Satyajit Das: Iran – Even War Has Been Financialized

Yves here. Das, while he makes some acute observations in this article, appears to have gotten his information about Iran, as English-speaking readers overwhelmingly have, from mainstream sources that amplify deep-seated, Orientalist hostility towards Iran. Iran’s objectives are not hegemonic. They are, however, exceedingly ambitious: to force the US out of the Middle East militarily, or at least so greatly reduce its footprint that it poses not much of a threat to Iran. IMHO, that is a minimum requirement. If the US were to have a Damascene conversion and concede that right now (as in agree not to rebuild the base that Iran has pulverized), Iran might be willing to allow traffic through the Strait of Hormuz on a metered basis, based on performance by the US versus agreed targets. But Iran looks likely to have to achieve that end through force.

In fairness, I do not know what Das’ beliefs are. He may also have shaded his presentation in light of what he thought his original audience in the Indian Express and its editors would accept. So I would focus on his analysis of market and economic effects.

But defense contractors are making bank:

November 2025: Netanyahu sets the goal of assassinating Iran's Supreme Leader.

December 2025: Lockheed Martin begins ramping up weapons production "months" before the war.

December 22: Senator Boozman (Chairman of Military Appropriations) buys RTX stock. Senator Williams buys…

— ُ (@kelevitch) March 10, 2026

Please click through:

November 2025: Netanyahu sets the goal of assassinating Iran's Supreme Leader.

December 2025: Lockheed Martin begins ramping up weapons production "months" before the war.

December 22: Senator Boozman (Chairman of Military Appropriations) buys RTX stock. Senator Williams buys…

— ُ (@kelevitch) March 10, 2026

By Satyajit Das, a former banker and author of numerous technical works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011) and A Banquet of Consequence – Reloaded (2016 and 2021). His latest book is on ecotourism – Wild Quests: Journeys into Ecotourism and the Future for Animals (2024). This is an expanded version of a piece first published  in the New Indian Express print edition.

The Iran and America-Israel conflict remains “overly dynamic”. Cliches and quotes from Clausewitz, Sun Tzu and generals are on their second or third rotation. The one that is most relevant given this Wag The Dog war is Oscar-winning screenwriter William Goldman description of the film industry is: “’Nobody knows anything”.

That notwithstanding, the rough contours of the conflict are emerging. Given the imbalances in capabilities, an Iran weakened by decades of sanctions and isolation will not win the initial kinetic conflict. It will suffer massive human and material loss although Iran may be able to inflict significant damage as well. But the ability of the US and Israel to win the strategic war is uncertain.

The problem is the lack of clear objectives. The Trump administration has offered an ever changing, confusing kaleidoscope of its dubious aims:  nuclear weapons; missile capabilities; sponsorship of terrorism; pre-emption against attack; regime change; retaliation for the 1979 hostage taking. Israel’s clearer goal is the creation of chaos and disarray to further its regional territorial and hegemonic ambitions. The conflict is, in reality, an exercise in two leaders distracting attention from well-known political, domestic and personal issues.

Unable to militarily match its opponents, Iran’s focus is on inflicting economic and commercial damage. Even war now is financial rather than human. The object is to hurt the Gulf and Western citizenry focused on their wealth and comfort with little toleration of risk or pain, for whom a late Uber pick-up and food delivery is a crisis.

First, the US is incurring costs of around $1-2 billion a day. Losses of expensive and critical weapons systems and bases suggest that the cost will rise. Congress has been asked for $50 billion in immediate emergency funding. One estimate puts the overall cost at as much as $210 billion depending upon the conflict’s trajectory. Given the past costs of US involvement in Middle east wars, that would seem low. Given public debt of $39 trillion, it will strain American government finances. The damage to Iran and the global economy will push the total cost higher.

Second, Iran has targeted the Straits of Hormuz and Saudi Arabian and Qatari energy facilities. It may seek to limit transit through the Bab-el-Mandeb (the Houthis have yet to surface in this war). Oil and gas prices, shipping and insurance cost have risen sharply with the potential for further increases. US proposals to provide escorts remains vague. The chances of a return to normality soon are low as the risk of new hostilities will linger.

Availability and cost of energy will have far reaching effects on electricity, fertilizer, shipping, chemicals, mining and manufacturing. Semiconductor supply chains, refining and industrial chemicals, and extractive industries will be quickly affected. Interruption to desalination a major source of water for the Gulf, which has commenced, would not be trivial.

Third, the economic impact on the Middle east is substantial. Curtailment of civilian air traffic has exposed one vulnerability. Each day 300,000 plus people transit through Dubai (home of Emirates), Abu Dhabi (Etihad) and Doha (Qatar) which act as a key link between Asia, Africa, Europe, the Americas and Oceania. This will affect not only people movements but cargo interfering with supply chains. The closure of Russian and Ukrainian airspace to European carriers after the invasion of Ukraine limits re-routing options The effects on airfares, freight costs and choices remains unknown. Even after the end of the war, the threat of future interruptions will mean a change in behaviours.

The Gulf’s standing as a business and financial hub will be tarnished, perhaps irretrievably. The illusion of liberal (to varying degrees) and lucrative (low tax and light regulation) centres for commercial activities has been shattered. Rebuilding reputations will be difficult unless the underlying geo-political tensions are resolved – a Herculean task.

The flight of expatriates and migrant labour from affected countries is another issue. They are critical to the Gulf economies because of their low populations. As workers return home, this will also affect remittances from migrant labour. Outbound remittances from the Gulf totalled over $120 billion in 2022. The impact will be felt by the originating countries, primarily in Asia and Africa, placing strains on domestic employment and services.

The aim is to force nations to choose sides in this, for Iran, existential battle.

Finally, the contraction in the Gulf economies, dependent on energy, transport, logistics, finance and tourism, will flow through into global capital flows. The petrostates may be asked to pay for the war. Consistent with his recent behaviour, President Trump will expect to be paid for ‘protecting’ them from ‘evil’ Tehran.  Longer term, they will be forced to increase defence spending, in some case like Saudi Arabia to acquire nuclear capabilities. This represents a large claim on income when some like Saudi Arabia are facing fiscal pressures. The Gulf administrations are already reviewing their investment portfolios because of cash flow pressures and reassessing their strategic relationships. The flow of funds into the West from regional investors, including the sovereign wealth funds, will dwindle and probably reverse.

If the war remains contained, then these pressures will result, at a minimum, in a global slowdown. As is obvious, the more protracted and widespread the war, the larger the impact. It will result in a large diversion of resources, which was already under way, to defence. As beleaguered Iran switched to asymmetric warfare, such as terrorist attacks against the West, more domestic security spending, such as that after 911, will be required.

Countries, not directly involved in the conflict, will face rising costs from war refugees, and returning migrant workers. If there is any humanity and compassion left in the world, they will also have to share the costs of repairing the humanitarian catastrophe that they have actively or passively allowed.

Inflation pressures will increase to an unknown extent. This will hit lower income groups as essential goods and services will be worst affected and governments scale back social programs prioritising weapons. Short and long-term interest rate will diverge. The tension between rising price and a slowing economy means that central banks face Hobson’s choice between the bad and the terrible. Long term interest rate may rise to accommodate higher budget deficits and the change in capital flows. Bond rates in the US, UK, and Europe have drifted upwards and have investment implications.

In currency markets, the Pavlovian drift to the US as a safe haven will reverse as familiar concerns about America and the weaponisation of the dollar intensify. Equities, which have ignored anything factual for decades, are now buying defence related industries and commodities. Investment in AI, whatever its actual merits, are being justified on the new grounds that it is essential for warfare. Purveyors will use the conflict cynically to raise funds. Volatility will be high, especially in commodities and bonds.

President Trump’s  messages are increasingly garbled even by the Administration’s slovenly standards. Republican politicians have chosen semantic games. Sen. Josh Hawley’s definition of war “in the constitutional sense” requires committing ground troops to the fight. Rep. Randy Fine (R., Fla.) has embraced circularity arguing that “the way you are officially at war is Congress declares war, and we haven’t declared war.” House Speaker Mike Johnson argues that America is not at war but merely “days into a very specific, clear mission—an operation.”

The President is looking for an exit. Like Humpty Dumpty, he will ascribe flexible meanings to “victory”, “a very complete” operation, or the “complete annihilation” of and “unconditional surrender” by Iran. President George W. Bush once claimed “mission accomplished” in a war which would drag on for two decades after his announcement. He did it in a fighter pilot’s jump suite which exaggerated his genitals, perhaps intentionally to assert American power. Inevitably, for the President who will not take responsibility for his own actions, the whole mess will be somebody else’s fault. Preparation for this is advanced: “Based on what Steve (Millar) and Jared (Kushner) and Pete (Hegseth) and others were telling me, Marco (Rubio) is so involved, I thought they were going to attack us.” Human sacrifices are likely to follow soon.

Unfortunately, it is unlikely that Israel and Iran will stand down. Iranians, who have seen over 10,000 of their compatriots killed or injured, are unlikely to let bygones be bygones. As former U.S. Secretary of Defence Jim Mattis understood: “in war, the enemy gets a vote”.

If the conflict continues and spreads, then a world conflagration is possible. It would precipitate an unprecedented financial reckoning. Given the existing economic excesses and other challenges (climate change and resource scarcity), it would be difficult to contain.

History will not be kind to what the US President has termed a “ little excursion”. As former US Defence Secretary Donald Rumsfeld put it: “Those who made the decisions with imperfect knowledge will be judged in hindsight by those with considerably more information at their disposal and time for reflection.”

© Satyajit Das 2026 All Rights Reserved