My new book:
“The testament of a disabused economist”
Our duty is to rebuild society on a solid basis, as well as making deep reforms to financial markets and getting rid once and for all of their intrinsic ability to cause harm. We haven’t learned anything from 2008 and have even worsened our exposure, and exacerbated our risks, so much so that this extreme vulnerability is now infecting even the most well-off. I dare to be the spokesman of an overwhelming majority of “ordinary” citizens by affirming that we will accept suffering this acute and unprecedented crisis (once again!) on the sole condition that our system’s structural and substantive vices are immediately put right. May the statesmen and women who have enough moral fibre to reject the economy and finance continuing to reign as supreme leaders, while society is bound to follow them with servility, come out of the shadows. The economic catastrophe that is lying in unavoidable wait for us is asking the right questions, and is making its demands for a deep cleansing. May this virus be thanked for it, and win the Nobel prize for economics, if it causes us all to mobilise.
English Articles
Inequality: The Gap That Obsesses, the Progress We ForgetMarch 31, 2026What the Inequality Debate Fails to Measure
In France, wealth is viewed with suspicion. This is a cultural fact before it is an economic one. For the past twenty years, the wealth tax (ISF, then IFI), inheritance taxation, “tax justice,” and “ultra-rich” have structured public debate as a series of totems — with one constant: the conviction that the gap between the top and the bottom of the distribution is, in itself, the problem to be solved. The work of Thomas Piketty and Gabriel Zucman did not create this conviction. They gave it an academic framework, long-run data series, and a formalized structure. They made it unassailable — or at least difficult to challenge without being seen as a defender of privilege.
It is precisely this difficulty that makes the exercise necessary.
Let us begin with what their critics rarely do. Piketty and Zucman are right on several empirical points. Wealth inequality has increased in most OECD countries since 1980. Legal tax avoidance mechanisms — stepped-up basis in the United States, split ownership structures and Dutreil pacts in France, foundations everywhere — allow a fraction of ultra-wealth to structurally escape inheritance taxation. Any critique that denies these facts loses credibility before it even begins.
But between these findings and the policy conclusions drawn from them lies a chain of choices — of measurement, framing, and values — that is rarely made explicit. It is this chain that this op-ed seeks to dismantle.
What the Debate Confuses
The inequality debate constantly blends three distinct registers. Empirical facts: wealth concentration has increased. Methodological conventions: how do we define the income of the ultra-rich? Values: which indicator of social progress should be prioritized — reducing relative gaps, or raising the living standards of the least well-off?
Piketty and Zucman measure with remarkable precision the gap between the first and the last runner in the race. The problem is that they look almost exclusively at that gap, without ever checking whether all runners have moved several kilometers forward. The result: normative choices presented as scientific findings. This slippage is not unique to their camp — liberals often do the same in reverse. This op-ed will try not to fall into the same trap.
The r > g Framework: Solid, but Conditional
The relationship r > g — the return on capital structurally exceeding growth — is the cornerstone of Piketty’s argument. Per Krusell (Stockholm) and Anthony Smith (Yale) showed in the Journal of Political Economy (2015) that this dynamic depends on a crucial assumption: an elasticity of substitution between capital and labor greater than 1. If this elasticity is below 1 — as most empirical estimates suggest — concentration converges toward a finite limit. The Piketty dynamic does not disappear, but it ceases to be inevitable.
This is not a minor caveat. It is the condition for the validity of the entire framework. A result conditional on contested assumptions is not a law of nature. It is a thesis — and presenting it otherwise is excessive.
Zucman: A Real Problem, a Misleading Measure
One of Gabriel Zucman’s most widely cited findings is that the 400 wealthiest Americans pay, proportionally, less tax than the middle class. This figure relies on including unrealized capital gains in income. If your assets rise by ten billion this year, Zucman counts ten billion as your income — even if you have sold nothing, received nothing, and that amount could collapse tomorrow.
Zucman’s argument is serious: these gains represent real economic wealth that can durably escape taxation, through mechanisms such as stepped-up basis in the United States or split ownership in France. But this argument concerns a long-term structural advantage, not the current effective tax rate. The Congressional Budget Office, which excludes such gains, calculates effective tax rates for the top percentile at around 30%. The two methods answer two legitimate but different questions. Confusing them produces striking headlines and flawed diagnoses.
Relative Inequality: Effects That Cannot Be Ignored
Piketty does not merely measure gaps; he argues that relative inequality has independent causal effects on health, social cohesion, and democratic quality. The literature is substantial: Wilkinson and Pickett (The Spirit Level, 2009) documented robust correlations between inequality and public health indicators; Marmot established social gradients in health that persist at equal income levels; Gilens and Page suggest political capture of institutions by the very wealthy.
These works are not without weaknesses — sensitivity to samples, causality still debated: are unequal societies unhealthy because they are unequal, or are inequality and social pathologies both symptoms of a deeper institutional deficit? Yet they are too serious to be dismissed outright. This op-ed does not claim that relative inequality has no effects. It argues that these effects, real but debated in magnitude, are not sufficient on their own to justify the systemic fiscal overhaul proposed by Piketty and Zucman.
Three Trajectories, One Question
Consider Bangladesh. Between 1990 and 2020, the country reduced infant mortality by 85%, increased girls’ school enrollment to 98%, and multiplied its per capita income fivefold. Its relative inequality increased slightly. Applied to this case, Piketty’s indicator would signal deterioration. No serious observer would accept that conclusion.
The objection is valid: Bangladesh is a developing country. Take South Korea. Between 1980 and 2020, GDP per capita increased tenfold and life expectancy rose by fifteen years. The Gini coefficient moved from 0.33 to 0.35. Judged by inequality, Korea in 2020 is less just than in 1980. Judged by lived reality, it is incomparably more so.
Even in France, between 1990 and 2022, the living standards of the bottom 10% increased by more than 30% in real terms (INSEE), while the Gini coefficient rose slightly. The gap widened; the floor rose.
Looking only at the gap without looking at the floor is a mutilation of the diagnosis. But looking only at the floor without looking at the gap is another. The choice between these perspectives is a value judgment — not a scientific result.
What This Op-Ed Assumes
To assert that the absolute condition of the most vulnerable should take precedence over relative gaps is a moral choice, not an empirical discovery. Liberal critics of Piketty often commit the very sin they denounce: presenting their framing as neutral rather than as a value system just as partial. This op-ed acknowledges its choices. It does not claim they are objective.
It also acknowledges this: the tax avoidance mechanisms documented by Zucman — stepped-up basis, split ownership, instrumentally used Dutreil pacts — are real problems. Recognizing that Piketty’s overall diagnosis is overstated does not imply defending the fiscal status quo. That would be another form of intellectual dishonesty — and perhaps the most costly one, because it hands Piketty exactly the opponent he needs to be right.
Three Proposals
Correct inheritance-related tax asymmetries. Transferring wealth without taxing accumulated capital gains is an unjustifiable advantage. In France, the combination of split ownership, the €100,000 allowance renewable every fifteen years, and Dutreil pacts allows significant business wealth to be transferred at very low effective rates. This is not a wealth tax. It is the correction of an asymmetry that even Piketty’s critics should acknowledge.
Complement relative indicators with measures of absolute poverty. The European poverty threshold, set at 60% of median income, has a perverse property: if median income falls during a recession, the threshold falls as well, and people can become materially poorer without the indicator capturing it. An absolute poverty threshold, indexed to a basket of goods, would provide a more honest picture of lived conditions.
Demand methodological transparency. Any study on effective tax rates should specify whether it includes unrealized capital gains and present both figures. Any study on inequality should present both relative and absolute indicators. If these requirements were applied, half of the headlines about taxing the ultra-rich would need to be rewritten — and half of complacent liberal op-eds as well.
Conclusion
The problem is not primarily that some people are very rich. It is that too many people are still too poor. Confusing these two diagnoses means designing policies to address the wrong problem — with real costs for those they claim to protect.
The inequality debate lacks neither data nor indignation. It lacks clarity about what is being measured, in the name of which values, and toward which objectives. This clarity is not a technical matter. It is a democratic requirement. It applies to all sides — including the one writing these lines. [...]
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European Banks: The Middle East Risk Blind SpotMarch 26, 2026An Organized Opacity
The fog is not an accident. It is an architecture. For the past forty-eight hours, two camps have clashed over French banks’ exposure to the Middle East with almost comical symmetry: some brandish €132 billion as proof of impending apocalypse, others dismiss it as a harmless accounting artifact. Both have arguments. Neither is asking the right question.
Because the issue is neither the magnitude of the figure nor its supposed benignity. It is the impossibility, for anyone — citizen, parliamentarian, analyst — to access a faithful picture of risk at the precise moment when such clarity becomes essential. And within this opacity, the danger is not even where the debate is looking for it.
What the numbers say
The European Banking Authority has published its Risk Dashboard Q4 2025. Direct exposure of EU banks to the Middle East stands at €132 billion, including €60.8 billion for France (46%). Relative to the sector’s €29.1 trillion in assets, that is less than 0.5%. CET1 stands at 16.3%, non-performing loans at 1.8%, and major French banks posted €35 billion in profits in 2025.
Taken in isolation, these indicators are reassuring. And those who decry sensationalism are right on one essential point: exposure is not risk. The European banking system could absorb significantly larger losses without jeopardizing its solvency.
But the net figure does not say much either.
Netting assumes a world that does not exist
The EBA publishes gross exposures. Banks publish net figures, after offsetting through collateral — sovereign securities, guarantees, derivatives. The method is legitimate, compliant with IFRS standards. The differences are considerable: for BNP Paribas, one moves from €55 billion gross to roughly €6 billion net.
The problem is not the method. It lies in its assumptions.
What is missing is not data, but assumptions. Netting assumes that markets function normally. That collateral remains liquid. That flows do not freeze. That the Strait of Hormuz does not close.
In times of stress, the value of collateral is no longer a market price; it is a conjecture.
Netting protects against credit risk. Not against liquidity risk.
And it is liquidity that kills — quickly, without warning.
The only figure that matters in a crisis — net exposure after stress on collateral — is published by no one.
The same illusion applies geographically. A sovereign rating measures repayment capacity in calm conditions. It does not model logistical disruption, cross-sanctions, or a regional energy shock. This does not mean banks ignore these risks. It means the public has no way to assess them.
The real scandal
The problem is not the level of exposure. It is the absence of synthesis.
The EBA publishes gross figures, with a lag.Banks publish net figures, according to their own methods.The gap can reach a factor of ten.No one reconciles them.
The result is an organized blind spot: everyone publishes a fragment of reality, no one makes it intelligible.
In that space, perceptions are manufactured: banks choose their narrative, the regulator avoids taking a definitive stance, the media simplify. And public debate oscillates between panic and denial.
When François Villeroy de Galhau asserts that financial stability is “not at risk,” he is probably right. But an assertion unsupported by verifiable data no longer generates trust. Since 2008, solidity is no longer proclaimed. It is demonstrated.
What should exist
The supervisor faces a real dilemma: too much transparency can amplify a crisis. But this dilemma does not justify the current opacity. On the contrary, it calls for aggregated, standardized, intelligible transparency.
Others have understood this. The Federal Reserve publishes detailed stress test results. The Bank of England regularly presents extreme scenarios. These exercises are not real-time. They are readable, comparable, debatable.
Europe could do the same.
What is missing is not an additional flow of data, but a public synthesis: a dashboard reconciling gross, net, and stressed net exposures under explicit scenarios. A document a parliamentarian can read, a journalist can verify, a citizen can understand.
The problem is not active concealment. It is institutional: no body is mandated to produce this readability.
The risk that matters
While the debate focuses on €132 billion, the real risk is shifting elsewhere. The EBA highlights this: second-round effects are the primary threat. A persistently high oil price, weakened growth, compressed margins — these diffuse mechanisms are what undermine balance sheets.
The next banking stress, if it occurs, will not stem from a sovereign default in the Gulf. It will emerge from a fabric of European companies, gradually weakened, increasingly unable to meet their obligations.
French banks are solid. The data show it.
But as long as that solidity remains partially opaque, every published figure becomes a source of confusion.
The problem is not the risk.
It is that it remains, structurally, difficult to see. [...]
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The West Has Made Oil UncontrollableMarch 24, 2026In seeking to cap Russian oil prices, the G7 set in motion a series of dynamics it no longer fully controls: sanctions evasion, reconfigured trade flows, more rigid demand, and financial fragmentation. The oil market has entered a more unstable phase, where traditional regulatory tools are losing effectiveness.
A Sophisticated Geoeconomic Weapon… Built on a Fragile Assumption
The G7 price cap on Russian oil was, at its conception, a remarkably sophisticated piece of geoeconomic engineering. The idea was to allow crude to keep flowing in order to avoid a global supply shock, while forcing Moscow to sell under unfavorable conditions. A form of financial jiu-jitsu based on a central assumption: that Russia would remain dependent on Western maritime insurance, brokerage, and financing systems.
As long as that dependency held, the mechanism could function. But Moscow did not force the lock—it bypassed it by changing routes.
The Quiet Reconfiguration of Oil Flows
Over the past two years, a significant portion of the global tanker fleet has been reshaped. Aging vessels have been acquired by intermediary entities, often registered between Dubai, Mumbai, and Hong Kong. Flags of convenience, alternative reinsurance structures, fragmented logistics chains: a parallel infrastructure has gradually emerged.
According to estimates that vary significantly across sources, between half and two-thirds of Russian crude exports are now routed through these alternative channels. Finance has followed a similar path: increased use of alternative currencies, bilateral agreements, and settlement mechanisms outside SWIFT.
This network—sometimes referred to as the “Dragonbear”—no longer belongs to theoretical discussions. It now constitutes an operational architecture for circumvention.
The West designed a system suited to a world organized around a few critical chokepoints. That world, however, is now fragmented and no longer conforms to that logic.
When Strategy Meets Its Own Constraints
Washington attempted to reinforce the mechanism by lowering the cap to $44 in January 2026. Yet at the same time, other dynamics reduced its effectiveness.
Geopolitical tensions in the Middle East contributed to pushing Brent crude prices close to $100. In this context, on March 6, the U.S. Treasury issued a temporary waiver allowing Indian refiners to purchase Russian crude without price restrictions.
Russian crude prices then temporarily reached levels close to $100, in direct contradiction with the announced cap.
This situation highlights a structural constraint: it is difficult to pursue multiple coercive strategies across different theaters simultaneously without diluting their individual effectiveness. The waiver is not an anomaly—it reflects an adjustment required by overlapping strategic priorities.
A Global Demand That Has Become Less Price-Sensitive
On the demand side, a more subtle but equally important shift is underway.
In 2008, when oil reached $147 per barrel, rising energy prices had a significant impact on household budgets, particularly in the United States. Global demand then declined noticeably: the system responded.
Eighteen years later, economic conditions have evolved substantially. Median incomes have risen in advanced economies as well as in several emerging markets. In China, urban wages have increased significantly; in India, they have at least doubled.
As a result, price sensitivity thresholds have changed. High oil prices no longer have the same proportional impact on household budgets. The oil market no longer has a single tipping point, but rather multiple thresholds, all shifted upward.
The corrective mechanism still exists, but it now activates at levels that make it harder to trigger without causing broader macroeconomic disruption.
An Interdependence Between Supply, Demand, and Asian Arbitrage
It is the interaction between these dynamics that defines the new market reality.
Russia’s ability to sustain exports depends in part on the capacity of major importers—particularly in Asia—to absorb these flows. But this relationship is not purely mechanical.
It also relies on industrial arbitrage, especially in refining, on structural price differentials between crude grades, and on geopolitical strategies aimed at diversifying supply sources.
The rising prosperity of certain importing countries facilitates these arbitrages. It does not fully explain them, but it is a necessary enabling condition. Without this economic base, alternative trade routes would be far less viable.
In this context, public policy measures—subsidies, strategic reserve releases, and various stabilization mechanisms—help smooth short-term shocks while delaying deeper structural adjustments.
Europe Facing Its Own Contradictions
A particularly illustrative case concerns refined products derived from Russian crude.
Some importing countries purchase crude oil, refine it domestically, and then export refined products to international markets, including Europe. In this way, part of the volumes indirectly linked to Russian exports re-enters European supply chains in refined form.
In this framework, sanction strategies confront a broader economic reality: the deep interdependence of global energy value chains.
At the aggregate level, constraints remain binding. Major Asian importers account for a significant share of global demand. In such a concentrated market, national strategies have limited impact when confronted with systemic global equilibria.
A Gradual Fragmentation of the Monetary System
Beyond oil, another dynamic is emerging: the gradual evolution of monetary circuits.
The increased use of the dollar as a sanctioning instrument has encouraged some actors to explore alternative settlement mechanisms. However, these alternatives remain constrained by structural limitations: lack of convertibility in certain currencies, insufficient market depth, and fragmented financial infrastructure.
This transition is unlikely to be rapid or uniform. It will unfold gradually, through the accumulation of parallel practices rather than abrupt substitution. Its pace will depend as much on political decisions as on the ability of alternative systems to provide liquidity and stability.
A Market Without Shock Absorbers
If current trends persist—rigid supply due to prolonged underinvestment, stronger producer coordination, and demand supported by rising incomes—then the historical equilibrium of the oil market may be durably altered.
The range of price fluctuations could widen, with more pronounced periods of stress and sharper corrections. In a system where traditional shock absorbers are weakened, adjustments occur later—but with greater intensity.
Public policies aimed at absorbing each shock in the short term may smooth immediate effects while potentially reinforcing longer-term imbalances.
Escaping the Trap
There is only one structural path out: extracting kilowatt-hours from oil.
This is not merely an energy transition. It is a shift in power.
As long as oil remains central, the market will remain exposed to geopolitical shocks it cannot control. Reducing that dependence means not only lowering price volatility, but also limiting the ability of external actors to impose constraints.
Every electric vehicle, every heat pump, every substitution reduces collective exposure to the trap.
Energy diversification is no longer a climate objective alone. It is a strategy of sovereignty. [...]
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The Pasdaran in RobeMarch 18, 2026How Iran has just revealed the naked truth of its own regime — and why it changes everything
There are moments in the history of regimes when the mask does not fall under external pressure. It falls through internal accident — because a crisis forces a decision too quickly, in the dark, without time to maintain appearances. On March 8, 2026, Iran experienced such a moment. That night, in a secret meeting in Qom, under bombardment, the Assembly of Experts appointed Mojtaba Khamenei as Supreme Leader of the Islamic Republic. In less than ten days, the regime resolved the one question it had never dared to settle publicly. And in doing so, it said — involuntarily, irreversibly — what it truly is.
The Founding Imposture
To understand what has just happened, one must return to the grammar of Iranian power. Since 1979, the Islamic Republic has rested on a structuring fiction: the Supreme Leader is not a monarch. He is a cleric — a faqih, an Islamic jurist — whose authority derives from mastery of sacred texts, not from birth. That is precisely what distinguished the Khomeinist revolution from the Pahlavi monarchy it overthrew. Power was not transmitted by blood. It was earned through religious scholarship.
This is precisely why a father-to-son succession was, until that night in March, considered unthinkable even within the system itself. For years, Mojtaba faced significant resistance within Iran’s clerical and political establishment. The Islamic Republic had been explicitly founded to avoid the appearance of hereditary rule that characterized Iran under the Shah, and many within the regime viewed the prospect of dynastic succession as fundamentally incompatible with its ideological foundations. Under normal circumstances — had Ali Khamenei died of natural causes, after a prolonged institutional endgame — Mojtaba would not have been selected.
What has occurred, therefore, is not a mere succession. It is the manifest transformation of Velayat-e Faqih into hereditary power: the son succeeding the father at the head of an anti-monarchical dictatorship that once claimed to have eradicated dynastic rule forever.
The Islamic Republic has just made itself into a Shah. It cannot unmake that.
But this is not yet the central point. For Mojtaba is not merely a son succeeding his father. He is something more precise, more revealing — and infinitely more destabilizing for the regime’s internal structure.
The Pasdaran in Robes: Anatomy of a Silent Takeover
Here is what almost no commentator states plainly. Mojtaba Khamenei is not a cleric who relies on the Revolutionary Guards. He is a Revolutionary Guard who wears clerical robes.
The distinction is not semantic. It is constitutional, institutional, and — for the regime’s future — existential.
Mojtaba joined the Islamic Revolutionary Guard Corps in the late 1980s, serving during the final years of the Iran–Iraq War. For over two decades, he cultivated close ties with IRGC commanders, from the Qods Force to the Basij militia and the Guards’ Intelligence Organization. When the U.S. Treasury sanctioned him in 2019, it stated that he worked with Qods and Basij commanders to advance the regime’s regional objectives and its domestic repression. The story of the “Habib Battalion” is central here: a network of Iran–Iraq War veterans who later formed Mojtaba’s inner circle, helping recruit trusted operatives within the IRGC and Basij for the security apparatus built around him.
Without the support of the Pasdaran, Mojtaba Khamenei could not have succeeded his father. The crisis merely provided the context in which they could impose what ordinary institutional resistance had previously prevented.
A member of the Assembly of Experts, Shaykh Mahmoud Rajabi, inadvertently confirmed as much. “The country’s wartime conditions,” he said, “were among the most influential factors in selecting the Leader.” This sentence deserves attention. Rajabi is not a liberal critic — he is an ideologue from the Mesbah-Yazdi circle, rooted in Qom’s hardline seminaries. In phrasing it this way, he revealed what the regime would prefer to conceal: the selection did not proceed from theological judgment. It proceeded from a national security decision. Not the merit of the faqih — but the urgency of the bunker. Velayat-e Faqih had just confessed its own foundations.
This is not a cleric who tamed an army. It is a man of the security apparatus who learned the language of clerics in order to wear their costume. His title of ayatollah, moreover, was formally conferred the very night of his appointment, broadcast live on state media, in what resembled less a religious recognition than a coronation.
One does not become an ayatollah overnight. One is crowned.
Separation of Powers as Safeguard — and Illusion
Since 1979, the architecture of the Iranian regime has rested on a productive tension between two poles: the clergy and the Pasdaran. The Supreme Leader, a cleric at the apex, arbitrated between them. This duality was exhausting, conflictual, often paralyzing — but it was also the source of the regime’s resilience. It prevented any single apparatus from devouring the others.
Today, the Pasdaran control roughly a quarter of Iran’s economy. They command ballistic missiles, drones, proxy networks across the Middle East, and the machinery of internal repression. What they did not have until March 8, 2026, was the turban. Now they have it.
With Mojtaba, the arbiter has vanished. The Supreme Leader is no longer above the Pasdaran — he is their product, their creature, their emanation. For the first time in the history of the Islamic Republic, the two institutional poles have fused in a single person. And this fusion is not a strengthening: it is a structural catastrophe disguised as consolidation.
Why? Because the duality was not a bug. It was the system’s self-regulating mechanism. By eliminating it, the regime has just lost its primary internal pressure valve. All the tensions that once accumulated between clerical orthodoxy and the Pasdaran’s militarized economic ambitions now have no institutional space in which to resolve. They will seek an outlet elsewhere.
And that elsewhere has a name.
The Artesh: The Institution That Did Not Merge
The Artesh is avowedly apolitical. Its leaders repeatedly affirm loyalty to whatever regime is in place. Unlike the Pasdaran, it does not define itself as a revolutionary institution.
This formula — loyal to any regime in place — now takes on an entirely new meaning. For the question is no longer “Is the Artesh loyal to the regime?” It is: “What now constitutes the regime?”
A leader in a bunker, wounded, invisible, designated through inheritance in an anti-monarchical system, elevated to ayatollah overnight by clerics seeking to survive bombardment — is that the regime in place? Or a regime in flight?
In the aftermath of the Twelve-Day War of June 2025, the Artesh had already gained increased influence in strategic deliberations, its role reinforced by its presence in the Supreme National Security Council and the creation of a National Defense Council. This institutional drift predates the current crisis — it is not a reaction to it. It is a structural trend.
Here is the concrete mechanism now unfolding: with a phantom leader, the Artesh absorbing the initial military shock — its armored and infantry formations serving as the first line of defense — someone must sign, decide, coordinate on a daily basis. The Pasdaran, now fused with supreme power in Mojtaba’s person, are both too exposed and too targeted to perform this administrative function. They have been designated a terrorist organization by the European Union since January 29, 2026. Their commanders are legitimate targets for Israel and the United States.
The Artesh, by contrast, is not blacklisted. It did not massacre protesters in January — that was the work of the Pasdaran and the Basij. It remains the only Iranian institution still presentable on the international stage. In any postwar scenario, it is the only possible interlocutor.
This is not a coup in preparation. It is something subtler and more powerful: a transfer of legitimacy by default.
A Slogan to Be Read as a Political Document
During the successive uprisings of the past decade, one slogan captured popular perceptions of Mojtaba’s rise: “Mojtaba, may death prevent you from ruling.”
The importance of this slogan lies in what it reveals as the true scandal. The scandal was not corruption, nor even brutality. It was transparency. Iranians understood before analysts what Mojtaba represented: not a legitimate successor within a theocratic system, but proof that the system had never been what it claimed to be. A monarchy invoking God. A security apparatus dressed in Islamic jurisprudence.
Today, many in Iranian society believe Mojtaba Khamenei is dead — or at least wish to believe it. This is not denial; it is a political statement. A leader imagined dead before having governed does not yet exist as real authority. And an authority that does not exist as a psychological reality in the minds of those it claims to govern is, in essence, already vacant.
What History Teaches About Regimes Built on Opacity
There is an empirical rule in political science, rarely stated but almost universally verified: authoritarian regimes do not fall at the height of their brutality. They fall when that brutality loses its internal legitimacy — when members of the apparatus themselves cease to believe in the narrative that justifies their own violence.
By appointing Mojtaba, the regime has told its own soldiers, clerics, and bureaucrats: Velayat-e Faqih was a fiction. What matters is family and security networks. We are not a revolution. We are an armed family enterprise.
Some already knew this. But knowing it tacitly and hearing it declared officially — in the language of Islamic law and the Assembly of Experts — are two different things. Private disillusionment remains silent. Institutionalized disillusionment seeks an exit.
That exit, in Iran in March 2026, can take only one form: an institution that did not participate in the imposture. An institution that can claim, tomorrow, that it was not present when the mask fell. An institution whose purpose is not to protect the revolution — but to defend Iran.
The Artesh does not need to seize power. It need only remain standing while the others collapse under the weight of what they have just admitted.
The Islamic Republic will not die under bombs. It will die from having finally told itself the truth [...]
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The Great Zombification of CapitalMarch 15, 2026Neijuan, or the Silent Involution Devouring East and West
The Chinese have a word for it.
Neijuan — awkwardly translated as “involution”: intense activity, massive deployment of capital, the appearance of vitality — and real returns collapsing until the moment they can no longer be concealed.
BlackRock limits withdrawals. Blue Owl loses a third of its value. In China, industrial profits are collapsing. Analysts speak of “poor underwriting,” of a “rate cycle.” No one pronounces the word. Yet it asserts itself on both sides of the Pacific.
China entered it from above: the state directed credit, manufactured overcapacity, exported deflation.
The West entered it from below: central banks flooded markets, funds refinanced the unprofitable, valuations survived reality.
Two opposing mechanisms. One identical dead end. One identical victim: those who work.
The Chinese Involution: Direction from Above
The word was born in lecture halls. In the early 2010s, Chinese students used it to describe that absurd sensation of working twice as hard to obtain exactly the same result.
Neijuan first referred to the educational competition of a zero-sum system: one more student at Tsinghua means one fewer elsewhere. It then slipped into economics, because what it described was not a university problem, but a system in which the intensification of effort no longer produces proportional returns.
In China, involution is imposed by the state: savings channeled toward investments with diminishing returns, massive overcapacity, persistent deflation.
The data for 2026 confirm it: growth at 4.5–5 percent, margins in electric vehicles falling from 7.8 percent to 4.4 percent, some manufacturers already in net losses. Downstream, the engineer accepts the “996” — 9 a.m. to 9 p.m., six days a week — simply to keep his job in a saturated market.
Neijuan is first experienced in bodies before it appears in statistics.
Yet one must resist an overly convenient symmetry. China’s overcapacity in electric vehicles, batteries, and solar panels is not an industrial accident; it forms part of a twenty-year strategy of domination.
Beijing accepts zero margins today in order to kill competition tomorrow. Involution there is as much a deliberate instrument as it is a symptom. What the West experiences as crisis, China may experience as geopolitical investment.
Western Involution: Illusion from Below
The West does not only import cheap goods — it also imports downward pressure on its real returns.
Post-2008 policies allowed structurally unprofitable companies to survive through perpetual refinancing. The private credit market has doubled since 2019 to reach $1.3 trillion. Defaults are rising, yields are falling from 10 percent to 6–8 percent, and withdrawals exceed available liquidity.
The dominant strategy assumed perpetual liquidity. It was not perpetual. It was merely abundant. That is not the same thing.
In France, a thirty-something executive spends 35 percent of net income on housing — compared with 18 percent for the previous generation.
A degree no longer buys access to capital; it buys the right to remain in the race. What Graeber called “bullshit jobs” — positions whose holders themselves doubt their real usefulness — is not a sociological anecdote: it is the symptom of an economy that produces activity without value.
China’s 996 and the Western bullshit job are not opposites. They are two faces of the same exhaustion.
GDP grows, assets soar. Certainly. For the person who works without owning capital, growth remains a story read in newspapers, never felt in a bank account.
This is not a cyclical injustice — it is the social signature of involution.
“Planning by Proxy”: Kaminska’s Verdict
Izabella Kaminska describes the Western system as “planning by proxy”: institutional incentives have dictated the allocation of capital in place of genuine profitability.
“The only difference lies in the source of the funding. Chinese repression draws on the deposits of households trapped within the banking system; Western private credit draws on institutional capital attracted by promises of stable returns.”
In both cases, each additional unit of capital buys less productivity — and more time.
Two systems opposed in principle. The same pathology in their outcomes. The same experience in their bodies.
Toward a Necessary Restructuring
The turbulence in private credit is not the cause. It is the collision between a decade of involution and the sudden demand for real returns.
Restructuring will require naming what no one dares to articulate: that post-Covid office real estate will not recover its former valuations; that certain sectors — overcapacity logistics, physical retail, parts of “fintech” — are zombies living on borrowed time.
Political choices will be brutal: who absorbs the loss? Pension funds — future retirees? States — taxpayers? Companies — employees?
If involution has a human face — the exhausted Chinese graduate, the Western worker growing poorer within a rich economy — restructuring cannot be merely accounting. It will have to restore meaning to effort, and admit that there was never a plan.
Involution is not a Chinese pathology imported abroad. It is the delayed consequence of a capitalism that for too long confused liquidity with prosperity, activity with value, asset growth with real wealth.
The question that remains — and that no one in trading floors or ministries truly wishes to ask — is this: if effort no longer produces proportional returns, neither for funds nor for citizens, what remains to make people want to keep playing the game?
Sources
This article draws on the analysis of Izabella Kaminska (The Blind Spot, March 2026), Goldman Sachs data on Chinese growth in 2026, and PIMCO reports on U.S. private credit. [...]
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Switzerland, a Negotiable Power?March 11, 2026How a Prosperous State Turned Its Neutrality into an Adjustment Variable
Switzerland is experiencing the most serious existential crisis of its modern history. What was once presented as a singular success story—armed neutrality, admired mediation, insolent prosperity—has turned into a spectacle of impotence and submission.
By 2026, the verdict is unequivocal: Bern no longer speaks to the world; it apologizes for existing.
More troubling still: Switzerland does not have a bad foreign policy. It no longer has one at all. It no longer defines a line; it absorbs shocks. It no longer pursues a vision; it manages risks.
One will object, at once, that neutrality has always been a calculation. That even Dunant himself was a pragmatist, not an idealist. That the Confederation never claimed heroism—only usefulness. It is an honest objection, one that deserves to be taken seriously before being overturned. For what distinguishes sovereign calculation from constrained calculation is not its content—it is its origin.
For two centuries, Switzerland chose its neutrality. It could have done otherwise, and it was precisely that choice which endowed it with moral authority. What it experiences today is different: it endures its neutrality—while optimizing it. This shift from chosen sovereignty to negotiated sovereignty is the real rupture. Everything else flows from it.
THE DIPLOMACY OF THE GOLD BAR
The episode of the summer 2025 tariffs is not merely a commercial dispute; it is a structural revelation.
By imposing a 39 percent tariff rate, Donald Trump demonstrated that Swiss exceptionalism no longer exists.
That President Karin Keller-Sutter was publicly mocked for her supposed “aggressiveness” is humiliating.That Switzerland responded with gestures of financial conciliation is even more so.
The 200 billion dollars of investments promised to the United States by 2028 were presented as a pragmatic compromise. In reality, they mark a strategic turning point. By agreeing to invest such a sum—under threat—Switzerland did not merely save its exports; it validated a precedent. Its sovereignty is no longer an intangible principle but an adjustable variable within an asymmetric negotiation.
A sovereignty that accepts being priced ceases to be sovereign; it becomes a contractual option.
Switzerland no longer negotiates a strategic relationship. It negotiates its exposure to risk. This is no longer diplomacy. It is asset management.
THE PHANTOM MEDIATION
In February 2026, during the indirect discussions in Geneva on the Iranian file, the role of the Swiss mediator amounted, according to several diplomatic sources, to providing a room and guaranteeing the confidentiality of exchanges. Not to formulate a proposal. Not to shape the outcome. To open a door—and remain in the corridor.
After the failure of these talks and the American–Israeli strikes that followed, an obvious fact returned with brutal clarity: Switzerland no longer influences major decisions.
The criticisms voiced by Gerhard Pfister and Franziska Roth do not merely concern a failed diplomatic sequence. They target a system. Pfister, a member of the Foreign Affairs Committee, is explicit: the “good offices” Switzerland claims are, in his own words, “very bad services rendered to the Iranian people.” Roth, a member of the Socialist Party, argues that “the policy of appeasement we have pursued so far leads nowhere.”
A diplomacy that offers a platform without producing leverage. The criticism is cross-party. It is therefore structural.
The “good offices” remain. The influence has dissipated.
Why? Because influence requires the willingness to assume risk. Switzerland now optimizes risk—it no longer bears it.
THE VERDICT OF OMAN
There is a counterexample that should sting Bern more than the mockery coming from Washington.
Iran did not choose Geneva. It chose Muscat. In February 2026, at the explicit request of the Iranian delegation, the indirect negotiations were relocated to the Sultanate of Oman—a petroleum state with no democratic tradition, no Red Cross, no centuries of proclaimed neutrality. In diplomatic circles, Oman is now described as the “Switzerland of the Middle East.”
The title has moved. Not by accident, but by the sovereign decision of an interlocutor who assessed his options and discarded Bern.
This is not a failed diplomatic episode. It is a verdict. When your interlocutors replace you, they do not comment on your foreign policy—they conclude it.
A state that merely endures while optimizing becomes invisible in the moments that matter. History does not remember wealth managers; it remembers those who took a position.
NEUTRALITY AS FINANCIAL ARBITRAGE
This is where the whole pattern becomes clear.
Swiss neutrality is no longer a moral posture inherited from 1815. It has become a contemporary financial arbitrage.
Faced with the war in Ukraine, Bern froze assets while limiting its military commitments. It protects its commercial model while benefiting from the Western security architecture.
The most damning demonstration came in the past week. Switzerland paid 650 million francs to the United States for the acquisition of Patriot missiles. Those missiles were then consumed by Washington in the war against Iran—the very country with which Bern simultaneously presented itself as the privileged channel of communication. Their delivery is now delayed by at least five years. Switzerland financed the weaponry used against the very interlocutor it claimed to mediate with.
One could hardly illustrate more clearly what Swiss neutrality has become: double-entry bookkeeping.
This mechanism produces a new perception: Switzerland maximizes its economic flexibility while externalizing its strategic costs. The reproach formulated by Donald Trump—“You exploit our generosity”—is brutal. Yet it reveals a real transformation: neutrality is now interpreted as opportunistic optimization.
Sovereignty has become calculable. Neutrality has become negotiable. Diplomacy has become accounting.
THE QUESTION EVERYONE AVOIDS
Switzerland’s problem is not moral. It is conceptual.
No one is asking Switzerland to deploy armored divisions on the Dnieper. No one is asking it to choose a side in every conflict that tears the world apart. What is being asked of it is to have a vision of the world that is not a balance sheet—a line that is recognizable, defensible, and coherent over time.
This is not a demand for heroism. It is a demand for credibility.
A state can be neutral. A state can be cautious. A state can be prosperous. But a state cannot indefinitely turn its sovereignty into an adjustment variable without altering the very perception of its reliability.
A sovereignty that accepts being priced ceases to be sovereign.
As long as Switzerland treats its foreign policy as a mechanism for protecting a model rather than as the expression of a worldview, it will remain peripheral in decisive moments.
Watching the world burn with a gold bar in one hand and a petition of principle in the other is not a strategy.
It is wealth management. And wealth managers are forgotten by history. [...]
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Kill the leader, create the worst enemyMarch 10, 2026The Trap of the Perfect Strike
The father was killed. The wife was killed. The child was killed. During negotiations. And now we wait for the successor to be reasonable.
Is that the calculation, the strategy? Eliminate the supreme leader at the beginning of the conflict, hope for a more pliable successor, and then go home with a clean victory?
An appealing theory—clear, elegant—and wrong.
No successor survives—politically or physically—by negotiating immediately after the liquidation of his predecessor.
Not because of ideology, nor out of a spirit of vengeance, even if that desire is indeed there, visceral and inevitable.
But because of pure mechanics, the arithmetic of power. Every authoritarian regime rests on a single axiom: the one who rules cannot appear weak. Not before the external enemy, but above all before the internal factions that observe, calculate, and wait for the first opportunity to replace him.
History leaves no ambiguity.
Muammar Gaddafi shot in a drainage ditch in October 2011: Libya did not produce a moderate successor, but two rival governments, six major militias, and a slave market documented by the United Nations.
Saddam Hussein hanged in 2006: Iraq gave birth to Islamic State.
Mojtaba Khamenei has barely taken his place when the Islamic Revolutionary Guard Corps must scrutinize his words, his tone, his hesitations, his cadence. In regimes where succession does not pass through the ballot box, legitimacy is proven in only one way: through hardness.
There is an additional layer—more intimate, more irreducible. The strike of February 28 did not only kill his father, Ali Khamenei. It also killed his mother. His wife. His son. His sister.
This man will therefore not govern with the abstract burden of succession, but with the fresh grief of a family liquidation. This man will not be available for diplomacy.
The West regularly confuses the summit with the system. “Eliminate Khamenei as one would cut off the head of a snake,” people said. Except that Iran is less a snake than an institutional hydra—pasdaran, clergy, networks of influence—each with its own interests and logic, and which did not wait for Khamenei to exist.
The Supreme Leader in Iran does not merely command these structures: he serves them. As they have no interest in moderation, he escalates—not out of inclination, but because he has no choice.
The paradox of the “perfect strike” is that it manufactures exactly the worst possible adversary. It takes a man who might perhaps have sought dialogue and turns him into a leader for whom compromise means political death. It takes a weakened regime and provides it with the one resource it lacked: a legitimate cause—revenge—universally understood, universally mobilizing.
The history of leadership decapitations in wartime has a cruel coherence. In the vast majority of documented cases, they have not shortened a conflict by eliminating the supreme leader in its first weeks.
Washington and Tel Aviv have forgotten that geopolitics is not a game of chess in which one removes a key piece to win the match. It is a game where every piece removed creates two new ones—more enraged, less predictable, determined not to end like the previous one.
There is a word to describe repeating the same action while hoping for a different result. But it does not belong to the vocabulary of strategy.
Khomeini to Michel, at Neauphle-le-Château, October 1978:
“Do you realize that you and I are sixty years apart! You remind me so much of my dear son Mostafa, who died almost a year ago to the day. Your presence, Michel, brings me serenity and encouragement in the fulfillment of my destiny.”
A Levantine Youth, Chapter 37, A Refined Man [...]
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When Tehran Bombs Its BankerMarch 7, 2026Dubai never claimed to be neutral. It claimed to be indifferent. A crucial distinction. For forty years, the United Arab Emirates allowed Iranian capital to pass through without asking inconvenient questions. It was not complicity. It was business. A perfectly rational model: taking a commission on the oxygen of a suffocated economy.
The numbers are now public. In 2024, according to the U.S. Treasury, $9 billion linked to Iran’s clandestine financial activity passed through Emirati companies — 62% of it directly derived from Iranian oil sales routed through Dubai. Nine billion. Annually. And that figure represents only what could be traced.
This system worked because it suited everyone. Washington could sanction Tehran while knowing the pressure would remain tolerable. The Revolutionary Guards could finance Hezbollah and the Houthis. Abu Dhabi collected the commissions. The equilibrium was not fragile. It was structural.
Then Iran decided to bomb Dubai International Airport.
Since February 28, 165 ballistic missiles, two cruise missiles, and 541 drones have been intercepted over the United Arab Emirates. Debris fell on the Fairmont Palm. Goldman Sachs, JPMorgan, and Citigroup ordered their teams to work remotely. Dubai International — the busiest airport in the world — fell silent. Supermarkets were stripped bare.
Iran did not attack an enemy. It attacked its banker
The response is now on the table. According to the Wall Street Journal, Abu Dhabi is considering freezing the assets of Iranian shell companies, seizing vessels from the shadow fleet, and subjecting informal exchange offices — those discreet arteries through which Tehran still breathes — to comprehensive inspections. No final decision has been taken. But the mere fact that the warning has been transmitted to Tehran already constitutes a historic rupture.
Because this is what changes everything: the freeze would not come from Washington. It would come from Abu Dhabi. This is not a sanction imposed from outside. It is a divorce initiated from within. The difference is abyssal. Iran circumvented American sanctions precisely through the UAE. If the UAE closes the tap itself, there is no longer any circumvention. There is no longer any door.
Experts who have followed the Iranian economy for years are unequivocal. Esfandyar Batmanghelidj, director of Bourse & Bazaar, says it plainly: the UAE is “Iran’s most important gateway to the global economy.” Andreas Krieg of King’s College London is even more precise: freezing accounts linked to the Revolutionary Guards would be “the most important non-military tool the UAE could use against Iran.”
Iran knew this. It did it anyway
This is where the strategic enigma lies. One can understand a risky decision. It is harder to understand a suicidal one. Tehran possessed a rare asset in a world of financial blockades: real, functional, daily access to global markets. Such an asset cannot be rebuilt in a few months. It was constructed over four decades of mutual discretion, profitable silences, and well-understood interests on both sides.
Six days of drones were enough to settle the account.
For the UAE, the turning point is painful but readable. Dubai built its reputation on a promise: to be the safest city in the most unstable region in the world. That promise is now cracked. Bloomberg puts it bluntly: there is no way back. The question is no longer whether Dubai will remain a global financial hub. The question is at what price it will remain one — and under what geopolitical conditions.
The realignment is underway. By freezing Iranian assets, Abu Dhabi would not only punish the aggressor. It would send a signal to Washington, to Tel Aviv, and to the hedge funds still hesitating to reopen their offices. It would signal that it has chosen its side — not out of ideology, but out of calculation.
Iran has not only lost access to markets. It has lost something rarer: an interlocutor that was not its enemy. In a world of total sanctions, that was the only luxury that truly mattered.
It has just destroyed it itself.
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What Khomeini Told Me in 1978
I didn’t read Iran in books. I heard it from his mouth.
It was in Neauphle-le-Château, a few weeks before the world tipped over. I was fifteen years old. I was brought into a room with no chairs — just rugs, a few dishes. The man across from me spoke an Arabic from another age — the Arabic of the Quran, not the streets. He placed his hand on my knee. He looked at me steadily.
“It is I who will write for the next two centuries the history of the entire Middle East. The chain reaction has already begun.”
He told me he would protect the Shia of Lebanon — despised, invisible, whose faces I knew from the women who worked in our homes. He would call them to rise, from Beirut to Baghdad, from Bahrain to Sanaa. “You will see how the Shia will become the most powerful force in your country. They will be the Party of God” – Hezbollah.
This was not prophecy. It was a plan.
Today, Khamenei is dead. Iran is at war. Hezbollah is firing from Lebanon. The Strait of Hormuz is closed. And the world looks on in shock at what this man had announced to me in that small house on the outskirts of Paris, in 1978.
Une jeunesse levantine is not a memoir.
It is the only firsthand account of a conversation with the architect of everything now unfolding before our eyes. [...]
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Bahrain: The Silent Test of American PowerMarch 4, 2026I grew up in Lebanon, in close contact with Shiite communities from whom I learned early on that they could not be reduced either to a confessional label or to an external allegiance. I later lived in Bahrain. What I describe here, I observed from the inside.
Bahrain does not threaten through conflagration. It tests through accumulation.
The strategic risk in Bahrain is not a sudden revolution. It is slow attrition.Not a spectacular collapse, but a gradual decomposition that makes the American presence, cycle after cycle, more politically costly and more regionally fragile.
This is what Bahrain is testing today: the ability of the American security architecture to absorb an accumulation of tensions without visible rupture.
The illusion of a threshold
Conventional analysis looks for a tipping point: insurrection, foreign intervention, a major attack against the U.S. Fifth Fleet.
But the most plausible scenario is different.
Regional escalation with Iran. Internal security tightening. Preventive arrests in Shiite strongholds. Regional media amplification. A return to apparent calm.
Then repetition.
With each cycle, stability holds. But the political and social cost rises.
The mechanism of attrition
When an American strike targets Iran, three mechanical effects appear.
The monarchy reaffirms its alignment with Washington. The security apparatus conducts preventive arrests in Sitra or Diraz. Media networks close to Tehran amplify images of detentions and accusations of collusion.
This pattern does not produce an explosion. It produces cumulative polarization.
A structural fracture
Bahrain has roughly 1.5 million inhabitants, of whom 60 to 70 percent of citizens are Shiite. Political and security power remains dominated by the Sunni dynasty. This imbalance is not an anomaly — it is embedded in the system’s functioning.
Since 2011, the apparatus has consolidated in layers: expanded anti-terror legislation, revocations of nationality, technological surveillance — with security expenditures now accounting for nearly one fifth of the public budget. A regime that devotes such a share of its resources to containing its own majority no longer governs by consent. It governs by exhaustion. And exhaustion is a costly strategy: fiscally, politically, generationally.
The budgetary constraint: the invisible breaking point
Unlike Qatar or the UAE, Bahrain does not possess the reserves that allow social peace to be purchased indefinitely. Its dependence on Saudi subsidies is structural, not cyclical — and medium-term fiscal projections only reinforce this asymmetry.
The breaking point may therefore be budgetary before it is social. An oil shock, a reduction in transfers from Riyadh — and the internal equation reconfigures abruptly.
Riyadh pays for Manama’s stability. And what Riyadh finances, Riyadh can condition.
The decisive role of Riyadh
Saudi Arabia demonstrated in 2011 its willingness to intervene militarily to preserve the monarchy. Any major crisis would trigger a Saudi reaction even before an American arbitration.
This umbrella reduces the risk of rapid collapse. But it automatically transforms internal tension into a Saudi-Iranian issue. By protecting Bahrain, Riyadh ties its own internal equilibrium to that of the island.
Stabilization is guaranteed. Regionalization is almost automatic.
Washington: ignorance or arbitration?
The United States does not “discover” Bahraini fragility. Congressional reports, diplomatic analyses, historical precedents — the demographic fracture has long been documented.
The reality is colder: Washington does not ignore this vulnerability. It accepts it as a strategic cost in order to maintain the Fifth Fleet and secure the Strait of Hormuz, through which roughly 20 percent of the world’s seaborne oil transits.
This is a trade-off, not blindness.
Iran: multiplier — not creator
It would be reductive to describe the Shiite opposition as an extension of Tehran. It is predominantly Arab and national in character. Its antagonism is the product of historical exclusion, not foreign instruction.
Nor is it a monolithic bloc. Moderate formations, such as the former Al-Wefaq, long favored institutional dialogue. Their forced dissolution did not extinguish them — it fragmented and, for some, radicalized them. When moderate interlocutors are eliminated, contestation is not suppressed. Its center of gravity shifts.
Iran operates within this space — through the media, religious, and digital ecosystem that connects Shiite communities across the region. It exploits existing terrain. It does not manufacture it.
That is precisely what makes the situation harder to defuse: the contestation does not originate from outside.
The Abraham Accords: one layer too many
By normalizing relations with Israel under the Abraham Accords, Bahrain added a symbolic dimension that Manama may have underestimated. For a significant portion of the population, the monarchy now aligns itself with what the regional narrative portrays as the historic adversary of Arab and Muslim causes.
This burden is not measured in opinion polls. It is read in sermons, in networks — and it reactivates with every regional incident, turning each new crisis into confirmation of an already entrenched narrative of humiliation.
The Abraham Accords brought Bahrain tangible diplomatic utility. They also carried an internal legitimacy cost that no one quantifies.
Each layer of tension — confessional, budgetary, security, symbolic — accumulates atop the previous one. That is how attrition works: not through rupture, but through sedimentation.
What Bahrain reveals
The system can endure. Riyadh guarantees regime survival. The security apparatus is consolidated. The American base is protected.
The risk, therefore, is not collapse. The risk is that each escalation cycle makes the American presence more politically visible, more regionally costly, more dependent on Riyadh, more symbolically exposed.
Through accumulation, the military platform may remain strategically viable — and become politically untenable.
In 2025–2026, several Gulf capitals are seeking to stabilize relations with Iran. If confrontation intensifies, Bahrain becomes the exception: the point where American military logic meets the region’s most pronounced sociopolitical fragility.
Not an immediate crisis. A resilience test.
Bahrain does not threaten through conflagration; it tests American resilience. How many cycles of attrition can Washington absorb before regional stability becomes incompatible with its military posture? [...]
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After the missiles, the silence of the insurersMarch 3, 2026We watch the missiles. We comment on the strikes. We scrutinize the straits. But the real breaking point may lie elsewhere: in the underwriting rooms of the City.
London no longer commands the seas through the Royal Navy. It commands them through insurance. Lloyd’s of London underwrites roughly 40% of global maritime freight. When a port is bombed, when a canal closes, when a vessel disappears—the bill is structured in London. And because 90% of world trade moves by sea, controlling insurance is tantamount to setting the global price of risk. Without insurance, there is no financing. Without financing, there is no economy.
The actuarial playbook is clear: in times of conflict, premiums rise, clauses tighten, but coverage remains in place. The outright cancellation of “war risk” cover is not a pricing adjustment. It is a methodological rupture. It signals that risk has become unpriceable—which is another way of saying it has become uncontrollable.
Insurance, first and foremost, is an information industry. The depth of the London market has never rested solely on available capital, but on its superior capacity to quantify what others could not model. If that information flow becomes distorted—for any reason, diplomatic friction, deliberate opacity, strategic surprise—the effect is not military. It is actuarial. A risk that can no longer be quantified cannot be priced. And a risk that cannot be priced becomes, by definition, uninsurable.
The danger is not local. The London market functions as a global benchmark: major international insurers calibrate their pricing to Lloyd’s quotations. If London is flying blind, the entire global reinsurance chain begins to wobble. The selective withdrawal of certain war-risk covers may not be the crisis itself. It may be the signal that the crisis has already begun.
As of March 2, the facts are unambiguous: the leading P&I clubs—Gard, Skuld, NorthStandard and their counterparts—have cancelled war-risk coverage in the Persian Gulf and the Strait of Hormuz, effective March 5 at midnight, London time. Traffic through the strait has already collapsed by more than 80% according to AIS data. Hull and marine premiums have surged by 25 to 50% (Marsh), while Hapag-Lloyd is now charging a surcharge of $1,500 to $3,500 per container. These are no longer warning signs. They are faits accomplis.
This is where the European dimension becomes strategic—and troubling. Despite Brexit, the Union remains heavily dependent on London’s underwriting capacity for large industrial risks, energy, maritime transport, and cyber exposure. If the London market contracts or becomes prohibitively expensive, European firms are mechanically underinsured. Neither Paris nor Frankfurt possesses the capital depth, syndication culture, or actuarial ecosystem required to step in. Building a credible alternative would take decades.
The Union speaks of energy sovereignty, digital sovereignty, industrial sovereignty. It rarely speaks of insurance sovereignty. Yet without autonomous reinsurance capacity, the European economy depends on decisions taken on Lime Street. This is not a technical debate. It is a question of power.
Three outcomes are conceivable. A simple repricing, if the market quickly regains its bearings—history argues for such resilience. A prolonged friction, if geopolitical uncertainty embeds itself and actuarial models struggle to absorb sustained volatility. Or, in an extreme scenario, a systemic crisis of confidence whose mechanics would resemble 2008—not in its cause, but in its transmission: a risk that ceases to circulate and ultimately freezes.
The question, then, is not only what Iran does. The question is whether London can still set the global price of risk with the same certainty as yesterday.
If the answer falters, it will not only be ships that list. It will be the founding assumption of the international financial system—that risk is always, somewhere, quantifiable—that begins to crack. [...]
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