OPINION:
The Iran war has revealed some unsettling lessons for the United States and will fundamentally change the global economy.
The U.S. military has demonstrated its unrivaled capacity to project power through its extraordinary professionalism, technologically superior high-end weapons such as the stealthy F-35 fighter, and its intelligence apparatus.
It has significantly degraded Iran’s conventional forces, missile stockpiles, air defenses and capacity to aid terrorist groups. Iran’s nuclear program has been set back many years.
However, Iran can still effectively keep the Strait of Hormuz closed and harass neighbors.
Although Saudi Arabia and the United Arab Emirates are using spare pipeline capacity to circumvent the strait, global oil supplies have been reduced by about 15 million barrels a day, or nearly 15%.
China was revealed to be no friend of Arab states, as it supports an Iran that attacks the economic assets of noncombatant states such as Qatar.
What all this means during prolonged negotiations or a tenuous peace will depend on how the United States repairs its capacity to protect allies while finally following through on its long-promised pivot to Asia.
During the conflict with Iran in the 1980s, the U.S. deployed some 30 warships to the Persian Gulf. This time, only about a dozen ships are just outside the Gulf because the U.S. Navy has significantly fewer surface combatants: destroyers, cruisers and frigates.
Gone are 113 frigates, ships smaller than destroyers but well-suited for escorting commercial vessels through the strait.
Those were replaced by about two dozen littoral combat ships that have proved mechanically unreliable. Efforts to replace those with an Italian-designed frigate have faltered because the proposed design modifications were too costly.
The Navy is superb at executing missions but lousy at shipbuilding.
Iranian drones have damaged at least 10 American radar sites, and the United States has significantly depleted stockpiles of expensive, slow-to-replace interceptor missiles to knock out inexpensive, quick-to-manufacture drones.
Military suppliers are working feverishly to develop less expensive alternatives that can be supplied more quickly in sufficient numbers.
Global energy markets are changing for good.
Asian nations that suffered the most from the closure of the strait are unlikely to allow themselves to be vulnerable again.
Alternatives to Qatar’s liquefied natural gas are being built, and by 2030, we could have a glut if the strait reopens.
Saudi Arabia and the UAE are expanding oil pipeline capacity to circumvent the strait. New port and rail capacity will be built.
Iraq is proposing pipelines that would require cooperation with Jordan, Syria or Turkey.
Venezuela is coming back online. Argentina has become a major shale oil producer, and Guyana is a rapidly growing new exporter.
Adding in Brazil, Canada and the United States, the Western Hemisphere now produces more oil than the Middle East. Exxon Mobil, Chevron, Shell, BP and TotalEnergies are exploring drilling prospects in Africa, South America and the eastern Mediterranean.
Entering the war, the global market had a considerable cushion of oil in storage and in transit, as well as the strategic reserves of Western governments and China.
Those are running down, and oil prices should rise still further.
The U.S. could suffer a brief recession, but increased oil export revenue will provide a counterweight to the drag on domestic demand from higher fuel prices.
We should not simply accede to Iran’s demand for cash for peace nor accept an end to the war that concedes to Iran control of the strait or the capacity to build nuclear weapons.
We cannot let a new status quo emerge where Iran can terrorize its neighbors or is permitted, by American default, to become a regional hegemon.
Hence, we must repair, harden and maintain our bases in the Middle East. Yet we must also demand that Saudi Arabia and others do more to aid their own defense, not simply by buying American weapons but also by using those in concert with our military to answer Iranian attacks.
Defense cooperation in the Middle East should, in principle, mirror the policy the Trump administration is shaping in Asia.
In a thoughtful speech at the Shangri-La Dialogue, a gathering of defense officials, Defense Secretary Pete Hegseth said the United States seeks “a favorable but durable balance of power in which no state, including China, can impose its hegemony or call into question the security or prosperity of our nation and our allies.”
Increasingly, our Asian partners recognize the need to bolster their defenses, and Mr. Hegseth said those that beef up their efforts may expect “expedited arms sales, deep industrial base collaboration, expanded intelligence sharing.”
To be credible, the United States must not bend to Chinese pressure. It must complete promised arms sales to Taiwan, and Congress should back President Trump’s request for a 50% increase in defense spending.
The administration must spend this money wisely by reforming the naval shipbuilding program, accelerating arms development, focusing on more affordable technologies and fostering a more resilient industrial base.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
Follow the author
Please read our comment policy before commenting.