Six months into the U.S.-Israeli war against Iran, Southeast Asia’s exposure to a conflict thousands of miles away has proven durable rather than transient — and it is beginning to function as a genuine stress test of the region’s institutions, not just its energy bills.
The U.S.-Iran war has become the most consequential American military engagement in the Middle East since the 2003 Iraq invasion. Despite periodic ceasefires and diplomatic efforts, the conflict has revealed that 21st-century power is not determined by military dominance alone. The United States has demonstrated unmatched force-projection capabilities, severely degrading Iran’s conventional forces, yet battlefield success has not produced a durable political settlement or fundamentally altered Tehran’s strategy. Instead, the conflict has settled into a cycle of coercion, adaptation, economic pressure, proxy warfare, and renewed confrontation.
Taiwan has proposed an 18% increase in its defense budget for 2027, pushing military spending above 3% of GDP as Chinese military and political pressure grows. The move comes as the United States remains engaged in its six-month war with Iran and has deployed its last aircraft carrier in the western Pacific to the Middle East, temporarily leaving the region without a US carrier presence.
North African governments have sought to remain outside the US-Iran conflict, regardless of their differing alignments and preferences. Geography insulates them from the fighting, but not from the consequences. That duality is the region’s predicament: what makes North Africa useful to others is what leaves it exposed.
Of all the fronts in President Trump’s peacemaking agenda, the South Caucasus has delivered the most concrete results. The August 2025 Washington Declaration, signed between Armenia and Azerbaijan and witnessed by Trump, marked an important step toward peace in the region. The two sides initialed a peace agreement and advanced plans to unblock regional connectivity, including through the establishment of the Trump Route for International Peace and Prosperity (TRIPP), which would connect Azerbaijan to its Nakhijevan exclave through southern Armenia. Implementation of TRIPP has since made notable progress, but construction has yet to start. A breakthrough on those two tracks would, in turn, unlock Armenia–Türkiye normalization, transforming a long-fractured region into an area of trade and interdependence.
Wars don’t just end. They get interpreted, reinterpreted, and turned into strategic doctrine. That is what happened after the Iran-Iraq War of the 1980s, a conflict that saw the United States back Tehran’s Iraqi adversaries. The war taught Tehran three lessons it never unlearned: that Washington wants the Islamic Republic gone, that Iran stands essentially alone in the world, and that it cannot survive a direct, overt fight with the U.S. and Israel.
Within 48 hours this week, Iran filled six of the most important posts in its battered military and security establishment. Read together with the biographies and mandates behind them, the appointments show how Tehran is drawing lessons from successive wars and preparing for a prolonged period of insecurity, without proving it has abandoned negotiation.
In an August 9 interview with Axios, when asked about the endless swings of the Iran standoff, he shrugged it off as familiar territory. “It’ll work out in the end. It always does. It’s like a chess game.”
Behind the rhetoric sat a harder fact.
With sanctions repealed, Syrian policymakers must ensure that growing volumes of credit reach beyond the narrow political and commercial networks that have generally dominated Syrian finance. That will require a credit strategy aimed at sectors and regions historically excluded from formal finance. Syria’s specialized state banks offer an imperfect but ready-made mechanism to do so.
The United States has long confused Iran for a rational actor with a low pain threshold, sensitive to battlefield losses and vulnerable to domestic unrest, which would bring it to the negotiating table. Each of those assumptions is wrong.
President Donald Trump’s disdain for strategy extends to process: mass National Security Council firings and reliance on a tiny circle of advisors have left the interagency policy process dormant amid the Iran war. The result is improvised, damaging moves like the Strait of Hormuz toll scheme. Reviving a professional, deliberative policy process is essential.
It has become a commonplace for Americans to describe our current war with Iran as stuck in a kind of limbo, neither full war nor real peace. We’re not the only ones. Iraq finds itself caught in a limbo of its own, between America and Iran, between the tolerable and the intolerable, between progress and relapse.
The MENA Energy Recap is a quarterly review of key energy developments that took place in the region from April through June of 2026 and what they signal in the months ahead. The Recap views these developments through the lens of policy and strategy, energy security, and markets.
In many ways, the U.S.-Israeli war against Iran and the war in Gaza that preceded it seem transformative. After decades of shadow warfare, Iran and Israel have now attacked each other’s homelands directly. And Israel and the United States have joined forces in a genuinely novel way to wage war against Iran.
It is now clear the United States is sinking into the quagmire of its war with Iran with no clear idea of how to get out. More than five months of intermittent bombing of Iran have not brought Tehran any closer to surrender. Recurring threats by US President Donald Trump to launch a massive military campaign against the country aren’t causing Iran to submit to US demands.