1. Iran cannot give up its nuclear programme, even though it may agree to dilute its stockpile or even transfer it abroad. For the Americans, and especially for the Israelis, retaining the ability to enrich uranium is unacceptable. The Iranians can agree a ten year freeze on enrichment, but not longer. For the Israelis especially, this is not enough. Moreover, it is not a given that Iran would give up or even dilute its nuclear stockpile. The regime’s survival is at stake, and that requires a nuclear deterrent.

2. Iran will not compromise on its control of Hormuz - this is the only means to recover economically and solidify the regime’s grip. It is also a matter of national pride, and a prelude to further Iranian expansionism. Conversely, the Americans cannot compromise on stopping Iran from collecting fees for passage through Hormuz Strait. The fees act as a sort of imperial tribute. However, Gulf Arab states already pay imperial tribute to the USA in the form of weapons purchases, building up reserves in dollars, and the dollar peg itself. Countries typically pay imperial tribute to one imperial master, not two. If the Gulf states have to pay Iran for their security, there is no reason to pay the Americans as well.

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What we are seeing is the white communities in Britain beginning to recognise themselves as a distinct and aggrieved group, angry with forced mass immigration, and willing to organise.

Organised violence

The Northern Irish, given the history of Catholic and Protestant militancy, have an advantage here, in that they are disciplined and have considerable paramilitary experience.

The violence we saw in Belfast, Northern Ireland reflected this: small groups of masked men deployed checkpoints, banned photography and recording, and went around certain areas to properties they knew to house migrants and to businesses owned by migrants, like Turkish barbershops and vape shops, which are often involved in money laundering, and kebab shops. They broke the windows and sometimes set the properties on fire. While the masked men were attacking the properties, there were protests and burning objects at key junctions in the city, paralysing the police response.

We would guess that this violence involved men securing both ends of targeted streets, ready to intercept police to give the perpetrators time to escape. We would also guess that it also involved spotters, whose role would be to identify approaching police, and runners or signallers, whose role would be to relay messages without using easily traceable smartphones. Obviously, this reflected a good deal of knowledge of the neighbourhoods, based on local intelligence. It also showed strong social cohesion and an existing social or paramilitary hierarchy. Moreover, these paramilitary groups are able to police their own neighbourhoods, and seriously injure or kill anyone who cooperates with the police.

English protests

In England, the picture was different. In England, the protests were mainly in London and Liverpool. There, small groups of people gathered, in London, largely peacefully. In Liverpool, by contrast, there was harassment targeting migrants, especially those in Deliveroo and similar services’ uniforms. In Southampton, far left protesters showed up - the city had seen disorder following the verdict being issued in the Henry Nowak murder case. Antifa also showed up in Bristol to counter a protest there. Today, news came out that a 17-year old girl had been gang-raped by four Afghan men, one of them a minor, suggesting that more protests are likely.

The English protests were considerably smaller and much less organised. The protesters in England do not have similar paramilitary structures to those in Northern Ireland, nor are they similarly disciplined. However, it is very likely that they will learn, and try to connect with Protestant groups in Northern Ireland.

Contagion?

Our view is that the Northern Ireland template may well spread to Britain, and perhaps to parts of Europe, especially in small and mid-sized urban areas. It is harder to replicate in larger urban centres given the lack of community cohesion - there, it is the migrants (first, second, and third generation) who are more able to organise in such a manner.

If this trend escalates, and the public are not convinced that the problem of mass migration is being addressed and at least partly reversed, the key risk in large urban areas is of wider attacks, such as, in the next few years, car bombs, or large scale demonstrations aimed specifically at attacking and burning certain neighbourhoods in their entirety. We would not be surprised if Ukrainians join up with European nativist groups to transfer skills to them.

State legitimacy

The state is likely unable to prevent this. As discussed earlier, Britain’s elites, like most European elites, have entirely lost their legitimacy and credibility. It has become impossible to hide crimes by migrants in the age of social media. Indeed, even BBC reporting that is intended to downplay the severity of certain crimes is becoming provocative to the public. It has also become impossible for the native British to accept that the state has their best interests at heart, or that it is just willing to offer them benign neglect. Rather, the prevailing view among the right is that the state is the enemy of the people.

Commercial Impact

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On 3 December 2024, 18-year old Nowak, the son of Polish immigrants to Britain, was walking home in Southampton when he came across a Sikh man called Vikram Digwa. Nowak was video-texting friends. Some kind of interaction happened between him and Digwa. At which point Digwa stabbed him five times with a Sikh ceremonial dagger that he was openly carrying - only Sikhs have a legal exemption from Britain’s incredibly restrictive laws against most kinds of weapons, allowing them to openly carry knives.

Digwa then apparently called his family. His brother arrived and called the police falsely claiming that Nowak had attacked Vikram and racially abused him. Neighbours had called the police saying a man had been stabbed. Digwa’s mother hid the knife from police, while his father told them that he was holding Henry upright as his mouth keeps filling with blood. Digwa and his family insisted that Nowak had not been stabbed, and accused him of a racist attack.

Nowak, by that time on the ground, told the police that he had been stabbed. Bodycam footage shows that the police responded with, “I don’t think you have, mate” - even though calls from other neighbours to the police stated that a man had been stabbed. Nowak is heard saying to officers that he cannot breathe and asking for an ambulance. A police officer is heard asking a superior if they should check if Nowak was stabbed, but the reply was negative. Only a cursory examination was done.

The police handcuffed Nowak, arrested him, read him his rights, and dragged him on the gravel. When he became unresponsive, they finally attempted to render aid. And only then did they call an ambulance.

Henry Nowak was declared dead on the scene.

Full details of the case only came out after Digwa’s trial and conviction for murder in 2026. Following a public backlash, prosecutors brought new charges against members of the Digwa family, even though no new facts had been revealed. This told the public that the police were afraid, and that prosecutors were finally acting to stem the backlash. The police watchdog in England , the Independent Office for Police Conduct said that it had been reviewing evidence since the day after Nowak died, but has not yet found evidence of misconduct.

The system working as intended

The reason the police watchdog could not fault the officers is simple: police race action plans call for them to treat different groups differently. The reigning ideology is Critical Race Theory, which assumes that non-whites are oppressed and whites are oppressors. The police officers would have gotten into trouble if they assumed that a Sikh man making an accusation of racism was a liar. They correctly assumed that they would not get into trouble if they accused a white man who was stabbed of being a liar.

If you are on the left, you will find this claim highly contentious. And yet, it is true, and a critical examination of police Race Action Plan and the Police 2030 strategy can confirm that. There were in Nowak’s case perhaps other considerations, such as lack of communication between dispatch and officers, or poor training, or what have you. But any normal non-ideological person who finds a man saying he has been stabbed and cannot breathe while barely able to move, and is further told that the man in question’s mouth keeps filling up with blood, would first opt for a thorough examination and call an ambulance. Only an ideologue would arrive at such a scene and arrest the helpless white man based on one unverified accusation of racism and with no corroborating evidence. The police saw the Sikh family, saw the white man on the ground, and instantly assumed that the Sikhs must be truthful and the white man must be a liar.

Their training was successful.

White identity

For decades now, progressive political action has been organised around various non-white identities, often focussed on racial grievances. Conservatives, for their part, have concentrated their effort on preventing the emergence or strengthening of white identity politics, in the fear that that somehow automatically leads to Nazism. Hence Nigel Farage’s repeated bragging about his role in stopping the British Nationalist Party.

Now, however, with whites at risk of becoming minorities in their own countries, with the political and legal systems clearly rigged against them, and with European economies falling apart due to energy prices and the rise of white identity politics is inevitable. And the starting point is Britain.

There, the right is careful to clarify that it is not interested in skin colour as such, but, rather, that it is interested in ancestry, as common descent provides a deep and wide web of relationships that create and define society. This is, of course, true of any society, from China to India to Nigeria. However, when anger reaches a certain point, such distinctions fall apart. Civil conflict does not encourage nuance.

The right’s main observation here is that highly insular parallel societies have formed throughout the West. These societies maintain different religious traditions and national loyalties - and therefore values and identities. This precludes the possibility of a shared common good between the natives and the new arrivals. Moreover, as demographic change continues, the right is increasingly fearful of them or their children being reduced to a minority - the fate of the white minority in Rhodesia and South Africa is not encouraging. The right increasingly (and correctly, in our view) sees this as a conflict for their survival.

Every day a new atrocity

The news environment in Britain is bifurcated. The mainstream media regularly fails to report on key stories, or underplays them enormously. With social media and podcasting, however, an entirely different news environment has emerged. There, every single day a new atrocity is reported. An average week has several rapes and assaults, a murder, multiple instances of brazen thefts, gang fights between youths of foreign origin, and so on. In all of these, the native British are typically the victims, and foreign men are typically the perpetrators.

At the time of this writing, a story is breaking of an attempted beheading in Belfast. In the harrowing video, some men try to stop a Somalian migrant straddling a helpless white man and attempting to behead him, while a woman films. When the police appear, the woman tells the men to move away from the migrant, implying that she believes that the police will go after them if they’re seen attacking him without asking for details. This reflects a level of mistrust in the police that is simply unprecedented.

And at the time that this piece was being edited, reports emerged of a triple stabbing in a school in Manchester. There are no further details, but 57% of the students in this school are non-native.

These images and reports are understandably generating increased anger and resentment. When paired with the racial policies of police forces and the judiciary - recall that just last year there were calls for sentencing guidelines to take race into account, which were only quashed through the intervention of Home Secretary Shabana Mahmoud - the result is, as Nigel Farage put it, “cold rage”.

The rage is turning hot.

Elections as a solution?

There are a few points worth sketching out when considering the nature of the political transition, if any, that follows from this anger.

1. The plight of the British right and its concerns are universal across the West, where rapid demographic change, Critical Race Theory, two-tier policing and justice, benefits for migrants, and so on are creating the same set of grievances. The Western right is now as international as the left.

2. The establishment parties all operate similarly. In France, Germany, Austria, and elsewhere, they set up some form of a cordon sanitaire, leading to ideologically incoherent coalitions that exist solely to exclude the right.

3. When that failed, and the right got into power, the result was terrible or unsatisfactory. Georgia Meloni in Italy is brining in half a million new migrants every year. Donald Trump followed through with most of the policies of his predecessors and in some cases exceeded them. Boris Johnson triggered what is now known as the Boriswave, an influx of several million new low-skilled migrants.

4. The failure of characters like Trump, Meloni, and Johnson does not change their supporters’ ideological views. Rather, it makes them even more hardline, and makes them insist on credibility as a prerequisite for support. In Britain, this is leading to less support for Nigel Farage’s Reform and more support for Rupert Lowe, whose nascent party, Restore, is now polling nationally at around 10%. This is likely to surge if somehow Restore wins the Makerfield by-election, where far left Labour candidate Andy Burnham is trying to gain a parliamentary seat to challenge Prime Minister Keir Starmer.

5. The popularity of the right, and the salience of anti-immigrant sentiment, is rising throughout the West. This is understandable. John Lennon’s Imagine is not just musically atrocious, but it is completely dissociated from any concept of morality, reality, or human nature. People don’t just get along if they don’t share values, which largely come from religion, and identity, which largely comes from ancestry.

6. As electoral success is thwarted, the possibility of voting Western societies out of the conflicts that arise from diversity reduces. Diverse societies are inherently unstable, always on the edge of civil conflict or civil war. Increasingly, therefore, the right’s position will harden, and, in some cases, it will turn violent.

7. The objective of the right is no longer halting further migration, legal or illegal, but reversing it. This is now a zero sum game between the natives and the new arrivals.

Which brings us back to the unfortunate death of Henry Nowak. The existing state structures are so intolerant of the idea that there is a difference between native Europeans and non-natives that it is unwilling to acknowledge the gravest of injustices: police showed up to find a dying man, and instead of rendering aid, they treated him as a criminal, because a Sikh family claimed he had been racist. This is not the kind of mess that is exited via coalition governments or voting. This is a zero sum game. And every single new atrocity inflicted by an immigrant on a native European will further compound this perception.

Commercial Impact

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Iran intervened in the Israel-Hezbollah war to stop the Israelis from bombarding the southern suburb of Beirut (Dahiyeh). Hezbollah and Iran’s fear is that Israel would reapply the Dahiyeh Doctrine, which calls for the severe bombardment of major civilian urban centres in retaliation to attacks on Israeli territory. Currently, the Israelis are flattening entire regions of southern Lebanon, forcing Shi’a civilians to seek refuge in Dahiyeh and elsewhere in Beirut. Similarly flattening Dahiyeh would turn Lebanon uninhabitable for Lebanese Shi’a, as it would displace far more Shi’a Lebanese. After Dahiyeh, the Israelis could then destroy other Shi’a urban centres in the Bekaa and turn the entire Shi’a population to refugees. This is why Iran drew a red line. With at least some urban areas safe, it can continue to back Hezbollah indefinitely.

Israel’s objective, by contrast, was and is to ensure freedom of action in Lebanon, including by turning Shi’a parts of Lebanon into another Gaza. For the Israelis, losing the ability to attack Lebanon would firstly prevent communities in northern Israel from returning to their homes. It would also permit Hezbollah to keep fighting and to survive for another day. The Israelis are seeking the elimination of Hezbollah, even though Israeli military officials sometimes acknowledge that this is unrealistic. The Israelis, however, are in no mood for realism. They are seeking complete victories - Israel went as far as to assassinate a Lebanese brigadier general who was part of the ceasefire coordination mechanism between Israel, the USA, and Lebanon, to signal to Lebanese authorities and Hezbollah that it had little interest in a lasting ceasefire.

Notably, after Iran first attacked Israel, in reaction to Israeli attacks on Dahiyeh, Trump told the Israelis not to respond. Now he is telling Israeli media that he had told Netanyahu that if Netanyahu were to escalate against Iran, Netanyahu would be alone. This is highly significant: Trump has finally put his foot down, accepting the Iranian equation that attacks on Dahiyeh would result in Iranian attacks on Israel. Given the enmity between Iran and the USA, this can only reflect the American assessment that resuming the war is not in America’s interests, confirming our view that the Americans do not want the war. We had thought that the Israelis could drag the Americans into war regardless. We were wrong, and Trump finally stepped in forcefully.

In reaction, the Israelis are escalating their attacks everywhere else in Lebanon. They want to ensure that neither the Americans nor the Iranians can set red lines.

Commercial Impact:

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For the Israelis, their main objective is to prevent a deal that would allow Iran to rebuild its missile and drone capabilities, let alone its nuclear capabilities. For the Iranians, they do not want a permanent ceasefire under which they remain blockaded. Rather, they believe that renewing the war, especially if in a managed way, can bring about a financial collapse globally, which, in turn, would facilitate an agreement. The Americans, for their part, are balancing the war’s domestic unpopularity, the threat to the world economy, and Israeli interests that they cannot ignore, given Israeli influence over American political life.

Commercial Impact:

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The Russia Ukraine War is obviously escalating. Below is a summary of the key developments, along with an explanation of why Russia will be more emboldened to attack Baltic states, Romania, and Poland, along with a timeline for escalation. We also explain the worsening Ukrainian position in the Donbass.

Frontline update

The size of Ukraine, the low number of troops available to both sides relative to that size, and the volume of drones being used all militate against rapid advances. There are no blitzkriegs in this war - the same is true of Israel’s wars in Gaza and Lebanon, and reflects the nature of modern warfare. Advances over even small urban areas are slow and difficult. The issue therefore becomes the ability to maintain and replace men and materiel. In this domain, the Russians have an advantage. They are slowly accelerating their advances. This is nowhere near enough to conclude the war quickly, however, at least not without Ukraine collapsing. This is contrary to what we expected last year.

The Russian strategy over the past couple of years has been consistent: launch a series of slow offensives that gradually speed up during spring and early summer, build up forces and capabilities, consolidate over winter. This is a slow grind that is not decisive, and, at the current rate, will not resolve the war in the coming year or two, contrary to our earlier expectations.

Specific frontlines that are worth mentioning are:

• Sumy and Chernihiv: There, Russia launched an offensive intended to deny the use of the north of Ukraine to launch drone or ground attacks into Russian territories, and to build up positions around Sumy, in advance of a broader attack against the city. This would bring the Russians closer to Kiev, and force the Ukrainians to divert troops from elsewhere. The Russians are around 10km from Sumy, but, in Ukraine, this is a long distance, given that the Russians will have to advance through defended forests and urban areas.

• Kharkiv: Russians are very slowly establishing a buffer zone in Kharkiv province, with the aim of pushing the Ukrainians away from their borders. The Russians are far from being in a position to launch an offensive on the city.

• Donbass: This is the main effort by Russia. The aim is to dismantle the Lyman - Solvyansk - Kramatorsk - Kostyantynivka defensive line. There, Lyman has been besieged from three sides, while Kostyantynivka is likely to fall by the end of summer. The frontlines are moving rapidly closer to Slovyansk, at which point Kramatorsk would be irrelevant. Breaking this line, or flanking it, would allow in theory faster Russian advances, most likely towards the critical logistics hub of Pavlohrad. The Ukrainians would have to move troops from other fronts, leading to even more rapid Russian advances.

  

• Zaporozhzhia: The Russians are advancing along the Ukrainian defensive lines, which are positioned towards the south, from the east - meaning that the lines are far less effective and have been outflanked. The Russians likely hope to reach Zaporozhzhia city itself by next year.

Drone war escalation

The second key factor that is changing rapidly in the Ukraine War is Russian allegations, likely true, that Ukrainian drone attacks are using the airspace of Baltic states, including Finland. Russia is claiming that Poland, the Baltic states, and Finland have all allowed Ukraine to use their airspace or territories to target Russia.

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Israeli elections are likely to be held in Israel in September 2026, and must be held by 27 October 2026.

Israeli politics is notorious for its shifting coalitions and unpredictability, and Israeli polls are close and unreliable. The proportional representation system, the low threshold required for parties to enter the Knesset, the ease of forming new parties, the intense petty hatreds among leading politicians, and the presence of multiple single issue parties that coalition builders must include in their alliances, all militate against stable Knesset majorities. This is precisely what makes Israeli Prime Minister Benjamin Netanyahu so remarkable: he has been able to navigate this electoral mess and stay in power to become the longest serving Israeli prime minister, whereas his rivals collectively struggled to keep a coalition stable for longer than a year.

That said, there are a few relevant broad points to keep in mind:

1. Israel’s military establishment has been consistently shifting to the right for decades. In the 1990s wars against Hezbollah, the military establishment under leftist Prime Ministers Itzhak Rabin and Shimon Perez opted to bombard civilian villages in Lebanon to try to force Hezbollah to capitulate by engineering a humanitarian crisis. The same tactic was used in 2006. Now, the Israeli military is bombarding civilian cities in Lebanon, not just villages and small towns. There is no indication of any moderating influence over Israeli politics or the Israeli security establishment (or over Palestinian politics for that matter, but that’s another conversation).

2. Israel’s enemies are all wounded but undefeated, and security remains the top concern for the public. Hamas may well attempt to mimic Hezbollah, build up its drone capabilities, and launch another major attack against Israeli soldiers (civilian areas targeted on 7 October 2023 are now insulated, with a military buffer zone in between). Yemen may also launch attacks in support once again. Iran remains defiant.

3. Israeli Prime Minister Benjamin Netanyahu will campaign on the weakness of his opponents, using their willingness to accept a ceasefire in Gaza in 2024, and their opposition to escalation in Lebanon against Hezbollah. In turn, Netanyahu’s opponents - former PM Naftali Bennet, Netanyahu’s main rival who leads the Beyahad coalition with media personality Yair Lapid - will also attack him from the right, claiming that he failed to guard against October 7, failed to disarm Hamas and Hezbollah because he did not go far enough, and could not end the Iranian threat despite his vaunted relationship with the USA. That is to say, there will be no competition between moderates and hardliners. It is a competition over who can be more hardline. Bennet and Lapid will change nothing in terms of war policy, even if they end up in a coalition with elements of the left.

4. Even if Netanyahu’s opponents win, they will be find governing differently exceptionally difficult. They will either have to align with Arab parties and the far left, or they will have to rebuild Netenyahu’s secular nationalist-religious coalition, and include Haredi parties like Shas and United Torah Judaism, as well as Itamar Ben-Gvir’s Jewish Power Party.

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Trump and Israel

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Optimistic signals

The Pakistani mediation was unusual in the last few days. The Interior Minister, Mohsin Naqvi, took over the talks from the Pakistani foreign ministry. US-educated Naqvi has no real diplomatic experience, but appears to be extremely close to the Americans, which would explain his role in the talks. The Americans were using an interlocuter they could fully trust.

Significantly, after spending three days in Tehran, Naqvi was joined by Pakistan’s Army chief Asif Munir. This suggested good progress on reaching a deal, and media reporting reflected that. Unlike previous rounds, where Trump seemed to suggest that a deal was imminent in order to assuage the markets, this time, it was real. Iranian media also suggested as much, whereas previously the Iranian media would deny any progress.

Even more importantly, President Trump held a call with all the key Sunni allies, including the UAE, Qatar, Turkey, Pakistan, Jordan, and Saudi Arabia, who seemed to back a new Iran-US deal. He held a separate call with Israel. He would not do so without a real deal being on the table. The Sunnis reportedly backed the deal, while the Israelis apparently objected.

Supposedly, the deal would include Iran committing to not acquiring a nuclear weapon, talks over Iran’s nuclear programme, sanctions relief for Iran, unfreezing Iranian assets, a full regional ceasefire for 60 days, the withdrawal of some American forces from the region, and the re-opening of Hormuz.

Reality strikes again

But then, things seemed to fall apart.

The Americans and the Iranians announced widely diverging views on what was agreed. Here are the main disagreements:

1. Iran insisted on its sovereign right to control Hormuz - it claimed it would allow the traffic through the Strait to resume to its previous levels, but that it would NOT relinquish its control over it and therefore its right to collect tolls for safe passage or “services”.

2. Israel refused to implement a ceasefire with Lebanon, insisting instead on language that would permit it to continue attacking Lebanon’s Hezbollah.

3. Iran demanded the speedy release of its frozen assets. The Americans want to continue to hold this as leverage over Iran to get concessions over the nuclear issue.

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The Indian rupee just hit an all time low, due to high energy, fertilizer, and other prices placing pressure on its current account, while the war in the Persian Gulf reduces remittances.

The Turkish lira has hit an all time low again, with energy prices playing a major role, as the government sells some of its gold reserves to defend the currency.

Britain’s ten year GILT (bond) yields are around 5.1%, and 30-year yields are above 5.8%. These are higher than the rates which ended Liz Truss’ brief tenure as Prime Minister. Rates are hovering between 1997 and 2008 highs.

Britain also relaxed delayed implementing new energy sanctions on Russia, permitting the continued purchase of oil derivatives processed in third countries.

US bond-yields are over 4.6%. The USA is due to roll-over USD8-9 trillion in debt within the coming 12 months.

The same story is unfolding in Japan, Germany, France, and elsewhere.

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The incompetence and division of Britain’s ruling Labour Party prevented them from mounting an effective challenge after the party’s terrible performance at the May 7th local elections. As they were unable to rally around a replacement candidate, they opted instead to have one of their Members of Parliament resign, triggering a by-election, in order to create a vacancy for one Andy Burnham, the Mayor of Manchester, to allow him to contest the leadership of the party and become Prime Minister. Burnham had attempted a previous run at leading the party in 2015 against Jeremy Corbyn, but failed spectacularly. He is a Blairite through and through, and is as discredited and bereft of ideas as any other senior Labour politician. And yet, reflecting the party’s desperation and lack of confidence in senior politicians who are in parliament and cabinet, and the fear of deep internal rifts, Labour has decided that he is their great hope.

The issue is the constituency that was offered for Burnham is far from a “safe seat”, a seat which the party is relatively certain to win. Makerfield, in Wigan, near Manchester, is 96% white, and ignored by the mainstream politicians who have always taken it for granted. It voted overwhelmingly for Brexit in 2016. In the local elections, the area voted for Nigel Farage’s civic nationalist centre right party, Reform, which has become the locus of the country’s protest vote. There is therefore every possibility that Burnham would lose this by-election.

However, this is not the end of the story. Reform is being challenged from the right by the nascent Restore Britain party, which is also fielding a candidate in Makerfield. Restore is an ethnonationalist and civic-nationalist coalition that is pushing for remigration for those who do not contribute economically, commit crime, reject Britain’s way of life, or entered the country illegally. Its economic policies lean towards a blend of economic nationalism, liberalism and deregulation, but are as of yet poorly defined. Restore Britain is only two months old. However, it managed to win all the local council seats in its founder Rupert Lowe’s parliamentary constituency, which had previously voted for Reform. And it is presenting itself as an uncompromising alternative to the establishment and to Reform, which has been damaged as it took in a number of discredited former Conservative and Labour politicians. The betting odds of Restore winning the seat went from 50/1 when they announced they would run to 4/1 as at the time of this writing. The atmosphere in Britain is febrile, and those who vote Reform are doing so as a protest. A more hardline protest party may prove popular.

Implications:

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1. The Americans retain the option of returning to the war at any time, and Trump is unpredictable. However:

   1. Returning to the war would guarantee the destruction of a significant portion of vital power, water, and energy infrastructure in the GCC.

   2. There is no politically viable American pathway to victory in the coming year at least, on the nuclear issue, on regime change, or on dismantling Iran’s missile programme. The Americans cannot restart the draft, nor can they justify using nuclear weapons on Iranian underground missile cities or the Iranian nuclear programme, even though these are theoretically options available to Trump.

   3. The American stockpile of critical munitions, including missile interceptors, stand-off munitions, and cruise missiles has been severely depleted, to the extent that threatens the ability of the USA to fight other wars.

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The Trump administration has not achieved very much in President Donald Trump’s visit to China. The promised increased purchases of American grains and natural resources, and of Boeing aircraft, will at best only partially materialise. Moreover, there was no agreement on Taiwan, with Xi openly saying that Taiwan could lead to “conflict” between the two sides. Trump claimed that the Chinese agreed that Iran should not have nuclear weapons, but, this has consistently been the position of China, Russia, and, officially, at least, Iran.

Is the USA deal-capable?

The Chinese fear, shared by Russia and Iran, is that the Americans are incapable of making stable agreements. Hence the repeated references in most Chinese communiques covering bilateral talks to the importance of implementing agreements. The view of America’s rivals is that American presidents make agreements, but the establishment refuses to implement them.

The Chinese perception is that the Americans, in their decline, are becoming far more aggressive - hence the capture of Venezuelan President Maduro and the Iran War, which some American policymakers incorrectly believe would weaken China.

Parity and American decline

The visit was a win for China. Trump entered his term promising a far more confrontational approach with China. Now, he is admitting that China is an equal. And with its manufacturing capacity outstripping that of the USA and its allies, it is China that is the ascendent force. Indeed, Xi went as far as describing America as a declining power - a rather unusual formulation from a head of state.

China’s aim during these talks was to stabilise the relationship with the USA as what it believes is American decline continues. Hence the emphasis in Chinese communiques relating to the visit on maintaining “constructive strategic stability”. The subtext is no renewal of the trade wars and no American support for Taiwan. However, without tariffs, and without European support for a trade war with China, the Americans cannot fulfil Trump’s ambition of a manufacturing resurgence that restores manufacturing parity between the USA and China.

Taiwan: implicit threats

When reading Chinese statements, it is important to note what is not said, or, the silent contrast between what is said and what is not said. Therefore, when Xi told Trump that “whether or not we could have mutual respect, peaceful coexistence, and win-win cooperation is the key to whether the relationship can advance steadily,” the subtext is that not having mutual respect, peaceful coexistence, and cooperation will lead to deteriorating relations and eventually conflict. Meaning that the Chinese will never acquiesce to a Chinese resumption of the trade war and will retaliate forcefully. Notably, Xi was more explicit on the Taiwan question. The Chinese official readout of the meeting said: “Xi described [Taiwan] as the most important issue in China-U.S. relations. If [Taiwan] is handled properly, the bilateral relationship will enjoy overall stability. Otherwise, the two countries will have clashes and even conflicts...”. Xi explicitly warned Trump against the Thucydides trap - a reference to the idea that ambitious naval and land powers inevitably collide based on the Peloponnesian Wars.

Commercial Impact

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As we have said, it is evident that American President Donald Trump is not keen to return to war. There have been exchanges of fire between the Americans and Iranians that technically violate the ceasefire. However, Trump did not use that to return to the conflict, even though he could have sold it to his base as Iran breaking the ceasefire while he merely tried to exercise freedom of navigation. Meaning that he is not eager to go back to war.

Trump is also not getting anything through negotiations. The Iranians are not going to give Trump in talks more than they gave him before the war. He will go to Beijing on 14 and 15 May to negotiate with Chinese President Xi Xinping. Trump, having lost the tariff war against China, will try to use the leverage of closing Hormuz against Xi, only to be told that China has adequate oil reserves, a much better energy mix than Europe, and access to Central Asian and Russian resources, ensuring that it suffers no shortages and that its position is relatively better than that of the rest of Asia or of Europe. Xi will give Trump absolutely nothing to help him extricate himself from the Hormuz swamp. Xi, however, may take various economic concessions from Trump to improve China’s access to American markets. But this will not be a stable arrangement.

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Four things are evident from the results.

• Labour and the Conservatives are collapsing further.

• Reform UK, a centre-right civic nationalist party led by Brexit campaigner Nigel Farage, has made enormous gains.

• Nationalism is rising: in Scotland and Wales, left wing nationalist parties won, while Reform itself is increasingly the party of English nationalists, even though this is not how it defines itself.

• Polarisation is rising: right wing parties are being pulled further to the right, while left wing parties are being pulled further left. The Fabian gradualist progressive centre accepted by both Conservatives and Labour has collapsed.

However, just like the 2024 Labour landslide victory in parliamentary elections was not a sign of support for Labour or their policies, but, rather, of hatred for the Conservatives, the 2026 resounding Reform victory is not necessarily a sign of support for Reform, Nigel Farage, or their policies. Rather, the British electorate is in revolt, as has been evident since the 2016 Brexit vote.

British politics, transformed

What we are seeing in Britain is a shift away from the establishment consensus.

The left is doubling down on support for welfare, Net Zero, and immigration, with the Green Party eating away at Labour’s voter base. What the Greens want, essentially, is more of Ed Miliband, Angela Rayner, and the Green-Red Islamic socialist alliance. In the words of former Prime Minister Tony Blair’s speechwriter Anthony Neather, they want to double down on “rub[bing] the right’s nose in diversity”. They no longer want the Fabian gradualist approach of Labour, enthusiastically endorsed by the David Cameron Conservatives, rather, they want further acceleration, with more immigration, more welfare, and more corrosive social liberalism.

The right is demanding more representation for their interests, and less government support for foreign interests, be they Jewish, Muslim, or Hindu. Immigration is the single largest electoral issue for the right, as most British regions were transformed by waves of mass immigration, legal and illegal. That is why the Conservatives, who permitted record levels of immigration, are still collapsing. The most commercially interesting part of the debate on the right, however, is on the economy: the right is no longer liberal, even economically liberal, but is rather increasingly nationalist and suspicious of big and especially of international capital.

Zombie Parliament, Zombie Cabinet

Labour lost badly in traditionally loyal Red Wall and inner city constituencies, while Conservatives lost in typically reliable Home Counties. This confirms that the vast majority of MPs currently in Parliament are almost certain to lose their seats. This is a zombie parliament - its members are, politically, walking dead.

Typically, in Britain’s first-past-the-post electoral system, parties run their leaders in safe seats, constituencies that they are assured of winning. If there are no safe seats, then party grandees may end up losing their seats, and their relevance. The established leading politicians therefore end up losing control of the party. What, if anything, emerges afterwards, is anyone’s guess. The two establishment parties could simply cease to exist, or could become vehicles for entryism by a more radical fringe.

Labour leadership’s despair

It is in this context that Sir Keir Starmer is being challenged from his left, with tens of MPs and hundreds of councillors asking that he step down, as well as some unions, who are Labour’s biggest financiers. However, instead of stepping down, Starmer is doubling down, and is bringing in older Labour party grandees, like Harriet Harman to advise him on women, and Gordon Brown to advise him on international finance. However, this is likely to backfire spectacularly. Starmer is turning to an establishment that could not win an election today and that is incredibly unpopular. Rather than address the transformation of British politics, he is recommitting to the discredited old paradigm, at a time when the base is closer to the Greens than to Tony Blair. Starmer and the Labour establishment are going to try to hold on to power until 2029, and will refuse any take over by the Labour left or an early election as they know it would end their careers.

Reform: a protest undefined

The debate on the right, and within Reform, is over the correct definition of what it is to be British: is it ancestry or a set of modern values that defines national identity. This has become more salient with the rise of the Islamic bloc vote, the discrediting of diversity, and the election of multiple individuals who are entirely foreign - arriving to Britain on visas from the Commonwealth - into council seats and the Scotting Parliament.

Reform UK, as a civic nationalist party with numerous high profile members of an immigrant Muslim and subcontinent backgrounds, is only a partial answer to what the right wing base wants. Restore Britain, a three-month old right wing party that has more members than the Conservatives and Liberal Democrats, both of which are long-established parties with a significant parliamentary presence, is challenging Reform on this territory - their answer is that it is ancestry, not modern values, that defines identity. Indeed, most of these values would have been unrecognisable to a Brit living in the 1920s, and Restore’s response would have been universally accepted for most of history. Restore only run in its founder Rupert Lowe’s constituency of Great Yarmouth. There, it thoroughly thrashed Reform, even though Lowe had entered Parliament as a Reform MP.

It is precisely because of this inconsistency that Reform remains stuck at under 30% of the vote share, despite the incredible unpopularity of both the Conservatives and Labour. At the same time, as it becomes obvious that Reform is getting closer to gaining power, more and more individuals are joining it who are simply seeking power for its own sake, without any coherent underlying beliefs. Therefore, we see Labour councillors defecting to Reform while praising immigration, even as much of the establishment media calls Reform racist, fascist, and far right. Simply, Reform is benefiting from the protest vote, but it has not defined what alternative it is providing. Indeed, its electoral strategy seems to be not to make any clear commitments before the 2029 or potentially an early election.

Commercial Impact

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This came after American President Donald Trump suspended Operation Freedom to force Iran to re-open the Strait of Hormuz, which lasted barely two days and may have succeeded in ensuring the passage of two ships.

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On 3 May, American President Donald Trump announced Operation Freedom to re-open the Hormuz Strait. The operation is intended to allow ships to go through Hormuz via Omani waters, rather than through the normal lane or through Iranian territories.

On 4 May, The Iranians then warned that any American ships that entered the Strait would be attacked. This came while negotiations continued, with Iran and the USA exchanging proposals and counterproposals. Iran then announced that it had targeted an American warship and prevented its passage, with the USA denying that any ships were hit and claiming that its ships did traverse the Strait. A South Korean, Panama-flagged cargo ship, HMM Namu, was then struck. The UAE then announced that it had intercepted drones fired by Iran. Afterwards, satellite imagery and social media posts showed a major fire at Fujairah oil export terminal, used to bypass Hormuz. The USA announced it had sunk six Iranian small boats, and shot down Iranian-launched missiles and drones. Trump then made a series of threats against Iran, as did social media figures close to Emirati decision makers. On 5 May, reports of limited airstrikes in Iran emerged, including in Bushehr and Bandar Abbas.

Over the course of 4 May, two American Merchant Marine vessels transited through the Strait (though Iranian sources are disputing this claim - it is too soon to say with certainty).

The Americans are trying to signal that the Strait is open and to establish a mechanism by which Iran’s blockade can be loosened, without giving up their own counterblockade on Iran. That is the upper limit of what they can achieve. The US’ aim is to allow the American blockade on Iran to last longer and limit the Iranian blockade on the Persian Gulf’s impact on the global economy, by permitting some transits, less than normal but above the current rate.

That said, the Iranians, despite the American blockade, are still managing to get some of their ships out by going through Pakistani and then Indian territorial waters, albeit at far lower levels than normal. The Iranians have also activated various border crossings with Pakistan and other neighbouring countries to lessen the impact of the American blockade. These do not nullify the blockade’s impact, but allow Iran to adapt over the long term, just as other countries are trying to adapt.

As discussed earlier, there is little hope of a blockade on Iran succeeding in collapsing the regime and forcing major concessions, especially in the short term. With Iran under attack, it has more incentive than ever to retain a nuclear option, requiring the retention of a nuclear programme. Moreover, it has always been a matter of national pride of Iran, its ticket into becoming a major regional and potentially global player.

Implications

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For the UAE to choose to withdraw from OPEC and OPEC+ right after Iran demonstrated its capabilities is quite a bold move. We believe that is opens up unforeseen scenarios, which are behind the paywall below. We note that this decision comes after the UAE chose to withdraw its USD3.5 billion deposit from Pakistan, due to Pakistan’s efforts to mediate the US-Iran conflict. This itself was highly unusual, as Turkey, Saudi Arabia, Egypt, and Pakistan are increasingly coordinating their positions against both Iran and Israel, placing the UAE in open opposition to this emerging Islamic consensus and to Saudi Arabia and Iran in particular.

Most of the region’s great survivors - Oman, Lebanon’s Walid Jumblatt, Syria’s Hafez al-Assad, Iraq’s Nouri al-Maliki and Masoud Barzani, and even the Hashemite monarchy in Jordan - never do this. Rather, their politics rely on a mix of balance and appeasement intended to avoid conflict, and to ensure that if conflict is imposed, there is a wide set of allies to help manage it.

Ed note: We know that our subscription is expensive. But we did predict the Iran-America War even before the 7 October attacks, the Saudi-Iranian reconciliation of 2023, and the Russia-Ukraine war. If you have business in the Middle East or the Islamic world, you need our services. We are typically several years ahead of the curve, even if we don’t get everything right. Subscribing to us saves you from many bad bets. This is one of those pieces that in five years you may wish you had read.

Drivers of the UAE’s Decision

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Iraq’s Coordination Framework, a body that brings together the various Shi’a parties especially those supportive of Iran, nominated businessman Ali Faleh al-Zaydi (or Zaidi) as the prime minister designate. His nomination resulted from a compromise between current Prime Minister Mohammad Shiya’ al-Sudani and former Prime Minister Nouri al-Maliki, who were both vying for the position.

Ali al-Zaydi

Mr Zaydi, heretofore largely politically unknown, now needs to present a cabinet in the next 30 days. He used to own the now-sanctioned Al Janoob Islamic Bank, according to Al Arabi TV, and currently runs a range of other companies. He has been on the board of the National Holding Company, Ishtar Medical Institute, and Al-Shaab University. He also led Dijlah TV, a popular TV channel formerly owned by the Sunni Karbouli family. This suggests ties across the political spectrum and considerable influence behind the scenes through finance and media. His former bank was banned from accessing dollar auctions through the Iraqi Central Bank following a visit by US Treasury officials to Baghdad, though our search did not find the bank nor Mr Zaydi listed on the OFAC website. Zaidi is also reportedly responsible for the distribution of rations cards, suggesting strong influence over patronage networks.

Credibility and defiance

The USA had been pressuring Iraq with the threat of further sanctions to compel the Iraqi state to distance itself from Iran-backed militias. In reality, these militias now run the Iraqi government. Appointing Zaydi must be seen therefore in the following light:

1. Maliki and Sudani picked a compromise candidate who lacks an independent power base. Their joint aim is to ensure that a strong PM does not threaten their own interests and powerbases.

2. By choosing someone relatively unknown, neither Maliki nor Sudani would be especially harmed if he fails to form a cabinet, or if his cabinet fails to meet public expectations. They can then return to their competition over who becomes PM.

3. By choosing someone almost sanctioned by the USA, they’re telling the Americans that they refuse to halt cooperation with Iran. Indeed, they’re confirming their alignment with Iran and with the militias.

Commercial Impact

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The Americans are mediating negotiations between Lebanon and Israel after having declared a ceasefire. These are the first direct negotiations between the Lebanese government and Israel since the early 1980s, where some factions of the Lebanese government held talks with Israel after it had invaded the country all the way to Beirut. Trump had previously imposed a ceasefire in Lebanon, declaring that Israel was “prohibited” from conducting further attacks. Of course, the Israelis ignored him. The war between Hezbollah and Lebanon is continuing, with Israel continuing to prevent Lebanese residents from returning to their villages and homes south of the Litani River and from some locations north of it.

The State of Lebanon

Lebanese President Joseph Aoun and Prime Minister Nawwaf Salam, who are both political novices who were severely overpromoted due to American patronage, believe that Lebanon can be a normal nation state. Of course, our readers realise that a diverse country with a Muslim majority is by definition incapable of functioning as a Westphalian nation state - unless it is under severely authoritarian rule. The cabinet that these two men run had had each of its members vetted by the American Embassy in Beirut to ensure their compliance. Furthermore, it does not include any major political figures, but, rather, disposable junior representatives, allowing the political leaders themselves to maintain distance and manoeuvring room to adapt to military realities. Therefore, the cabinet suffers from a combination of political naivete and weak legitimacy, with room for backtracking. The actual sectarian political leaders of Lebanon allowed the cabinet to issue decrees such as demanding that Hezbollah disarm. However, as Hezbollah continues to fight Israel with at least some effectiveness, they know that this is impossible to implement politically and militarily.

Israel’s view

The Israelis do not believe that peace with Lebanon is possible so long as the Lebanese Shi’a, who largely back Hezbollah, are armed. Moreover, the right wing factions in Israel which dominate the Netanyahu government are seeking territorial expansion. In the 17 May, 1983 abortive peace agreement, the Israelis essentially sought de-facto control, or at least heavy influence, over the Lebanese security forces, in order to compel Lebanon to fulfil its state responsibilities, both in the Westphalian sense and under current international law, by preventing non-state armed groups from attacking Israel. This objective has not changed.

That said, for the factions in Israel that aspire to territorial expansion, these negotiations are merely a mechanism to humour Trump until political and military realities permit them to proceed with the expansionist agenda. They will likely refuse any agreement that forces them to withdraw from South Lebanon. Rather, they are using negotiations as a pressure tactic to drive an even deeper wedge between Hezbollah and Lebanese officialdom.

Commercial Impact

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