A friend of mine wrote this in response to my two petrodollar articles, articles he almost certainly skimmed without reading:
“I do believe that the Iran war will have political consequences. I also believe that the price of oil will climb in the short term. I also believe that there will be short-term economic disruptions. When we get through this we will have massively reduced our world risk for the foreseeable future. Inflation adjusted, we’ve been here and worse before. Hopefully, we have also freed the people of Iran and Venezuela from brutal dictatorships. If that does come about, I think it’s worth it. I agree that it’s an if and not a when.”
Every sentence in this comment contains an assumption that the evidence contradicts. What follows is not a difference of opinion. It is a correction of the record.
“When We Get Through This We Will Have Massively Reduced Our World Risk”
This is the central claim, and the historical record demolishes it entirely. Every American military intervention premised on “reducing risk” in the Middle East has increased risk, measurably, documentably, and catastrophically.
The 2003 Iraq invasion was justified on identical logic: short-term pain, long-term stability. The Atlantic Council’s own retrospective acknowledged that the U.S. “willfully ignored the need for an adequate nation-rebuilding strategy, leaving a power vacuum that an expansionist Iran could fill”. ISIS filled the vacuum left by American forces in Iraq, orchestrating brazen prison breaks, seizing cities the U.S. had taken at enormous cost, and building a caliphate across Iraq and Syria that required yet another American military campaign to dismantle. The war that was supposed to reduce world risk created the next threat.
Brown University’s Costs of War Project calculated the total price of the post-9/11 wars at $8 trillion, with over 900,000 people killed. The Iraq war alone cost $2.2 trillion and killed 190,000 people. Afghanistan consumed $2.3 trillion over 20 years and ended with the Taliban walking back into Kabul within days of the American withdrawal, rendering the entire expenditure meaningless. Brown’s researchers found that the Afghan military, despite $88 billion in training and equipment, “rapidly crumbled without American support,” and the “speed at which the Taliban was able to take the country back is evidence enough that the U.S. was never going to build even a short-lived democracy in Afghanistan”.
The pattern is not disruption followed by stability. The pattern is intervention, power vacuum, worse instability, repeat.
Iran is not Iraq. It is nearly four times the geographic size, with a population exceeding 80 million, triple what Iraq had at the time of invasion. Operation Epic Fury is already burning $891 million per day, with $3.7 billion spent in just the first 100 hours, according to the Center for Strategic and International Studies. CSIS noted that the majority of these costs, roughly $3.5 billion, were not previously budgeted, meaning the Pentagon will need emergency Congressional appropriations if this becomes a prolonged conflict. If Iraq, a country a fraction of Iran’s size, consumed $8 trillion and 20 years, the scale of what Iran would require is beyond anything Washington can afford, or sustain.
The Cato Institute’s comprehensive review of the academic literature on regime change concluded that “regime-change missions rarely succeed regardless of the strategy utilized and they often produce unintended consequences, such as humanitarian crises and weaker internal security within the targeted state”. Scholars found that “overconfidence in the ability to achieve quick success is a psychological necessity before policymakers will sign off on regime change”, and that once the decision is made, officials become “less receptive to new information about the likely costs, benefits, and outcomes”. This psychological pattern describes my friend’s comment precisely: the desirability of the goal replaces any scrutiny of the steps required to achieve it.
“Inflation Adjusted, We’ve Been Here and Worse Before”
We have indeed been here before. That is exactly the problem.
In 1953, the CIA overthrew Iran’s democratically elected Prime Minister Mohammad Mosaddegh because he nationalized Iran’s oil industry, threatening British and American petroleum interests. The coup installed the Shah, who ruled as an authoritarian for 25 years with the backing of the SAVAK secret police, until the Iranian Revolution of 1979 swept him from power and installed the theocratic regime Washington is now bombing. Scholars universally agree that “the foundations of the 1979 Iranian Revolution lay in the 1953 Anglo-American coup”. The CIA admitted its role publicly in 2013. The 1953 intervention did not reduce risk. It created the adversary we are fighting 73 years later.
Libya’s 2011 intervention, sold as a humanitarian liberation, produced a failed state. The Atlantic Council’s own assessment a decade later found that Libya descended into civil war, with competing governments, foreign military interventions, and the complete collapse of state institutions. A country that had the highest Human Development Index in Africa before NATO’s intervention became a territory with open slave markets.
Jeffrey Sachs has documented over 100 U.S. regime change operations since 1947, encompassing coups, wars, and color revolutions across every continent. The record, as Sachs describes it, is one “of violence, bloodshed, deliberate creation of instability, coups, assassinations, civil wars, thuggery and so on”. The question is not whether we have “been here before.” The question is why we keep doing the same thing and expecting different results.
“Hopefully, We Have Also Freed the People of Iran and Venezuela”
The liberation rhetoric is the oldest trick in the American interventionist playbook, and it fails on its own terms every single time.
In Venezuela, the “maximum pressure” sanctions campaign was explicitly designed to remove Maduro and restore democracy. It failed completely. Maduro remained in power for years (until the recent kidnapping operation), the opposition fractured, and U.S. sanctions devastated the civilian population. The Washington Office on Latin America documented that U.S. sanctions “directly contributed to the deep decline” of Venezuela’s economy, with monthly public imports dropping 46% in 2019 and another 50% in 2020. Venezuela’s economy was already in crisis from government mismanagement, but American sanctions accelerated the collapse of food and medicine availability for ordinary Venezuelans. Eighty-five percent of all medicines became unavailable. Fifty percent of the population fell into poverty. Defense Priorities concluded bluntly that U.S. regime change efforts “exacerbate humanitarian suffering and assume Venezuela’s problems are America’s to solve”.
In Syria, the American intervention to topple Assad led to a former al-Qaeda leader becoming the country’s president. In Afghanistan, the $2.3 trillion “liberation” ended with the Taliban retaking the country in days. In Iraq, the “freed” population endured a decade of sectarian civil war, the rise of ISIS, and the consolidation of Iranian influence, the precise opposite of every stated American objective.
DW’s historical review of American regime change operations noted that historian Joseph Stieb identified a recurring pattern: Americans operating “under the misguided belief that the values of liberal democracy would flourish” after forced regime change. They never do. The Cato Institute found that “far more nations got worse democratically” after U.S. intervention than improved. Covert regime change operations succeeded in even replacing the targeted leader only 39% of the time during the Cold War. The word “hopefully” in my friend’s comment is doing all the work that evidence, history, and strategy should be doing.
What My Friend Isn’t Seeing: Istanbul and the Abandonment of International Law
My friend’s comment exists in a vacuum, as though the Iran war materialized from nowhere, disconnected from the broader collapse of the international order that American policy itself engineered.
In March-April 2022, Ukraine and Russia negotiated a near-complete peace framework at Istanbul. David Arakhamia, head of Zelensky’s own parliamentary faction and the chief Ukrainian negotiator, confirmed publicly that “Russia’s goal was to put pressure on us so that we would take neutrality. This was the main thing for them: They were ready to end the war if we accepted neutrality, like Finland once did”. The Istanbul Communiqué proposed Ukrainian neutrality, limits on Ukraine’s military, a Russian withdrawal to pre-February 2022 lines, security guarantees from Western powers, and Ukraine’s continued path to EU membership.
Then Boris Johnson flew to Kyiv on April 9, 2022 and told Zelensky to stop negotiating, “let’s just fight”. The Quincy Institute documented that Western governments refused to provide the security guarantees that would have made the deal viable, with “Western allies advising Ukraine not to agree to ephemeral security guarantees”. The deal died. What followed was not peace but a proxy war that has killed hundreds of thousands, destroyed Ukraine’s demographic future, and, most critically for the petrodollar question, led Washington to freeze $300 billion in Russian sovereign reserves.
That single act taught every central bank on earth that dollar-denominated assets are conditionally yoursthat Washington can confiscate the reserves of a sovereign nation at will. It was the most consequential blow to dollar credibility in the system’s history, and it was entirely self-inflicted.
The Carnegie Endowment published a devastating analysis in 2025 concluding that the prohibition on the use of force, the foundational principle of the post-1945 order, “faces its greatest challenges yet,” warning that “as more states conclude that international law provides inadequate protection, they will increasingly rely on self-insurance, expanding their own military capabilities,” creating “a spiral of declining cooperation and rising militarization”. This is sovereign anarchy, the Hobbesian condition the United Nations was built to prevent.
The EU’s High Representative, in the March 2026 Churchill Lecture, acknowledged that the “rules-based global order” is now operating “in an era of power politics”. Al Jazeera reported Canadian Prime Minister Mark Carney’s declaration at Davos: “We are in the midst of a rupture, not a transition”. The Munich Security Report 2026, titled Under Destruction, described the current international system as being actively dismantled.
This is the context my friend’s comment ignores. The Iran war is not an isolated intervention. It is the latest in a sequence of American actions (sabotaging the Istanbul peace deal, weaponizing the dollar, withdrawing from international institutions, threatening to seize allied territory) that are systematically destroying the institutional architecture that sustained American power for 80 years.
What My Friend Really Isn’t Seeing: The Petrodollar’s Structural Erosion
The most dangerous blind spot in my friend’s analysis is what the Iran war is doing to the financial system that underwrites American prosperity. He sees “short-term economic disruptions.” What is actually happening is the acceleration of the petrodollar system’s terminal decline.
The Strait of Hormuz (33 kilometers wide, carrying 25% of global maritime oil trade and 20% of LNG supply) is now effectively closed. Shipping traffic has collapsed by over 90%, with more than 150 tankers idling outside the strait. Maritime insurers have withdrawn war-risk coverage entirely, creating what analysts call a “financial blockade” more effective than any physical obstruction. War-risk premiums surged from 0.2% to 1% of hull value within 48 hours, on a $100 million tanker, that lifts a single-voyage premium from $200,000 to $1 million. Maersk and MSC, the world’s largest shipping companies, have suspended Persian Gulf operations.
Bob McNally, former energy advisor to George W. Bush’s White House, stated flatly: “A prolonged closure of the Strait of Hormuz is a guaranteed global recession”. Thomson Reuters’ analysis found that “roughly one-third of global seaborne crude trade is compromised simultaneously” with the Hormuz and Suez corridors both disrupted. Oil has passed $110 per barrel and climbing. Qatar has halted LNG production at the world’s largest export facility after Iranian drone strikes. Iran’s Revolutionary Guard has warned it will fire on any ship attempting to transit the strait.
The Trump administration’s response, offering $20 billion in federal reinsurance for tankers, is an admission that the private market has already priced the risk as unacceptable. The government is now attempting to insure the very commerce its war has made uninsurable.
And this is where the petrodollar enters. The entire system depends on oil trading in dollars through stable energy corridors. Disrupt the corridor, and you disrupt the mechanism. But the deeper damage is structural. Every act of American financial coercion over the past four years (freezing Russian reserves, cascading sanctions regimes, weaponizing SWIFT) has accelerated de-dollarization. Iran already conducts approximately 80% of its oil trade outside the dollar system. Saudi Arabia has joined China’s Project mBridge digital currency payment platform. The dollar’s share of global foreign exchange reserves has fallen from 71% in 2000 to approximately 57% as of early 2025, and the trend is accelerating. IMF data shows the dollar dropped to 56.32% by Q2 2025, its lowest level since the mid-1990s.
The Hudson Institute, not a dovish institution, acknowledged in February 2026 that “Russia and Iran are undermining the dominance of the dollar” through parallel financial systems that “demonstrate to potential BRICS partners that commerce can persist outside the dollar system, even under heavy US pressure”. The Atlantic Council warned that “the US cannot afford to lose dollar dominance” because it “amplifies Washington’s ability to project power”, while simultaneously acknowledging that the weaponization of this system is driving countries away from it. That is the trap. You cannot wield the dollar as a weapon and expect the world to keep treating it as a neutral store of value.
The Deus Ex Machina That Isn’t Coming
My friend believes we will “get through this.” The unstated assumption is that a god descends from the machine to resolve the plot, that American power is self-correcting, that disruptions are temporary, that the system always snaps back to equilibrium.
But the machine was the post-1945 institutional order: the United Nations, the Bretton Woods architecture, the prohibition on aggressive war, the petrodollar recycling mechanism. Each of those components has been systematically dismantled, not by America’s adversaries, but by America itself.
The U.S. sabotaged the Istanbul peace deal that could have ended the Ukraine war in 2022. It weaponized the dollar until the world started building alternatives. It invaded a country four times the size of Iraq while simultaneously threatening to seize Greenland, kidnapping the president of Venezuela, and withdrawing from dozens of international organizations. It is spending $891 million a day on a war whose architects, by the assessment of every independent analyst consulted for my original articles, “do not understand the nature of this conflict.”
The regime change track record speaks for itself. Since 1945, the United States has conducted over 100 overt and covert regime change operations. Academic research consistently shows these operations “rarely succeed regardless of the strategy utilized”. The ones that “succeeded” in replacing a leader frequently produced authoritarian successors, civil wars, or, as in Iran itself, blowback that took decades to materialize but proved catastrophic when it did.
There is no deus ex machina. There is no arc bending back toward stability. There is only the compounding consequence of a country that confused its privilege for permanence, and a friend who, with the best of intentions, believes the next bomb will be the one that finally makes it all work out.
It never has. It won’t this time.
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