Kamal Ghorui
Dr. B. Bala Bhaskar
There are no winners in West Asia’s wars, and the unfolding conflict with Iran is unlikely to be an exception. At some point, each side will craft its own narrative of success. Yet the war—at the theatre of energy politics, sectarian contestation, regional dynamics and great power rivalry—is revealing deeper geopolitical and structural shifts in technology, energy, alliances and ideology that will outlast the conflict.
A striking feature of the conflict is the changing character of warfare: low-cost Iranian drones and missiles are offsetting conventional disadvantages by challenging advanced air defences across Israel and the Gulf. With a roughly $15 billion defence budget, Iran contests America’s trillion-dollar edge — powered by rare-earth magnets in which China holds a 90% monopoly as the principal supplier. This advantage is reinforced by China’s BeiDou-3 navigation system, which delivers superior precision and jamming resistance over GPS in contested environments.
The conflict is exposing fault lines in the Gulf security architecture. The Gulf Cooperation Council, long reliant on its partnership with the United States, appears increasingly vulnerable—underscoring the limits of outsourced security and prompting reassessment. Perceptions that Washington’s priorities align closely with Israel, at times at the expense of Gulf interests, have deepened unease, reinforcing the China-brokered Saudi Arabia–Iran rapprochement and Saudi–Pakistan defence cooperation.
These vulnerabilities are longstanding. Opposition to foreign military presence—articulated by Osama bin Laden in his 1996 “Ladenese Epistle” branding the Gulf Rulers as “Apostates”—persists despite the weakening of such groups and resurfaced during the Arab Spring. Ironically, a Shia state like Iran, along with Shia organisations such as Hezbollah and the Houthis, has emerged as a prominent advocate of the Palestinian cause, challenging Sunni–Shia binaries. Amid renewed instability and declining Western credibility, tensions between regime security, external alignment, and domestic legitimacy of ruling dynasties may sharpen, lending renewed resonance to Henry Kissinger’s warning that “it is dangerous to be America’s enemy, but fatal to be its friend.”
Gulf states have also been reminded of their geographic vulnerabilities—particularly their dependence on the Strait of Hormuz for energy and food, particularly in the backdrop of its monetisation, and on undersea cables for critical IT and financial services. Nearly 30% of the world’s undersea cables transit this corridor, exposing vital infrastructure to disruption.
For Iran, the network of US bases across the Gulf has long been seen as a strategic encirclement. Its retaliatory doctrine extends beyond military targets to the broader American economic and security footprint. Under these conditions, there may be renewed interest among Gulf states in alternative frameworks such as a “collective security arrangement for the Persian Gulf”, long proposed by Russia.
A nuclear-armed Israel has long portrayed Iran as an “existential threat”, even as it remained a major adversary. The Iranian question has served as a unifying axis in Israeli politics, unlike the more divisive Palestinian issue. In the aftermath of the war, Iran could emerge as a more entrenched challenger, less constrained by American pressure.
At the same time, Israel faces mounting internal strains. The dominant mood reflects war-weariness tempered by cautious relief, alongside deep polarisation and persistent anxiety over an uncertain future and inconclusive wars. Around 70% of Israelis oppose military exemptions for the ultra-Orthodox (Haredi), underscoring widening social divisions.
In the United States, while official support for Israel reached its peak, public opinion is sharply critical of the war. Divisions within the American Jewish community—evident during the Gaza conflict—persist and may deepen if the war continues. A September 2025 Washington Post poll found 61% of American Jews (around 7.5 million) believed Israel committed war crimes in Gaza, with 39% describing its actions as genocide. Growing dissent among Jewish and non-Jewish constituencies may temper future U.S. support.
These trends may compel Israel to reconsider notions of “Greater Israel” and adopt more pragmatic approaches, including substantive engagement with the Palestinian question.
For Iran, the leadership has long invoked a religious decree (fatwa) attributed to Ali Khamenei prohibiting nuclear weapons. However, the scale of destruction and perceptions of resilience against United States pressure could revive nuclear ambitions, even as the regime may gradually adopt a more accommodative domestic posture amid reduced suspicions of citizens’ collusion with foreign intelligence.
The constriction of the Strait of Hormuz could trigger a structural shift in global trade, accelerating the salience of Arctic corridors such as the Northern Sea Route and the Northwest Passage.
Reinforced by the huge presence of rare earth elements in Russia, the United States and Russia may be compelled to collaborate. This war could also revive stalled momentum in the transition to renewable energy, coal and nuclear energy.
For an energy-constrained Europe, the crisis underscores the limits of full decoupling from Russian energy. Reliance—evident in continued flows from projects such as Yamal LNG—is likely to persist, forcing a reluctant recalibration of ties with Russia.
The cumulative effect could destabilise NATO, with strains already visible. As economic pressures clash with security commitments, internal divisions may widen—especially as the United States shifts its strategic focus away from Europe.
Beyond the battlefield, the Iran conflict is reshaping global finance: Tehran’s push to link oil trade through the Strait of Hormuz to the Chinese yuan challenges the US-backed petrodollar system established in the 1970s with Saudi Arabia. Central banks have already shifted about 30% of reserves from dollars to gold, signalling a gradual move toward a more multipolar monetary order.
Another emerging trend is the prospect of an arms race shaped by China. The growing dominance of missiles over airpower, combined with China’s control over rare-earth supply chains and critical minerals such as tungsten—a key input for interceptors—gives it a strategic advantage.
The war is thus more than a regional conflict. It is a prism through which broader transformations are unfolding—in warfare, national security, great power rivalry, regional alignments, energy systems and financial structures—and how these will shape both West Asia and the global order.
At the same time, the apparent limits of US power projection may accelerate China- and Russia-led integration across energy, infrastructure, and defence, including nuclear cooperation, with an elevated role for Pakistan. Even ending the war could depend on credible security guarantees involving Russia and China to avert renewed hostilities.
Taken together, these shifts point to a gradual but consequential narrowing of India’s strategic and economic space, set against the backdrop of China’s expanding influence across South and Southeast Asia.
Yet, India continues to be viewed as a resilient democracy marked by diversity and cultural pluralism, as well as a civilisational source of spirituality in an unsettled world. This enduring appeal strengthens the case for an urgent recalibration of India’s foreign policy—more agile, representative and regionally attuned—to preserve its strategic autonomy and global standing.
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