Summary of The heavy cost of the war on Iran

Overview of The Rachman Review — "The heavy cost of the war on Iran"

Gideon Rachman interviews Jack Watling (Royal United Services Institute) about the military, political and economic dynamics of the current campaign against Iran. The conversation centers on the strategic importance of the Strait of Hormuz, how Iran is using maritime disruption as deterrence-by-punishment, the military and political options for reopening the strait, the changing nature of naval warfare (drones, uncrewed systems), the consequences of targeted assassinations of Iranian leaders, and the wider geopolitical and economic fallout. Watling also draws lessons from Ukraine and previews his book Statecraft: The New Rules of Power in a Divided World.

Key takeaways

• The Strait of Hormuz is the crux: roughly 20% of global oil passes through it, so Iran’s closure aims to inflict global economic pain and establish deterrence.
• Iran has shifted from “deterrence through denial” (coastal defenses) to “deterrence by punishment” (economic disruption of shipping).
• U.S./Israeli strikes have degraded many Iranian military assets, but reopening the strait requires a combined military and political strategy.
• Military measures will be staged: strike launch sites and missile/anti-ship infrastructure, then convoy and escort operations — but low-signature drones, long-range launches and mines make protection difficult and persistent.
• Drones and uncrewed surface vessels have changed the calculus: threats can be launched from far inland and beyond where navies can easily interdict.
• Navies must adapt (retain large ships for global presence, but increasingly use motherships and uncrewed systems for mine-hunting and persistent patrols).
• Targeted killings of political leaders are effective at disruption but complicate prospects for later political settlement and negotiation.
• Allies matter primarily for basing, logistics, political legitimacy and niche expertise (e.g., Ukraine’s anti-drone lessons), rather than necessarily providing more escort fleets.
• Economic ripple effects are immediate: oil price spikes, strains on European energy budgets, possible budgetary pressures on aid (e.g., to Ukraine), and the long-term risk of a global recession if shipping remains disrupted.
• Likely near-term timeline: attempts to reopen the strait in weeks, followed by a period of protracted harassment rather than full denial; political processes will then begin to emerge.

Military options to reopen the strait

• Staged U.S. approach:
  • Phase 1: Strike anti-ship missile sites, drone bases, known launch sites and small-boat facilities to reduce immediate threat.
  • Phase 2: Commence convoying — naval escorts to protect commercial tankers and LNG ships.
  • Ongoing: Mine countermeasures (hard), suppression of long-range/low-signature threats, maritime surveillance and persistent strikes against remote launch capabilities.
• Major problems:
  • Low-signature aerial threats and long-range drone launches are hard to detect and can persist from deep inside Iran.
  • Mines are cheap, easy to emplace, and create persistent risk even if only a few are deployed.
  • Escorting all vulnerable commercial shipping is resource- and risk-intensive; friendly-fire and collateral damage are real risks.
• Political component: military action alone won’t remove Iran’s incentive to disrupt shipping — a negotiated or coercive political settlement (economic pressure, seizure of key infrastructure, leadership pressure) will be necessary.

Navies, drones and the changing character of maritime warfare

• Drones (air and surface) and long-range precision have shifted the battlefield: threats are now mobile, can be launched far from coasts, and can bypass traditional naval protections.
• Navies remain essential for global reach and “sea control,” but must invest in:
  • Uncrewed systems (mine-hunting, ASW, ISR) deployed from motherships.
  • Improved sensors, command-and-control and integrated air defenses oriented to persistent, distributed threats.
• Example: Russian fleet in the Black Sea has been constrained by drone and missile threats despite its size — a precedent for how relatively small, distributed systems can force larger naval forces to retreat or change posture.
• The UK and others face capability gaps from decades of underinvestment; symbolic deployments (e.g., sending a single destroyer) may not match operational needs.

Allies, geopolitics and competing U.S. objectives

• The U.S. benefits from allied basing (Kuwait, Qatar, Cyprus, UK) but allied fleets may add little militarily to Strait security and could complicate operations.
• Allies contribute politically, logistically and technically (e.g., reconfiguring Gulf air defenses). Ukraine’s experience with drone defenses offers valuable expertise, though Ukraine lacks spare physical capacity.
• U.S. motivations are mixed:
  • Military strategic logic: degrade Iran’s strike and missile capabilities to prevent simultaneous conflicts elsewhere.
  • Long-standing security community hostility toward Iran.
  • Political/administrative drivers in the White House (including resource/control motivations).
• Israel is strongly supportive and has contributed strikes and targeted assassinations, but it is not the sole driver of U.S. policy.

Targeted killings and political implications

• Decapitation strikes (e.g., killing Ali Larijani and others) degrade command-and-control and decision-making capacity and can coerce fear.
• Downside: killing political leaders undermines prospects for post-conflict negotiation by removing potential interlocutors and makes a political settlement harder.
• This form of “personalized warfare” is facilitated by modern intelligence and data; it revives older historical logics of targeting elites but departs from post-WWII norms separating military from political-targeting.

Economic consequences & investor implications

• Immediate risk: serious disruption to global oil and LNG flows; even short-term closures boost prices and can feed inflation and recessions.
• Secondary effects: higher energy revenue for Russia, strained European budgets (which could reduce aid to Ukraine), higher shipping insurance and rerouting costs, supply-chain stress.
• Practical actions for investors to monitor:
  • Oil and LNG prices, shipping insurance premiums, and OPEC/Gulf policy signals.
  • Energy-sector equities, defense contractors, and logistics/transportation stocks.
  • Regional political developments and timeline signals for attempts to reopen the strait.
  • Consider portfolio hedges tied to energy commodities and geopolitical risk.

Duration and likely trajectory

• Watling’s baseline: attempts to reopen the strait within a few weeks of setting conditions, followed by a phase of protracted harassment rather than total denial.
• Expect a prolonged period of low-to-medium intensity attacks, economic pain, and then political bargaining — not a quick decisive victory.
• Iran retains asymmetric options: proxies (Iraq, Lebanon), expanded Houthi activity (Red Sea), terrorism and global harassment — any of which could widen the conflict.
• Unlikely but catastrophic options (e.g., attacking civilian desalination plants in Gulf states) are possible but less likely because Iran would have to live with long-term consequences among regional populations.

Notable quotes

• Jack Watling: “Whether or not Iran succeeds in establishing deterrence is essentially determined by whether the straits can be reopened.”
• On U.S. posture: President Trump: “We don't need anybody. We're the strongest nation in the world.” (quoted during the discussion about allied help)

Final point — systemic lesson from Watling’s book

• National security systems are designed for episodic crises; today’s environment features multiple large-power uses of force that change baseline assumptions. Governments must decide earlier and build peacetime resilience (stockpiles, air defenses, supply-chain planning, allied coordination) rather than scrambling only after conflict begins.
• Watling’s book (Statecraft: The New Rules of Power in a Divided World) explores these strategic changes and informs much of his analysis in the episode.