US Midterms: The Syndicate Must Revisit Its Iran War Strategy

The November 03, 2026, US midterm elections may deliver a significant verdict on President Donald Trump and his administration. However, irrespective of whether Trump and the Republican Party win or lose, I believe Washington’s policies will remain Israel-centric, with an increasingly brutal approach towards Iran. An extensive US-Israeli air assault on Iran after the midterms remains a distinct possibility.

My verdict is unequivocal: even another round of military assaults will not change the fate of this war. The United States has already lost strategically, having failed to achieve its declared objectives. Military superiority and the ability to inflict enormous destruction do not automatically translate into victory.

Ironically, the Trump administration has not swallowed this bitter reality. It continues to live under the illusion that the United States, in collaboration with Israel, can overpower Iran and compel it to surrender. This refusal to acknowledge strategic failure could lead Washington into another costly military adventure.

The prolonged, yet non-yielding, war has given Iran considerable time to revamp its military strategy and strengthen its strategic relationships with China and Russia. Although there is little discussion of this evolving cooperation in conventional and social media, its implications for the regional balance of power should not be underestimated.

Meanwhile, Arab allies hosting US military bases have had a bitter experience. Their critical assets have remained vulnerable, raising serious questions about the United States' ability to protect its regional partners. The presence of American military installations has not provided the security guarantees these countries had expected.

In my opinion, the time has come for “The Syndicate” to revisit its US war strategy. I can understand that even the Syndicate is not prepared to accept American defeat. However, refusing to acknowledge reality will only compound the consequences of strategic miscalculation.

Today, I suggest that Washington de-escalate, or even retreat, and take time to devise a new strategy. It must remember that the maximum-pressure policy has failed. Continuing to pursue the same approach while expecting a different outcome is an exercise in strategic adventurism.

A new, accommodating policy towards Iran is essential to ending this prolonged confrontation and the energy crisis it has unleashed. Global economies, including the US economy, are paying a heavy price.

The United States must recognize that another military assault cannot reverse a strategic defeat. The time has come to abandon the illusion of overpowering Iran and pursue a policy that can bring this war to an end.

Making Pakistan Economically Stronger

Pakistan faces three interconnected challenges: a trust deficit, a budget deficit and a trade deficit. These are not isolated economic problems; these reinforce one another. Weak investors’ confidence discourages productive investment, fiscal imbalances constrain development spending, and insufficient export competitiveness perpetuates external-sector pressures. The country must therefore adopt a coherent growth strategy that addresses these challenges at their roots rather than managing them through short-term measures.

Pakistan should target GDP growth above 5%, but achieving this objective requires more than setting ambitious targets. The government must create a business-friendly environment, formulate supportive policies and implement them consistently, in letter and spirit. Sustainable growth depends on productive investment, rising productivity, competitive exports and confidence in the continuity of economic policies.

Productivity and Competitiveness

Agriculture and manufacturing should be the principal engines of economic growth. The first priority must be to minimize wastage and create greater synergy across production, processing, storage, transportation and marketing. Competitiveness in international markets depends not simply on producing more, but on delivering quality products at competitive prices and within agreed timelines.

Agriculture requires modern farming techniques, quality seeds, efficient irrigation, mechanization, improved storage and stronger market linkages. Manufacturing needs modern machinery, skilled workers, quality certification, technological upgrading and greater value addition. Expanding production without addressing inefficiencies will only increase costs and weaken competitiveness.

The second priority is to raise production and productivity, while the third is to reduce the cost of production and doing business. Expensive energy, high financing costs, regulatory uncertainty, inefficient logistics and unpredictable taxation undermine the potential of domestic enterprises. The government must address these structural constraints instead of relying on temporary relief packages that rarely deliver lasting results.

Equally important is the need to stop the illegal influx of merchandise through smuggling, under-invoicing and other forms of trade evasion. These practices deprive the exchequer of revenue, undermine compliant businesses and discourage domestic investment. Effective border controls, transparent customs procedures and stronger enforcement must ensure a level playing field for local producers. Import substitution, however, should not become an excuse for protecting inefficient industries indefinitely.

Investment Foundation of Sustainable Growth

Higher production and productivity require fresh investment in capacity creation, balancing, replacement and modernization (BMR). Existing facilities must be upgraded, production bottlenecks removed and obsolete machinery replaced. New capacity should be developed where market demand, technological opportunities and export prospects justify investment.

Businesses cannot make long-term commitments when policies change unpredictably, regulations are applied inconsistently or the competitive environment favours selected interests. Rebuilding trust between the government and the private sector is therefore an economic imperative. Policy continuity, transparent decision-making and timely implementation are essential to encourage investors to commit their capital.

Pakistan must also develop a new financing culture in which businesses rely more on equity and less excessively on borrowing. The Pakistan Stock Exchange should become a major channel for mobilizing domestic savings and directing them towards productive enterprise. Companies should be encouraged to raise capital through public offerings, rights issues and other appropriate equity instruments.

Unlike debt, equity does not impose fixed interest payments or scheduled principal repayments. A deeper capital market can therefore support expansion, strengthen corporate balance sheets, broaden ownership and reduce dependence on bank financing. This requires better investor protection, stronger corporate governance and greater public confidence in the stock market.

Reward Formalization and Productive Enterprise

Companies perform three fundamental economic functions: they establish productive facilities, create employment opportunities and generate exportable surpluses. Listed companies can make an additional contribution by improving financial disclosure, strengthening corporate governance and bringing more economic activity into the documented sector.

Pakistan's tax policy should recognize these wider economic benefits. The government should consider a significant reduction in the corporate tax rate for listed companies, subject to a transparent and carefully designed framework. Such an incentive could encourage businesses to seek stock exchange listings, retain and reinvest earnings, expand productive capacity and operate within the formal economy.

This reform should be accompanied by a broader and more equitable tax base, effective enforcement and safeguards against tax avoidance. The objective must be to reward transparency and productive investment rather than create another concession for established business interests. A simpler, predictable tax regime would also improve the country's appeal to domestic and foreign investors.

Economic Stabilization to Transformation

Pakistan cannot resolve its three deficits independently. Higher productivity and competitive exports can strengthen foreign-exchange earnings, while a broader documented economy can improve revenue mobilization. Greater reliance on equity financing can support investment without creating equivalent debt-servicing obligations. Above all, consistent policies can rebuild the trust necessary for sustained private-sector participation.

The government must move beyond managing recurring crises and create conditions in which productive businesses can invest, innovate, compete and grow. The success of economic policy should be measured not by the number of incentives announced, but by investment mobilized, capacity modernized, jobs created, exports expanded and wastage reduced.

Making Pakistan economically stronger requires a fundamental shift in priorities: from consumption to production, from excessive borrowing to equity financing, from protection to competitiveness, and from policy uncertainty to trust. If the government supports these changes with consistency and determination, growth above 5% can become a credible milestone on the path towards a more productive, resilient and prosperous economy.

 

Estimating the Damage to US Strategic Facilities in the Middle East

The US administration has remained reluctant to disclose the financial cost of its war against Iran, which began on February 28, 2026. An equally important question remains unanswered: why is Washington avoiding a comprehensive disclosure of the damage inflicted on its military installations across the Middle East?

An Associated Press investigation, based on satellite imagery and interviews with regional officials, provides a revealing account. Through August, more than 115 Iranian or Iranian-backed drone and missile strikes had damaged or destroyed structures at 26 military bases and other sites housing US equipment.

Iran's strategy was particularly significant. Rather than limiting its retaliation to conventional military installations, Tehran initially concentrated on early-warning radars and systems designed to detect incoming attacks. These included strategically important facilities in Kuwait, Bahrain, Saudi Arabia, Jordan and Qatar.

The consequences were substantial. At least 15 US aircraft were reportedly damaged, while aircraft hangars, refuelling tankers, communication systems, fuel bunkers, troop accommodation and other infrastructure suffered considerable damage. One sophisticated radar system destroyed in Jordan was among only 13 possessed by the US Army globally, with an estimated replacement cost of around US$500 million.

Kuwait's Ali Al Salem Air Base was reportedly struck at least 30 times, damaging or destroying 15 aircraft hangars. Camp Buehring also sustained extensive damage.

More importantly, the US has reportedly moved aircraft, air defence systems, communications equipment and other military assets away from the Persian Gulf. This raises questions about the resilience of America's military presence and the credibility of its security commitments in the region.

Washington frequently invokes operational security to justify withholding information. However, prolonged silence also invites speculation about the actual scale of losses and the enormous expenditure required to restore damaged facilities. Replacing sophisticated military equipment and rebuilding infrastructure could cost billions of dollars and potentially take several years.

The Trump administration must also recognize that another round of hostilities could expose remaining American installations to further retaliation, adding to the financial and strategic burden.

The larger lesson is that expensive military infrastructure does not guarantee security against relatively inexpensive drones and precision-guided missiles. As Raphael Cohen, a RAND analyst, observed, the changing nature of warfare makes all militaries vulnerable to large-scale, low-cost drone attacks.

America must explain not only how much it spent prosecuting this war but also the extent of damage to its strategic infrastructure and the estimated cost of restoring it. Withholding the figures cannot erase the damage or its long-term strategic consequences.

Big Oil record cash windfalls from US-Iran war

According to Reuters, Big Oil is reaping near record cash windfalls from the eight-month-old Iran war, but Western energy producers’ reluctance to ramp up spending reveals persistent doubts about the industry’s long-term outlook.

BP, Chevron, Exxon Mobil, Shell and TotalEnergies reported combined net profits of US$56 billion in the third quarter, driven by surging oil and gas prices, record-high refining margins and ​strong trading results.

BP posted its highest quarterly profit ever, US$8.5 billion, as earnings from its refining business rose tenfold from a year earlier. For the other majors, the quarter was generally their ‌second-strongest on record, behind only the extraordinary gains booked following Russia's invasion of Ukraine in February 2022.

Market conditions remain incredibly favourable. Brent crude has surged around 60% to US$114 a barrel since the start of the Iran conflict on February 28, while benchmark European natural gas prices have climbed to their highest levels since late 2022. Diesel prices, meanwhile, remain close to September's all-time high above US$200 per barrel as fuel markets continue to grapple with refinery outages and disrupted trade flows.

Big Oil has so far shied away from ​major new spending, suggesting the majors do not see today's market conditions as evidence that the industry's long-term outlook has improved.

Entering the year, the energy industry had been bracing for a ​looming supply glut. Many companies were cutting spending plans, freezing hiring and intensifying cost-saving programs amid expectations that a flood of new oil and liquefied natural gas (LNG) ⁠supplies would pressure prices later in the decade.

The joint US-Israeli strikes on Iran in February and the prolonged closure of the Strait of Hormuz upended the short-term supply picture, as exports from the Gulf ground to a ​halt and refining capacity shrank.

However, energy companies have so far maintained their conservative approach, directing excess cash mostly to strengthening balance sheets and repurchasing shares.

The majors’ combined net debt fell to US$117 billion in the third quarter from US$204 ​billion in the first quarter.

BP, which entered the conflict carrying one of the highest debt burdens among its peers, nearly halved net debt to US$13.9 billion from a year earlier. The company will continue to focus on debt reduction, its CEO said.

Share buybacks also rose to US$12.3 billion in the third quarter, little changed from the previous quarter. Shell and TotalEnergies announced sharp increases in buybacks over the next three months, while Exxon said it planned to buy back US$20 billion of shares in 2027, a similar ​level to this year.

While debt reduction and share repurchases can be dialled up or down from one quarter to the next, capital spending and dividends are longer-term commitments that are much harder to ​reverse if market conditions deteriorate.

So it is telling that the majors' dividend policies and capital spending plans have remained largely unchanged since the start of the war.

Shell, for example, reduced its 2026 capital spending guidance by US$1 billion to US$23 billion to US$25 ‌billion despite the ⁠sharp improvement in commodity prices.

Chevron expects 2026 spending to remain at the lower end of its US$18 billion to US$19 billion guided range.

The extreme volatility and uncertain outlook have also curbed companies' appetite for large acquisitions, as buyers and sellers struggle to agree on fair valuations for assets.

The main exception has been North American natural gas, where abundant supplies and relatively predictable pricing have made it easier to strike deals.

Shell's U$16.4 billion acquisition of Canada's ARC Resources in April reflected growing confidence in the continent's expanding LNG export sector and long-term gas demand prospects.

TotalEnergies has also indicated interest in deals that would help raise its US gas production by around 1 billion cubic feet ​per day, although CEO Patrick Pouyanne said oil assets ​remained too expensive at current valuations.

Boards will review ⁠2027 spending plans before year-end, when companies could decide to increase shareholder distributions or accelerate investment. But all signs so far indicate that any changes will mostly involve returning more capital to shareholders.

What stands out in this bumper earnings season is that energy industry executives appear unwilling to treat today's elevated prices as the start ​of a new supercycle.

The experience of the past decade, from the 2014 oil price collapse to the pandemic crash and the post-Ukraine boom, has reinforced a preference ​for financial discipline over production ⁠growth.

That is understandable, particularly because the concerns driving the industry’s long-term uncertainty – namely the speed and shape of the energy transition, particularly in Asia – have not improved and may have got worse.

The wars in Ukraine and the Middle East have highlighted the risk of being overly dependent on imported fossil fuels. This could spur stockpiling, but it could also encourage countries to pursue more domestic energy production, from both traditional and alternative fuel sources.

There are ⁠growing signs that ​oil and gas markets could remain tight, helping to generate heftier profits for the energy majors. Over the longer term, ​geopolitical fracture and energy nationalism appear set to usher in a new era of greater energy market volatility.

 

China to build aircraft carrier-sized ‘science island’

China’s massive maritime science infrastructure – an aircraft carrier-sized floating artificial island – has officially entered its engineering construction phase. On October 18, Shanghai Jiao Tong University (SJTU), the facility’s lead developer, signed a construction contract worth over 2.7 billion yuan (US$405 million) with a shipbuilder under China State Shipbuilding Corporation, according to media reports.

The semi-submersible twin-hull platform is the world’s first mobile, self-sustaining artificial island and is expected to be fully completed and delivered by June 2030, news outlet Shanghai Observer reported on October 21.

During deep-sea and far-ocean expeditions, traditional research vessels struggle to remain stationary in gale force winds and massive waves for extended periods. In such violently pitching environments, on-board precision optical instruments and analytical balances cannot function properly.

Conversely, while fixed offshore platforms are massive and highly resistant to wind and waves, they lack self-propulsion and cannot be relocated to suit changing research needs.

The ultra large floating research platform therefore fills a unique need, and what makes it revolutionary is its combination of mobility and permanence.

Unlike fixed research stations or conventional vessels constrained by fuel and supplies, the floating island can cruise at 11 knots, or about 20 km/h (12.4mph), while supporting more than 200 researchers.

Officially named the Deep-Sea All-Weather Resident Floating Research Facility and designated as a major national scientific infrastructure project in China’s 14th five-year plan, the facility – also dubbed a “far-sea floating mobile island” – is the culmination of a decade of research and planning.

The structure measures 138 meters (453 feet) long and 85 meters wide, with its main deck sitting 45 meters above water – roughly the height of a 15-storey building.

This means that, even in extreme sea conditions churning up 20-metre waves, the swells would be unable to breach and flood the core laboratory zones and living quarters on the main deck.

The platform’s maximum displacement is about 74,000 tons, surpassing the vast majority of conventional destroyers and research vessels worldwide and approaching the scale of a large aircraft carrier. China’s newest aircraft carrier, the Fujian, has a displacement of more than 80,000 tons.

Its twin-hull design allows it to operate in sea state 7, namely “high” seas with six to nine-meter waves. And it can survive typhoons as intense as up to Force 17 on the Extended Beaufort Scale.

Notably, while it is officially a civilian research platform, engineers behind the project have proposed a nuclear-blast-proof design.

To support prolonged, high-intensity deep-sea research, the floating island features comprehensive architecture comprising a main platform system, a shipborne laboratory system and a shore-based support network.

The shipborne component features six laboratories dedicated to researching core fields such as heavy marine equipment and systems technology, marine disaster meteorological observation and the long-term observation of marine ecosystems.

According to China’s state news agency Xinhua in May, Zhou Meng, the project’s chief scientist and dean of SJTU’s School of Oceanography, said the facility would excel in scenarios such as sea trials for high-end equipment, close-range typhoon detection and marine scientific observation.

The mega facility would also be open to, and shared with, global research institutions and enterprises, Zhou added.

 

AI Bubble: Investors Must Prepare for a Crisis Worse Than Sub-Prime

The artificial intelligence revolution may transform the global economy, but investors must not confuse technological progress with guaranteed financial returns.

The warning signs are becoming increasingly difficult to ignore. More than US$2 trillion in market value is set to disappear from the technology-heavy Nasdaq 100 in October, which has already declined over 5.8%. Investors are beginning to question whether the enormous sums being poured into artificial intelligence (AI) infrastructure can generate adequate returns within a reasonable period.

The problem extends beyond declining share prices. Big Tech companies are escalating capital expenditure, building data centres, acquiring expensive computing equipment and expanding infrastructure at an extraordinary pace. Morgan Stanley expects AI infrastructure spending to exceed US$1 trillion next year, while J.P. Morgan projects global AI capital expenditure of US$5.5 trillion by 2030.

What makes this development particularly worrying is the growing dependence on external financing. Companies that once financed expansion through substantial operating cash flows are increasingly approaching bond and equity markets. Meta's proposed US$97.5 billion fundraising and Microsoft's reported US$25 billion bond issuance illustrate the scale of financing requirements.

Investors must ask a fundamental question: what happens if anticipated AI revenues fail to justify these investments?

Data centres, specialized chips and associated infrastructure involve enormous upfront costs. Technology also evolves rapidly, creating the possibility that today's expensive assets could lose economic value before delivering expected returns.

The sub-prime mortgage crisis demonstrated how excessive optimism, leverage and interconnected financial exposures can turn a seemingly contained problem into a global financial catastrophe.

The AI investment cycle carries a different risk profile, but its potential transmission channels are equally concerning.

A sharp correction in technology valuations could spread into corporate bonds, private credit, banks and institutional investment portfolios.

There is no denying AI's transformative potential. However, technological breakthroughs do not guarantee that every company investing in them will earn attractive returns. Nor does strong revenue growth automatically justify unlimited capital expenditure.

My warning to investors is simple: do not become prisoners of the AI narrative. Examine valuations, debt exposure, cash flows and realistic returns before committing capital. The danger is not that AI will fail, but that financial markets may have priced in an exceptionally optimistic future.

If expectations collapse, the resulting financial damage could extend far beyond Silicon Valley. Investors who ignore these warning signs today may discover tomorrow that the AI bubble was considerably more dangerous than they imagined.

Arabs Must Come Out of the Illusion That the US Is There to Protect Them

When we launched our blog, Geo Politics in South Asia and MENA, in June 2012, I had a clear perception that the United States wanted to keep Arab monarchies strategically dependent on Washington. Its objectives were straightforward: secure access to inexpensive oil, ensure petroleum transactions remained predominantly dollar-denominated, and sell billions of dollars' worth of weapons to wealthy Arab states.

The US-Saudi strategic relationship laid the foundation for this arrangement. Over subsequent decades, Washington consolidated its influence over Arab oil producers while becoming their principal arms supplier.

Following the Islamic Revolution in Iran in 1979, the United States increasingly promoted the narrative that Iran posed a greater threat to Arab security than Israel. This perception helped Washington strengthen its military presence and deepen Arab dependence on American protection.

Egypt, although not part of the Arabian Peninsula, was persuaded to sign the Camp David Accords and subsequently normalize relations with Israel. During Trump's first presidency, several other Arab countries were encouraged to join the Abraham Accords.

Meanwhile, the United States established military bases across the Gulf, ostensibly to protect Arab monarchies against Iranian aggression. Recent developments, however, have exposed the limitations of this security arrangement. American bases were extensively used in military operations against Iran, yet their presence did not guarantee adequate protection against Iranian missile and drone attacks on Arab territories.

Developments surrounding the Strait of Hormuz have further strengthened the perception that Washington's regional priorities do not necessarily coincide with those of Arab oil producers. Disruption of this vital energy corridor threatens not only Iran but also the economic interests of Gulf exporters.

These developments should compel Arab leaders to reconsider decades of strategic dependence. The Iranian threat should not remain a permanent justification for Arab subservience to American interests.

The Gulf Cooperation Council (GCC) must convene an emergency summit to initiate a new regional security framework. Member states should overcome historical animosities, establish cordial relations with Iran and stop outsourcing their security to Washington.

They must also strengthen independent defence capabilities and expand strategic partnerships with China and Russia.

The time has come for Arab monarchies to recognize that American protection comes with American priorities. Regional security must be built through regional cooperation, not purchased through endless arms deals.