Week signals: Two strikes, but is Iran out?
Plus: watch points for the US, Pakistan, China, Nepal, and Latin America.
Hello,
In this edition of Week Signals:
IN REVIEW. Wars of categorical choice, Tehran’s new philosopher-in-chief, lessons from China, and the limits of reason.
UP AHEAD. Midterm primaries, Af-Pak talks, China's 'Two Sessions', Nepal's elections, and western hemisphere summits.
And don’t forget to connect with me on LinkedIn.
Week Signals is the Saturday note for clients of Geopolitical Strategy, also available to GD Professional subscribers on Geopolitical Dispatch.
The Week in Review: Can and Kant
The week began with the Supreme Court striking down the main pillar of Donald Trump’s tariff policy. It ended with the world on the brink of a third Gulf War. With the president’s ratings sinking ahead of a midterm election, where Republicans may not only lose the House but the Senate, the dots seemed to connect themselves. Add in the spice of the Epstein saga, and an inability to solve Ukraine on time or on budget, and the case for sending in some missiles would, ipso facto, speak for itself.
Yet what if I told you this was mad? Many will probably already agree. As Richard Haass said in his always excellent Substack yesterday, US policy in Iran is “an armada in search of a strategy.” And just like the second Gulf War, the justifications offered so far have been tenuous at best. Moreover, they make a mockery of diplomacy. Just as Oman’s foreign minister went on CBS to announce the outlines of a deal, Israel-based air assets were prepared to launch. In a repeat of the events of 2025, it would seem for a second time that the talks were conducted in bad faith. Iran is not exactly a good actor, but who will believe it for a third time if the US says it wants peace, in spite of several days left (again, like last time), on a negotiating deadline?
We don’t yet know how severely, or for how long, Iran will (or can) respond. We don’t yet know what’s next, or who is wagging the dog. Diplomacy and a JCPOA-style outcome may still happen, but this would seem to lack – without sufficient investment inducements – a credible “win” for Trump. “Sometimes you have to use force”, the president said this week, without explaining why or how.
As we wrote last week, Trump’s approach to foreign policy is not strategic but opportunistic. He doesn’t so much squeeze an adversary to achieve a set outcome but to see what comes next. Give me your wallet, the mugger says, without knowing if it’s full or empty. Always be coercing.
Iran, with its thousands of years of history, on the other hand, has a knack for strategy. It made chess into its modern form. The Greeks had their strategos, but only because the Persians kept attacking in increasingly novel ways. As we wrote last month, Trump doesn’t always chicken out, but Tehran always calculates outcomes.
This is not to excuse the Iranian regime in any way or claim that they’re masters of the arts of war. Before and after the massacres of January, the Islamic Republic has been a byword for cruelty and incompetence. The messianic streak of its Shia theocracy has frequently overtaken the strategic culture of its secular foundations. Its support for Hezbollah and Hamas – external deterrence on the cheap – looks reckless in hindsight. Its goading of “Great Satan” America has needlessly extended its isolation. And while there’s an internal logic to it all – the Islamic Revolutionary Guards have their pick of the economy; the hardliners have done quite well out of a closed system – the average Iranian is far poorer and less free than her birthright would suggest.
Yet there is a story underneath what many regard as a clapped-out third-world has-been. Rich in culture and resources, but with a kleptocratic elite that antagonises its neighbourhood, Iran is rightly compared to Russia. Yet there’s another civilisational state that can perhaps illustrate some facets overlooked in the recent commentary. China, also 5,000 years old and with a pedigree for strategic boardgames, was, until recently, similarly closed, hostile, misunderstood, and feared. With its own modern history of foreign interference, coups, invasions and plunder, the state’s paranoia reached its apogee under Mao Zedong’s Cultural Revolution. With enemies in both the US and the USSR, China turned to autarky and a cult of personality. The humanitarian and economic costs were, and still are, incalculable.
But then two things happened: Washington reached out, and Mao died. Replaced by the reformist Deng Xiaoping, an altogether different revolution ensued. From a backwater to a powerhouse, China witnessed the greatest uplift of human potential in history. The economy expanded as the population stabilised. In less than a generation, families went from subsistence farming to high-tech jobs. Medieval villages became absorbed into futuristic megacities. Deng was no Western liberal. He oversaw the Tiananmen Square massacre. The Chinese Communist Party’s Leninist structure remained. But he was, if nothing else, a pragmatist. And irrespective of how one views the Party today, it is genuinely regarded within the country as an indispensable source of security and prosperity. No regime change there.
Iran’s mullahs can’t claim the same thing, though during the Deng years, and after the height of the near-catastrophic Iran-Iraq war, Iran’s economy rapidly expanded. Huge oil and gas reserves powered expansion in social and physical infrastructure. Urbanisation and investments in education led to a large, if not globally competitive, manufacturing sector. Much of Iran’s military hardware was frozen in the Shah’s era, but research into missile and later drone technology would build asymmetric capabilities. Still, Iran remained far poorer than its resources would suggest. Losing ground to the Arab Gulf states, which rose on the tide of US hegemony in the post-Cold War era, Iran’s economy stagnated even as energy exports continued. And then there’s the recent destruction to the business sector, the pressure of new sanctions, and the uncertainty of Trump’s strikes.
Yet again, beneath the headlines, Iran may have found its Deng, who - with a fair amount of hutzpah and care - may be able to get both Tehran and Washington (though probably not Tel Aviv) out of this unholy mess. In recent weeks, hardline but pragmatic bureaucrat Ali Larijani has emerged as Iran’s de facto ruler, with Supreme Leader Ali Khamenei, soon turning 86, allegedly in hiding. Larijani is no mullah. He wrote his doctoral thesis on Immanuel Kant, not Islamic jurisprudence. His daughter lives in the US. He comes from a clerical family, but presents casually in Western jackets and shirts. And while from the Revolutionary Guards, and an orchestrator of this year’s brutal crackdown on protests, he is an experienced international negotiator.
Whether the US intends to go beyond today’s initial strikes or not, regime change of a sort has possibly already happened. And irrespective of what happens in the short term against the US, in the longer term, with investment from China and others in the Global South, a hinge seems to have turned in Iran’s trajectory. Any country that can be considered at credible risk of an autonomous nuclear breakout has enormous economic and scientific potential. Iran is the last “big” country not to have yet benefited from post-Cold War globalisation. It is one of the few emerging markets yet to truly emerge.
Looking beyond the noise of Trump’s escalatory theatre, and the real but likely limited prospects of another extended regional war, are we missing a bullish scenario for Iran, under a Deng-style technocrat like Larijani? And following the recent experience of Venezuela – a confrontation that seemed to only last hours – could we yet see a new direction for an old regime that surprises even the most unconventional political analysis?