Trump’s failed gamble in Iran

Politics, Lenin once observed, “is a concentrated expression of economics”.1 If so, perhaps one way to think about the war launched by Israel and the United States against Iran in February 2026 is as “concentrated politics”—a double or triple-strength distillation of the trajectories dominating the global and regional systems of inter-imperialist competition over the past two decades. The trend of US hegemonic decline is easy to discern and is accepted among many mainstream commentators. The imperialist competition between the middle-sized powers of the Middle East, however, is less frequently acknowledged and likely to prove more destructive in the short to medium-term.

This article argues that paying careful attention to winners, losers and survivors in the state system of the Middle East must play a critical role in refining strategies for anti-capitalist and anti-imperialist resistance. It is important to understand why Israeli strategists failed to destroy the Iranian regime’s ability to project power beyond its borders and hence reset the unstable equilibrium between the principal regional states. This is not simply a matter of geopolitical coincidence. The Iranian regime survived this round of the war and emerged relatively strengthened compared to its position in January 2026 because its leaders wielded their class power as managers of military-industrial capital to manufacture innovative weapons at scale and ordered their deployment through the military institutions of the state.

Although this might seem an obvious observation, the implications are deeper than many commentators of the war realise. These implications also confirm arguments I have made repeatedly in this journal since 2018 about the significance of the emergence of a regional system of inter-imperialist competition among the Middle East’s most powerful states.2 Military conflicts between the regional powers have been a persistent feature of how imperialism works in the Middle East since 1967, and Israel has long played a structural role for the US as guarantor of its interests. However, the economic integration of the region into multiple circuits of capital accumulation critical to the global economy—not merely those related to oil and gas—has deepened as capitalism has matured. This means that survival for the contending powers depends to a greater extent on their ability to harness shifts in capitalism’s productive forces rather than insulate themselves from such changes. The Iranian regime’s success in drone manufacturing is just one example of this process. The pursuit by the Gulf states and Israel of investment in digital infrastructure and Artificial Intelligence (AI) is another.

This is why the conflict that unfolded in late February 2026 is not likely to be settled definitively any time soon, whatever temporary agreements US negotiators may cobble together in order to extricate Donald Trump and Pete Hegseth from a disaster of their own making. It is also why, although the defeat of the US by Iran should be welcomed by anyone who opposes imperialism, the escalation of military rivalry between the regional powers does not provide a genuine alternative to the cycles of war, genocide and apartheid that have wrecked the lives of millions. The key to unlocking an alternative future lies in different kinds of struggle: those of ordinary people in their workplaces and on the streets for liberation and justice.

America’s “Suez moment”?

In early January 2026, the US decapitated the Venezuelan regime and brought a more compliant government into office. However, when the US attacked Iran almost two months later, Trump and Hegseth found themselves confronted by opponents prepared to throw everything into a battle for survival. The war has prompted some speculation that we will see a replay of the 1950s Cold War-style superpower rivalry, now between the US and China. Indeed, the US administration has long promoted the idea that it faces a shadowy “Axis of Autocracy” consisting of China, Iran and Russia.3 However, Iran’s success has a lot to do with its own skill. So far, the most striking lesson of the war in the Gulf is that the gradual decline of US hegemony is being driven as much by the regional states of the Middle East as by the rivalry between the great powers.

A comparison between the 2026 US-Israeli onslaught against Iran and the Suez Crisis of October 1956 underlines this point. The joint British, French and Israeli invasion of Egypt in revenge for Gamal Abdel Nasser’s nationalisation of the Suez Canal triggered fierce resistance in the Canal zone cities and turned Nasser into an overnight hero across the Arab world as a symbol of the struggle for independence from the old colonial powers. Nasser owed this political victory to two key aspects: firstly, Egyptian fighters—including Communist activists opposed to Nasser’s regime—threw themselves into a guerrilla struggle against the invaders in Port Said.4 Secondly, at the top of the global system, the US and the Soviet Union asserted themselves rapidly and forced Britain and France to withdraw.

There is no doubt that Iranians would fight just as hard to defend themselves against any US invasion today, but they have not yet needed to do so. The drone and missile barrages launched by the Iranian military in response to the US and Israeli aerial assault achieved what Nasser’s air force never managed, whether in 1956 or in 1967: to take the war to the enemy (or at least to the enemy’s allies). The costs to the US military of defending its own bases and the civilian infrastructure of the Gulf states had reached around $30 billion (£22.4 billion) by mid-May 2026, depleting stocks of missiles that will take years to replenish.5

The enormity of what Iran has done has not been lost on US commentators. Max Boot, a foreign-policy analyst with the Council on Foreign Relations thinktank, put it like this during an online event analysing the war on Iran:

The US Navy is afraid to go through the Strait of Hormuz. They refuse to go through the Strait of Hormuz, which I would assume is an acknowledgement that the risk of doing so is too high. And so Iran, which is really a fifth-rate military power, has managed to exert a stranglehold over 20 percent of the world’s oil, and Trump doesn’t know what to do about it.6

Republican hawks, such as senator Lindsey Graham and senator Roger Wicker, who chairs the Senate Armed Services Committee, appeared to concur with this analysis in posts on X, criticising a proposed peace deal with Iran. Graham notes that “this combination of Iran being perceived as having the ability to terrorise the Strait in perpetuity and the ability [to] inflict massive damage to Gulf oil infrastructure is a major shift of the balance of power in the region and over time will be a nightmare for Israel”.7

No wonder that many Israeli analysts, politicians and military figures argue that a resumption of war is all but inevitable to secure a military victory over Iran. As General Tamir Hayman, director of the Institute for National Security Studies, a well-known military thinktank, points out in a recent balance sheet of the unfinished war, none of the major objectives set by Israeli and US commanders for the war with Iran have been achieved to date.8 The Iranian regime appears stronger than in January, when it was rocked by major protests, and Iranian military command and control structures survived the initial assaults targeting senior leaders. Hayman also estimates that the Iranian military still retained 60-70 percent of its missiles and launchers, and its enriched nuclear material remained safely underground. Support for Israel has weakened across the political spectrum from sections of the Make America Great Again movement to the mainstream of the Democratic Party, and pursuing war in that context would bring its own set of risks. Hayman explains:

The manner in which this war ends will be critical for the future of Israel-US relations. If the war is recorded as a failure in the annals of American history, Israel will bear at least partial responsibility. If the fighting resumes and the American cost rises without a shift in the outcome, the implications for Israel will be even more severe. 9

Sibling rivalries in the Gulf

Does the intensifying collaboration between Israel and the United Arab Emirates (UAE) point to a possible way for the US to extricate itself from the mess by enrolling one of the Gulf states directly into a military alliance, which could then contain Iran in the future? The UAE certainly took a number of steps closer to joint action with Israel during the course of the war, including receiving Iron Dome air defence batteries and Israeli soldiers to operate them and establishing a joint defence acquisition fund.10 UAE aircraft struck targets inside Iran according to media reports, and the UAE’s media spokesmen lambasted other Arab countries for failing to offer practical support against Iran’s missile barrage.11 The financial leverage the UAE holds over its neighbours may also prove to be an equally effective weapon of a different kind. Egypt’s military dictator Abdel-Fattah el-Sisi sent fighter jets to Abu Dhabi, despite also posing as a “mediator” in the conflict. The UAE is the largest foreign investor in Sisi’s cash-strapped state, bailing out the regime from potential collapse with a $35 billion (£26.1 billion) land purchase many Egyptians have criticised as a neo-colonial land grab.12 Pakistan, another regional power deeply indebted to the UAE, had to pay back a $3.5 billion (£2.6 billion) loan early in April this year, most likely because Abu Dhabi was displeased by Pakistan’s role in hosting negotiations between Iran and the US.13

In Pakistan’s case, however, the funds were quickly replenished by Saudi Arabia, which also offered an additional $5 billion (£3.7 billion) loan. The growing ties between Saudi Arabia and Pakistan have taken shape in a bilateral defence pact, signed in 2025. The war has led to further signs of divergence and competition between the UAE and Saudi Arabia, most notably in economic policy. The UAE announced it was quitting the Organization of the Petroleum Exporting Countries (OPEC) after 60 years of membership. It proclaimed its intention to raise production from the 3.5 million barrels per day (bpd) permitted within the quota system imposed by the oil producers’ cartel to nearly 5 million bpd as the oil era comes to an end.14 The UAE has clashed with Saudi Arabia over oil production quotas for several years, and the two countries’ support for different warring parties in Sudan’s brutal civil war shows that the split over OPEC is a sign of deepening rivalry in several dimensions. The UAE-Saudi military alliance that has devastated Yemen through bombardment and famine since 2015 has also experienced major tensions. Contrary to Saudi Arabia, the UAE backs the bid of Southern Yemeni factions to form an independent state. Direct military clashes between Saudi-backed and Emirati-backed forces in January 2026 demonstrate the scale of the fracture between the former allies.15

Competition between Saudi Arabia and the UAE takes place across several different dimensions. The UAE has achieved a greater degree of economic diversification than Saudi Arabia, which remains much more dependent on oil revenues. Fuel made up 68 percent of Saudi Arabia’s exports in 2024, compared to 40 percent for UAE.16 Although both states are authoritarian, highly personalised monarchies, their social structures differ significantly. Saudi Arabia’s ruler Mohamed Bin Salman has to pay more attention than his Emirati counterpart Mohamed Bin Zayed to managing public opinion among Saudi Arabia’s far larger, young population. Saudi Arabia’s Vision 2030 policies, which aim at industrialising and diversifying the economy, depend on increasing the size of the Saudi working class, including through the expansion of work for women. The state-controlled media promote this shift. A major newspaper article from early 2025, for example, celebrated the graduation of ten young women trained as remote crane operators in the new port city of Neom on the Red Sea Coast.17

The proposed expansion of digital infrastructure to complement the Gulf’s existing hydrocarbon extraction and petrochemical industries must create a new layer of relatively well-paid, skilled workers if it is going to succeed. The huge construction projects associated with building major data centres and cable networks will also bring in less well-paid and more precarious jobs for tens of thousands, if the drones and bombs stop falling. Then there are other critical jobs in the AI supply chain, ranging from data labellers and annotators to better-paid roles in evaluating, testing and refining the performance of Large Language Models. If the UAE and Saudi Arabia want a “sovereign” AI industry, they will need thousands of Arabic-speaking workers, including a relatively large number of graduates and postdoctoral researchers, to fill these kind of roles.

In some of these developments, India looms large in the background. The Gulf states have expanded their trade with India, driven partly by the important role played by Indian citizens in the expansion of Gulf capital. Indian migrant workers have been a significant section of the Gulf’s workforce for decades, and the remittances they send home boost income for tens of millions of families. However, there is also a powerful segment of the Indian ruling class involved in joint ventures with Gulf businesses, and Nahendra Modi’s Bharatiya Janata Party sees them as an important political constituency.18 The disruption to oil and gas supplies from Iran has added an extra degree of urgency to the situation. India is overtaking China as the world’s largest source of oil demand growth and has invested heavily in domestic refining capacity as its industrial economy expands and matures.19 In recent years, this has led Modi to develop strong relationships with both Saudi Arabia and the UAE, but the recent war, combined with the shifting military alignments between Saudi Arabia and Pakistan, may be tilting the balance towards tighter bonds with the UAE.

The Indian prime minister’s visit to the UAE on 15 May 2026 included agreements on defence cooperation and energy security. Significantly, these agreements included designating crude oil storage in Fujairah (UAE) as part of the Indian strategic petroleum reserve.20 Fujairah has been heavily targeted by Iranian missiles and plays a key role in the UAE’s plans to bypass the Strait of Hormuz chokepoint with a pipeline connecting its western and eastern coasts. The Saudi-Pakistani military pact, with its NATO-style language of mutual defence and the hint that this may include extension of nuclear capabilities between the two allies, also demonstrates the risks rising levels of economic and military competition across South Asia and the Gulf create: terrifying feedback loops within multiple conflicts between nuclear-armed powers.21

Israel and the regional order

The question of nuclear weapons brings us back to the role of Israel, which has had a nuclear weapons programme since the 1950s and likely developed its own warheads in the 1960s. Israel’s nuclear arsenal was created with Western support but has never been declared, and Israel, unlike Iran, is not a signatory to the non-proliferation treaty. The destruction of Gaza and Israel’s capacity to carry out genocide with impunity illustrate the level of threat that the Israeli military poses to tens of millions both inside and outside the borders of historic Palestine. Analysis carried out by the Financial Times shows that Israeli forces have seized at least 1,000 km2 of land in Gaza, Syria and Lebanon since October 2023.22 The one-sidedness of the “war” on Gaza, which is better described as a series of genocidal massacres against a civilian population lacking any form of air defence, has boosted the self-confidence of Israeli commanders. The slackening grip of the US over the regional imperialist system has removed many of the constraints that previously kicked in to rein them back. There are also multiple ways in which the integration of a vital segment of the Israeli economy—its militarised hi-tech industry—in the current digital manufacturing and communications boom driven by aggressive competition between US and Chinese tech firms provides an important boost to Israel’s ambitions for regional dominance.23 At least temporarily, it seems to have overcome some of the contradictions within its own tech sector and is forging ahead with more armoured semiconductor factories and data centres creaming off a proportion of the enormous profits from the US-based Big Tech giants.

The diversification of US tech companies’ investments in the Israeli economy and the fierce competition between them in order to acquire Israeli-developed products and researchers is an index of the relative maturity of Israel’s hi-tech capital. It is not simply a subsidiary of the US military-industrial complex, but rather forms an independent centre of accumulation. The competition between Amazon, Google and Microsoft over Project Nimbus, a massive Israeli cloud computing deal, is one indicator. Another is Nvidia’s rising investment in its Israeli labs following the giant chip manufacturer’s acquisition of Israeli company Mellanox in 2016. Although the cornerstone of Nvidia’s rise to its current valuation of $5 trillion (£3.7 trillion) has been the manufacturing of Graphical Processing Units (GPUs), Mellanox’s products have proved highly profitable for Nvidia. Moreover, the research teams that joined Nvidia through the acquisition are credited with major roles in developing the networking side of Nvidia’s business, which declared quarterly revenues of nearly $11 billion (£8.2 billion) in early 2026, a year-on-year increase of 267 percent.24 Nvidia announced that it is planning to commit $1.5 billion (£1.1 billion) to expanding its Israeli data centres over the coming year. This reflects the integration of products developed and tested in Nvidia’s Israeli labs into the company’s global networking business. When completed, the company will own and operate Israeli cloud processing and AI production facilities with nearly 100 megawatt capacity.25

Nvidia’s decision to commit investment on this scale shows that the company considers the risks of locating a lot of extremely expensive machinery in a warzone and the threats posed by boycotts and campaigns exposing its complicity in genocide, apartheid and occupation are currently outweighed by the profits—though it has admitted that this could change. This calculation also shows that the Israeli tech manufacturing industry has multiple linkages to highly dynamic circuits of accumulation flowing through major US-based capitals. So long as those capitals continue to expand, the Israeli state is likely to reap some of the benefits. Google’s purchase of cloud cyber security company Wiz for $32 billion (£23.9 billion) will provide $3.2 billion (£2.4 billion) to Israeli state coffers, for example. The Times of Israel noted that “the tax revenue injection comes as Israel’s finances are being further strained by higher military spending needs amid the ongoing war with Iran”.26

Nvidia’s investment in the Israeli economy is a welcome boost after US chipmaker Intel announced layoffs from its Israeli workforce in 2025 and was reported to be even considering shutting down a key semiconductor production facility at Kiryat Gat, located on the site of a destroyed Palestinian village just a few miles from Gaza.27 The risks Intel and other US-based tech companies are prepared to run in order to chase profits from the AI boom are considerable. A well-aimed drone or missile hitting Kiryat Gat could wipe billions off Intel’s balance sheets. The company admitted in a revealing paragraph from its recent public filings with the US government that it has no insurance cover and would be required to absorb the costs itself:

As we are not insured for business interruptions resulting from war or political violence, a disruption of that facility could have a significant adverse impact on our business. We could also be adversely impacted by disruptions to our product development centers in Israel. As our property, plant and equipment assets in Israel are self-insured for losses resulting from war or political violence, any significant impact from the conflict, especially to our fabrication facility, could have a material adverse effect on our consolidated financial results and position.28

Meanwhile, the Trump administration plans to create another massive tech park on stolen Palestinian land in the Naqab (Negev) desert through leasing the area from the Israeli government and building huge data centres and possibly more semiconductor manufacturing facilities under the title Fort Foundry One.29 This project is part of the Pax Silica initiative, which the US launched in December 2025 to secure the full semiconductor and AI supply chain. However, so far, it remains in the realm of phrase mongering without much in the way of concrete policies or financial commitments to back it up. One question the member states of the Pax Silica will certainly ask themselves in the wake of the debacle over the Strait of Hormuz is what a US promise of security is worth when Trump “chickens out” in the face of military resistance from weaker, but determined adversaries.

The problem is that the real “game of chicken” is only just beginning as large and small states accelerate military spending and update their war games to include sudden treachery by old allies. The number of doom loops of competition between the top and middle layers of capitalism’s state systems and associated capital are growing, leading to increased exposure to crisis on both levels. Trump’s delusion that he can ignore the consequences of shutting down critical circuits of trade and production as he engages in brinksmanship with Iran over the Strait of Hormuz is partially fed by booming oil and gas production within the US. This in turn has attracted a massive influx of capital investment from the UAE and Saudi Arabia. The UAE has promised to increase investment in the US energy sector to $440 billion (£328.5 billion) by 2035, reflecting long-term interest from a range of Gulf national oil companies in the US liquid natural gas sector.30 China’s role both in the Gulf region and the global economy is, of course, what lies behind these shifts. Far from egging on Iran to embarrass the US, to date China has much more investment at risk from incineration by Iran’s drones and missiles on the other side of the Gulf than it does in Iran’s infrastructure. Nevertheless, the jolts from the grinding economic tectonic plates that are pulling key circuits of capital towards a new polarisation between US-based capital in the West and Chinese capital in the East is forcing all regional powers to choose sides. Israel’s flirtation with Chinese technology and investments has receded, judging by recent data showing a precipitate drop since 2018.31 The US pressurised the UAE likewise to pick a side in the technology war, promising access to advanced chips for manufacturing AI models only on the promise of giving up Chinese technology.32

In today’s world, where economic and military competition appears ever more tightly fused, what are the prospects for the revival of resistance from below? The processes rooting the causes of war deep in the soil of capitalism itself must be the starting point. The power to disrupt supply chains, halt the movement of ships and turn off the taps in refineries also lies with the people operating them. The history of the oil industry across the Middle East in the 20th century provides a reminder that capitalism cannot develop and grow without also expanding the social weight of the working class. This highly-capitalised, technologically-advanced industry became a site of anti-colonial struggle in the 1950s and a seedbed for radical experiments in workers’ democracy through the organisation of mass strikes and workplace councils (shoras) by Iranian workers during the 1979 revolution.33 The same contradictions can be exposed in the electric dreams of the regime’s current rulers when workers flex their muscles and start to fight back against an inhuman system. Within the Middle East, the country to watch most closely in the short term is Egypt, where the military regime is more dependent than ever on funds from the UAE to stave off collapse—while anger over Gaza has been brutally suppressed but remains potent.

Hence, the most significant gap is not between the middle and great powers, but rather between the states most at risk over rebellion from below at the rising cost of living. The key question for us is which political forces will benefit from the widening social fractures within the more powerful contenders, including the US itself, where the benefits of the oil and tech boom are very unevenly distributed, and Europe, where polarisation is deepening. The recent waves of general strikes in Italy and Portugal point to the fertile possibilities of making resistance to capital the pivot of anti-imperialism from below.

Anne Alexander is the author of Revolution is the Choice of the People: Crisis and Revolt in the Middle East and North Africa (Bookmarks, 2022). She is a founder member of MENA Solidarity Network, the co-editor of Middle East Solidarity and a member of the University and College Union.

Notes