US–Iran strikes shake the Middle East as supply chains and conflict collide

Iran's Revolutionary Guards Corps (IRGC) has historically calibrated its responses to avoid triggering full-scale war, relying instead on proxies in Lebanon, Iraq, Yemen, and Gaza. The decision to strike directly at bases in three US-allied Arab states marks a significant departure, suggesting Tehran calculates that the cost of appearing weak now outweighs the risk of broader confrontation.

For Gulf Arab states, the episode is acutely uncomfortable. Jordan, Kuwait, and Bahrain host US forces under security agreements that are central to their defence posture, yet they also depend on stable relations with Iran across trade, energy, and diaspora ties. Being drawn into the crossfire of a US–Iran exchange tests the limits of their strategic hedging — the policy of maintaining ties with rival powers simultaneously.

The United States is co-hosting the 2026 FIFA World Cup alongside Canada and Mexico, making it one of the largest sporting events ever staged on American soil. Sports diplomacy — the use of athletic competition to build goodwill or open dialogue between hostile states — has a storied history, from 'ping-pong diplomacy' between the US and China in 1971 to Iran and the US meeting on the football pitch at the 1998 World Cup in France.

If Iranian fans are formally barred, FIFA faces a dilemma: its own statutes prohibit discrimination against fans on the basis of nationality, yet the organisation has limited leverage over a host government's visa and entry policies. The episode may force a broader conversation about the risks of awarding mega-events to countries engaged in active geopolitical disputes.

The M23 (March 23 Movement) is a Tutsi-led rebel group that re-emerged in eastern DRC in 2021 and has been linked by UN experts to support from Rwanda — an allegation Kigali denies. Control of mineral-rich territory gives the group both economic resources and strategic leverage, making conflict resolution inseparable from the question of who profits from the region's vast natural wealth.

International frameworks such as the OECD's Due Diligence Guidance for Responsible Mineral Supply Chains and the US Dodd-Frank Act's Section 1502 were designed precisely to address conflict minerals — resources whose extraction finances armed groups. However, enforcement has been inconsistent, and the complexity of multi-tier global supply chains makes tracing the origin of raw materials genuinely difficult, providing cover — intentional or not — for continued sourcing from conflict zones.

The Durand Line, the colonial-era border between Pakistan and Afghanistan, has never been formally recognised by any Afghan government, adding a layer of sovereignty dispute to every cross-border military action. Pakistan's strikes are framed domestically as counter-terrorism operations against TTP sanctuaries, but the Taliban government views them as violations of Afghan sovereignty — a position that resonates even among Afghans deeply critical of Taliban rule.

The episode also has economic dimensions: the China-Pakistan Economic Corridor (CPEC), a flagship Belt and Road Initiative project, depends on stability in Pakistan's border regions. Escalating conflict with Afghanistan raises the security costs of infrastructure investment and could deter the foreign capital Pakistan urgently needs as it navigates an ongoing IMF programme.

India's gold import bill is a perennial source of current account deficit pressure — the gap between what a country pays for imports and what it earns from exports. Successive governments have used import duties as a blunt instrument to suppress gold demand and conserve foreign exchange, but the strategy has repeatedly backfired by stimulating smuggling rather than reducing consumption.

The revival of gold smuggling also has regional security implications. Trafficking networks that move gold across South and Southeast Asian borders often overlap with those moving narcotics, weapons, and counterfeit currency, meaning that a tax policy decision in New Delhi can have cascading effects on organised crime across the broader region.

South Korea's foreign exchange reserves and the policy toolkit of the Bank of Korea are frequently tested during periods of global stress, as investors tend to move capital from emerging market currencies into the US dollar as a safe haven. The won is particularly sensitive to shifts in global risk appetite because of South Korea's high trade openness and its deep financial market integration with the United States and China simultaneously.

The episode also reflects a broader tension in international finance: the dollar's reserve currency status means that even countries with strong economic fundamentals can face destabilising capital outflows during geopolitical crises they have no direct part in — a dynamic economists call the 'original sin' of emerging market finance, where liabilities are denominated in a currency the country cannot print.