Research & Commentary Results

Wars are decided by those who hold military power, but their costs are increasingly borne by those who have little or no voice in the decisions that start them. The US–Iran war shows this imbalance very clearly. Its economic consequences have gone far beyond the battlefield and have disrupted energy markets, trade routes, food supplies, public finances and investment in the Gulf, Europe, Africa and Asia. The most striking feature of the conflict, however, is not only the size of the damage but its very unequal distribution.

Geopolitical influence over trade increasingly rests on controlling the systems that make them work. The Middle East illustrates the stakes. US ports, cable corridors, cloud facilities, artificial intelligence (AI) investments, and maritime routes connect regional economies to global commerce while exposing them to external decisions and disruptions. For the United States, the challenge is to translate technological advantage into resilient networks rather than rely on centrality that can itself become a source of vulnerability and coercion.

Israel is preparing to hold what may be its most consequential election in decades. On October 27, Prime Minister Benjamin Netanyahu will face his first electoral test since October 7, 2023. In this bonus episode of Middle East Focus, we present the audio from a recent MEI webinar, hosted in Israel on the eve of the vote. Senior Fellow Natan Sachs is joined by Dr. Shira Efron, Distinguished Chair for Israel Policy and senior fellow at the RAND Corporation, and Neri Zilber, veteran journalist and Financial Times correspondent. They explore what’s at stake in this historic election and how different outcomes could reshape Israel’s domestic politics and the wider region.

Israel’s national anthem, Hatikva, means “the hope.” Israel is not just another country, but the culmination of a 2,000-year-old dream of national redemption. The rebirth of the Jewish people’s ancestral homeland, just three years after the Holocaust, was a miraculous triumph of hope over all odds.

Today, that hope has been shattered and the elections on October 27 have become the most consequential in Israel’s history.

Crude oil is flowing out of the Gulf again, but the market is no better prepared for another disruption in the Strait of Hormuz. It has assembled a temporary system for managing one. Crude exports from the Gulf, excluding Iran, returned to pre-war levels in September, while total Gulf shipments reached 15.5 million barrels a day, more than 80% of the pre-conflict volume.

A year after world leaders gathered in Sharm el-Sheikh to mark the end of the war in Gaza, Israel controls about 70% of the Strip, Hamas retains its arms, and reconstruction has yet to begin. Meanwhile, in the West Bank, record settler violence and settlement expansion are colliding with a Palestinian Authority on the brink of fiscal collapse. Hosts Alistair Taylor and Matthew Czekaj are joined by MEI Associate Fellow Tahani Mustafa to discuss why the Gaza peace plan is deadlocked, an increasingly emboldened Israel in the West Bank, Mahmoud Abbas’s postponement of Palestinian elections, the Palestinian Authority’s deepening economic crisis, and what role the US could play.

The Israeli government’s plan to build 3,401 housing units in the 12-square-kilometer E-1 corridor, between Jerusalem’s municipal boundary and the Israeli settlement of Ma’ale Adumim, would cut the West Bank in two. Israeli officials are under no illusion about the implications. Announcing the plan’s approval in August 2025, Finance Minister Bezalel Smotrich called it a “significant step that practically erases the two-state delusion.”

In the summer of 2003, King Abdullah II told Bloomberg Jordan sits “between Iraq and a hard place,” a play on words designed to describe the kingdom’s challenging environment to an American audience amid the US-led Iraq war to the east and the lingering Palestinian-Israeli conflict to the west. Jordan is grappling with a much “harder place” today.

The 20-point plan for Gaza introduced before the war with Iran began has languished, with no meaningful recovery, reconstruction, Hamas disarmament, governance transition, or Israeli withdrawal. The diplomatic pivot back to Gaza in late July and early August suggests that the Iran war’s stubborn persistence may be causing the US and regional actors to seek wins on other fronts.

There may be no near-term resolution to the conflict between the United States, Israel, and Iran. The cease-fire and memorandum of understanding (MoU) signed on June 18  have broken down, there is little diplomatic engagement, and new flare-ups in early September indicate a further round of escalation. Gulf states may have no choice but to protect their assets and populations while trying to deter Iran by finding mechanisms of both containment and accommodation.

Across the Gulf, views differ widely on how the Iran war can and should end, and what the region will look like once it does. Yet on the crisis over the closure of the Strait of Hormuz, the view is near-unanimous that a repeat is not only possible but likely. That expectation, more than any single incident over the past year, is becoming a major driver of decision-making in industry and policy circles alike.

When Iranian drones struck two Amazon Web Services data centers in the UAE on March 1, 2026, and damaged a third in Bahrain the same morning, many thought this could spell the end of the Gulf’s AI ambitions. Whatever the intent, the attacks highlighted the new reality that data centers have now become targets in inter-state wars.

Egypt, which is not party to the war on Iran, has become a target as well as an intermediary in the conflict. As a result, the war has affected Egypt’s future calculations, particularly in three major areas: its economy, its security, and its regional alliances. 

Apart from the brief honeymoon period between 1961 and 1963 under President John F. Kennedy and President Nazim al-Qudsi, US-Syria relations have never held such optimistic potential as they do today. Today, following the fall of Bashar al-Assad regime and the rise of a new government under President Ahmad al-Sharaa at the end of 2024, a new geopolitical window has opened.

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.