The Americans paused the war on Iran unilaterally for four reasons:

1. They are low on interceptors.

2. They remain deterred by Iranian capabilities.

3. They know that further bombing of Iranian assets used to control Hormuz would be ineffective, leaving them a choice between massive escalation and a pause.

4. Oil prices went up too much.

Trump wants diplomacy to work - we have repeatedly asserted that he wants out of the war, and every indication suggests that. However, the tragic reality is that he cannot, unless he accepts Iranian control over Hormuz. Iranian control over Hormuz, however, would lead to Iran dominating 20% of global oil exports. With that, it could levy fees on shipping that significantly improve its economy, and it could become the dominant player in oil markets in partnership with Russia. Given the US-China trade war and the sanctions regime on Russia and Iran, this would be a major win for the Chinese.

Simply, there is no way for the Americans to accept this. Unless they also accept that they are no longer a global empire, but an especially powerful regional empire on the retreat. The American establishment is unwilling to even consider this view, though it is evidently more realistic. The establishment will fight to avoid this recognition.

The Iranians, as usual, are pressing their advantage. Rather than attempting to reach a compromise, there was an attack on Saudi Arabia’s Abqaiq and a pumping station on the East West pipeline on 27 July, most likely by the Islamic Revolution Guards Corps operating via Iraqi militias and Yemen’s Houthi movement, as the Saudi government alleges. Abqaiq is Saudi Arabia’s main oil processing facility, and is a critical component in its oil export infrastructure. The facility remains on fire.

Critically, the American thinking right now is binary: they are planning either for a massive escalation, with attacks on Iranian infrastructure that trigger a widespread response, or they slow down and negotiate. The current policy of focussing on Iranian military targets has failed, by the admission of Chief of the Joint Chiefs of Staff General Dan Caine.

Commercial Impact:

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Even if the Americans and Iranians reach another ceasefire, there is no reason to expect it to hold. The only thing that would signal a true end to the war is an American withdrawal from the region, including, at the very least, the removal of aircraft carriers and most refuelling aircraft.

Military Update

Reporting by mainstream media, based on satellite imagery and intelligence briefings to journalists, suggests that:

1. Iran is able to quickly repair sites that are bombed, especially road infrastructure and missile bases’ entrances.

2. The Americans are unable to stop Iran’s underground missile cities from firing despite repeated strikes.

3. Iran is attempting to reduce the USA’s ability to conduct strikes by attacking American bases in the region. The Iranians cannot stop the USA conducting strikes, but they can reduce the rate of strikes.

4. The USA is either running low on ammunition, or is constrained in the number of strikes it can launch due to Iranian attacks on its bases, or is still holding back in the hope of an agreement, despite its rhetoric to the contrary. The latter, if true, would suggest that the USA is still deterred by Iran’s retaliation ability.

5. The Iranians are signalling their ability to paralyse infrastructure in the Gulf and make it uninhabitable by attacking power and water infrastructure in Kuwait.

6. There is no sign that the Americans can stop Iran from attacking shipping in Hormuz, even if they can occasionally get some tankers out.

7. The Houthis’ decision to join the war serves to overstretch the Americans further, allowing the Houthi to last longer than the 51 day 2025 campaign, which ended with a US-Houthi ceasefire that excluded Israel.

8. Open source reporting suggests that the Israelis are likely to enter the war soon and significantly escalate it, while Iran considers a pre-emptive strike against Israel.

9. The Americans will be under increasing pressure to commit ground troops to capture islands against Hormuz. This will not succeed, as the Iranians will able to attack shipping throughout the Persian Gulf and the Gulf of Oman, and as they will certainly impose significant casualties on the USA.

Irreconcilable

The red lines of the two sides are impossible to reconcile.

The Americans cannot tolerate Iran controlling Hormuz, and therefore gaining control over 20% of global oil exports. The Iranians cannot allow Hormuz to open normally, as this would cost them their leverage, and allow the Americans to regroup , refill energy stockpiles, and relaunch the war. Moreover, for the Americans, walking away without a deal is not an option: after America’s attacks on Iran, the Iranians now need nuclear deterrence more than ever, and it is obvious that their nuclear programme was NOT obliterated. Additionally, Iran has no choice but to prove its dominance over Gulf states by controlling Hormuz, and pressure them to remove American bases - otherwise, the Americans would be able to return and launch another, bigger war in the future. The conflict is existential for Iran, and for American regional relevance and global power.

Therefore, our view is that the infrastructure, shipping and energy wars will escalate, and likely expand to an aviation war, with strikes on airports rather than on civilian planes, as Iran attempts to besiege the Gulf states to the extent that they are forced to ask the Americans to leave.

The Houthi Angle

The closure of Bab al-Mandab is similarly difficult to resolve. In theory, the Yemenis need Saudi aid, they need to return to a ceasefire and avoid a major humanitarian crisis. On the other hand, they see the Saudis preparing to defeat them if Iran is defeated. Conversely, the Saudis realise that if Iran gains dominance over Hormuz, it will immediately move to consolidate over Yemen. Now that the war has started, neither side has a way out, even if tactical reasons force temporary ceasefires. And since the Americans are committed to defeating Iran, the Saudis need to commit alongside them and crush the Houthi or at the very least severely constrain them. Similarly, the Houthi need to double down on backing Iran to ensure their own survival. They know that, without Iran, the Saudis and their allies would probably defeat them.

Security vs Economics

This war is increasingly taking an existential aspect: for the survival of the Houthi, for the survival of the Islamic Revolution regime, for Saudi Arabia’s future ambitions under Crown Prince Mohammad bin Salman (MBS), and for America’s role in the region. It is undoubtedly true that attacks on Iranian infrastructure, and restrictions on their oil exports, are a threat to the regime. However, rather than driving them towards a compromise, this is likely to make the competing sides to double down at least until they are convinced of the impossibility of victory, which will not happen soon. In this dynamic, escalation is the logical option for political survival, regardless of the economic consequences.

Similarly, the Americans are unlikely to soon surrender their influence over the Gulf to Iran, without a major breakthrough in the talks that renders Iran into a security partner of the USA. This is not on the table right now. Higher oil prices will increase pressure on the USA to seek ceasefires, but, it is unlikely that the Iranians will concede to that without a full agreement and a significant withdrawal of American forces. That would be a major victory for Iran, which the Americans will not be eager to concede.

The Sunni Powers

One question our readers have asked is, do the Sunni powers in the region choose to back the Gulf states.

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Observations

Before delving into some individual appointments and what they mean, it is worth making four points:

• There is clearly a conflict in the Labour Party between northerners and southerners. Starmer represented the southern elite wing of the party - the lawyers, the civil servants, the upper echelon NGO workers, the quangocracy. They are at odds with the north over the distribution of resources: the northerners believe that the south is too rich, and that higher taxes should result in more welfare for the north, given how badly done by the north has been as a result of de-industrialisation.

• Burnham more or less purged the Starmer loyalists from the cabinet, and would not appoint someone like Al Cairns as defence minister, probably because of Cairns’ own rather obvious prime ministerial ambitions. The exclusion of the south, and of competent potential rivals, is going to escalate the north-south conflict within Labour. Already, Starmer loyalist and former Cabinet Minister Darren Jones, who is seen as relatively competent, is criticising Burnham for promising to cut VAT on electricity bills and fund that by ending DigitalID: Jones points out that DigitalID was not funded, and that, pointedly, that Burnham would have to fund the promises that he is making. It is early for this kind of infighting to be made public, and it is a sign of things to come.

• No one in the Burnham cabinet has any relevant private sector experience. Burnham himself worked for a publishing company for three years. His First Secretary of State worked in Aviva for three years. The Home Secretary worked as barrister for three years. That is all. The rest have had their careers focussed exclusively on politics, local councils, charity, and so on.

• Burnham’s worst quality, compared to Starmer, is that he wants to be popular, and wants to gain popularity by spending money thoughtlessly. Starmer, to his credit, cared not a whit about being popular. He was cautious and mechanical in his speech, whereas Burnham has a tendency to make promises with no concern as to whether he can keep them.

The cabinet

Having made these points, we will examine some of Burnham’s top appointments and then the commercial implications:

1. The new Chancellor of the Exchequer, John Healey, is committed to raising defence spending. While this is necessary, there simply is no money, given the rest of the cabinet’s support for more tax and spend policies. Healy is supposed to be there to comfort the market, but he is only able to do so because the alternative was “Red” Ed Miliband.

2. The appointment of the new Defence Secretary, Wes Streeting, is only explainable by internal party politicking: Streeting has no qualifications for the role. Al Cairns or Dan Jarvis would have been much more credible candidates. However, Streeting had agreed not to challenge Burnham in a leadership contest following Starmer’s resignation, leading to his elevation.

3. The new First Secretary of State, Cabinet Office Minister, and Chancellor for the Duchy of Lancaster, Louise Haigh, was convicted of fraud for getting her then employer to upgrade her Blackberry to a new iPhone 5 by falsely claiming she was mugged. This sort of petty corruption may suggest an appetite for much bigger corruption. Furthermore, she is on record as a massive supporter of more tax and spend policies. She is a supporter of larger tax rises - including wealth taxes. In her view, that would stabilise government revenues and permit more spending.

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As the war turns increasingly existential for Iran, the Iranian strategy strategy will be to threaten to make certain parts of the GCC so uninhabitable as to preclude the possibility of these states being able to provide the Americans with basing rights. We are already seeing signs of this in Kuwait, with the attacks on desalination plants. In our view, the next two targets are Bahrain and the UAE. Iran’s aim will be to collapse the economies of these states and their societies by striking their biggest vulnerability: water desalination plants, which provide more than 90% of potable water in the region.

The question for the United States will be whether to seek a ceasefire before Iran completes its plan.

Simultaneously, by targeting American bases in Qatar, the UAE, and especially Bahrain and Kuwait, the Iranians are also reducing the number of American bases available for use against Iran, and disabling more American radars. The idea is simple: to limit the Americans’ freedom of action in the region, reduce the number of bases they can fly from, force the Americans to concentrate their air assets in fewer bases - particularly in Jordan, western Saudi Arabia, and Israel - and limit the number of potential American sorties. In addition, reducing the number of radars delays air defence reaction times. Combined with aircraft being more concentrated in fewer bases, this makes missile strikes on American bases more effective, especially as troops end up being more concentrated in Jordan. It also forces air defence systems to launch more interceptors at each Iranian missile - given the slower reaction time and the higher risk of impact. This serves to deplete increasingly limited air defence missiles faster.

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The Americans have conducted strikes on Iran on 16 July intended to disable Chabahar Port near the Pakistani border and to isolate Bandar Abbas on the Strait of Hormuz, thereby cutting off Iranian shipping and potentially paving the way for a ground operation against Iranian islands in the Strait as well as weakening Iran’s ability to target ships in Hormuz. Iran retaliated with attacks on Oman, Kuwait, Bahrain, Jordan, Qatar, and Syria, intended to disable American radars, inflict casualties, strike ammunition storage, and destroy HIMARs tactical ballistic missile launchers.

No victory

Neither the Americans nor the Iranians have a pathway to victory.

The Americans cannot invade Iran and topple the regime. They can reduce Iranian fire, but they cannot prevent Iran from attacking ships, firing one way attack drones, or damaging energy infrastructure. They most certainly cannot secure the waters between Kuwait and Pakistan. But they can raise the cost on Iran.

The Iranians, for their part, also cannot win. They are unable to strike the American mainland, nor can they damage American military industrial output. They can raise the cost to the USA, and to the global economy, but they cannot win.

The war has to end with either a negotiated settlement, or with the long term normalisation of attacks on energy, transport, and infrastructure throughout the Persian Gulf. However, neither side has any confidence that the other side would honestly implement any agreement.

No way out

On the other hand, neither side has an exit strategy: given that Iran still has enrichment facilities near Natanz in the Pickaxe Mountain, and that it still has enriched uranium, the Americans fear that leaving without a deal would result in Iran acquiring a nuclear weapon. And for the Iranians, releasing their grip on Hormuz would end their leverage on the United States. They cannot tolerate a pathway through Hormuz via Omani territory. A deal is the only way out, but, the regime fears that a deal that does not allow them to control Hormuz, or that is followed by several years of developing oil resources elsewhere, will again bring American attacks on their territory. On the other hand, allowing Iran to control Hormuz leaves it as the regional power in control of the GCC, especially with the Houthis’ position in Yemen. The Americans cannot tolerate giving Iran that much regional power.

Increasingly, the Iranians will view acquiring a nuclear weapon as the only way to ensure regime survival. Only a deal can stop them doing that, but they cannot trust the Americans to implement any deal, as we discussed in a previous piece:

Timing

When the Iranians resumed attacks on shipping on 7 July, they knew perfectly well that this would lead to a broad American response. They went for it anyway. They are clearly betting that the low levels of oil inventories would force the Americans’ hand. And they have some good reasons to believe that. The Strategic Petroleum Reserve (SPR) in the USA is at a 43-year low. That said, there are around 250 million barrels that could be released. At a rate of 1 million to 1.5 million barrels released per day, this should last for another 5-8 months. Moreover, of the initial IEA initially promised release of 426 million barrels, only 220 million have been released. The total IEA stock is around 1.2 billion barrels in governments’ hands (excluding China, including the SPR). Another 600 million barrels is in private hands, but under government mandate (meaning that governments have authority over them). Oil production outside OPEC has also increased, albeit nowhere near as much as has been lost due to the Iranian blockade, but, apparently enough to keep oil prices at manageable levels. The big limitation on this, however, is that the spread that refiners make from producing two barrels of gasoline and one barrel of diesel out of three barrels of oil (so called 3-2-1 crack spread) is $70, indicating that oil product prices are moving in a way that is completely out of whack with the price of oil. This suggests that there is some financial manipulation by the Federal Reserve of the price of oil.

Therefore, there is room for several months of fighting.

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1. Iran attacked an offshore platform in Kuwait.

2. Iran also attacked three border posts in Kuwait.

3. Yemeni government forces conducted strikes on the San’a Airport.

   

Commercial Implications

• The strike on Kuwaiti offshore energy is as much a message to Qatar as it is to Kuwait: it is just as easy to strike Qatari gas platforms in the North Dome field, which Qatar shares with Iran. It also signals the possibility of Iran returning to attacking oil export terminals in Saudi Arabia and the UAE.

• The strikes in Yemen signal escalation between the Houthi and their rivals. It is increasingly likely that the Houthi will reimpose their blockade on the Red Sea. If the Iranians are going to use the Houthi card, now is the time to do it. We had predicted this would happen in the past, but the Houthis have stayed out so far. Now, it is harder for them to justify inaction.

• (Become a paid subscriber to join our subscriber only call tomorrow. Link below)

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Oman announced on 12 July that Iran had struck assets in its Musandam Governorate with UAVs. Musandam sits across from Iranian territory in the Strait of Hormuz. It is the most likely location for American ground-based surveillance assets intended to help police traffic through the Strait and monitor Iranian attacks on ships. Attacking Musandam, which is sparsely populated and incredibly vulnerable to drone, missile, and small boat attacks, is a signal from Iran that Omani control over that territory is not necessarily permanent. Oman only acquired this previously ungoverned territory due to British backing in the 1970s, and its residents travel to Iranian islands and cities on the other side of the strait regularly: smuggling and trade with Iran are the main economic activities there.

The attack on Oman followed negotiations on 11 July between Iran and Oman on future management of the Strait of Hormuz. The Omanis proposed to run one free of charge corridor in the south while the Iranians run another in the north, for which they would collect fees. This was obviously unacceptable to the Iranians, as they insist that only Iran run the Strait, niceties of international law be damned. The Iranians intend to compel Oman to collect fees for passage through Hormuz and to split those fees with Iran.

To make its point clear, on 11 July, Iran targeted the engine room of a Cyprus-flagged container ship in the southern (Omani) corridor of the Strait with a cruise missile, rather than a drone. First, a cruise missile is harder to intercept. Second, it is far more likely to sink a ship. News reports state that the crew has evacuated the ship using lifeboats, meaning that the ship is not likely to be recovered.

Iran also conducted attacks on Bahrain, Jordan, Kuwait, Qatar, and the UAE. There were no reports of attacks on Saudi Arabia. This may be because of Pakistani pressure, or simply the result of the Saudis refusing to announce that they were hit. The USA announced wide retaliatory strikes on Iran.

As we had said, the Iranians seem to believe that they have the upper hand, due to historically low oil reserves and the West’s fear of a global financial crisis that would follow any re-closure of Hormuz. Iran’s position is strengthened by the depletion of American and Israeli missile interceptors.

Meanwhile, the Israelis are telling the Americans that Iran intends to kill US President Donald Trump. The Americans are claiming that this is not serious, while Trump himself is posting that he has ordered the destruction of Iran in case the Iranians kill him. This, obviously, creates rather perverse incentives. However, the importance of this is that the Israelis are placing further pressure on the USA to escalate against Iran, at a time when Iran seems willing and eager to escalate.

The Iranians are likely to claim that they were adhering to the MoU of 17 June 2026, but that it was the Americans who violated Article I, which required a ceasefire in Lebanon, Article V, which the Iranians interpret as giving them management over the Strait, and Articles X and XI, which require the USA to issue waivers for Iran’s oil and derivative trades, as well as associated services, and the gradual unfreezing of Iranian assets.

Iranian Parliamentary Speaker Ghalibaf, who is leading the Iranian negotiating team, has said that the time for uneven agreements is over. Meaning that Iran is aiming for recognition of its full sovereignty over Hormuz. The attacks on Musandam reflect this.

Russia and China are almost certain to give Iran updated targeting coordinates, to weaken the USA, and as part of Russia’s response to American support for Ukraine.

Commercial Impact:

• The Iranians are escalating against Oman and Qatar, as well as the regular targets Bahrain, Kuwait, and Jordan, to increase pressure on them as mediators, and pressure the states of the region into pressuring the Americans.

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It is impossible to guess how long does any given round between Iran and the USA continue. Last night, the USA launched 80 attacks on Iran, while the Iranians claimed to have launched 85 attacks on American assets in the region. Kuwait reported power outages resulting from Iranian strikes. As of the time of this writing, the fighting has stopped. However, we maintain our view that the two sides are not capable of a stable agreement (below).

For all we know, after this round, which was initiated by Iran launching missiles and drones at four ships in one day, global shippers will decide to use the Iranian-approved lane in the Strait of Hormuz, and, after 18 August, when the ceasefire terminates, they will pay Iran fees while talks continue. This would satisfy Iran, but it would be an embarrassment for Trump, who would instead pivot to talking about the mid-terms.

Conversely, Trump could decide that the mid-terms are lost anyway, the economy will not recover before Hormuz is fully opened, and that he has to see through the destruction of Iran until total victory. The war would then resume in full, and continue for several months.

That said, it is worth reviewing the drivers and constraints for the two sides:

• Iran needs to export oil, with or without sanctions. If the Americans reintroduce the blockade on Iranian trade, the country will be in real trouble.

• Iran received a lifeline as it already managed to export some 50 million barrels of oil since the ceasefire.

• The USA cannot afford a surge in oil prices that would trigger a rise in interest rates. However, with oil prices at $72, he’s sitting quite comfortably. This permits American President Donald Trump to escalate.

• Iran needs the oil price rising well above $72, and for it to be closer to a $100, for it to have meaningful leverage over the world economy. This forces Iran to escalate more.

• The Americans are very low on interceptors. They are not sending interceptors to Ukraine, as these are needed in the Middle East.

• There is no popular support for the war, and Trump does need to show it is over by the mid-terms.

• However, as the mid-terms approach, and especially if oil prices rise again, ending the war serves no political purpose: the economic damage would linger for several weeks after a ceasefire regardless.

• A key issue, which is not easy to categorise as a driver or a constraint, is President Trump’s utter and complete lack of credibility. He has pivoted and changed his mind so many times that neither his threats nor his promises are worth much.

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This was Iran again signalling that it will not allow the passage of ships through Hormuz without its approval - no matter what diplomatic niceties are exchanged with Oman. Gaining full control over Hormuz has become the main Iranian objective, alongside preserving the influence of its proxies. Lifting American sanctions is a secondary objective as far as the Islamic Revolution Guards Corps are concerned. Rather, they believe that controlling the Strait, and, therefore, 20% of global oil exports, is what leads to sanctions being lifted.

Regional escalation

On paper, the Americans are very far from leaving the Middle East region - the relationship between the USA and Israel is becoming more intertwined, with Congress proposing legislation in the National Defence Authorisation Act that would effectively merge the American and Israeli military R&D and intelligence. Although American public support for Israel is fraying, the American establishment is moving towards deeper cooperation and more long term backing for Israel. Absent an under the table Iranian-Israeli agreement, this necessitates continued war with Iran, and prevents Iran from taking its natural position as a Western ally - recall that Persia has always looked to the West for alliances, given that it fears being surrounded by Sunni powers.

The Americans are escalating their fight against Iran in other theatres, as the attacks on Iran itself have failed in their declared objectives of de-nuclearization, addressing the Iranian missile threat, and stopping Iranian support for regional proxies. As such, the USA is putting pressure on Iran’s allies in Lebanon, Yemen, and Iraq simultaneously.

• In Lebanon, the USA and the government of Lebanon are trying to impose the disarmament of Hezbollah alongside a peace treaty between Lebanon and Israel. A preliminary agreement has already been signed, allowing Israel to remain in Lebanon until Hezbollah is disarmed, whereas Hezbollah demands an immediate Israeli withdrawal and rejects disarmament.

• In Iraq, the Prime Minister has announced that militias would be placed fully under state command by 30 September. In theory, the militias are already under state command, and this declaration is largely meaningless. However, the intent is to prepare for a possible trimming of the influence of these militias.

• In Yemen, there are mobilisations by the Houthi and their Saudi-backed rivals, with reports of Iranian advisors and equipment arriving, and of fighting taking place near Hodeidah.

Hardening Iranian position

Meanwhile, following the funeral of former Supreme Leader Ali Khamenei, the regime is more willing to take a hard line due to the huge crowds that turned out. While it can always be argued that some of these crowds were government employees who had no choice, it is very difficult to deny that the regime has a strong social base of support, despite repeated unrest. This support is likely to surge if Iran can assert itself against its regional rivals in the Gulf.

Iran believes it has the upper hand in the region. More importantly, it seems keen to consolidate gains now, rather than continue with the proxy wars that have gone on since 1982 in Lebanon, 2003 in Iraq, and 2004 in Yemen.

The Iranians understand that global oil reserves are low, that markets are prone to panic, that Trump needs to enter the mid-terms without the distraction of the war and its economic impact, and that putting further pressure on global markets may yield more concessions. Simply, Iran does not want to let negotiations continue while its regional influence gets targeted piecemeal.

Commercial Impact

• As we had said at the start of the ceasefire, Iran will not let go of Hormuz. It will not permit its full opening. Rather, it will do all it can to maintain its leverage.

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Russia’s pattern for the Ukraine war has been broadly consistent:

• Launch slow offensives in Spring

• Accelerate the rate of advances in Summer

• Consolidate and clean up in Autumn, while accelerating attacks on infrastructure

• Destroy infrastructure in winter to push the civilian population out

While this pattern is consistent, a major change is underway. Specifically, Russia is trying to collapse power, transport, and gas station infrastructures in the areas around the urban conglomerations of Chernigov, Sumy, Kharkov, Zaporozhzhia, and Dnipro. The aim is to push the citizens out and trigger a humanitarian crisis, and to disrupt Ukrainian military logistics. This is proceeding relatively successfully given Russia’s superiority in missiles and drones, despite immense gaps in its own air defence. This will push Russia to double down on missile and drone warfare, including against NATO.

Battlefield update

Donbass

The Russians have claimed that they captured Kostyantynivka, the southernmost of the fortress belt of Slovyansk, Kramatorsk, and Kostyantynivka, which is Ukraine’s most formidable line of defence. This line has forced both sides to concentrate their forces in the Donbass, limiting Russia’s ability launch major attacks elsewhere, as that front alone may have up to 500,000 out of the total 700,000 to 800,000 Russian troops in Ukraine. The fall of Kostyantynivka, and the imminent fall of Lyman, allows Russia to attack the other two fortress cities from the south and north, whereas that defenses of that area are mainly oriented towards the east. In 2027, Russia will be in a position to hammer this defensive belt and probably to take it completely. That then changes the dynamics of the battle, in two ways. First, Ukraine doesn’t have major towns behind these cities where it can concentrate large forces and provide them with adequate logistics. This, in turn, may permit Russia to reintroduce armour into the battle, accelerating Russian gains. However, what this does not change is the manpower shortage facing Russia, and the difficulty it faces in launching major offensives against urban areas with a million or more inhabitants.

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The Iranians have resumed attacking ships in Hormuz, as we had said last week.

This led to two separate attacks on international shipping attempting to bypass the Iranian transport corridor and going through the Omani corridor. The Americans have retaliated to both, leading to Iranian retaliation in turn. As is typical, Trump has resumed his threats to obliterate Iran.

The drivers of this breakdown in the ceasefire are five:

1. Lebanon: Israel and the Lebanese government signed an agreement that would, in theory, at an undetermined point, lead to an Israeli withdrawal from Lebanese territories in exchange for Lebanon’s government disarming Hezbollah. This deserves a brief digression:

   1. Israel will not withdraw from Lebanese territories except through military means - this has been the example of the precedent set since the Yom Kippur War of 1973. Rather, the stage is being set for a major conflict between the Lebanese government, the Sunnis, and some Lebanese Christian factions against the Shi’a.

   2. Iran viewed Lebanon as a test. With the agreement paving the way for more conflict against the Shi’a in Lebanon, Iran views this as a sign that the Americans and Israelis still want to escalate.

2. Hormuz: for the Iranians, any attempt to bypass them via Hormuz paves the way for them having to relinquish control of the Strait, which as become a core national security priority, as it will fund Iranian reconstruction and permit Iran to become the main player in global energy markets. By controlling Hormuz, Iran controls the OPEC quotas of Gulf Arab states and profits from their oil exports by charging fees. For the Americans, this is an unacceptable state of affairs.

3. Iraq: as of this morning, the new Iraqi cabinet is engaging in a major crackdown on political figures associated with Iran and/or implicated in corruption. For the Iranians, this may well appear as an attempt to cut them off financially from Iraq and to push Iraq closer to America, Turkey, and Saudi Arabia. Iraq and the Persian Gulf are core national security interests for Iran.

4. Economics: the Iranians believe that they have the upper hand.

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Ukrainian President Vladimir Zelensky threatened a major attack on Belarus within a week if Belarus does not withdraw Russian equipment that is used in support of Russian operations in Ukraine. The deadline expires in three days.

Zelensky’s logic

Ukrainian forces are facing major setbacks in each of Kupyansk, Zaporozhzhia, and the Donbass, despite very slow Russian progress. Zelensky most likely needs to escalate the situation in order to force Russia to back down, or to impose an acceptable compromise on the Russians by threatening major escalation.

Strategically, forcing Belarus into an open war with Ukraine is certain to lead to much wider escalation: attacks on Belarus would lead Minsk to allow Russia an even freer hand in its territories, paving the way for ground offensives towards Kiev and possible Lviv. Were Kiev to be threatened, European support for Ukraine is certain to increase, or so Zelensky hopes. And attacks on Lviv would raise the risk of Poland entering the war. Moreover, given the Belorussian military’s lack of experience, it would have to be placed under Russian command.

Notably, Russia has said since 2023 that it had placed nuclear weapons in Belarus, precisely to deter such escalation.

Russia’s constraints

Russian forces are advancing, but their progress is extremely slow. Russia’s view, increasingly, is that deterrence against NATO is failing, permitting NATO to escalate against Russia in Ukraine without facing any consequences. Major Ukrainian drone attacks on energy, Moscow, and St Petersburg demonstrate this, from Russia’s perspective.

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The Israelis did succeed in expanding a buffer zone along the border with Lebanon. However, without a political agreement, this guarantees that Israel will be stuck in a new buffer zone fighting a war of attrition against the Lebanese Shi’a, backed by Iran, Iraqi militias, and the government of San’a in Yemen. Israel was in exactly the same quagmire between 1984 and 2000, and had to withdraw due to politically unsustainable losses, at a time when Hezbollah was backed only by Iran and Syria.

Turkey’s logic

Moreover, the Turks are unenthusiastic, to put it mildly, to help Israel defeat Hezbollah using their Syrian proxies. Rather, Turkey is more interested in preserving Hezbollah for as long as Israel remains expansionist - their fear is that, without Hezbollah as a buffer, Israel would link up with the Christian and Alawite communities along the Eastern Mediterranean, extending its influence to Syria’s Latakia, Hama, and even Aleppo.

Furthermore, any Syrian operation against Lebanon, as suggested by American President Donald Trump, would very likely trigger Iraqi intervention in Syria, backed by Iran, risking a Turkish-Iranian conflict. While this conflict is likely at some point in our generation, this appears unlikely in the next five years.

American support

Additionally, and most critically, the Israelis are facing the prospect of a confrontation with Iran on their own, without American backing. Iran is linking re-opening Hormuz to Israel agreeing to a ceasefire in Lebanon. Although the ceasefire is holding, it is only a matter of time before Hezbollah relaunches attacks on Israeli occupation forces on Lebanese territory. The Israelis will then want to pressure the civilian population by bombarding densely populated urban areas. At that point, it is very likely that Iran will either retaliate directly, instruct its proxies in Iraq and Yemen to retaliate, or provide Hezbollah with additional capabilities to permit it to strike Israeli cities, as it had been able to do in the early stages of the 2023-2025 7 October War and during the 2006 July War.

Iran - US negotiations

This is the context in which the Iran-US talks are taking place.

The Iranians are trying to force the USA to rein in Israel and compel it to withdraw from Lebanese territories, using their strengthened negotiating position and their control over Hormuz.

As for the Israelis, they insist on defeating Hezbollah, sooner rather than later. If the fight were delayed, the Israelis would have to return to war and mobilisation, which would be hugely unpopular. Electorally, pausing the war would damage Netanyahu enormously, while withdrawing from Lebanon would be a humiliating defeat. Moreover, after 7 October, the Israelis fear that Hezbollah would launch its own similar operation with support from Iran and its regional proxies. The Israelis cannot afford to accept a ceasefire in Lebanon, let alone a withdrawal.

At the same time, the Israelis recognise that they cannot fight a prolonged insurgency in which Hezbollah establishes rules of the game that permit Iran to strike Israel were Israel to strike Lebanese urban areas. The best they can achieve is to sit tight and wait for the next war, while trying to influence the American political system to break the deal with Iran.

Hormuz

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Labour Prime Minister Keir Starmer has become the most unpopular British national leader since records began. This was confirmed not just by polling, but by the local election results of April 2026, in which Labour lost 1,500 seats out of 2,200 contested seats.

However, the Labour Party’s leadership is bereft of serious contenders for the top job. Therefore, rather than simply replace the sitting Prime Minister with another Member of Parliament (the PM must be in the House of Commons or the House of Lords), the party vacated a safe parliamentary seat and let the Mayor of Manchester, Andrew Burnham, run. He won spectacularly on the promise of replacing Starmer and reforming British politics.

Starmer is almost certain to resign or be forced out, and to be replaced by Burnham.

The problem for Labour, however, is structural. It is the party of welfare and immigration, not of economic growth. Its current leadership and cabinet are so bereft of talent that it could not provide an alternative candidate, and had to bring Burnham in.

Who is Burnham?

Burnham, a career politician with no private sector experience, has been a fixture of the Labour Party for over two decades. He served under Tony Blair, Gordon Brown, and Jeremy Corbyn. In these roles, he regularly advocated for more state spending on social care. His economic model of “Manchesterism” relies heavily on state spending. He ran for the Labour leadership before and lost. There are no major distinctions between him, Keir Starmer, or Tony Blair. Except that, unlike during the Tony Blair years, interest rates in 2026 are much higher, and public tolerance for immigration and demographic change is much lower.

Like most Labour politicians, Burnham supports Net Zero zealotry, immigration extremism, regulation, and high levels of government social spending. However, when under pressure, Burnham has shown some political flexibility. He no longer advocates for Britain to return to the EU. He supports Home Secretary Shabana modest Mahmood’s restrictions on immigration. And he promises he will stick to Chancellor Rachel Reeves’ budgetary restrictions.

What can he achieve?

Oddly enough, quite a lot.

Labour current backbenchers are notoriously left wing and the front bench is hollow. However, Labour is currently so weakened that it staked its entire existence, and its performance in the next general election, on Burnham. Labour cannot afford to replace more than one Prime Minister over the life of a single Parliament - it knows it would be crushed by voters if it showed the same kind of chaos as the Conservatives did after the 2019 election, when they went through three Prime Ministers. Therefore, despite the backbenchers being extremists, Burnham is in a position to whip them into compliance.

Therefore, despite his rhetoric about not wanting to be in hoc to the bond markets, Burnham is almost certain to maintain the current economic orthodoxy. He will be as beholden to the diktats of the Treasury as Brown, Cameron, May, or Starmer.

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American President Donald Trump posted on 14 June that the deal with Iran was complete. An agreement is set to be signed on 19 June in Geneva.

Agreement to reach an agreement

The full terms of the agreement are unconfirmed, as the two sides leak to the media their own version of the agreement. There are at least two major points of disagreement between Iranian and American leaks:

1. The Iranians insist that Hormuz is under their management, implying that they will be levying imperial tribute from the Gulf states.

2. The Americans deny that they will authorise the transfer of USD12 billion dollars to Iran before the 60 days of negotiations over the nuclear programme begin.

That said, the American and Iranian leaks suggest that the Americans have agreed that the war has to end in Lebanon, and that the talks will not address the Iranian missile programme or its support for proxies, and focus exclusively on the nuclear issue.

Meaning that the Iranians have succeeded in establishing a zone of influence that includes Lebanon in the teeth of Israeli objections, and that by implication includes Iraq and Yemen. Moreover, it means that the Iranian strategy of using the nuclear portfolio to extract regional concessions has been completely successful.

Other terms of the agreement include Iran receiving up to USD300 bn in reconstruction funds - essentially, a workaround for Iran’s demand for compensation.

Strategic disaster for Israel

The American - Iranian War has turned into a conflict between Israel and America.

On the one hand, Congress is set to pass a defence authorisation act that integrates American and Israeli R&D, procurement, and technology development, while also preparing an intelligence authorisation act that makes it all but impossible for the USA to not share intelligence with Israel, and that makes Israel the main intelligence power in the Middle East.

On the other hand, the conflict between President Donald Trump and Israel has never been greater. It is incorrect to claim that this is a conflict with Israeli Prime Minister Benjamin Netanyahu: Netanyahu acts on behalf of the entire Israeli security system.

The Israelis cannot tolerate having their freedom of action in Lebanon and the Palestinian territories limited by Iran. The implication of such a limitation is that the Iranian missile programme is sufficiently capable to deter Israeli expansionism. This setback is more evident when we recall that the Israeli media, acting as a mouthpiece for the Israeli defence establishment, was stating clearly that the problem for Israel was not the nuclear programme - there has been no evidence of weaponisation for years now according to American intelligence assessments - but the Iranian missile programme. Now that Iran has set the precedent that it can use its missiles and regional threats to constrain Israel in Lebanon, it can build and expand on it.

All of the above is on top of the Israeli and American failure to overthrow the regime or in end its support for proxies. Rather, given Iran’s defence of Hezbollah, the relationship with proxies is stronger. And with the assassination of both Supreme Leader Ali Khamenei - who as a martyr represented the hardliners and the military - and Ali Larijani - who represented the traditional court philosopher class - the regime is even more consolidated, despite the continuing traditional internal divisions.

(As an aside, the internal divisions of Iran are misunderstood. They are not partisan - principalist vs reformist vs centrist or whatever. They are caste-based. There are the soldiers, the thinkers/bureaucrats, the clerics, and the merchants. The soldiers want to fight, the thinkers and bureaucrats want to avoid war, the clerics adjudicate, and the merchants are milked while they try to buy influence and protect their assets. The system is DESIGNED to be divided, as that facilitates the ability of the Supreme Leader - who is not more than a black-turbaned Shah - to control it).

That said, perhaps the most consequential impact of the war is how it brought Israeli influence into the limelight, and turned the populist right and left against Israel.

Commercial Impact:

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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.

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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.

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