By the end of this month, US–Iran negotiations had reached a near stalemate, following rounds of talks in Islamabad and Muscat that failed to produce any meaningful breakthrough. At the same time, the conflict has been steadily morphing into something closer to a “cold war,” driven less by direct confrontation and more by sanctions and economic pressure. Trump’s decision to pursue a ceasefire, and then extend it, has effectively shifted the burden of the conflict; what was once carried primarily by Israel on the military front has increasingly been transferred to the economic arena, where Washington now bears the real weight of the war.
Since then, Washington has doubled down on this approach, leaning heavily on a policy of “maximum pressure” against Iran, tightening maritime restrictions and squeezing its oil exports in the hope of forcing concessions at the negotiating table. Yet this strategy runs up against a reality that US policymakers either underestimate or choose to overlook. Iran is not a state easily subdued by conventional blockade tactics.
Decades of living under sanctions have honed its ability to adapt, cultivating resilient networks for economic circumvention, as well as a strategic depth and partnerships that extend well beyond the Strait of Hormuz itself.
Herein lies the paradox of Washington’s approach: in seeking to compel Tehran’s capitulation through economic strain, the United States risks entangling itself in the very trap it set, shouldering the greater cost of a war that shows no clear end.
The sustained pressure prolonging the crisis in the Middle East is now beginning to reverberate inward, into the United States itself and across its network of allies, as disruptions to energy flows and the global economy persist. Even under a ceasefire, these dynamics have produced a grinding war of attrition, not only for Iran but for Washington and its partners as well. The longer this trajectory holds, the more it risks reshaping the international order in ways that run counter to American interests, a prospect Washington cannot afford to ignore. This raises a central question: has President Donald Trump, through this strategy, become the primary loser in a conflict he chose to manage economically rather than resolve politically or militarily?
Within this tangled international landscape, the United States appears to be paying for the war with Iran, and the attritional strain it has produced, through the fraying of its ties with Western allies. Europe, heavily dependent on energy imports, particularly from the Middle East, has found itself especially exposed. The war, coupled with disruptions to navigation through the Strait of Hormuz, has driven up energy costs, heightened the risk of industrial slowdown, and fueled inflationary pressures across the eurozone. In effect, Europe is bearing the economic consequences of Washington’s decision to pursue this course.
After largely declining to take part in the conflict, several European powers, led by France, Germany, and the United Kingdom, have called for a return to negotiations between Iran and the United States, emphasising the need for a political settlement over further military escalation. A number of European leaders have even floated the possibility of easing sanctions on Iran as part of a future agreement. At the same time, Europe has advanced proposals to safeguard navigation in the Strait of Hormuz without sliding into direct confrontation with Tehran. Rather than closing ranks, the war has deepened an already widening transatlantic rift. Even before its outbreak, tensions had been building over Washington’s increasingly assertive trade and security policies toward Europe, ranging from the imposition of tariffs to demands that European allies shoulder a greater share of NATO’s defense burden, a stance forcefully championed by Donald Trump since taking office.
Spain’s evolving policy toward China offers an early signal of a potentially significant political shift within Europe, one that is unfolding in direct connection to the dynamics of this war. Over the course of this month, Madrid has signed 19 agreements with Beijing spanning investment, trade, technology, and scientific research. The breadth and scope of these deals point to an emerging framework for comprehensive cooperation and sustained strategic dialogue, rather than a one-off arrangement. Such a move could encourage other European states to follow suit, positioning Spain as a potential gateway for deeper Chinese industrial and economic penetration into the European market.
Canada, too, declined to align with the United States in the war against Iran, echoing the broader Western stance that has favored de-escalation and a diplomatic resolution. At the same time, Ottawa has sought to strike a more balanced posture, reducing its reliance on Washington while expanding its external partnerships, with China emerging as one of those avenues. Within Europe, France has similarly resisted participation in the conflict, consistent with its long-standing push for greater strategic autonomy from the United States. It continues to maintain robust economic ties with China, even as this runs counter to American preferences. Germany, for its part, has stayed close to this broader European line, eschewing military involvement, advocating for diplomacy, and deepening its economic engagement with Beijing. The energy shock triggered by the war has further complicated the picture.
As European states scramble to diversify away from Middle Eastern supplies, some have cautiously explored renewed channels with Russia. In certain cases, this has translated into political friction within the European Union itself, for example, Slovenia has threatened to obstruct EU sanctions on Moscow.
While these positions remain limited for now, they carry the potential to expand, particularly under the pressure of policies pursued by the administration of Donald Trump. Taken together, these developments cannot be viewed in isolation. They are part of a broader European recalibration, one that points toward a gradual strategic repositioning beyond the traditional transatlantic framework.
Nor has Washington itself been insulated from the consequences of Trump’s policies and this war. Rising gasoline prices, mounting inflation, slowing growth, and a weakening dollar have unsettled the U.S. market, which is now grappling with a pervasive sense of uncertainty. The political fallout is equally visible on Capitol Hill. The conflict has exposed a clear divide within the Republican Party in Congress, between those backing the war and those opposing it, while most Democrats remain firmly against it. At the same time, momentum is building on the legislative front to activate mechanisms that would constrain the president’s authority to initiate or sustain military action, particularly under frameworks such as the War Powers Resolution, reflecting a broader public mood that is largely averse to war. With American electoral sentiment closely tied to economic performance, these pressures place the current administration in a critical domestic test ahead of the upcoming midterm elections in November.
For the Gulf Cooperation Council states, the consequences of the war are even more immediate, tightly bound to both economic stability and regional security. Official statements issued during the recent Jeddah summit point to a growing recognition that the conflict is no longer merely a security concern, but a direct threat to the region’s economic foundations, particularly as it navigates its most severe crisis since the COVID-19 pandemic. Across the region, governments have underscored the urgency of reopening the Strait of Hormuz, a lifeline for their economies. At the same time, Gulf states have been careful to signal that their territories “will not be used as launchpads for attacks,” while placing greater emphasis on strengthening both national and regional defence coordination. Economically, recent moves reflect a broader strategic shift, toward diversifying partnerships and opening up to new global actors in response to mounting uncertainty. Yet despite the escalation, Gulf rhetoric has stopped short of advocating a rupture with Iran. Instead, it continues to stress the need to rebuild trust, acknowledging a fundamental reality:
Iran, by virtue of geography and history, remains an inescapable regional actor, one that must be managed and integrated into a long-term balance rather than excluded from it.
Israel, for its part, has not been insulated from the consequences of a war it pushed to ignite. Recent domestic political signals suggest that the conflict is reshaping the country’s internal balance of power. Rather than consolidating Prime Minister Benjamin Netanyahu’s grip on office, new dynamics are emerging that could work against him in the electoral arena.
The absence of a decisive military outcome against Iran, coupled with the mounting costs of confrontation, particularly with Lebanon, has contributed to a gradual shift in public sentiment. Increasingly, there is a preference for de-escalation or containment, especially as security and economic pressures persist. This shift has coincided with the reemergence of long-simmering domestic issues, including corruption cases involving Netanyahu and the contentious debate over the conscription of the ultra-Orthodox (Haredim). These issues, once sidelined by the dominant “security first” narrative, are now moving back to the center of political discourse. At the same time, a notable development has been the growing coordination within the opposition, led by figures such as Naftali Bennett and Yair Lapid. Efforts are underway to unify factions from the right and center into a broader front with the primary objective of unseating Netanyahu’s government, a close ally of Donald Trump.
In this context, the war is generating what may be the most politically precarious environment Netanyahu has faced in years: a public less inclined toward escalation, a domestic agenda weighed down by internal pressures, and an opposition that is increasingly cohesive.
As a result, the prospects for change in the upcoming elections appear more tangible, potentially ushering in a political realignment that could steer Israel toward managing its confrontation with Iran and Lebanon through containment and calibrated restraint rather than open-ended escalation and war.
Washington’s strategy of economic attrition, designed to pressure Iran into compliance, appears to be steadily rebounding, draining not only Tehran but also American capacity and that of its allies. The central question is no longer how long Iran can endure, but how much cost the United States itself is willing to bear in pursuing this course. Beyond that, a more consequential question looms, one tied to the broader shifts underway in the balance of the international order itself.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.
