mistakes made in terms of the kind of systems that have been developed, how they've been deployed, you know, what is considered a like a sensible doctrine for the U.S. with the range of adversaries that it faces globally. But if you're talking about the military industrial complex in the U.S. as a question of political economy and, you know, a system that is trying to justify its own large S and all of that. And I mean, this is nothing new. I mean, this argument has been made a million times. You know, arguably it's not like they don't know what they're doing, right, in a sense, right? So the acumen question, you know, it's, I don't think they have built a system that has made them dumb. I think they've built a system that serves their purposes very well. And that the purpose of that system is not really to win wars, especially if you can just show the president a highlights real and convince the commander in chief that he is winning a war that he is obviously losing. Asla. I do want to say though that this goes back to the like what do you say, just how do you send to reconfigure? Or just generally like what does it mean to say that you build in response to a strategic environment of that kind in a way that emphasizes resilience and endurance? And just I mean, this is not even specific to Iran. I do think that there is a way that there is an asymmetry and strategic acumen if you want that is an inverse relationship between material power and strategic acumen. So if you have raw material power, military dominance, larger resources, etc. That means that the adversary has to understand at some level that it is weaker in this case Iran. And so what does that mean to be weaker in an asymmetric context? It means you're not going to be able to outspend your opponent. You're not going to be able to dominate your opponent through the sophistication of your technology or win necessarily in conventional battles, right? Iran's not about to launch a retaliatory war on US soil through conventional means. So Iran is confronting a very different question than the one that the US in its planning is confronting. The question Iran has to answer is where is the system most vulnerable? That's not necessary. I mean that logically is a question the United States military planners ought to be asking, right? Like putting aside the political economy, just those that are planning with respect to military battles might want to ask that question. But Iran has no choice but to pursue that particular question, which means its strategies are going to be overwhelmingly looking at things like choke points, right? Like how can it use leverage that it has available to it? Attacking insurability, right? I mean, you've made the point that we've made the point generally speaking that even the threat of the use of coercion often achieves ends for the United States. But the same is true for the asymmetrically weaker opponent when it is in command of something like choke points. And so going after reputation and insurability rather than I mean that's at least as effective as any strike on territory of neighbors in the Gulf and so forth, using low cost tools along the lines that Yaris was just describing like that you really magnify the effect of the industrial base that Iran has available to it so that it's not about you know winning decisively by having an overwhelming capacity to marshal material resources that through blunt force will impose a victory but rather being able to have a reliance on those kinds of tools that are sustainable over the long haul preparing for the longest possible version of the conflict and therefore stretching the conflict across time and geography. These are the ways systemically you have to think if you're asymmetrically in the weaker position and stronger actors don't have to think that's why they should. They might need to, right? Like I'm you know far from being someone who is a military strategist but if you're dominant it's obvious, right? That you can rely on overwhelming military capability, deep financial resources, technological superiority and there's going to be a temptation to think in those terms rather than through these systemic thinking that any actor Iran certainly but any actor that's asymmetrically situated in the this then turns to why Yars insight that the US performs terribly over time in all of these asymmetric contexts. It's the explanation to my mind for that. It's that, you know, the thing that's available to the United States is so capable of delivering blunt short-term victory. It's very difficult to see past that, to ask the medium and long-term questions, let alone when you have the political incentives you do for short-term thinking, would give in the electoral calculus that many of those choosing to go to war faith. So direct applications of force become incredibly tempting and over time produce habits like the ones we were talking about earlier over confidence and escalation, underestimating second or second order effects of your conduct and not and discounting medium and long-term consequences by over-valuing the short-term benefits, assuming that you have control over outcomes because of the world's weakness of your adversary, we've already discussed on this show. I mean, I've actually discussed with you on this show the proclivity to punch down that Trump is only interested at this point in meaningful conflict with parties that he assesses to be weaker. This is itself part of the same logic, right? That bluntness that force enables. Like there is a very low likelihood of kinetic war anytime soon. In fact, actors in the ordinary foreign policy circles of the United States are very concerned that Trump is not going to be willing to defend Taiwan for this very reason. That he's unwilling to engage with adversaries that he assesses as in a position to pose a meaningful threat. But of course, he's miscalculated with respect to Iran for the reasons that he is just described. Previous asymmetric wars have been against actors that don't have the particular resource set that Iran does, but all of them have had the strategic capacity to fix systemically in the way that I just described, which is why the US typically doesn't succeed in asymmetric warfare in my view. I feel like it is important to point out there in terms of the Trump's insistence on only punching and waging war downward that even as we might find a bit of a silver lining in this catastrophic war in terms of like relishing, watching US power find its hard limits. Still, we saw Israel with US backing conductor genocide in Gaza with near total impunity impose an all but total blockade on Gaza currently a all but total blockade on Cuba with Trump exercising so much power over the entire Western hemisphere that surviving second pink tide left governments in Latin America, Columbia, Brazil, Mexico will not defy the president to give Cuba oil. It's really quite astounding and depressing. No, absolutely. Sorry. Just to be clear, there's no relish here. I'm not. Oh, no, I'm not. I'm not. I'm not. I'm talking about so. I'm not. I'm talking about myself. I mean, the US is certainly expending its power in a way that is accelerating its own decline. So that's a different way of telling the story you just did, right? But there is that. And there's, I think there's no doubt that that's true. Like, you know, we can talk about the dollarization, like what are the incentives that all actors that those that formerly understood themselves as allies and those that understand themselves as adversaries have against the backdrop of the strategic picture that the United States has created. I do think it's a secular decline story. No question in my mind that that's the case. But at the same time, like at what cost and what, you know, what does that mean? I mean, the reconfiguring capacity, of course, and like the generative reality that uses a force producer, of course, at what horrifying cost and absorbed by who and, you know, whether you look to Cuba or Gaza, as you say, or Lebanon at the moment or Iran, the cost that is being imposed on populations on the ground is just mind bogglingly horrific and the pure, the sheer cruelty and exaltation in a kind of pornographic carnival of suffering that the US is illustrating, including through the memeification of its own war strategy and the release of these obscene videos, et cetera, it's, I mean, you know, nothing that we discussed today will be sufficient to capture the horror of what is actually being undertaken. So, you know, that's still re-lining such as it is has to be put set beside the astonishing total of human suffering that's being imposed and the constant complicity, by the way, that I mean, like in the crippling guilt that many of us feel for even being in this jurisdiction ultimately because of the degree to which we are implicated and we're living in a democratic, you know, nominally democratic society, but certainly in a society, if for those who are resident in the United States, where we have a greater capacity to alter the strategic calculus that's being engaged by the leadership in this country, then ordinary radians do with respect to Iran or populations elsewhere. And so, in a sense, we are ultimately responsible. We're more responsible than any population in the world, certainly than those in Mexico or Colombia or anywhere else to rein in these logics. And so, what we're describing also has to be understood as a kind of rally cry to mobilize ourselves as a citizenry or as a population in this jurisdiction capable of raising our voices to resist the things that are being done with our resources, with our tax dollars and allegedly in our name. Yeah, Nick. Yeah, I think that this is a very important area to explore the capacity for the projection of force and the domestic constraints or lack thereof. And that also ties into the questions you posed earlier, Dan, about geoeconomics. Why did the US find it so easy to impose these sanctions? Why could it do it with such a ban? And with so little thought of the second and third-order consequences? And here, there's actually an interesting tie-in, not just to the relative insulation of foreign policy from democratic control in the United States, but also the US political economy. And it's a bit the flip side of Iran's political economy of resistance. There's a US political economy that is uniquely inclined towards external economic coercion. And that has a lot to do with the fact that trade, imports and exports are a much smaller share of US GDP than they are of almost any other rich, advanced industrial economy. And another thing, which is very interesting, and this is very relevant also to the listeners of the show who are care about labor issues, the decline of organized labor since the 70s and 80s has been mirrored by a remarkable decline in the organization of foreign-oriented and export-oriented business organizations. And this is a really major point because this puts the US really in a class of its own. If you go to any European country, Germany is the great example here at the German car industry or German manufacturing industry. But if you go to any Asian country, to all the export industries, have a powerful lobby. That is, at the domestic level, used in bargain with labor for collective bargaining. But at the level of national politics and foreign policy formation functions as a way to represent the interests of those industries in stable open globalization and trade. And the United States used to have that in the mid-20th century, around the time of the New Deal and the Treaty of Detroit. There were highly articulated US export industries. It's when the US ran an export surplus, right? Also, big American corporations were able to have a serious impact on foreign policy formation through the political process. And that since the 70s and 80s has become a lot more disarticulated, a lot more fragmented. And in a sense, the Trump administration is an amazing demonstration of how incoherent American business has become as a political actor. Because it is a real free-for-all. And I think the issue with trying to understand the Trump administration in a kind of political economic sense is that there are so many small factions, all of whom are in fact at cross purposes with each other, many of whom are pursuing their own agendas and who cannot articulate a general rational capitalist agenda that is both coherent at the national US level, right? That balances the interests of labor and capital, of imports and exporters. And that is then generalizable at the world level to tie in American allies. All of that is basically disintegrated. And so you get now arguments that are completely ridiculous, right? That that in fact deep in the miscalculation that the US has made, that an oil pressure won't even matter. Oh, we didn't foresee that this oil pressure was going to happen. But now that it's here, surely we've become a net exporter of energy. So the US economy will simply gain. And that completely confuses the sectoral interests of a very small oil and gas export industry, which it seems actually will not even be able to respond adequately to those high prices in time to really benefit from them with the overall interests of the US economy, which is very fossil fuel intensive still, and which will suffer much greater cost, suffer high inflation and ordinary consumers households. And all other businesses too will pay much higher costs for energy and basic inputs. So that I think is a really key part for why the US has not had any meaningful internal constraint on the use of sanctions. There isn't an organized exporter foreign business lobby in the United States that has been able to make this claim that existed almost every other country. And that really accounts for why do other countries use economic pressure much less as well from the domestic point of view. The only area where you saw it recently, I come back to the Chinese chip export controls was Envitya, right, which last year picked a pretty high profile fight with the Trump administration when Jensen Wang, because he was now the CEO of the most valuable company in the S&P 500 felt emboldened enough to say, I think these chip controls are a mistake. We're losing market share. And I would like to have some sort of exemption from them. And then of course, Trump very quickly, rather than think its structural terms, just decided to use it as an opportunity to extract rents and say, you should give me a 10 or 15% cut of all your sale. in the Chinese market. So I think that that's really key and it also ties into the Venezuela case where Trump argued that it was to capture the oil, but there actually was no real driver from the American fossil fuel industry because it's very difficult to in the short term reinvest. It's going to cost enormous amounts of money. The oil isn't actually the right grade of oil, particularly for the United States and it will require an enormous amount of extra capital and investment to make that usable. So this was essentially a kind of imperialist form policy looking for a domestic economic driver after the fact. It was a very bizarre situation, but that's one of the chaotic and unpredictable elements in the current state of the American political economy. Nick, we could add to this ledger, this ledger of factors that enabled Trump and more generally the US's abhorrent chaotic behavior. We can add to that ledger the pathetic subservience of European liberals, these European liberals who were preparing just weeks ago for Trump to potentially invade and seize European territory in Greenland. Trump also, of course, actively supporting far-right insurgencies across the continent. What's the political economic assessment of this? I want to guess we call a European commitment to long-running strategic defeat. Well, it's become quite chaotic in Europe too and this war has driven it to a head. So there was still a relatively broad preparedness by European elites last year when Trump started the trade war and imposed very hefty tariffs on Europe to take a quick upfront loss in return for some longer term predictability. Then came the Greenland crisis, Trump's threat to just a nex Greenland territory part of Denmark over the winter of right and when the Davos World economic form was happening right after the Venezuelan crisis as well. And now we're in this terrible war. All of that, I think, has shown that that predictability, whatever the Europeans thought they were getting through acquiescence was very poultry. Still, of course, you're right. There are these people, Mark Ruther, the former Dutch prime minister, now Secretary General of NATO, most brazen in his sicklefincy and kind of bootlicking behavior right towards Trump. But essentially, that, I think, should be understood also in a sociological fashion that as a technocratic center-right liberal prime minister, he was very devoted to his office. He is a complete workaholic and his job as Secretary General of NATO is to keep the US and Europe together at whatever cost. He has no constituents, you anymore, that's going to punish him for this sort of behavior. He's really playing that intra-elite game and I think that accounts for a lot of his behavior. What you can see, however, is that now, those recent utterances by Ruther have led a number of European leaders, French, Spanish, Italian also to really realize like, wow, there is a big cost to siding. So openly with the United States. And I think that Sánchez, Pedro Sánchez of Spain has really been leading the way, of course, here. His position is much closer to the European mainstream view of this war among all European populations. And he has been rewarded for it, I think, at the polls in terms of public opinion. And so as this goes on, that course, I think, will be increasingly attractive. Does he risk the re-run retaliation by Trump? Absolutely. But ultimately, you're beholden, you know, to your own base and to your own populations who have elected you. And I think that that's the big crisis happening within the European elite right now. The Atlanticism is actually becoming a kind of toxic thing to embrace in many countries. And European political leaders are now going to have to navigate this landscape in which the United States is perceived as the main source of global instability. I think it's also worth connecting this back to the Iran case because I think Iran was in many ways the sort of lightning rod for a lot of these debates when they first emerged. I mean, it's, you know, the one of the strongest kind of efforts towards European economic sovereignty came during the first Trump term where, you know, European governments did try and make an effort to stand by the Iran nuclear deal. And, you know, in particular, you had the then French finance minister Bruno Le Mère, you know, talking publicly about how it was unacceptable for the US to get to dictate, you know, whether European businesses can do, can trade with a country like Iran, especially when it's connected to a deal that had been enshrined as a UN Security Council resolution. And, you know, this goes back to an next point about the fact that in Europe, you had these strong business lobbies that were connected in many ways to kind of the organs of European foreign policy where, you know, there was an, there was an ability to look at economic diplomacy as one way in which Europe was advancing its power. And to the extent that the US was curtailing that they were really infringing on Europe's ability to be a player in the global economy. But the difficulty was first and foremost that, you know, Europe really struggled to come up with mechanisms to respond to US unilateral sanctions. And, you know, you got a very clear education in the power of kind of US dominance of the global financial system. The other thing was that there just wasn't really enough time for a lot of that energy to be expended and for the political systems in Europe, which are a bit slow moving to kind of come up with solutions. So on one hand, you know, although Iran did not escalate on its side around the US withdrawal of the nuclear deal in terms of weakening its own commitments, non-proliferation commitments for a little over a year, eventually Iran did start increasing its uranium enrichment, which ultimately had the effect of weakening Europe's kind of resolve or interest in finding solutions to maintain trade with Iran. And then ultimately we did get the Biden administration came in, the European sort of felt that, well, he was just going to re-enter the nuclear deal so they didn't need to think about, you know, counteracting US Germany. And then the Russian invasion of Ukraine happened and transatlantic cooperation became kind of the order of the day. Although I think I agree with Nick that at this point, the outcome of really the Biden sort of administration and its leadership around these issues and then subsequently how Trump has come into office has really put new question marks around this transatlantic relationship and how it's going to play out. But ultimately, you know, what we see with Iran is today, if there was a US deal that achieved some kind of ceasefire and then there's negotiations around a more sort of long-standing agreement, the inability of the US to roll back its own economic coercion and to lift sanctions credibly and to re-engage economically, that's like an Achilles heel of a lot of this policy. So, you know, also I mentioned this like ratcheting up of pressure, US officials, if you talk to them in private settings, we'll acknowledge that sanctions are a one-way ratchet. They really don't have the means to reduce this pressure. And as you know, I wrote with Nick, I guess six years ago now in a piece in foreign policy, although the US has plenty of sort of tools for waging economic war, it does not have the real tools for reconstruction in the wake of an economic war. So, economic wars have effects similar to actual wars. In the case of Iran, we ended up with a real war anyway at the end of this. But if the US was to try and step in and re-engage Iran economically, it's very difficult to see what the actors would be in that scenario and what constituencies would be there in the US to do that work. To give you an example, around the time when the nuclear deal was implemented in 2016, the most-vonted organization of strategic thinking in the United States, McKinsey and specifically their global institute issued a report called Iran, the $1 trillion opportunity. And it was a report that they didn't actually put out publicly, but a major report that was their assessment of the economic opportunities in Iran. And it was mainly intended for McKinsey's clients in Europe who were sort of in pole position to re-engage. But there was a view that US companies taking advantage of a general license called General License H, which meant that a non-US subsidiary of a US company could engage in business in Iran. So, a company that did that for a while was proctor and gamble. Or major US companies that would get specific permission from the US government to engage like Boeing, that they've had this enormous opportunity in the Iranian market. But what was really striking about that report was actually how hard it was to make the argument in US boardrooms that one of the largest emerging markets in the world was opening up and that there were opportunities and to mobilize US capital, get US technology, get US expertise to come into the Iranian market, in ways that would necessarily, almost necessarily be profitable. It just takes you actually, getting on the ground there. And that ultimately is also a weakness here. I mean, when we talk about US power, it's very easy for us to talk about all the obvious ways in which the US is very powerful. But one of the things that's also very striking about the US is a global headgemon in a unique position that to dominate the global economy is that US companies are so absent from the global economy, that they really really are not engaging in investment or even more basic commerce that is supporting global development around the world. And that's something that when paired with the use of economic coercion and the sanctions, if anything actually makes them doubly harmful because it points to this perennial issue of when the time comes to actually lift the sanctions, you're not able to do that. And Iran has actually really been the case study there. And in many ways, the fact that we are facing this war is precisely because there were no constituencies, specifically business constituencies in the United States that could create a political case for why engaging Iran was in U.S. interests beyond the national security debate that is always so fraught. I'm just going to add one quick thing here, going back to the question of Europe, because there's a way in which our conversation, which I first of all totally agree with everything that has preceded, but present Europe as the kind of more rational actor or the wiser and more stable actor in some ways. And I want to just disable that claim a little bit at the margins. One of the things worth noting about what's different about the European position relative to the U.S. and the reasons that Europe therefore has the kinds of industrial lobby and other things is that, of course, they're geographically not in the same situation as the United States at all. And that produces its own pathologies. So on the one hand, you have forms of foreign policy that are more closely tied to an actual investment in the global economy. And for the reasons that Nick and Yara have both articulated, that means a far greater sensitivity to the actual consequences of using economic warfare. But on the other hand, the fundamental and deep racism of European policies and the fear, I mean, the thing that is making Atlantisism toxic, maybe more than any other at the moment, I think, than there are many. So I'll concede that in the Greenland moves and so on. But the worry that the Iran War is going to produce another so-called migration crisis and that Europe actually has to absorb the cost associated with the recklessness of the United States, et cetera, in a way the U.S. is toxic in the same, I mean, I would make an analogy to the ways in which Israel itself, the perceptions of Israel and the domestic context in the United States are shifting. In a similar way that perceptions of the U.S. and the European context are shifting, I mean, those shifts are very similar, very parallel, that this long-standing relationship is now driving us over a cliff and is going to have these terrible, dilitarious effects. And it has an underside in both jurisdictions in the U.S. there is a clear underside of just open anti-Semitism that is hand in glove with that turning against Israel. And in the European context, the racism is not against Americans, but against this idea that the U.S. is consistent botching of its policies in the Middle East is producing this kind of instability at the border of Europe that forces liberal Europe into this unfortunate posture of having to raise its fortress walls, undo its internal integration in terms of borders, turn its back on earlier, erstwhile, so-called liberal asylum policies, et cetera, which are also self-deception and fictions that overlay what is effectively an inability in Europe, just as much as in the U.S. of liberals to actually reconcile themselves with realities of multiracial democracy. And again, treat the arrival of trivial numbers of Muslims in an earlier period in 2015 and a million people showing up in a block that is, you know, whatever, a number of hundreds of millions strong as a crisis that required all of that backlash and cause the right, the far right to rise in the ways that it did an internal European politics. I just want to say that some of the things that are alarming Europe about the consequences of this war are themselves deeply suspect and vicious in their own right and need to be examined as such quite separate from the proper assessment that the United States is engaging in absolutely catastrophic and reckless conduct. But it's not the humanitarian consequences. I mean, you're really struck by it when you look at, just as when you look at the U.S. coverage of the war and it's somewhere between the mimefcation and just a pure interest in markets and the potential blowback at the gas pump and so forth. I could total absence of any concern about the humanitarian consequences, the meaning in the even short term for the geopolitics of the region in which this war is being conducted, what it means for, you know, people on the ground inside of Iran and not only expats in the Gulf. But you have a very similar moral numbness in the European coverage, which is also self-regarding, internal and and tinged with exactly the same kinds of racism. And so there's a kind of pathology of the liberalism that I wanted to like, you know, name in addition to agreeing with all of the points that Nick and Yarra put on the table. I'm Sam Adler-Bell and you're listening to The Dick by far my favorite podcast for sophisticated, lucid and very, very, very thorough conversations about the past, present and future of left politics. Personally, I would be completely lost and adrift without it, so please support the show at patreon.com/thedig. This episode of The Dick is brought to you by our listeners who support us at patreon.com and by Haymarket Books, which has loads of great left-wing titles perfect for dig listeners like you. One that you might like is Cold War on Five Contents, a global history of empire and espionage by Alfred W. McCoy, transforming battlegrounds in Africa, Asia and Latin America into vertebratable hellscapes, the surrogate wars of the Cold War era left behind a legacy of collective trauma and social conflict that persisted into the present. In this ambitious work, Alfred W. McCoy uses a bottom-up outside an approach to offer an unexpected new perspective on the longest, most consequential conflict in modern history. McCoy renders an intimate portrait of both em battled covert operatives and committed anti-war protesters, thus humanizing the history of the Cold War. We keep referencing the Russia-Ukraine war that's so caught up in the war on Iran in the sense of creating this strong self-perceived European dependency on the United States and also in terms of the various ways that the war on Iran has benefited Russia, but we haven't really robustly assessed that war yet. What do we learn about economic warfare and its efficacy from the massive sanctions imposed upon Russia since 2022 full-scale invasion of Ukraine? Nick. I was also going to just say something briefly which ties in very well to this question in response to what Asla just said. I think that's right that the Europeans are very worried about a migration crisis now, or that's an argument at least that one sees more and more, but I would argue that they're worried about Middle Eastern refugees was particularly strong in the 2010s and that the Russia-Ukraine issue has displaced those sorts of fears as the not just the top fear, but the fear through which all other fears are now understood. This is itself a very debilitating thing because it means that all global geopolitics and geoeconomics by Europeans, and I encounter this a lot what I'm in Europe, is understood through the prism of which side of Russia-Ukraine are these countries on. A large part of the world in fact has not really taken an overt stance, most of the world, despite this being a very big important international sanctions regime, about 35 to 40 countries actively participate in the global north. Most of the world's states, at least three-quarters of them are not part of the sanctions regime, continue to trade with both Russia and Ukraine, but this you can see particularly in the way that Europe has responded to China because a lot of the reactions you see now to Iran that perhaps it is legitimate to take out ahead of state and the entire top of a government without, you know, while you're in negotiations. All of that is very much justified oftentimes through the claim that because Iran supplied Russia with drones to use against Ukraine, Iran has taken a side and therefore all means in the fight against Russia which are increasingly disinhibited should also be applied to Iran. I think similar arguments are being made about China through a very kind of fallacious analysis that China has somehow swung fully behind Russia when China is acting really as an opportunistic neutral in this conflict and an opportunistic neutral that controls one-third the world's manufacturing base and does not participate in Western sanctions. So almost by definition China is going to be supplying huge amounts of materials for drones, rockets and all sorts of ammunition to all sides in these conflicts and it was supplying until very recently also most of the components for Ukraine's drones, right? So it was actually feeling both sides of the war, it was extending the war but not because of any overt political alignment necessarily. Anyway, the Russia-Ukraine sanctions case, I think the relevant part of it for economic warfare is that it was so large and so systemically important because of Russia's integration into global commodity markets that as I mentioned before, it required a very careful calibration of pressure. There are still ongoing efforts by the U.S. and its allies and by European countries to sway particularly. intermediaries and countries that are so third states that act as conduits for trade in Russia and make them break those links. Yara will be able to say more about that central Asia is a real focal point there now. Kyrgyzstan for example is being scrutinized by the European Union as a conduit state. So that's still ongoing. This is a very big ongoing rolling multi-year diplomatic effort to tighten that economic pressure. And it's also cat and mouse game because one of the things that we've seen is the rise of this massive shadow fleet, which is now playing a vital role in Iran's ability to continue to export oil and earn for an exchange. And that shadow fleet was already in existence. The first shadow fleet in a way started when there were sanctions against apartheid South Africa. It never fully went away. There was always a black market in oil sparkling also for North Korea and its oil imports. But it really mushroomed in the 2010s first due to Iran and Venezuela sanctions. And then it completely expanded massively. And so now you start to see the accumulated effect of all of those different sanctions that regimes against different countries. Having a systemic effect on the global economy. And the one other factor that has made that very difficult problem for the sanctions policy makers to solve is the fact that the world is also, as you well know, very much driven by an offshore system of letterbox companies of jurisdictions where it is very easy for companies to house property rights and register companies. And that archipelago capitalism as Vanessa Ogle calls it or that kind of offshore way of structuring global capitalism. It turns out also provides you with all of these havens where you can incorporate companies use them for a few transactions to say sell sanctioned Russian oil to India. And then once it gets put on a blacklist, you just create new companies in the Emirates or in Hong Kong. And then the game keeps going on and on. It's effectively a race between how quickly the sanctions policy makers can update their sanctions blacklist and how quickly global corporate lawyers who are willing to engage in these transactions can create shell companies. And as we've seen, that's very, very difficult to stay ahead of. That's a pretty fantastic irony in the global economic order that the US superintendents a system that simultaneously allows for oligarchs to evade and avoid taxation and regulation, but that also insists on the US's ability to dominate and police the entire global economic order. Yeah. We've seen multiple apparently false statements from the Trump administration suggesting a soon to come and to the war statements that ships will be protected in the straight of Formu's assertions that negotiations are underway with Iran that seemingly are not underway. Statements that at the end of the day seem all about moving markets. There was also seeming insider trading on the timing of the US's rail attack on prediction markets, also just recently extremely well timed, large volume oil futures trades just before Trump made again, a perhaps false announcement on Monday, March 23rd about negotiations being underway with Iran. This is the sort of thing that we've seen constantly since Trump re-took office. How do the movements of global financial markets figure into the economic warfare underway? And is that novel historically speaking? Under all circumstances, it's right to say that war doesn't just destroy value, it redistributes value. And so the question to ask is always who profits and through what mechanisms at some level and so what you're describing is not something new in that respect, but it is also true that this war in particular is being fought not just on battlefield, but inside of price systems. So there's a way that the Trump administration is particularly attuned to this and is particularly keen to be the one to profit. Literally personally and possibly their own entourage and then just more generally to the sort of again, exaltation I've used that word before around the means of the violence, but there seems to be a similar just almost fetishization of the capacity to move financial markets through the use of disinformation. And so of course, it's just always the case that signaling in a war is going to happen and it's also all going to be a form of manipulation, right? So it's going to serve deterrent purposes, it's going to serve market manipulation purposes because signals can be designed to influence market, shape expectations, etc. And war presents a particularly fertile ground for speculation and manipulation. And so those things are always going to blur at some level, but we do see I think a very significant intensification and explicit manipulation here that is, I don't want to call it new, but is an intensification of dynamics that you would expect to see in war no matter what. Because you have, I mean in this particular war, it's clear that any actor with inside information is going to be able to profit from oil futures, currency shifts, basic volatility. And then you have a remarkable willingness of the person that is most publicly engaging in delivering information to US publics simultaneously, meaning Trump himself personally, simultaneously saying that he has completely unconstrained in his ability to financially exploit the war that he himself is pursuing in real time and make that clear. So that I think is, there's something unique about that, unconstrainedness of the US executive, but where war is always creating speculative opportunities in highly liquid markets like the ones that we have in the geo economic universe that we're in now, events are tied so tightly to financial instruments and prediction markets that speculation is moving faster in much more pervasive ways, information wars and financial speculation are intertwined in ways that have become much more in my view explicit. So it's hard to even say exactly what counts as insider trading under these circumstances, because insider trading is about trading on non public material information. But in a war context, that could mean advance knowledge of any number of things, like anybody in the US government with some degree of access to either the president or war planning or just generally speaking, even accidentally stumbling on some aspect of Trump's own social media capacities has advanced knowledge of strike ceasefire sanctions decisions infrastructure hits, whatever it might be. The smallest timing advantage matters because markets in this global economy can move immediately and that means the financialization of everything produces a kind of speed and opportunism that the volatility of war is intensifying. So of course war is always going to be fertile ground, you have discrete high impact events and uneven information distribution. But in this particular war, access to information means that you could have tiny changes having massive ripple effects and producing huge financial windfalls. And I think we're seeing that play out in real time with an especially undisciplined executive willing to resort to this constantly and in full view. So everybody now prices in that any major change in military policy is going to happen after markets close on Friday or that you need to be attuned to exactly what's going to happen early in the morning on Monday in an attempt to manipulate markets. And of course, Iran has internalized this and is consistently naming it all the time publicly as well. All of this takes something that I think is a structural feature of war and speculation. But given that it's energy markets, given the character of the particular, the Israelis aren't doing this in the same way. There is something uniquely Trump about the appetite for publicly personally profiting at a return that has made this a subject of public debate and a really high profile one and one that is being explicitly named by both sides as driving at least the disinformation element, at least the propagandistic element. And of course, the risk here and all stuff is yes, the signal always risks blurring into strategies of manipulation. But here, there's nothing but manipulation all the way down. I think it's basically making it almost impossible to detect signal any longer either for insiders. I mean, I just don't know how much longer you can play this game of saying, for example, we're going to deploy thousands of paratroopers to the region while simultaneously claiming that peace is on, is now at hand. And we've, you know, major gifts have been provided to us and we have struck the deal. I mean, you know, there's only so many times, like credibility of a commodity also. And I think it's been shredded in a way that, again, is accelerated at a speed that is distinctive, if not new. Yeah. So, also mentioned the fact that, you know, Iranian officials are calling this out. So, you've had the speaker of the parliament, the person that, you know, according to reports might be the key interlocutor for the Trump administration, Muhammad Baugh or Khalibov, you know, use the term job boning in a tweet directed at, you know, that this is sort of unprecedented stuff. I mean, when is the last time a major US adversary would send out a public statement like that during a war? It just seems completely new. So maybe this is something that is new. But that also reflects that, you know, this is the first time, I don't know, probably since World War II and Nick can correct me if I'm wrong, that the US has faced an adversary with it. also have a highly financialized economy. So Iran does have a very financialized economy. There are markets and there's a lot of speculative activity in that economy. And here, I think the other observation I want to make is that if you were to write a science fiction book that would create a metaphor for the Iran-US rivalry, I think one of the devices of that book would be this sort of like mimetic quality of the US-Iran war. I mean, we've talked about it. It's been discussed a little bit in the context of the war on terror, the sort of boomerang effect that how the war is waged ends up coming back. But this is actually a really interesting example of that, where within the context of Iran, the economic war on the country, there was one price signal that was incredibly important for everyone. And it really has become the way in which the strength of US sanctions is understood. So any listeners who have been reading about Iran's economy will have probably read about the exchange rate in the country. So the idea that the real has lost something like 98% of its value since the start of the sanctions campaign and is just constantly sort of devaluing as the country struggles to keep foreign exchange markets supplied largely because of the sanctions on Iran's oil exports, which are the main source of foreign exchange revenue. Now, what's interesting is that the Iranian response to a market that is subject to this kind of volatility, but generally volatility in one direction has been to create a whole sort of ecosystem of speculation around it. So on one hand, you have government officials in Iran doing a lot of job boning themselves. And this is something that Iranian commentators and people on social media have sort of pointed out in response to Iran's statements of Iranian officials about what the Trump administration is doing. They're saying, ah, of course they can recognize that because they've been doing the same thing to try and build confidence around, let's say, the stability of the real. You would have the central bank governor come out and say that funds have been unfrozen in some unnamed country. And therefore, the market's going to have more euros and dollars. And so you better not go and try and sell your reals to buy gold coins or physical bills at the bazaar. That's going to be a bad investment because actually the reals going to strengthen. And that kind of practice was developed a lot. And ultimately, as to us less pointed, eroded the credibility of Iranian economic policy making because how many times can the president or central bank governor get up there and say the market, you know, the real is going to stabilize. And then at the end of the year, they have to do a sharp devaluation anyway. The second thing about this, though, is that, you know, it's not just the job boning isn't benign. And I think just the same way that Oslo has been describing the emergence of a form of corruption in the way in which the kind of geopolitical events can turn into forms of volatility that become financialized and then become sources of rent seeking for different kinds of actors. That has absolutely been something that we've seen in Iran as well. Where, you know, ultimately individuals who have access to capital have the financial means can find ways to structure basically, in a sense, their own portfolios and their investment behaviors to take advantage of this kind of economic degradation in the country. And this has been part of the a, the increase in the financialization in ways that favor a small elite over the majority of Iranians. And then also be, I think, has led to a situation in which there's some very perverse incentives here, because actually there are people in Iran for whom returning to a more normal state of affairs may not be conducive to making money the way they have been right now. And this is, this feeds back into the question mark about the attractiveness of US promises of sanctions relief after many years of this kind of economic pressure and coercion. But generally speaking, I think this like mimetic thing that's happening, where the same perverse outcomes that we see in Iran are emerging in the US. And it's part of this push and pull around these systems that are being sort of mutually constructed. And I think that's the key thing here is that, you know, there is an action and reaction aspect here where the fact that Iran has not acquiesced, has forced the US to tighten its sanctions and has led us down this escalatory path, which has then become the fodder for polymarket and Colchie and all the prediction markets. You know, that's a story that I think we're almost too close to it to be able to say. And maybe what I've just described is sort of ravings and doesn't make a lot of sense. But at some point, I imagine either like a science fiction writer or some very astute historian, I don't know, Nick, if you want to take this challenge, you know, could sort of look at, take a long view here and describe the way in which the way in which the US pursued economic war boomeranged back and actually changed the way in which a lot of the fundamental are thinking about signals in the US economy, about speculative financial activity in the US economy were really constructed. And I think that's something that for the other forever war, which is this series of economic wars, there hasn't been a full accounting of those possibilities in their effects, Nick. - Yeah, so I think that's wonderful. And I don't actually want to write that because I don't feel equipped to do it. But I completely agree with Yars analysis, but I'll just bring in the case of Russia, which I think is another good example of a country that is highly financialized too, which is actually one of the largest users of US dollars around the world in the 2000s. And looking at what sanctions have done to change domestic society and also changed the nature of Putin's regime, right? Because there's an interesting set of differences and similarities with Iran. On the one hand, the war in Ukraine has obviously empowered the Russian security elite very massively, but something else has happened due to this economic war, the Western sanctions, which also involved, of course, the freeze of nearly 300 billion in Russian central bank reserves and about 60 billion in assets from those superyouts that we saw in apprehended in places like Fiji and all over the world, but also London, townhouses and places on Sardinia, a very kind of glitzy, high profile, private property of Russian oligarchs. And the basic theory was essentially you heard the people who support Putin's regime, who have benefited from it, and that will through some kind of very basic mechanistic political economy explanation force the regime to adjust course. Now, of course, no such thing has happened because what it failed to account for was that Russia also was very highly integrated with Western lenders and with Western investors and Western capital markets. And particularly European firms have sunk hundreds of billions of foreign direct investment in Russia in the last two decades. And that provided Russia with an incredible reservoir of property, which by hook and by crook, has essentially irrigated to itself, dispossessed, expropriated and all-button name, often times not explicitly so, but through Sirthitius legal means de facto, it has dispossessed the original owners of it and it has then rebranded them at a loud local oligarchs, some of whom were completely unknown to rise. So the Forbes rich list of Russia actually had more billionaires in it by 2025 than the year 2022. So the wealth concentration at the top of the Russian elite has risen, but this is the largest redistribution of assets in Russia since the privatizations of the 1990s. So a major reconstitution of property has been taking place. People who the West assume the well-known oligarchs and the West who we may have heard of in the news, those are no longer, in many cases, the people who have any kind of influence. And there now, either a stock abroad with their assets frozen have had to leave Russia and dissociate themselves from those companies, or they're back in Russia with their remaining domestic assets, but now under even tighter political control. So there's been a war-economic nationalization of property that has really retrenched Putin's regime and given him much more political power. So the autocracy in that sense is much stronger than it was before the war began. And those sorts of dynamics, I think, are really important to take into account. And they account for why these sanctions, despite definitely having imposed serious coastal Russia, right? They're causing real economic problems. They do not lead to political change because the entire political economy has shifted in response and the regime has become much more entrenched. Then can I just add to that quickly? I mean, one thing just to point out here and we could talk about this issue for a long time, but this actually points to a maybe a possible flaw in sanctions designed that policymakers need to kind of grapple with. So Nick and I were at a conference in November last year on sanctions issues. And there was an economist there, Alexandra Prokopenko, who's written about this specific issue publicly. But one of the arguments she has made, and I think the same argument can be made about Iran, is that the strange thing about sanctions the way they're currently used is that the financial sanctions act like a kind of capital control on the targeted country, meaning that financial resources cannot flow out. And so in a way, way you sort of trap the oligarchs in Iran or in Russia in the country and they have to double down in a sense on their investments. Whereas if you actually wanted to create an acute financial crisis in a country connected to a sort of balance of payments, weakness that maybe was related to sectoral sanctions, you would probably want to prevent the limitations to cross-border banking. And at the very least put the onus on the government that's being targeted to institute capital controls that would be actually quite unpopular with the elites because then it's the government that is being targeted that saying you can't take your money out anymore. We don't care if it's going to be, you know, your worse off as a result. But at the moment the way it works is that the US basically, by imposing these sanctions, is saying to the oligarchs, you're going to have a very hard time getting your money out. Maybe you can ferret some away into Dubai or something like that. But if you want to stay billionaire, you better keep co-zing up to, you know, the leader in your country. And that ends up, I think, being a very counterproductive outcome from a US perspective as well. Speaking of unintended consequences of economic warfare, much of the US has power to conduct economic warfare depends upon the US dollars position as the global reserve currency. A status dependent upon other countries conducting trade, making financial investments in dollars. Is there a possibility that the US in wantonly abusing its imperial authority that it'll provide an opening for rival currencies like the, the you on? Yeah. You know, there's been this argument made for a long time that the overuse of US sanctions, tariffs, export controls, the general kind of coercive approach of the US and the global economy is going to spur de-dollarization, moving away from the dollar as the global reserve currency of choice as the currency in which most of the foreign trade is denominated. And also, and I think this is crucial and often missed out, moving away from the centrality of American banks in providing the basically convertibility between different currencies. So one of the reasons that the dollar is really important is that it's the biggest pool of liquidity for foreign exchange transactions. If you want to, for example, go from Korean wuan to UAE derhams, you probably have to exchange into dollars in between and this brings US banks into the middle of these financial transactions, even when the sort of two parties at the either end of the transaction are neither a US person or are not using US financial institutions to do the banking. The problem here with I think this idea that de-dollarization will get accelerated is first that it is rising from a very low base and very slowly. So there has been a little bit of a shift in let's say the willingness of countries to invest in US treasuries and to really maintain dollars on the books at their central banks. But we have not seen any decisive shifts away from the dollar. We have also not seen decisive shifts away from the dollar in denominating most of the trade that's happening in the world, including trade of oil. And the other consideration I think that we have to make here is that yes, it's true that the US taking this very coercive kind of zero sum approach probably creates more incentives for other countries to try and create alternative financial infrastructure and to use other currencies for their trade and investments. But the problem is that creating those alternative systems is very difficult. And at the level of laws and institutions and just basic trust, it's very hard to create a common structure to rival the post-war structure the US has created. At the level of technological capabilities, so building the payments messaging systems and the sort of core banking networks that would be an alternative to the use of US systems US software. And then actually just the very connections between correspondent banks which have atrophied significantly since the global financial crisis for various reasons. Those are also hard to get back into some sort of network that doesn't depend on the US as being the hub for all of these banks around the world. And so the reason I raised this is that yes, it's true that the US is probably creating incentives for countries to move away. But going back to the analogy that Nick brought up, it's very easy for them to throw sand in the gears or throw a wrench in the gears of any process to try and create this alternative. And I think that's partly why we haven't seen a very concerted effort on the part of China, Russia, Brazil, the BRICS countries that are often talked about as being the vanguard of this de-dollarization effort to really come up with alternatives because it's hard to do. And in a way, it puts a target on your back. And I think arguably, and I'd be interested to know what Asla and Nick think here, there's the real economy and there's the paper economy. And I think the US has often confused control over the movement of money in the paper economy as being the same thing as power in the real economy. I have a view that in some ways China might be very happy to keep the US as sort of the key player in the global financial system. As long as it counterbalances that influence with its own power in the real economy, meaning through its industrial capacity, its role as the leading global exporter, the leading provider of key technologies. And arguably, if you have that power, yes, the world may be trading in dollars, but if they're trading Chinese goods, that is a certain victory that just trading in dollars doesn't provide in terms of boosting your national power or your hegemonic kind of aspiration. So that's sort of my read on this. But again, this is like, there's a lot of debate over the dollarization and how it might play out. But I think it's not happening very quickly and it certainly won't happen decisively given how easy it is for the US to interfere with it. Yeah, I agree that it's a slow process. And at the margin, it is taking place in a variety of ways, but we shouldn't expect this ultra-flow into one big new beneficiary of it, right? What we actually see is de-dollarization happening gradually and a gradual erosion of some uses of dollars, but the money that was invested in dollars or denominated in dollars first is now going into many different little pots. Some of it goes into the smaller currencies of very open trading economies. So that's what a number of economists now have called non-traditional reserve currencies, Scandinavian currencies, Australian and New Zealand dollars, Canadian, Hong Kong, Singaporeian dollars. None of those are ever going to be an alternative to the US dollar because those economies are just much smaller. So I think that's right. And then the opportunities for US disruption are big. Where I do see a potential for financial blowback is something we haven't talked about yet. We've talked about finance. We've talked about energy markets, but the debt market is important to the way that US-Hajemini functions. What we have also begun to observe in the last few days is a pretty serious spike again in US government debt yields. That also happened last year during the trade war and it was the big thing that forced Trump into a pause on his tariffs. And I think the reason that that's relevant is that the US as a financial hedgemon has developed its global economic role on a very unique pattern where it absorbs the exports of lots of its trading partners, and run deficits as a result, but also provides a very good haven for the reinvestment of the surplus that other countries make. And the most of the foreign holders of US treasuries of US government debt now are it's no longer China, which has diversified very strongly. It's actually Europe and Asian allies, chiefly Japan and South Korea. And those countries are being put under great strain for a variety of reasons this war and the major energy shock. They're going to be suffering much higher inflation in the next few years, almost guaranteed. They're also ramping up arms spending and military spending. And both those factors together mean that they are issuing more government debt, the interest rate and the yields on their government debt is going to go up. And they're going to become increasingly attractive for their own citizens savings and investment as domestic financial markets. In other words, the premium, the attractiveness of the US as the kind of sinkhole of everyone's savings around the world in relative terms is diminishing due to all of these factors that are pointing in the same direction, which is basically that that becomes more attractive to invest for Asians in Asia and for Europeans in Europe. And those things together make US government debt, the demand for it less noticeable. And they push up the yield in US government debt. And we've seen Trump is extremely sensitive to that. Besen, as a strategy secretary, has been trying against a jawbone, but also in a concrete way to play with the issuance issue much less long run debt and much more short term debt that kind of helped them through the last year and the yields went down. I think however, now the energy should and the pressure of rearmament and increasing autonomy on the part of US allies is going to erode that ally investment into US treasuries. And I think that we're going to see some pretty serious financial constraints on the US kicking in eventually. They're not insurmountable, but they're going to be playing a much bigger role, particularly now that the US debt burden is still quite large. So I don't want to sound like a fiscal hawk, but it's important to take that into consideration. And this administration has shown a particular sensitivity to it as well. Israeli or US forces attack have attacked Iranian gas infrastructure Iran responded by attacking Qatar's gas inflicting serious damage. Companies across the region are declaring force major on oil and gas projects left and right. And stepping back, these wealthy Gulf monarchies over a century have cemented domestic power and their regional and global position through on the one hand the exploitation of massive energy resources and then on the other by way of military alliances with the United States. And one would think that that military alliance, one of its key purposes is to guarantee the conditions for Gulf monarchy capital accumulation. But clearly what we're seeing is that this military alliance has instead exposed their economies to incredible harm. What do you make of the sudden exposure of this contradiction between the Gulf States economic program and their geopolitical posture? I mean just a few years ago so many Gulf States were pursuing potential normalization of relations with Israel a step actually taken by the UAE. Will this war force them to pursue a new geo-politics that's more more conducive to capital accumulation and thus to regime stability or to the contrary now that the war has started, will they double down on the military alliance? I was just reading reports yesterday that MBS has been encouraging Trump to keep going which kind of shocked me. So just picking up where you ended there with the Saudi behavior, those reports if they're reliable seem to be suggesting that the Saudi leadership is expressing a kind of private escalation preference despite maintaining a public de-escalation posture and I think that begins to get at how they're responding to this environment and I think it goes back to exchange I was having with the R earlier about economic integration. So I think the strategy to deal with the contradiction that you've pointed to right that on the one hand their economic reconfiguration required stability openness their presenting themselves as kind of like these free trade mechas in the region and places where expats can comfortably come and you can have robust financial centers emerge with the security alignment of the US. Like this was always there was always a kind of some latent contradiction there because the US has not just now in this war but over you know, dorkly over at least a quarter century if not longer been a destabilizing factor in this region as well and so there's attention in those two positions but the Gulf had tried to I think take a posture of increasingly in the most recent period hedging diversifying engaging in a kind of partial strategic realignment for example when you mentioned earlier the rapprochement between Saudi Arabia and Iran following the strikes that occurred under their first Trump administration that was brokered by China that was part of that diversification etc so the desire for stability to enable capital accumulation while maintaining a US led security architecture that was producing instability in a variety of ways led them to have a kind of model of managing risk and that included de-escalation with Iran economic diversification minimizing geopolitical risk by creating a different kind of portfolio. Now the logic seems to be that because of the strikes themselves Iran will now be a persistent structural threat even after a war that that that earlier strategy is not possible so I ironically I think it may be causing I mean if this again I'm saying if these MBS claims are correct a desire a preference for a decisive weakening of Iran and going away from that kind of management of risk towards what has been the Israeli preference right which is the elimination of the source of the risk itself but we've already explained or gone through the degree to which that's just not an attainable goal so I think that if the Saudi if the if it's true that these reports are that Saudi would prefer to prolong the war what I think it's expressing is one the fear of an incomplete outcome so if this war ends now or anytime soon Iran survives and retains its asymmetric capabilities it's going to emerge as a much more formidable problem structurally for the region and that there is currently a window of vulnerability that now is the moment to try to seize on the heavy military pressure that exists the partial degradation that's been achieved to try to create a long-term shift in the balance in the region not to stop halfway through what could be a regional reconfiguration in which a weakened Iran could you know have fewer posterior threats to Gulf infrastructure shift the balance in favor of the Gulf States maybe make the Abraham Accord suddenly more desirable because a powerful Israel emerges a weakened Iran is you know destabilized for a period that can entail real integration with Israel rather than with Iran but I think that this is totally unattainable right so I don't know how long a logic along the lines that the reports about MBS you know expressing this preference could possibly be sustained because fundamentally the entire economic model of the region requires stability, insurability, predictable energy flows which are always going to remain vulnerable to the asymmetric position that Iran is incurrently if you try to pursue a strategy of destroy Iran maximally and then keep it in a box you produce also a forever incentive for Iran to use those vulnerabilities to its advantage systemically and that's just not something that the Gulf could pop the Gulf is not going to be able to return to its earlier political economy by building on that strategy and again for the reasons I mentioned earlier Israel is not long-term in a position to sustain a Mothalan approach to its maximum coercion idea with respect to Iran policy preference which is of course illegitimate illegal and horrific in the context of Gaza can't be translated honestly I don't think it can be translated to Lebanon let alone Iran and yet that's the maximal ambition that the greater you know Israel project appears to be pursuing in Iran it's just not viable I mean the thing that this all points to I think is just a deeper point which is energy you know and if this is an oil war in the mind of Trump or whoever is not just a resource right it's a system where control over flows matters in many ways more than ownership of specific fields and the control over flows is not something that can be changed through a catastrophic blow to Iran so long as you can't get the kind of regional integration I was describing previously which requires Iranian participation Qatar's fields are shared with Iran Iran's geographic position cannot be erased by a desire to flatten its infrastructure it will remain in that position no matter what so unless they're thinking of a ground invasion to dobbely literally physically control Iranian territory they simply cannot preserve the global economic system in which the Gulf wants to be integrated in the way that the Gulf has been accustomed to thinking of its political economy while pursuing this maximal strategy against Iran so this is a this is a kind of short-termism if it's true that the Saudis are suggesting that they want to prolong one can understand that they're in this absolutely terrible position where their previous strategy which was a wise one and the only one for preserving the political economy that benefits them has been made unavailable right they cannot now in the short-term pursue integration with Iran or regional stabilization through a de-risking strategy with respect to Iran and it is also the case that they are dealing with an external actor in the case of the US that is absolutely fickle that is not going to absorb the principal costs of the project that mean in the long-term it will I agree with what Nick was describing and Yarr was describing there are long-term risks of erosion of dollar dominance or diversification of portfolios other reserve currencies etc but in the short-term the US is not going to absorb the principal risk the cost so the Gulf is in this incredibly unambiable position of having a war it didn't ask for that it tried to warn against now having produced an incredibly damaged Iran that is going to be a much bigger structural problem for the region and the structural enmities that have been produced here are going to be resistant to the earlier attempts to de-escalate but the idea that therefore pursuing an even greater devastation of a country and doubling down on pro-an in this conflict is somehow going to improve the circumstance is totally misguided in my view so we have this horrible situation in which the US embedding Israel has smashed up what was a promising path forward for this region and put the the whole of the Middle East, I think, again, on a path in which it's going to take decades to undo the damage that's been brought. But the idea that adding even more fuel to this fire is somehow the solution is not one that's going to serve the political economy of the region or the wealthy Gulf states in any way, and that certainly is not going to serve the peoples on the ground. To close out what kind of global order might bring about greater economic justice, peace, and security because it seems increasingly clear that we can't solve geopolitical problems without solving the geoeconomic ones, and might part of that solution, might it be glimpsed in the irony of the petro-capitalist imperial headgemon blowing up oil and gas infrastructure across the Middle East, and in doing so, seemingly perhaps setting in motion what could be a massive irreversible historic shift to clean energy facilitated by cheap Chinese green tech. So I'm an international lawyer, right? And at some level, I'm not an international lawyer because of a naive belief that the system constraints or that law operates as like this important mechanism for ensuring that these kinds of breaches don't occur, et cetera. It's because law ultimately channels power in particular ways that do produce institutional logics which themselves can enable some kind of credible multilateral constraint because it's a reminder of the intense costs associated with recklessness on the scale that we're seeing at the moment. So what a global order that enables balance would requires restoring credible multilateral constraints on the use of coercion. And I think that that would require, we talked earlier about why it's so difficult to come up with an alternative reserve currency to the US or to displace the US's role in the global financial system. It's difficult. The US was once the guarantor of that credible multilateral constraint, and it's completely defective from that. So it's very difficult to imagine how you get back to an actually global multilateral system that has that and would require the same kind of collective action that would be necessary to replace the role that US banks are currently playing. No individual state is going to necessarily be able to bear that cost or care the risk because they would put a target on their back, as YAR mentioned earlier, but collectively a coalition of states might be able to and these kinds of actions could provide the incentives because the alternative is not a different multilateral system that's dominated by China in my view, but rather silos of regional systems that aren't multilateral linked and intensify even further the risk of conflict. And that I think in a universe of not only some nuclear weapons, but deep incentives that have just been generated for further nuclear proliferation is genuinely catastrophic. And it's that risk that produced the multilateral system that we have at the moment, right? It's the risk at the end of World War II of planetary extinction that produced an institutional set of structures and ideas about self-constraint and the production of international law. So it retains the idea of those multilateral constraints, retain that instrumental value without having to subscribe to some kind of fetish around law or imagining that international law on its own produces a constraint. But rather the logic of self-constraint itself is expressed through law, which is a way of channeling power away from the most catastrophic, most cataclysmic engagements. But that's only a part of it. A durable order also has to confront the deep issues of structural inequality, which I think are one of the drivers of what we're seeing now. The hubris, the asymmetry, the reasons that the United States doesn't have the sort of strategic acumen we were describing is all of this is kind of the long tail of the system of the US itself inherited. And this goes back to a couple of points Nick was making earlier, Pax, Britannica, open systems, closed systems. It's imperial orders that have produced the structural inequalities that we have today and also produce the logics that made multilateral constraint briefly possible in what is ultimately I think now we would look at as a parenthetical in a broader global history that is driven primarily by unrestrained, unconstrained resort coercion. And those deep structural inequalities are the long tail of colonial and imperial extraction that shaped the asymmetries that we live with in wealth, security, institutional power, and so on. So the tensions that we're seeing over nuclear rights, sanctions, resource control, all of these are intensified by a reality in which the rules are applied unevenly when we speak of a system exerting constraint. Some states are allowed security guarantees or deterrence. Others are categorically denied those economic coercion disproportionately burdened some societies that already face structural disadvantages. So it's not directed at powerful or financialized states typically, but rather much weaker states that punching down problem, the description that Nick provided us of the Cold War period where it really wasn't. The core states, but rather only rush or smaller global South peripheral states that face sanctions. This order is built on rules, but doesn't address the asymmetries and will continue to be unstable for those reasons. It is what I'm suggesting. So we don't just need a multilateral system or constraint on coercion, but one that has meets additional requirements around material equity. So reforms that address unequal exposure to shocks. Some meaningful commitment to sovereign parity, which is to say more consistent application of rules like that is expressions of self restraint that actually value the long term benefit over the short term capacity to engage in defection. And that instantiate forms of voice and representation that the existing international legal or just haven't had for states that are outside of the traditional core. So without this, what you have is not so much order as managed hierarchy that depends on a hegemonic actor providing the kind of entrenchment capacity of the institution when all of the small states are actually just crushed under the weight of the way that the order has been constructed. And that to me remains unstable. Now, of course, all of the things I just described are desiderata that are extraordinarily difficult to attain. But I do think we need to have some kind of just an understanding of what has made this system come undone. And it is in part the clear appreciation for the existential risks faced, not just by the weak, but also by the powerful at the end of the Second World War, has simply itself eroded. We don't have an understanding of that any longer. And this war to me, the Suez crisis might be an appropriate analogy, but another one that one thinks that is the First World War because of the entanglements of alliances that have driven unwilling parties into a conflict that they sought to resist, including the Gulf States that we were just talking about a moment ago, and that keeps threatening to spill over further the US speculation about bringing NATO into a company tanker. It's just one example of the ways that one of the incentives that the US has currently is to try to draw in as many actors as possible to this conflict, to distribute risk and to distribute costs in a variety of ways. All of that is just catastrophic. Like this could be one of those moments that produces a self-correction. And that takes many forms. And one of them, that is obviously going to be manifest is countries have a very strong incentive to diversify away from fossil fuels. So this one of the ironic collateral effect will be accelerating the energy shift, maybe not in the United States, because of Shale for a variety of idiosyncratic reasons. But everywhere else, globally you are going to have an intensification of dynamics that were already underway there. But it may have other effects as well. We retain a system that does not continue moving further and further towards greater increments of coercion and more likelihood of global configuration is by finding a way, a sober way, to assess the threat that's now been unleashed against both very powerful states and weak states. And that involves not just a return to an idea of multilateral constraint on coercion, but a one that would be built on a sufficient commitment to equity to tame the kinds of hubris that we're seeing at the moment. So whether that's a table I don't know, but at least being able to articulate what would be required I think is a step towards being able to think through policies that could move us in that direction. The thing that I would begin by asking is actually how did all that oil infrastructure emerge in the Middle East because it arose in the 1930s and 40s with explorations largely by British and American firms, right? Aramco, the Anglo-Iranian oil company as part of an imperial system that became key in World War II to victory of the Allies, that powered a little of the logistical effort that drove the Allies to victory. And Asla already explained how that system gave us some of the global order that's now disintegrating based on ideas of equal sovereignty, at least normally, and a sense of restraints on coercion. But I think the deeper lesson of it is that there are integrative material benefits to empires that subsequent national and emancipatory and egalitarian projects build on, and that this crisis is a crisis of the material economy. It is not a financial crisis, even though that's where a lot of the dynamics of pressure and counter pressure and jaw-boggling that we talked about play out, it should refocus our attention on the physical foundations that sustain our societies. And the deeper lesson, I think, about the rise in all of these orders is that they have to be built on a system that can guarantee provision of those material resources, of energy flows, of basic commodities, of basic implements and resources with which societies can survive and reproduce themselves. And then on top of that, we have a system of rules that emerges and we've talked about that too, that makes it possible for everyone subsequently to enter a global order or a trading system and deal with it with relative predictability. Be able to assume that certain rules are going to be in place, that certain commitments are going to be honored. And whatever progressive and emancipatory projects you want to have, must presuppose some degree of that predictability. And the big question, of course, is whether there is a sufficiently large group of countries that will be able to do that in the future in the absence of the United States, which is clearly abdicated that role. And that's a big open question. China is very materially powerful. It has a leading role in the dissemination of the green energy. It is a logistics and provisioned superpower. It is now capable of delivering millions of solar panels to Cuba and to Pakistan and electrifying, developing economies and societies at a faster rate than many Western societies. They've already leapfrogged some Western societies in the levels of electrification. So that is tremendous, but that doesn't make an international order. And for that, you need many more countries that used to be active if begrudging participants in that order to also come together around it. I think there's a kind of relatively intelligent version of globalist, centrist liberalism articulated by Mark Carney that already put that agenda on the table at Davos in January, right? A middle power strategy of, OK, can we come up with an agenda for a 21st century globalization outside of US a Germany that can insulate us against some of the risk? But that discussion needs to be open. My main suggestion would perhaps be let's start from countries and governments whose policies we think are good and can be universalized, right? Can be scaled up who could call out aggression consistently when it happens against Ukraine or against Iran or against other countries. And I think Spain in Europe is for me a country that really has the epitome of a consistent approach to the international system, to international law that has invested very strongly in green energy. Unsurprisingly, is also one of the countries that has a balanced view of European autonomy that is equidistant from the US and from China. It's being misread, I think, is cosying up to China in reality, given the nature of US dominance and still supremacy over many European countries, any move towards independence is going to be construed as cosying up to China, right? So just getting to equidistant and autonomy is going to have to be willing. I think Europeans are going to have to be willing to face some of those criticisms. But ultimately, that seems to me the kind of policy that if we scale that up, we could get somewhere very promising. And I would also say Brazil has been a very important benchmark for me in thinking about, right, now very much investing a lot of renewables as well, thinking about a progressive future that is still possible in the absence of the current order as it exists and thinking about building that back up. So those are maybe my suggestions. Let's think about the countries and the projects, regional projects that we think do it well, then how can we link those together? Yeah. Yeah, I mean, Aslan and Nick, I think, have covered this ground phenomenally, but just to build on that last point about regional projects, that's exactly how I see it. I mean, ultimately, much the same way that creating a new order after World War II required thinking about the reconstruction of Europe and the process by which you create a political and economic order to enable that reconstruction then gave us the framework for a global order that had many positive effects, but was, of course, an imperfect kind of political project. I think we can imagine the same for the Gulf. And this is where, again, as Nick said, trying to be hopeful and optimistic, I do think there is a pathway out of this war and towards a more durable piece where basically Iran and the Gulf states double down on their mutual dependence and double down on the idea that actually building a framework, a regional security architecture that is alongside a model of shared economic prosperity, alongside a deliberate effort to create institutions that coordinate political action, that becomes a project that then provides a model, particularly because even if we are skeptical about the capacity for countries like Iran or the Gulf states to participate in progressive or emancipatory kinds of politics, at the end of the day, these are sort of consummate middle powers and they are middle powers that exert a lot of influence in the global system. And so if they are able to go through this process and thereby find some new way of a coexisting and become less dependent on a US-led sort of order, which has had so many deleterious effects that we've discussed in this conversation, that's a really profound and important outcome. And I think ultimately that's where a lot of the more forward thinking leaders in that region, and there are many, and that is itself in a real asset, may be willing to take things if we can break out of this very zero-sum thinking that is dominating during the war itself. So the pause of a ceasefire allows us to think with a greater political imagination, think again about not just the short-term crisis, but building for a long-term future. And that's where I see a lot of potential. And it's really about going back to the regional projects and finding the solutions that then can be universalized. And this war, as devastating as it is, if we can take it as a teaching moment and find a way to build a more sort of equitable order in the Middle East, I think that will be profoundly meaningful for the rest of the world as well. - Well, Asla Bali, Esfandiar, Batman Gellig, and Nick Mulder, thank you all very, very much. - Thanks Daniel, thank you very much, Dad. - Thanks so much for having me. And I really want to say what a pleasure it has been. I've learned so much in being in conversation, Nick and Yara as well, so Dan, always so great to be in conversation with you. And thank you so much for inviting me to be in this particular conversation. It's been great. (upbeat music) That was Asla Bali, Esfandiar, Batman Gellig, and Nick Mulder. Asla Bali is a professor of law at Yale Law School who focuses on public international law and has published essays and op-eds in such venues as The New York Times, Boston Review, The London Review of Books, Jackabin, and Descent. Esfandiar, Batman Gellig, is the CEO of the Bourse and Bazaar Foundation, a research foundation dedicated to economic development and economic diplomacy in West Asia. Thank you for listening to the dig from Jackabin Magazine. As Mark Swin said, after noting that, the preservation, the conservation of the present state of affairs, is accordingly the best result the protectionists can achieve in the most favorable circumstances. Good, but the problem for the working class is not to preserve the present state of affairs, but to transform it into its opposite. While other podcasts suddenly interpret it the world in various ways, our point is to change it. We're posting new episodes most weeks. The dig was produced by Alex Lewis. Our associate producer is Jackson Roach, music by Jeffrey Brodsky. Our operations manager is Sylvia Atwood. Our senior advisors are The Areal Franko Sand, Ben Maybe. 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