Ignore the Blockade Bluster: Israel and the US Have Lost this War. Prepare for a Global Slump.

First responders stand amid rubble at the site of an Israeli airstrike in Beirut’s Corniche al-Mazraa neighborhood April 08. Photo Middle East Eye.

I hesitated before writing a post on this war. Until today.

Finally the fog of war has lifted. Trump’s decision to impose a blockade on shipping moving out of the Gulf is a deliberate act of economic sabotage of the global economy. It is in revenge for his and Israel’s own strategic and military defeats.

Defeats that even the Wall Street Journal’s editorial board is obliged to acknowledge.

Six weeks after its launch, and days after Israel’s ceasefire-busting massacre of hundreds of civilians in Lebanon, the defeated parties in this war are now igniting an economic conflagration that will cascade outwards and across the world - leading to a global recession - unnecessary inflation, defaults, bankruptcies, unemployment and deaths for many years into the future.

It is an action whose purpose will have only a slight impact on Iran, but one that constitutes an attack on China and other east Asian countries dependent on Iranian oil. As such it threatens to widen the war even further and draw in parties that had preferred neutrality.

Back in March, I asked: Would the Israeli-led war on Iran expand from its status as a regionalised war (expanded horizontally by Iran) to become a global war? ¹ Looked at from today’s perspective the answer is clear. Israel and the United States have now ensured every economy in the world suffers the consequences of this reckless and illegal war.

It is a war sanctioned and sustained by American stock and bond markets largely inflated by Silicon Valley plutocrats and their AI bubble. In other words, without the active support provided to the wider US economy by Silicon Valley tech lords and their fast deflating bubble, Trump’s decision to submit to Netanyahu and Mossad’s desire for war would surely have been constrained by investors and markets. Instead these markets have provided comfort to the crazed warmongers in Trump’s administration.

But for how much longer?

The War and Israel

President Netanyahu is attacked by his extremist Zionist supporters for accepting Trump’s capitulation to Iran’s ten points and agreement to a ceasefire. Be sure the ceasefire was an act of submission to Iran; and an admission by Trump, of failure. We know this because the president told us so.

Israel also agreed to the ceasefire, the White House said. As Trump announced he was suspending his plans to escalate attacks across Iran, the US president said he had received a 10-point proposal from Iran which was a “workable basis on which to negotiate”.

In accepting the 10-point proposal (and ditching the US’s 15-point plan) Trump, and by implication Netanyahu, accepted defeat. As the New York Times reported on 7 April 2026 the president conceded

that the United States would work on finalizing an agreement with Iran. “It is an Honor to have this long-term problem close to resolution,” he (Trump) wrote.

In Israel Netanyahu is accused of giving up on the war before achieving the stated goal of regime change in Iran - a goal described as ‘farcical’ by the CIA’s pre-war briefing to the US president. The angry reaction of Zionist extremists led to what the Financial Times reported was a massacre of Lebanese civilians straight after the ceasefire announcement. The paper explained that Israel had called the 8 April attack
Operation Eternal Darkness and said it struck Hizbollah “command and control centres”, killing more than 200 “terrorists” — a description, the FT explained, that made little sense to many of the people who lived in apartment buildings that were struck. Israel hit 100 targets across Beirut, the Bekaa Valley and southern Lebanon in less than 10 minutes, marking what the FT called one of the deadliest single bombing campaigns in the history of a country wracked by decades of war and destruction.

In the meantime as David Hearst, editor of Middle East Eye explained:

Tehran has established control over the Strait of Hormuz, while uniting the Arab world behind it - and crushing Netanyahu’s dreams of regional domination…. Far from the low-hanging fruit that Mossad chief David Barnea imagined it to be earlier this year, Iran has proved to be astonishingly resilient.

Worst of all, from Trump’s point of view, the Islamic Republic is still standing tall, after an aerial bombardment measured in terms of 13,000 strikes.

Ironically, Netanyahu’s legacy is likely to be the severance of US/Israeli relations. The Pew Research centre in results published April 7 found 60% of all American adults had an unfavorable opinion of Israel, compared with 53% a year earlier. That change in attitudes is remarkable after decades of Israeli-financed propaganda and outright political manipulation that corruptly purchased the loyalty of American voters, politicians and presidents.

The war and the US

So that we do not easily overlook these facts, I want to place on record the sheer insanity and criminality of President Trump’s statements of intent, and his decision-making. That coupled with the impotence of his closest advisers - and of members of the US Congress - in restraining his profanity-laced TruthSocial outbursts, is both shocking and historically unprecedented.

That post was followed by a war crime declaration of intent. One that gleefully conceived of the US military committing a form of genocide - ‘eliminating’ a whole civilisation of ninety three million souls.

[ Note the 61,400 ‘likes’]

This is an American president threatening a war crime on a scale that in 1945 ensured the death penalty for Germany’s fascist leaders - as Prof. Mearsheimer argues.

On 13 March 2026 Pete Hegseth, “Secretary of War” had uttered a similarly shocking statement:

We will keep pressing. We will keep pushing, keep advancing, no quarter, no mercy for our enemies.

“To give no quarter” means no prisoners will be taken, surrender will be refused, all will be killed. Its very expression is a war crime, because every word of a military leader signals intent. It is explicitly prohibited under international law and U.S. military doctrine as Nate Charles explains.

Pete Hegseth cares little for international law. But as Victor Orban’s allies are discovering in Hungary today, careless corruption, thieving and lawlessness has consequences.

The Israeli-led war and its costs are not going down well with American voters. Several recent polls show Trump faces largely negative disapproval ratings, reaching as high as 64% disapproval of Trump’s job performance in a CNN poll. Unsurprising given rising gas, diesel and fertilizer prices and the threat of rocketing food prices this autumn and winter.

Ironically while rising oil prices fixed by speculators in global markets are good for America and immensely profitable for US oil and natural gas barons - the rising cost of gas at the pump is bad for Americans.

The War and Iran

The consequence of Trump’s verbal incontinence drawn from military incompetence is that Iran - in its defeat of the US and Israel - now holds all the economic cards. These include the global chokepoint that is the Strait of Hormuz; the potential chokepoint of Bab al-Mandeb strait controlled by the Houthis in Yemen; the potential destruction or damage by Iran of critical fossil assets including fertilizer; 14 US military bases in Gulf countries; and the vulnerability of the US naval fleet as it anchors a safe distance from the conflict, but close enough to the Bab al-Mandeb.

Americans and their terrorist ally have only a blockade and bombs with which to try to achieve their confused goals.

The war and China

China, a country that considers itself a civilisation was not impressed by Trump’s threat to destroy Iranian civilisation. And so on the 7 April both China and Russia vetoed a security council resolution promoted by Bahrain that called for states to

coordinate efforts, defensive in nature, commensurate to the circumstances, to contribute ‌‌to ‌‌ensuring the safety and security of navigation across the Strait of Hormuz..

China’s UN mission explained its position here:

At a time when the United States is openly threatening the very survival of a civilization, when the current hostilities imposed on Iran are very likely to further escalate, the draft resolution, should it have been adopted, would send an extremely wrong message and have very serious consequences. The Security Council has lessons to learn from issues such as Libya and the Red Sea. Such past mistakes must not be repeated. The Security Council’s actions should be aimed at deescalating the situation. They must not provide the legal veneer for unauthorized military operations.

The Economic Outcome?

Can only be grim.

We are now in a grave global crisis.

We face shortages and soaring prices for oil, diesel, jet fuel, gasoline, liquified natural gas and fertilizer. These are all inputs that sustain the global economy’s outputs. Millions of people in low and medium-income countries in Africa, India and Latin America use diesel to sustain economic life. Soaring prices will inflict huge damage on their livelihoods and pain on their families.

The WSJ reports that the oil shock is already rippling through Asia, forcing some factories to slash production and a small but growing number of gas stations to ration fuel. Airports across the region are starved for jet fuel with no quick fix in sight, and some airlines are already paring back flights.

As Trump in his demented anger escalates this war, so Iran must be preparing to respond, helped by Houthi rebels in Yemen that could block Saudi oil exports from the Red Sea.

It is critical to understand that as a result of today’s globalised economy most countries (with China as exception) have developed supply lines intended to provide instant ‘just-in-time efficiency’ - not buffers or stockpiles of essential commodities built up in preparation for an emergency - or a war.

That explains reports of buyers paying unusually high premiums to get hold of jet fuel and diesel straight away.

Note also that the major belligerent in this war - the United States - enjoys the privilege of holding the world’s reserve currency. This war and Trump’s incompetence is undermining confidence in the US dollar and its reserve status. Already Iran is demanding Chinese Yuan in exchange for oil. This follows reports that talks between China and Saudi Arabia to price more oil in the Chinese yuan accelerated last month.

Just as Britain’s incompetence at Gallipoli in 1915-16 damaged Britain’s reputation, and was the beginning of the end of sterling as the global reserve currency, so this war will slowly but surely damage the reputation of the United States and its place in the global economy.

In the meantime all we - the world’s citizens - can do is ignore Trump’s blockade bluster and prepare for a prolonged global recession.

---

PS Before the fog of war lifted, I was invited by TRT to discuss the possibility of a global recession a week ago. Here is a link to the broadcast:

1. On 7 April, 2026 the New York Times published the inside story of how on 11 February Netanyahu and Mossad director David Barnea persuaded Trump to embark on a war against Iran. “Mr. Netanyahu and his team outlined conditions they portrayed as pointing to near-certain victory: Iran’s ballistic missile program could be destroyed in a few weeks. The regime would be so weakened that it could not choke off the Strait of Hormuz, and the likelihood that Iran would land blows against U.S. interests in neighboring countries was assessed as minimal.”