Indian Strategic Studies

24 March 2026

Assessing India’s Trade Performance: Pathways to Strategic and Deeper Integration With Global Value Chains

Prerna Prabhakar, Fukunari Kimura, Ikumo Isono, Satoru Kumagai, Koichiro Kimura & Isamu Wakamatsu

Global economic developments have triggered significant policy shifts across major economies, and for India, this presents both opportunities and challenges. The opportunities lie in addressing India’s fundamental structural weaknesses to integrate into global value chains (GVCs) and become a key destination for foreign investments. The current period holds an immense opportunity to shift the policy focus toward manufacturing. Historically, India’s growth story has not been effective in adequately promoting its manufacturing sector. This is reflected in India’s limited participation in global manufacturing GVCs.

To address the challenges facing Indian manufacturing, it must focus on its fundamental constraints: access to land, labour productivity, technology adoption, domestic competition, and an over-reliance on import protection measures. Correcting these structural issues is essential for enhancing competitiveness, raising productivity, and positioning India as a key player in global production networks.

Precision strike: China targets US, Japan stranglehold on photoresist supply

Ann Cao

China’s push for semiconductor self-sufficiency is shifting from broad aspiration to a precision strike on chokepoint materials, with photoresist – the light-sensitive chemical essential for etching microscopic circuits onto silicon wafers – emerging as a new battlefield.

The sector, which provides the key material for lithography, was expected to enter a critical stage of “accelerated breakthroughs and large-scale application” over the coming years, according to Fu Zhiwei, chairman of Xuzhou B&C Chemical, a major domestic supplier of photoresist.

Fu, also a deputy to the National People’s Congress, told the South China Morning Post during the “two sessions” annual political gathering last week that the

There’s a Reason No President Before Trump Authorized War With Iran

Dalia Dassa Kaye

For nearly a half-century, U.S. leaders, and perhaps Americans themselves, have viewed Iran as the “ultimate rogue.” Tehran’s unchanging anti-American ideology combined with a religiously dogmatic leadership have set it apart in the American imagination from other difficult enemies.

Just two weeks before U.S. President Donald Trump launched the current war against Iran, Secretary of State Marco Rubio expressed a long-standing view of the regime’s leaders, arguing: “These people make policy decisions on the basis of pure theology. That’s how they make their decisions. So it’s hard to do a deal with Iran.”

Nearly 100 ships pass the Hormuz Strait - who is getting through?

Kayleen Devlin, Tom Edgington, Yi Ma

Just under 100 ships have passed through the Strait of Hormuz since the start of March, according to data analysed by BBC Verify, despite periodic attacks on shipping in the area by Iranian forces. While some energy and everyday goods are still moving through one of the world's busiest shipping lanes, daily traffic is down about 95% since the Iran war began on 28 February.

Before the war, about 138 ships passed through the strait each day according to the Joint Maritime Information Centre, carrying one fifth of the global oil supply. The data provided by shipping analysts Kpler shows 99 vessels passing the narrow strait so far this month, an average of just 5-6 vessels a day.

How the Iran War Ignited a Geoeconomic Firestorm

Edward Fishman

The economic consequences of the U.S.-Israeli war in Iran are coming into sharper focus as the conflict enters its third week. As the fallout expands beyond the Middle East and ripples through the global economy, markets and supply chains are being increasingly reshaped by the drones and missiles buzzing over the Gulf—and the United States has few options to de-escalate the conflict.

The Strait of Hormuz, which is critical to the oil and gas industry, is at the center of this disruption. But it’s not just energy markets that depend on the strait. Fertilizer and high-tech supply chains are also negatively affected, widening the crisis further. If the war develops into a protracted conflict, these issues could become lasting structural shocks to the world economy.

What the War Has Done to Iranians

Cora Engelbrech

One night in early March, an Iranian writer and dissident climbed to the roof of his apartment building, in Tehran, to marvel at a towering inferno that had blanketed the sky in smoke. The blaze was from a series of oil depots that had been hit by air strikes—the latest target in the United States and Israel’s joint operation against Iran. Since the conflict began, the writer, whom I will call Hadi, was among dozens of neighbors who emerged on rooftops or balconies every night to cheer at the constellation of missiles razing their city. But this night felt different. “You feel a mix of amazement and terror,” he told me. “Like watching a meteor shower from the end of days.” Overnight, the smoke coiled upward and gave way to acid rain that stained the city black.

After the U.S. and Israel killed the Supreme Leader, Ayatollah Ali Khamenei, on the first day of the operation, President Trump called on Iran’s ninety-two million people to rise up and establish a new order. But an uprising seems unlikely, at least for now. As of this week, more than fourteen hundred Iranians have been killed. Thousands have fled Tehran, the epicenter of the attacks. One father told me that he left in less than an hour, after celebrating his son’s fourth birthday. “We blew out candles, said farewells to friends, and got into our car,” he said. “My son hates loud noises. I had told him Superman was coming to save Iran, and that we would be back soon

Iranian strikes on bases used by US caused $800m in damage, new analysis shows

Daniel Bush

Iranian strikes on military bases used by the US in the Middle East caused about $800m (£600m) in damage in the first two weeks of the war, a new analysis shows. Much of the damage was caused in initial retaliatory strikes by Iran in the week after the US and Israel launched the war, according to a report by the Center for Strategic & International Studies (CSIS) and an analysis by the BBC.

The full extent of the damage caused by Iranian strikes on US assets in the region is not clear.

But the $800m in estimated damage to US military infrastructure - a figure that's higher than has been previously reported - offers a picture of the steep costs to the US as the conflict drags on.

In the Strait of Hormuz, Iran unleashes a plot against the West years in the making

Lucia Stein, Emily Clark and Mark Doman

When Donald Trump bombed Iran's nuclear facilities last year, he set in motion a plan the "thinkers" inside the Iranian regime had long been devising. It is now in play and it all comes down to a stretch of water that, at its narrowest point, is little more than 30 kilometres wide. The Strait of Hormuz connects many of the Middle East's oil and commodity producers to the rest of the world.

For Persian Gulf nations, their wares must make their way to the Arabian Sea via the narrow stretch of water. And when Israel and the United States launched their military operation against the regime last month, Iran moved on it. For decades, analysts and war gamers had warned that the closure of this passageway would be a likely consequence of a larger conflict with Iran.

The Gulf’s Zeitenwende Moment

Michael Stephens

The new Gulf War launched by Israel and the United States against Iran represents the most serious strategic shift in the Gulf since Saddam invaded Kuwait in 1990. It is a before and after moment that will likely be as significant a turning point for the states of the Gulf Cooperation Council (GCC) as Russia’s full-scale invasion of Ukraine did for Europe in 2022.

Although the war has (to date) resulted in only limited casualties and material damage in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, its political and economic effects on the region are significant, and it would be a mistake to expect that things will simply return to normal once the hostilities are over. Even if the war were to last only a few more days or weeks, its impacts will fundamentally reshape the national strategic considerations of the GCC countries, including the way they will interact with allies, partners and adversaries around the world, and how they will engage with the

Iran Wields Wartime Internet Access as a Political Tool

Mahsa Alimardani

On March 10, 2026, Iran’s government spokesperson Fatemeh Mohajerani made a notable public admission in the middle of a war, at a moment when its citizens had already spent one-third of 2026 in a near-total digital darkness thanks to shutdowns imposed by the regime. She said, “For those who can carry our voice further, opportunities will be provided.” This is a reference to the regime’s privileged system that grants unfiltered connectivity to select individuals. Five days later, Foreign Minister Abbas Araghchi appeared on CBS News via Zoom while millions of Iranians remained offline. He was asked why he had internet access. His answer: “because I’m the voice of Iranians.”

Together, these statements did something new: Rather than hiding behind security justifications, regime officials openly defended connectivity as a political instrument. The internet is reserved for those who carry the state’s voice, and it is withheld from everyone else. Internet access during a dangerous war was not being restored, rather, it was being allocated exclusively to people who would amplify the regime’s voice outward.

The Unravelling of Dubai as a Safe Haven

Omnia Al Desoukie

In 1999, Fatima Nedaei, a thirty-six-year-old widow in Tehran, decided that it was time for her family to leave Iran. She had long bristled at the idea of raising her children in such a restrictive environment—a society remade by the 1979 Iranian Revolution, which had gutted civil liberties, and destabilized the region. When Nedaei’s husband was still alive, she had broached the possibility of leaving. But he had refused, and, under Iranian law at the time, a married woman typically needed her husband’s consent to obtain travel documents. It was after he died, several years later, that she began making arrangements to emigrate.

“She was very brave,” her son Mohammad told me recently. “She was the only one in the family who decided to leave Iran. Everyone was against her decision. But she wanted her children to grow up in a safe and open country.”

Are US and Israel aligned on Iran war? Deciphering Trump's post after gas field attacks

Paul Adams

US President Donald Trump has issued a typically strongly worded statement in the wake of attacks on a major gas field shared by Iran and Qatar on Wednesday. Israel hit Iran's South Pars - part of the world's largest natural gas field – and Tehran retaliated by striking an energy complex in Qatar. The attacks led to a spike in energy prices, and fuelled Trump's wrath.

On his Truth Social media platform, Trump threatened Iran again and said he didn't know about Israel's plans for the attack. So what does the language used by the US president tell us about the course of the war and the extent to which the US and Israel are aligned on its strategy and goals?

What Trump May Do if He Loses in Iran

Suzanne Nossel

U.S. President Donald Trump doesn’t like to lose. And as his chances of pulling off a win in the war on Iran look increasingly slim, the world may soon face the prospect of a volatile president confronting a foreign-policy dilemma that is utterly out of his control. To be sure, Trump may yet pull off a feat that is lauded by geopolitical analysts as advancing U.S. interests and justifying the human, economic, and political costs of the war. But as Trump finds himself in an increasingly tight corner, it’s time to anticipate how he might react to the specter of failure in Iran—and prepare for the possibility that his response could make the conflict even more dangerous.

The challenges of the Iran war seem to mount by the day. While the U.S. military, working together with the Israel Defense Forces, has been largely successful in destroying Iran’s air defense, naval, and ballistics capabilities, the country’s political system and sources of economic leverage have proved far less tractable. There is also the matter of Iran’s remaining fissile material and nuclear capabilities—not to mention the risk that Tehran emerges from the conflict determined that it can only properly defend itself with nukes. Hopes of either a mostly seamless Venezuela-style transition to a pliable leader or a widespread people’s revolution have faded.

Quantum pioneers win Turing Award for encryption breakthrough

Paulin Kola

A US physicist and a Canadian computer scientist have won this year's Turing Award for their invention of a form of seemingly unbreakable encryption. Charles H Bennett and Gilles Brassard's work, which dates back to 1984, is known as quantum cryptography and has "redefined secure communication and computing", the award's body said.

Scientists believe their work will be central to electronic communications in a world that depends heavily on data-sharing, but which for years has been trying to develop more powerful quantum computers. The Turing Award, named after the mathematician and code-breaker Alan Turing, is known as the "Nobel Prize of computing". It comes with a $1m (£800,000) prize.

Six strategic risks the Trump administration should evaluate in the Iran war

Nate Freier

WASHINGTON—War is a serious endeavor. And, make no mistake, Operation Epic Fury is a war. Its current scale and the scope of its desired outcomes render the suggestion that it is anything less than war implausible.

Epic Fury features the largest concentration of US military power in the region since the invasion of Iraq in 2003. Though subject to different official narratives, the conflict seems focused on eliminating—or inspiring an end to—Iran’s current regime, neutralizing the coercive structures that enable it, and destroying Iran’s capability to threaten US interests. Epic Fury’s conduct, ongoing impacts, and strategic outcomes are globally significant. And finally, the Iranian regime seems to perceive Epic Fury as an existential threat and is fighting as though this is the case. This all adds up to a real war, and US officials should not consider it anything less.

Chinese narratives around Anthropic highlight contradictions for the US

Kenton Thibaut

TAIPEI—The dispute between the US artificial intelligence (AI) company Anthropic and the Department of Defense has garnered much attention in the Western press in the past few weeks. It has also been the subject of lively commentary in the People’s Republic of China (PRC). For one, there is no shortage of schadenfreude being directed toward Anthropic in PRC outlets: The company has been vocal in highlighting China’s abuses of its technology and restricting Chinese firms from using its models under the auspices of preventing Chinese entities from advancing capabilities that might threaten US national security.

Given this, Chinese outlets noted with glee that Anthropic, which “has long been one of Silicon Valley’s most vocal proponents of peddling the ‘China AI threat narrative’ to Washington,” later faced US government restrictions on national security grounds. One Chinese outlet argued that this revealed the “chaos at the heart of US tech governance.” Perhaps the most uncomfortable PRC media critique of the Pentagon’s move against Anthropic is one that has long been lodged at PRC-based companies: that the trustworthiness of US AI systems is undermined when the government can compel access to them without restraint.

Why It’s Now or Never for Putin

Spring is arriving, a season pregnant with hope and life. But in Ukraine, it has become a harbinger of death and destruction. As battlefield conditions improve, commanders in Moscow and Kyiv prepare for more months of brutal warfare.

The signs are that Russian forces are readying a new offensive in eastern Donetsk, where Ukraine still holds around a fifth of the territory that the Kremlin covets but has so far been unable to seize.

External factors are aligning in Moscow’s favor, creating the Kremlin’s most advantageous moment in years. Russian President Vladimir Putin looks poised to press his military advantage.

Sinking of Iran warship: 5 questions on US strike and whether Southeast Asia should be concerned

Aqil Haziq Mahmud

KUALA LUMPUR: The United States' sinking of a "prize" Iran warship off the coast of Sri Lanka suggests tankers carrying sanctioned Iranian oil that sail through busy Southeast Asian waters may not be safe either, analysts say.

While Iranian warships do not make frequent visits to the region, actors looking to disrupt Iran's income sources could target and destroy this "shadow fleet" of tankers instead, potentially creating environmental disasters and tension with coastal states in the Association of Southeast Asian Nations (ASEAN), the experts add.

For instance, the US could target commercial tankers in a military operation if Washington declares they are not being used for commercial purposes but are believed to be serving Iran’s military aims instead.

The missile strike that changed the war

Paul Nuki

The Israeli fighter jets moved into Iranian airspace at around midday on Wednesday.

Moments later, the F-35I Adir jets, supported by F-15I Ra’am and F-16I Sufa aircraft, reportedly released one or more Rampage supersonic air-to-surface missiles – long-range, precision-guided projectiles designed to deliver a large explosive payload.

Thousands of missiles have been fired by Israeli jets since the war started on Feb 28, but this assault was different – and it has changed the course of the war.

US intelligence elevates AI as a top global threat in new report

PATRICK TUCKER

In its 2026 Worldwide Threat Assessment, released on Wednesday, the Office of the Director of National Intelligence calls AI a “defining technology for the 21st century,” notes that it is being used in combat, and identifies China as “the most capable competitor” to the United States. The assessment, released on Wednesday as intelligence leaders testified to lawmakers, offers a rare window into how they interpret the global threat landscape.

The new version of the annual report treats AI far more prominently than in 2024 and 2025. It gives AI a larger role in the report—but one that resists easy categorization. Unlike enduring threats from China, Russia, Iran, North Korea, and terrorist groups, AI is treated less as a discrete actor or capability and more as a cross-cutting force shaping each of them.

Ukraine’s Saab 340 Airborne Early Warning Radar Plane Spotted Operating Over The Country

Thomas Newdick

Footage has emerged that purportedly shows a Saab 340 airborne early warning and control (AEW&C) aircraft operating over Ukraine. If legitimate, this would be the first time that the radar plane has been seen in Ukrainian service, as far as we know, and would mark an important new capability for Ukraine, and one that we have discussed in depth in the past.

The video in question appears to have been first posted to a Russian Telegram account and clearly shows one of the aircraft, with its distinctive ‘balance beam’ radar fairing on the upper fuselage, in level flight during the daytime. The date and location of the video cannot be confirmed. It should also be noted that we cannot verify the footage itself, but there is nothing to immediately suggest it may have been doctored.

Why are Middle Eastern governments lobbying against a US attack on Iran?

Galip Dalay

Not long ago, most leaders in the Middle East were frustrated with the US for not taking a firmer stance towards Iran. Many regional elites were furious with the Obama administration for pursuing diplomacy with Tehran, adopting an accommodating stance, and prioritizing a nuclear deal, which culminated in the short-lived JCPOA.

The reason was clear: Iran was widely viewed as a major threat to regional stability.

Between 2003 and 2023 its influence had grown across the region. In the aftermath of the 2003 US invasion, Iraq came increasingly under Tehran’s influence, alongside Iran’s long-standing alliance with Syria (under the now deposed Assad regime), and its considerable clout in Lebanon wielded through Hezbollah. Conflict in Yemen saw Iran’s influence in the country deepening through its alliance with the Houthis. Iran, therefore, had created a powerful network of state and non-state allies across the region, commonly referred to as the ‘Axis of Resistance’.

BRICS Meets Reality in the Middle East War

C. Raja Mohan

Two weeks into the war in the Persian Gulf, BRICS has issued no joint statement on the conflict. This has disappointed many BRICS enthusiasts in both the East and the West who imagined the grouping as a credible counterweight to U.S. power and a harbinger of a multipolar order. Yet the failure should not surprise anyone. It was foretold in the very structure of the grouping.

As a collective, BRICS has done little even for Russia during its yearslong confrontation with what Moscow calls the “collective West.” Now the problem has become sharper. When the United States and Israel launched a massive military attack on Iran—another BRICS member—the forum struggled to articulate a common response. Some members are working closely with Washington’s military operations; others, such as India, have developed strong partnerships with Israel.

Which Jobs are at Risk From AI? Evaluating Karpathy’s Exposure Dashboard

TG Srinivasan

Andrej Karpathy’s AI Exposure Dashboard provides an occupational scoring metric using data from the Bureau of Labor Statistics (BLS) Occupational Outlook Handbook to assess the vulnerability of various professions to artificial intelligence (AI). This note evaluates the dashboard’s heuristic approach against findings from the formal labour economics literature. The dashboard’s results are found to directionally align with established task-based exposure models, indicating high exposure for cognitive, computer-mediated occupations and low exposure for physically embodied work. However, as an exploratory metric, the tool remains subject to significant economic limitations, notably the omission of demand elasticity, within-occupation task heterogeneity, and general equilibrium adjustments.

Recent advancements in generative AI have prompted widespread efforts to quantify occupational exposure. Karpathy’s AI Exposure Dashboard functions as a transparent exploratory occupation-scoring exercise rather than a structural forecast of job loss. Evaluating 342 BLS occupations that represent over 143.06 million US jobs, the metric identifies 38.1% of occupations and 34.3% of total employment as highly exposed to AI (defined as a score of 7 or above on a 10-point scale).

Iran war shows how AI speeds up military ‘kill chains’

Craig Jones

The US-Israel war on Iran has been described as “the first AI war”. But recent deployments of artificial intelligence are, in fact, the latest in a long history of technological developments that prize a need for speed in the military “kill chain”.

“Sixty seconds – that’s all it took,” claimed a former Israeli Mossad agent of the strikes that killed Iran’s supreme leader, Ayatollah Ali Khamenei, on February 28 2026, the first day of the US-Israel war on Iran.

The speed and scale of war have been significantly enhanced by use of AI systems. But this need for speed brings serious risks for civilians and military combatants alike.

23 March 2026

Northeast India Turns Mercenary Corridor In Myanmar Civil War

Subir Bhaumik

Bertil Lintner’s ” Great Game East ” seems to be unfolding in right earnest on the mountainous borderlands where South Asia links up to the Southeast.

Western mercenaries, possibly supported by US intelligence, are smuggling weapons and sneaking in to train and arm multiple local insurgent groups fighting Myanmar’s China-backed military junta. It has the trappings of the Big Power rivalry involving an aggressive US and a rising China , with both backing rivals in a nagging civil war between Myanmar’s military junta and the country’s many ethnic rebel armies.

Neighbouring countries like India, Bangladesh and Thailand are getting dragged into another forever conflict, which can only unsettle their vulnerable frontier regions.

Seven Foreigners Nabbed

Designating The Muslim Brotherhood: A Game Changer In The Fight Against Terrorism?

Prof. Rohan Gunaratna

The contemporary wave of Political Islam was influenced and shaped by the Muslim Brotherhood. The foundational ideology of Al Qaeda, Islamic State (ISIS) and other Islamist terrorist groups is inspired, influenced and sourced from the Muslim Brotherhood. Both at its place of birth and nucleus, Egypt has proscribed the Muslim Brotherhood. Nonetheless, the politico-religious movement has spread, surged and sparked violence both in battlefields and off-the-battlefield.

The Muslim Brotherhood promotes exclusivism, extremism, violence and terrorism. An insidious threat, the Muslim Brotherhood can adapt to the operating environment functioning both clandestinely and openly. The most notorious branch of the Muslim Brotherhood is Hamas, the Palestinian group that led the massacre of 1,200 and abduction of 254 Israelis and foreigners on October 7, 2023. (1)

Antelope Reef Could Now Be the Largest Island in the South China Sea

Media reporting in early 2026 has highlighted new Chinese dredging and landfill activity at Antelope Reef in the Paracel Islands. This is the first significant artificial island-building Beijing has undertaken in the South China Sea since 2017. But the more consequential—and underreported—development may be the projected size of the artificial island. If construction proceeds at the pace seen in satellite imagery, Antelope Reef is set to become China’s largest feature in the Paracels and potentially in the entire South China Sea, equaling or even surpassing the size of Mischief Reef in the Spratlys.

Antelope Reef lies within the Crescent island group in the southwestern part of the Paracels. It is located approximately 162 nautical miles from Sanya Port in China’s Hainan province and 216 nautical miles from Da Nang, Vietnam. Previously one of China’s smallest outposts in the Paracels, Beijing began major dredging at Antelope in October 2025, and in recent weeks has begun preliminary construction on some areas of the reef.

US, Allies Move to Shore up Taiwan Defense

Jens Kastner

In late February, the Philippine, US and Japanese militaries for the first time moved their joint “Multilateral Maritime Cooperative Activities (MMCA)” military exercises from the South China Sea to the Bashi Channel that separates the Philippines from Taiwan, a shift that serves as a key focal point of strategy for the US and its allies to restrain China’s maritime expansion and deter a potential Taiwan invasion.

The drills’ geographical focus is Mavulis Island, a 2.2 sq. km uninhabited outcrop 142 km from Taiwan and 200 km from the northernmost tip of Luzon. The island is garrisoned by Philippine troops who have constructed a shelter for local fishermen, a water desalination plant, a helipad, lighthouse, and a hilltop flagpole.

How Does Saudi Arabia See the War with Iran?

Michael Ratney

For Saudi Arabia, the Iran war in its scale, intensity, and potential impact is as unsettling as it is unprecedented. The Saudi leadership finds itself simultaneously trying to protect and prioritize its own economic and societal transformation, to navigate its relationship with an impulsive and unpredictable U.S. president, and to manage the geographic reality of living a drone’s flight away from a country that is likely to remain its principal antagonist for the foreseeable future. Not surprisingly, Saudi views of this war are complicated.

The question of how Saudi Arabia views this war has drawn considerable speculation, misunderstanding, and wishful thinking. The Saudi government communicates principally through official statements, and to the frustration of international journalists, unauthorized leaks are rare. Media reports citing unnamed and ambiguously defined sources with claims about Saudi intentions or their communications with President Donald Trump should be read cautiously. And so, to understand actual Saudi thinking, the best place to start is with what their government is saying publicly.

The Iran War is Causing Energy Chaos in Asia

Joshua Kurlantzick

The Iran war has clearly upended energy markets around the world. Oil futures closed at $95 yesterday, even as some countries have released reserves in an attempt to prevent the oil price from going even higher. As Agence France Presse (AFP) has reported, strikes on the massive Ras Tanura refinery in Saudi Arabia, Ras Laffan gas processing base in Qatar, and the complex housing the Ruwais refinery in the United Arab Emirates, combined with Iran’s blockage of the Strait of Hormuz, has resulted in a drop of Gulf countries’ oil production by 10 million barrels per day, as compared to March 2025. AFP further reported that the amount of oil passing through the Strait of Hormuz has fallen to less than 10 percent of pre-war levels.

The impact can be felt everywhere, but in Asia – where nearly every country is highly dependent on Middle Eastern oil – the war has caused outright energy panic, with governments scrambling to respond and having few short-term answers. After all, Asia is the most exposed to the effects of the war on oil prices, since it is the region that relies most heavily on oil and gas shipped through the Strait of Hormuz. The level of consumer panic, in particular, is so great in some Asian states that it could soon lead to not only major economic shocks but even violence over limited energy supplies.

How the Iran War Ignited a Geoeconomic Firestorm

Edward Fishman

The economic consequences of the U.S.-Israeli war in Iran are coming into sharper focus as the conflict enters its third week. As the fallout expands beyond the Middle East and ripples through the global economy, markets and supply chains are being increasingly reshaped by the drones and missiles buzzing over the Gulf—and the United States has few options to de-escalate the conflict.

The Strait of Hormuz, which is critical to the oil and gas industry, is at the center of this disruption. But it’s not just energy markets that depend on the strait. Fertilizer and high-tech supply chains are also negatively affected, widening the crisis further. If the war develops into a protracted conflict, these issues could become lasting structural shocks to the world economy.

Defending the skies of the Arab Gulf states

Albert Vidal Ribe

Since the beginning of the current war in Iran on 28 February, the Arab Gulf states have used hundreds of missile interceptors to counter Iranian missiles and one-way attack uninhabited aerial vehicles (OWA UAVs). They have already consumed a significant portion of their stockpiles of long-range interceptors. These air-defence systems have protected the Arab Gulf states while the United States and Israel prioritised the destruction of Iran’s ballistic-missile launchers and effectively eliminated most of Iran’s launch capabilities, which led to a sharp drop in the rate of Iranian ballistic-missile fire after the first few days of hostilities.

Though Iran’s UAV attacks have also decreased in intensity, drones continue to enter the skies of the Gulf Cooperation Council (GCC) states by the dozen. Compared with ballistic missiles, these are cheaper systems and easier to launch, and Iran possesses a much larger stockpile of them. In the absence of a durable diplomatic settlement to the conflict – which is unlikely, at least in the short term – Iran is likely to rely on UAVs as a major part of its harassment strategy.

Why a weakened Iran is insisting on prolonging the war

Mostafa Salem

Iranians attend a joint funeral held for security chief Ali Larijani, paramilitary commander Gholam Soleimani and 84 sailors from the Iranian Navy frigate IRIS Dena on Wednesday in Tehran. Majid Saeedi/Getty Images

Even as Iran confronts the gravest threat to its regime yet, it is signaling a willingness to prolong its conflict with the United States and Israel in a bid to finally reshape the region in its favor.

Iran’s regime has endured devastating losses over the past few weeks, with near daily US-Israeli strikes eliminating entire tiers of its leadership and military command structure. The Iranian population, already worn down by years of economic hardship, sanctions and mismanagement, now faces the added burdens of wartime shortages, infrastructure damage and an increasingly militarized domestic environment.

The Stunning Failure of Iranian Deterrence

Nicole Grajewski and Ankit Panda

Although it was the United States and Israel that instigated attacks on Iran on February 28, leaders in Tehran deserve some of the blame for failing to effectively deter their adversaries. As the deceased commander of the Islamic Revolutionary Guard Corps Aerospace Force, Amir Ali Hajizadeh, once put it, maintaining deterrence is like riding a bicycle: “You have to keep pedaling all the time, or else the bicycle will fall.” Over the past three years, Iran started to lose its balance; now it has tipped over.

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