Is Russia the real winner from the war in Iran? | The Economist

Let's talk about Russia now then. Because if Russia, I think. is one of the only potential big winners in this, Shashank, both. in terms of a high oil price, but more broadly, strategically, how do you see Russia coming out of this? So I think there's lots of good news for Russia. There's sort of small. bits of good news, the fact that air defence interceptors. that might have been sold for Ukraine, particularly for its Patriot. missile defence system, are being chewed up. at this extraordinary rate by the Gulf states. and by the United States. And demand will be diverted. And that will mean fundamentally, in the next 12 months, more Russian missiles will get through.

and that's that's good news for Russia. But I think beyond that, we're also seeing. perhaps holes develop. in the sanctions architecture. So for example, the waivers. granted to India by the United States. And that's not in itself a big deal, but it's the beginning of it, which I think. And then more broadly, you step back. And this is where the biggest effect is, as we've discussed so many, so many times around this table. Russia's economy is suffering. some serious pressures. And it's not that it was bound for a crisis. is that it was highly vulnerable. to an external external shock. If an external shock came.

that that sort of hit the economy, it had no buffer left. And we saw that in so many ways. Russia dipping into gold reserves. Now, the increasing fiscal pressure. of mobilising more men by paying them. bigger and bigger salaries, on and on and on, we could go. What this is done is stick. a safety net under Russia. It's brought it space to breathe. And therefore, how does that affect Russia's. incentive to negotiate when it already really is? We've we've established again and again. and again wasn't jumping for a deal. It pushes that further away. My view. that's actually very bad for Donald Trump. It certainly is very bad for Europe.

and for Ukraine. I agree with that. I just say one things are on Ukraine. I mean, Russia's problem on the front. line is not a lack of money. It's a lack of a way to. to convert manpower and weapons into advances. And I don't think this changes that. It just buys a bit more time and changes. the incentive structure. Let's I'm going to hold that thought there. It's time to for Ukraine discussion. But but Russia is seemingly. one of the few winners out of this. Let's just go round the other areas of the world, not just in the impact in the very short term, but in the sort of medium term too.

And Gregg, I want to start with you with the Gulf, because. let's play out. if this I mean, the Straits of Hormuz presumably. are not going to be closed forever more. So at some point, some kind of an agreement will be reached. But it is one where Iran has. because its aims are so limited, it has shown itself to have relatively more clout. than it might have had before. How does that change. the sort of geopolitics of the Gulf? What does it mean for Gulf stability? This is a region that has prided itself. on having loads of capital.

and being business friendly, and being a stable. kind of new growth engine for the world. Is all of that out of the window now? It means they are going to have to. fundamentally reassess their place in the world. I think there's been a lot of premature. Duma ism already. There are people talking about how. Dubai is done in the Gulf is done. I think that goes much too far. I think that's premature. I think this region will still have capital. It will still be business friendly. It will still be attractive. to lots of international firms.

But I think after the war, the Gulf is going to have to make a choice. If we assume that. the Iranian regime is going to survive the war. in some form, diminished but hostile. And as you say. now with the demonstrated capability. to attack and disrupt life in its neighbours, Gulf states have one of two things. that they can do. Either they can try to cut a deal. with that regime, they can essentially let themselves. be blackmailed and make a deal. whereby they offer some trade and investment. and perhaps diminish America's.

military role in their countries. Iran would like to see that happen. I find it very hard to believe. that Gulf states would do that. After having been bombarded for weeks. by an Iran. that they had worked for years. to improve relations with, and they're being thank for that. by being attacked. There's a lot of anger directed at Iran. in this region right now. The other path they can go is to double down. on their relations with America, try to build up more of their own. indigenous military capability as a deterrent.

They have lots of, advanced weapons, but in some cases, their militaries are not terribly proficient. at using them. And they can go that route. I think they are more likely to do that. But then that will change. Everything from the business climate in the Gulf. to the social contract. that Gulf states have with citizens. and with residents. If you no longer. have that guarantee of. this is an oasis of stability. in a turbulent region, the gulf is going to look very different. going forward. But it's it's too early. to say what it's going to look like.

So if if that's the case, if the if the Gulf to some degree. is going to face a different future. than it would have done just three months ago, let's do the same analysis, for Asia. And let's start with China, because there's a really interesting, set of, impacts on China on the one hand, you know, Iran was a source of of energy. and is a source of energy for China. On the other hand, this is using up an enormous amount of U.S. weaponry, fired missiles, how launchers have been.

moved from South Korea to to the Gulf. It's also presumably. going to have a knock on impact. on the United States appetite. for these kinds of things in the future. How do you put those things together? Ed? It's complex. I'd say that the first point is that I think. kind of intentionally or not, the United States has demonstrated. a serious choke point for China. You know, if the United States wanted to stop oil. going through the Strait of Hormuz. in a war with China,

that would have a very, very big effect. So that's the first thing. And I think that Trump might quite like that, having had the same thing done to him, except the United States. isn't isn't able to do this, except it isn't doing it now. So that's the first thing. But it does demonstrate choke points. It also, I think, demonstrates the extraordinary. sort of technical proficiency. of the US military machine. I mean, the strategically, this war might be a mess. Its outcome might be bad. But in terms of just the operations, the US has been remote.

Do you really think that's. going to be the conclusion? I would have agreed with that a week ago. But that's on the plus side on the, on the, on the on the negative side, I think it blunts America's appetites. for, for fighting wars. I think it does Donald Trump. in the end he comes out of this a loser. I don't see how comes out of this conflict. a winner. And I think that that is something. that China, well, China will also think has been very disruptive. So China will back. all of those three things. on the positive side of the balance sheet. And the net effect. I think is probably marginally positive.

for China. Shashank, do you agree with that? How do you think China will view. you, America's military successes. and not in this crisis? Well, try to remember, the 1991. Gulf War was a seminal moment for China. It saw what America did. with satellites, precision bombs, all of this stuff. And it's thought, wow, we need some of that. And that set them off on this. 30 year path of modernisation. So I think in terms of the American ability. to exquisitely track. all of Iran's leadership and, you know, conduct is totally undisputed.

air superiority of Iran. That will be a source of, you know, of it'll impress them. But having said that, we've seen, even in this incredible age. of being able to find and strike missiles. And in 1991, America could barely find. Saddam Hussein's Scud missiles, Scud hunting. It was a total failure. This time around, they've hit loads of them. But it turns out, as I've said. at the beginning, hitting loads isn't enough. as long as you have a stockpile of these, you can cause immense chaos. And it's also established. I think America's interceptor stocks. are just insufficient to cope. with long protracted conflicts.

And so if we assess only the next two year period. before American defence. industry can transform itself, I think Chinese will look at their chances. of a protracted conflict. and their endurance and stamina. in that, and think, we fancy our chances.