April 4, 2026
Geopolitical Monitor
By Jose Miguel Alonso-Trabanco
As the testament of history teaches, there is no war that lacks an economic layer. Since the dawn of civilization, wars have been waged with economic assets and for the pursuit of economic relative gains. However, the conflict that is shaking West Asia, even more so than the Ukraine War, highlights the contemporary centrality of geoeconomics as the expansion of war through other means. Just like bombers, fighters and guided munitions serve in the kinetic battlespace, the weaponization of oil barrels, currencies, high-tech supply chains and commodities is at the forefront of this confrontation.
The Weaponization of Complex Interdependence
Admiral Alfred Thayer Mahan explained that, as narrow chokepoints, mastery over straits matters for both commerce and naval power projection. With selective interdiction in the strait of Hormuz through drones, naval mines and missiles, Iran has triggered a geoeconomic earthquake. This measure, likely inspired by the instructive lessons of both the Suez crisis and the Arab oil embargo, is meant to strangle both Gulf petro-monarchies and oil importers in Washington’s politico-strategic orbit. At gunpoint, these states are being pushed to convince the Americans to seek a negotiated settlement that restores economic normalcy before their energy security is compromised any further.
As an additional externality, volatility in international oil markets has the critical mass to trigger recessions. In the highly sensitive realm of international finance, the resonance of the Third Gulf War has provoked losses worth at least 2.5 trillion dollars. In a macroeconomic environment underpinned by systemic financialization, mounting panic in Wall Street, stock exchanges, capital markets, and the elite corporate boardrooms of investment banks foreshadows both stagflation and political trouble.
For Iranian statecraft, this de facto blockade is not just a powerful asymmetric equalizer, but also a money-making machine. The fees charged by Iranian toll booths for safe passage (reportedly, $2 million per ship) bolster Tehran’s war chest. On the other hand, although Tehran does not intend to target partners like China and India (buyers of Iranian oil), both Beijing and Delhi are being indirectly pressured to broker a ceasefire through diplomatic solutions.
Based on the fundamentals of connectivity wars, Iranian reactive countermeasures have been masterminded to maximize the impact of ripple effects on global supply chains. Attacks against regional gas fields have partially disabled power grids that fuel energy-intensive aluminium refining facilities. The resulting shortages will disrupt worldwide industrial production in sophisticated sectors such as aerospace and car-making. Considering its dual-use applications, aluminium is officially classified by the United States as a critical metal for national security and defense. The Iranian chokehold is also curtailing the exports of Saudi and Qatari nitrogen-based fertilizers (derived from hydrocarbons) to the wider world. The resulting bottleneck is causing disturbances such as rising prices and diminishing output. Far from being only a transitory macroeconomic problem for individual farms and agribusinesses, such a disruption endangers global food security in both developed and underdeveloped nations. Since the Middle East provides roughly a third of the world’s total fertilizer supply, in the worst-case scenario of a protracted conflict, the prospect of famines is not unrealistic. Iranian attacks against major regional desalination plants follow a similar politico-strategic logic.
Geopolitical Monitor
By Jose Miguel Alonso-Trabanco
As the testament of history teaches, there is no war that lacks an economic layer. Since the dawn of civilization, wars have been waged with economic assets and for the pursuit of economic relative gains. However, the conflict that is shaking West Asia, even more so than the Ukraine War, highlights the contemporary centrality of geoeconomics as the expansion of war through other means. Just like bombers, fighters and guided munitions serve in the kinetic battlespace, the weaponization of oil barrels, currencies, high-tech supply chains and commodities is at the forefront of this confrontation.
The Weaponization of Complex Interdependence
Admiral Alfred Thayer Mahan explained that, as narrow chokepoints, mastery over straits matters for both commerce and naval power projection. With selective interdiction in the strait of Hormuz through drones, naval mines and missiles, Iran has triggered a geoeconomic earthquake. This measure, likely inspired by the instructive lessons of both the Suez crisis and the Arab oil embargo, is meant to strangle both Gulf petro-monarchies and oil importers in Washington’s politico-strategic orbit. At gunpoint, these states are being pushed to convince the Americans to seek a negotiated settlement that restores economic normalcy before their energy security is compromised any further.
As an additional externality, volatility in international oil markets has the critical mass to trigger recessions. In the highly sensitive realm of international finance, the resonance of the Third Gulf War has provoked losses worth at least 2.5 trillion dollars. In a macroeconomic environment underpinned by systemic financialization, mounting panic in Wall Street, stock exchanges, capital markets, and the elite corporate boardrooms of investment banks foreshadows both stagflation and political trouble.
For Iranian statecraft, this de facto blockade is not just a powerful asymmetric equalizer, but also a money-making machine. The fees charged by Iranian toll booths for safe passage (reportedly, $2 million per ship) bolster Tehran’s war chest. On the other hand, although Tehran does not intend to target partners like China and India (buyers of Iranian oil), both Beijing and Delhi are being indirectly pressured to broker a ceasefire through diplomatic solutions.
Based on the fundamentals of connectivity wars, Iranian reactive countermeasures have been masterminded to maximize the impact of ripple effects on global supply chains. Attacks against regional gas fields have partially disabled power grids that fuel energy-intensive aluminium refining facilities. The resulting shortages will disrupt worldwide industrial production in sophisticated sectors such as aerospace and car-making. Considering its dual-use applications, aluminium is officially classified by the United States as a critical metal for national security and defense. The Iranian chokehold is also curtailing the exports of Saudi and Qatari nitrogen-based fertilizers (derived from hydrocarbons) to the wider world. The resulting bottleneck is causing disturbances such as rising prices and diminishing output. Far from being only a transitory macroeconomic problem for individual farms and agribusinesses, such a disruption endangers global food security in both developed and underdeveloped nations. Since the Middle East provides roughly a third of the world’s total fertilizer supply, in the worst-case scenario of a protracted conflict, the prospect of famines is not unrealistic. Iranian attacks against major regional desalination plants follow a similar politico-strategic logic.
The US is partially shielded from this disruption thanks to self-sufficiency in oil supplies as a result of fracking and the availability of a formidable strategic petroleum reserve. However, the political will and the material capacity of the US to reopen Hormuz and restore freedom of navigation, the backbone of free trade as an international public good, are now being questioned. By targeting the keystones of the US-centric global economic order, Iran is arguably playing with fire, but this West Asian state has no interest in the preservation of an international commercial, financial, and monetary regime from which it has been excluded. Aware of this dwindling commitment to the preservation of open sea lanes, both US partners and adversaries are recalculating accordingly.
Taking Hormuz would give the Trump administration the opportunity to hold China’s energy supplies hostage to US strategic control. However, the facts on the ground suggest that removing this de facto blockade, let alone a full-fledged seizure of the Iranian oil industry, is a challenging endeavor for the Pentagon, even with boots on the ground.
Failure to reopen the strait of Hormuz would evoke the humbling withdrawal of British forces from Suez as a breaking point in the global balance of power. Iranian forces do not need to sink a US aircraft carrier, only to embrace strategic patience and resistance in order to weaponize time until the Americans, frustrated with the elusiveness of a quick victory, decide to call it a day and cut losses before things get uglier with the breakout of a land war and the ensuing carnage. For example, even though Richelovian France was behind the much richer but overstretched and heavily indebted Habsburg Empire, it managed to turn the tables through attrition, diplomatic intrigue, selective harassment, and proxy wars until the Austrian monarchy ended up in an irreversible bankruptcy. Yet this risky gamble will falter if the Iranian war effort crumbles first due to an economic implosion. Whereas the rial is on life support, Iranian industrial infrastructure is being incapacitated, and the Iranian social compact is severely strained.
For Israel, chaos in the Persian Gulf brings opportunities to promote oil and gas pipelines connecting the Arabian peninsula with Israeli ports such as Eilat and Haifa. Regardless of the outcome of the ongoing conflict, these alternative networks would bypass territories and waterways under Iranian suzerainty. If such projects ever come to fruition, Jerusalem would develop leverage over European energy security. If European states want a reliable supply of Middle Eastern fossil fuels, then their foreign policies would have to defer to Israel’s strategic national interests.
Myths and Political Realities of Sanctions
Iran is one of the most heavily sanctioned economies. These unilateral coercive measures were implemented by the US to force Tehran to freeze the development of its nuclear program. Under pressure, the Iranians engaged the Americans and other counterparts under the frame of the JCPOA. Yet, aside from the exchange of empty diplomatic niceties, these negotiations did not deliver substantive breakthroughs. The Iranians did not abandon their dual-use nuclear program, and the Americans did not lift any sanctions or restored Iranian access to payments networks like SWIFT. In parallel, Iran felt undeterred by their enforcement. Iran, inspired by Shiite revolutionary zeal and the legacy of the Persian imperial tradition, tried to forge a Shiite Crescent as the crux of Iranian regional hegemony. In order to further resilience and overcome the impact of Western sanctions, Iranian economic statecraft relied on the reorientation of its economic exchanges with Asia and the circuits of decentralized cryptocurrencies like Bitcoin. Even after setbacks for Iran’s regional influence and under the pressure of Israeli-American airstrikes and a relentless campaign of targeted assassinations, Tehran remains defiant and such an attitude seems to be paying off. Under the pressure of Iranian asymmetric tactics of economic warfare, the Trump administration has responded with the temporary suspension of sanctions on seaborne Iranian crude exports. This extraordinary measure, unthinkable barely one year ago, reflects mounting concerns surrounding instability in oil markets and surging prices. Without the availability of Iranian petroleum, the economic and financial fallout of the war may escalate further. In public, Iranian government officials have downplayed the benefits of this unexpected decision. Behind closed doors, they are surely learning that sanctions imposed by an adversarial great power can be challenged with a combination of chutzpah, expedient opportunism, and sabre-rattling.
The Promised Land of Start-Up Mercantilism versus Shiite Economic Resistance
The conflict between Israel and Iran is, aside from an interstate war, a confrontation between two systems of political economy, neither of which follows the theoretical roadmap of free trade. Instead, both Israel and Iran have neo-mercantilist models, but their recipes differ. Unlike other Middle Eastern economies, Israel has no abundance of natural resources, but this Levantine state has a qualified, multicultural and business-savvy human capital. Under these conditions, Israel has managed to sculpt, through a synergic partnership between the state and the private sector, an economy focused on start-up capitalism. Whereas the state lays the groundwork for a prosperous business environment, private companies conquer markets through the deployment of goods and services with added value. This hybrid blends intrepid entrepreneurship, advanced technologies, intensive R&D, world-class expertise, spillovers, and dual-use innovations. For example, Unit 8200 is not just involved in SIGINT tasks and cyber-warfare, it also operates as a cradle in which high-tech scalable commercial solutions are incubated. As a result, Israel is positioned as the world’s eighth most complex economy. Israeli leadership in biotechnology and diamond-cutting embodies this sophistication.
Israel has built a state-of-the-art military complex which manufactures assault rifles, tanks, intelligence software, and UAVs. Although the top-notch materiel is usually reserved for the IDF, competitive surpluses are exported to various foreign destinations. Israel’s complex economy has proved to be resilient thanks to the best practice derived from strategic intelligence and business continuity plans, but the ongoing war represents a major challenge for the pillars of this economic model. For example, the exodus of Israelis—especially amongst secular and highly educated citizens— as a result of war fatigue, economic disruptions, theocratic tendencies, and psychological exhaustion is encouraging an incremental “brain drain.” For these people, despite their ideological affinity to the Jewish state, the loss of prosperity is a deal breaker. Another weakness is that Israel’s high-tech arsenal needs imported hardware made by foreign companies, including American F35 fighter jets and German diesel-electric submarines. Although pro-Israeli governments are in charge of both Washington and Berlin, the automatic continuity of this proclivity must not be taken for granted, especially as long-term generational shifts reshape foreign policy attitudes.
In contrast, the Iranian model of state-led capitalism, under external pressure, seeks national resilience as a necessity for statecraft rather than shared profits or competitiveness. Tehran’s policy of “economic resistance” is based on national security considerations and the preservation of internal political stability. Despite having the world’s ninth largest pool of STEM graduates, Iran is far behind Israel in economic complexity. Yet Iranian statesmen think that the country does not need to be rich to satisfy its politico-strategic imperatives. This logic explains why strategic and lucrative sectors of the Iranian economy are in the hands of IRGC generals. The spectrum of such a military control over the Iranian system of political economy includes oil, construction, banking, agriculture, industrial manufacturing, tourism, real estate and even black markets. This scheme is not random. As in the cases of Cuba, Egypt, North Korea, and Pakistan, the IRGC Inc empire has been engineered to ensure the loyalty of this military elite with the carrots of economic rewards. IRGC senior commanders have therefore little incentives to stage a coup that would jeopardize access to sources of wealth. In addition, Tehran has prioritized industries whose output strengthens national power (such as aerospace and nuclear power) rather than marketable goods. Based on this rationale, Iran —deprived of access to Western conventional weapons and distrustful of alternative suppliers like the Russians— has nurtured the development of an indigenous military industrial complex which, despite existing limitations, produces Shahed kamikaze drones, ballistic missiles, and satellites.
Iranian “economic resistance” is also aligned with the doctrinal tenets of Shia Islam. For Shiites, the endurance of hardship, as a hallmark of righteousness, leads to virtue. The removal of US sanctions would be very much welcome by the Iranian business community as a sign of relief. Unsurprisingly, the so-called “bazaaris” (heirs of the Persian merchant tradition that goes back to the ancient “silk road”) are unhappy with the country’s leadership due to rising prices, commercial disruptions and wildly fluctuating exchange rates. Nevertheless, despite this discontent, the Iranian state has adapted through asymmetric tactics, partly thanks to the abundance of oil and natural gas. For example, since Iran cannot freely export petroleum to the rest of the world, these energy resources have been invested in large-scale cryptocurrency mining farms. Such a process enables the ‘alchemical’ transmutation of energy into digital money through nonstate blockchain-based networks whose geometries are, to a certain extent, sanctions-proof. Regional partners, like Georgia, have also provided additional lifelines.
Petrodollar Warfare
The Third Gulf War has ambivalent ramifications for the dollar’s hegemony as dominant reserve currency. In the short term, systemic uncertainty and higher prices in oil markets are encouraging importers to reinforce their reliance on dollar-denominated assets and arteries, at the expense of secondary hard currencies like the euro or the yen. From the perspective of Iranian economic statecraft, attacking the energy infrastructure of GCC members and the asphyxiation of the Hormuz Strait targets the cornerstone of the petro-dollar recycling system. The Gulf states, in exchange for US security guarantees, invest the proceeds of their oil exports in dollar-denominated assets. Tehran is weakening both the transactional commitment of the US military to the military protection of regional Arab partners and the incentives of these petro-monarchies to rely on the US as a trustworthy sentinel of the Middle Eastern status quo. Under Iranian pressure, systemic uncertainty and a multipolar correlation of forces, these states are being pushed to abandon Washington’s strategic orbits to pursue more diversified collective security mechanisms. Apparently, Tehran is also brandishing the Hormuz crisis to advance de-dollarization of its oil sales by embracing the yuan as an alternative settlement currency.
Although the Suez crisis spelled the death knell of the pound sterling as the world’s supreme reserve currency, it is unlikely that this measure will cross the greenback’s event horizon beyond the point of no return. The Iranians, despite their combativeness, lack the financial firepower that the Americans had when they threatened to sink the British currency or to put in motion a cascading domino effect. However, this ‘currency war’ can accelerate existing structural trends that herald the genesis of a new multipolar monetary order in which the centrality of the US dollar is diminished. In hindsight, future historians will discuss how the proliferation of high-intensity economic warfare hastened the dollar’s decline (and fall?).
High-Tech Geoeconomics
Digital code, now mightier than the sword, is reprogramming the operational grammar of warfare in theatres of engagement shaped by both complex interdependence and the Fourth Industrial Revolution. As a lab, the Iran war gives a glimpse of what a high-tech geoeconomic battlefield looks like. In this regard, advanced technologies are heavily reliant on material inputs and a supporting infrastructure. Hence, the shockwaves of the war are problematic for energy-intensive AI models whose functionality requires affordable, stable, and reliable sources of fossil fuels. This need will grow even more, as AI platforms are structurally embedded, as digital infrastructure, to major governmental and corporate nerve centers. These considerations are driving the US scramble to secure access to overseas oil reserves, and to prevent Chinese competitors from overtaking US national champions in the race for AI superiority.
Furthermore, the historical record will remember the Iran War as the first conflict in which data centers were attacked by both sides. These nodes have been added to the belligerents’ banks of targets because, in the so-called “information age” they underpin telecom, financial services, e-commerce platforms, public utilities, and even military preparedness. US forces have used both Palantir and Claude to process data for the enhancement of intelligence tasks and battlefield performance. This AI-driven war will reinforce the symbiotic covenant between the US defense establishment and Silicon Valley as an oligopolistic high-tech cluster. Although Israel has wielded AI-tools that maximize enemy casualties in Gaza (such as Habsora and Lavender), it is unknown if these assets are being used over Iranian skies to increase the lethality of its fighters, UAVs, and smart projectiles.
Despite being behind the US and Israel in military-grade AI operating systems, Iran has diagnosed the condition of AI infrastructure networks as centers of gravity and Achilles’ heels worth undermining. Iranian forces have hit Amazon data centers in the UAE and Bahrain. And it looks like Tehran also intends to strike regional nodes of tech companies like IBM, Google, Microsoft, Nvidia, Oracle and Palantir because of their close organic connections to US and Israeli national security ecosystems. This trend will encourage the securitization of data centers as strategic hardware and the development of ad-hoc public-private partnerships for their protection. They also highlight their incremental centrality for modern-day smart warfare, as well as their exposure as legitimate targets of kinetic attacks.
Finally, since helium is produced on a large scale in Qatar as a byproduct of natural gas processing, the Iran war is compressing the global supply of this gaseous chemical element, especially considering its complicated storage and transportation logistics. Helium is a strategic input for advanced manufacturing in applications related to semiconductors, chipmaking, cooling systems, fiber optics, photolithography, and satellites. Without helium, the progression of Industry 4.0 will be slower. Despite its outward ethereal appearance, the cloud is anchored to the worldly political economy of natural resources. The fateful principles of “historical security materialism” remain valid in the digital age.
Concluding Remarks
Shifts in the structural architecture of world order, usually as a result of major war, and systemic economic transitions are two sides of the same coin. The Third Gulf War is no hegemonic confrontation fought between peer competitors, but this asymmetric clash may potentially reshuffle not just the balance of power in West Asia. The threshold of the conflict has escaped the domain of conventional Clausewitzian operations. The resulting devastation is being amplified by the frontline deployment of economic weapons and the destruction of economic targets. Contrary to what neoclassical economists and liberal internationalists prophesied about a ‘Pax Mercatoria’ as a harbinger of stability, prosperity, and restraint, the grammar of economic exchanges has been swallowed by the politico-strategic logic of war. Money, commerce, high-tech and natural resources —as instruments of power projection in warfare— are too important to be left exclusively in the hands of traders, corporate executives, and financiers. In the heartland of ancient Persia, the lines in the sand of West Asia’s geoeconomic map are being redrawn.
This article was published by Geopolitical Monitor.com
Geopoliticalmonitor.com is an open-source intelligence collection and forecasting service, providing research, analysis and up to date coverage on situations and events that have a substantive impact on political, military and economic affairs.
Geopoliticalmonitor.com is an open-source intelligence collection and forecasting service, providing research, analysis and up to date coverage on situations and events that have a substantive impact on political, military and economic affairs.
