Foreign Affairs
Iran and the New Rules of Global Power
The Making and Unmaking of American Dominance
Robert A. Pape
July 24, 2026
A U.S. Navy aircraft carrier in the Gulf of Panama in Panama City, Panama, March 2026
Enea Lebrun / Reuters
ROBERT A. PAPE is Professor of Political Science and Director of the University of Chicago Project on Security and Threats. He is the author of Bombing to Win: Air Power and Coercion in War.
On the night of January 17, 1991, television viewers around the world watched something they had never seen before. Against the backdrop of a black sky illuminated by antiaircraft fire, American precision-guided bombs slammed into windows, air shafts, and command bunkers in Baghdad. CNN broadcast the Gulf War live. For millions of people, the images seemed to herald the arrival of a new age.
To understand why those images mattered, it is necessary to remember how threatening Iraq seemed before the war began. Iraqi dictator Saddam Hussein commanded nearly one million armed men. His army had survived eight years of brutal war with Iran and possessed one of the largest tank forces in the world. Iraq’s invasion of Kuwait raised fears that Saddam would soon turn his forces on Saudi Arabia, potentially making his country an oil hegemon in the Persian Gulf and placing a quarter of global oil supplies under his direct control.
Few Americans expected an easy victory. The debacle of the Vietnam War still cast a long shadow. “Yours is a society that cannot accept 10,000 dead,” Saddam told the U.S. ambassador to Kuwait a week before he invaded his neighbor. Many analysts worried that he might be right, and the Senate authorized force by only a narrow margin. The Pentagon prepared for heavy losses, shipping thousands of body bags to the region. The expectation was not another World War II. It was another Vietnam.
What followed shocked almost everyone. After five weeks of air attacks, coalition ground forces liberated Kuwait in roughly 100 hours. The Iraqi army crumbled. More than 300,000 Iraqi troops in Kuwait were defeated, captured, or forced to flee. American combat deaths totaled 147, a stunningly low figure given concerns entering the war. A major state that had seemed formidable only months earlier had been routed with astonishing ease.
The significance of the American triumph extended well beyond the battlefield, underscoring the extraordinary position of the United States. With the Soviet Union disintegrating, Washington faced no major adversary and sat at the center of the world's financial, technological, and alliance networks. It boasted advanced military capabilities that no other power could match. The United States had become something unusual in modern history: a single state without a peer competitor. Operation Desert Storm transformed abstract measures of American power into lived experience. Governments, investors, and ordinary citizens around the world now possessed a shared image of what American military dominance meant in practice.
Most wars disappear into history. A few divide history into before and after. For the post–Cold War world, the Gulf War was one of those moments. The conflict resulted in the liberation of Kuwait and then launched the age that followed, one commonly referred to as an era of U.S. unipolarity, when peerless American military power undergirded globalization, growing prosperity, and relative stability.
But that age has now come to an end. The United States no longer enjoys the sort of military advantage it possessed in 1991. Thanks to globalization, the systems necessary to conduct precision warfare are no longer the preserve of a handful of great powers: they are accessible to a range of actors who are now able to stand up to much stronger states.
Indeed, the Iran war exemplifies this turning of the wheel. Where the Gulf War demonstrated American dominance, today’s clashes around the Strait of Hormuz reveal American limitations. A new era beckons, one in which the assumptions of the post–Cold War period are turned on their heads. The United States is not capable of bending others to its will through the exercise of force at low cost. Far from guaranteeing stability and predictability, American power has become a source of volatility. Weaker powers have learned the virtues of defiance and disruption, and they possess the tools to impose huge costs on the United States and its allies and partners. The coming era will be one of more frequent crises, higher costs for protecting global commerce, and intensifying competition over the world’s strategic chokepoints. The rules of power that governed the post–Cold War era have withered away, and a more dangerous international order awaits.
GREAT EXPECTATIONS
Major military victories do not often create new international orders. Wars can end with altered borders but they tend to leave the larger structure of world politics intact. The 1991 Gulf War was different because it transformed the world’s expectations. The gargantuan gap between what analysts predicted before the war and how the United States won a decisive and rapid victory convinced governments, markets, and societies that a new reality had emerged.
That reality rested on four assumptions: The United States could effortlessly impose military outcomes. Washington possessed unmatched escalation dominance, the capacity to quickly and cheaply defeat major threats. American power guaranteed the flow of goods through the world’s commercial arteries. And resistance to American power was ultimately futile.
These assumptions reinforced one another. Because American military superiority appeared overwhelming, allies reduced their own defense burdens and deepened their dependence on Washington. Because American power discouraged other actors to risk confrontation and escalation, investors discounted geopolitical risk. Because maritime commerce appeared secure, corporations stretched supply chains across continents and minimized their inventories at home. Because American power appeared unrivaled and implacable, most states sought to accommodate the United States rather than resist it.
The post–Cold War order rested less on Washington’s capacity for coercion than on the strength of its credibility. States did not need to experience American military power directly. They only needed to believe in it. The United States defeated Iraq so quickly and so cheaply that future resistance appeared irrational. Only a handful of “rogue states” and actors, such as North Korea, Iran, and Somali pirates, dared to ignore what all could see. In 1990, the U.S. Air Force ambitiously called its new doctrine “Global Power, Global Reach.” The 1991 Gulf War made this a reality few could ignore.
An Iraqi soldier near Basra, Iraq, March 1991
Reuters / Richard Ellis
The seeming invincibility of American power heralded by the Gulf War had immediate consequences in Europe. During the Cold War, Western European governments had maintained large militaries because the threat of the Soviet Union required them to do so. After 1991, European countries slashed defense budgets while increasingly integrating their economies. They signed the Maastricht Treaty in 1992, laying the groundwork for a shared currency and the flattening of borders among EU member states. Formerly communist countries competed for entry into Western institutions. NATO, which had 16 members in 1991, expanded eastward, eventually incorporating much of the territory that had once belonged to the Warsaw Pact. Countries that only a few years earlier had feared NATO now sought protection within the U.S.-led order. By the end of the decade, American preeminence was no longer a subject of debate but a matter of fact.
Even Washington’s future rivals absorbed the lessons of Baghdad. As the Gulf War unfolded, Chinese officers studied it obsessively because, in many respects, Iraq’s military resembled the People's Liberation Army. Beijing concluded that the massed armies of the industrial age were dangerously vulnerable to precision warfare. Over the following decades, China reduced troop levels dramatically from nearly 3.5 million personnel in 1990 to two million a decade later and modernized command systems, expanded missile forces, and invested heavily in information technologies. What is ironic is that many of the capabilities now challenging American military predominance in East Asia originated in China’s effort to understand why the Iraqi army had collapsed so quickly in 1991.
Confidence in American power affected economic decisions as much as military ones, encouraging one of the greatest expansions of economic interdependence in modern history. Merchandise, capital, energy, and information crossed borders with unprecedented speed. Trade as a share of global output rose from roughly 38 percent in 1990 to approximately 60 percent two decades later. Manufacturers embraced just-in-time production. Supply chains spanned continents because firms increasingly assumed that wars among major powers were unlikely and that future disruptions to maritime commerce would be only temporary.
Beneath the optimism of the era lay a deeper assumption: the strategic foundations of the international system had become unusually secure. And that rested squarely on the lived reality of American military dominance. In 1998, U.S. Secretary of State Madeleine Albright described the United States as the “indispensable nation,” capturing a widely shared assumption that international stability ultimately depended upon American power.
That assumption retained much of its force even through the 2003 Iraq war, which did not affect global markets in a serious way. Wars flared and crises erupted, but serious instances of instability appeared the exception rather than the rule. Political leaders, corporations, and ordinary citizens around the world organized their expectations around the belief that major disruptions influencing global markets and politics would ultimately be contained. Like the nineteenth-century United Kingdom after the Battle of Trafalgar in 1805, the United States exercised influence far beyond the direct reach of its military forces because others had already accepted that Washington could not be challenged. The world did not become peaceful after 1991. It became predictable.
SEEDS OF ITS OWN DEMISE
Ironically, the very success of the post–Cold War order led to that order’s unraveling. The next technological revolution in warfare was itself a product of the economic transformation of the post–Cold War era.
Every major military revolution has rested upon prior economic change. Great powers rise not simply because they possess superior armies or navies but because their economies generate the wealth, technology, and industrial capacity necessary to sustain those forces over time. The first precision revolution displayed over Baghdad in 1991 depended upon capabilities available only to a handful of advanced states. Precision-guided munitions, satellite navigation, secure communications, infrared sensors, and advanced processors required industrial ecosystems that few countries possessed. The Gulf War revealed these capabilities to the world, but the underlying technologies remained concentrated within the United States and among its closest allies.
Over the following three decades, globalization transformed these scarce military assets into mass commercial products. The semiconductor industry became one of the largest and most geographically dispersed industries in the world. Global chip revenues exceeded $790 billion in 2025 and are approaching $1 trillion annually, driven largely by demand for smartphones, cloud computing, and artificial intelligence. The same supply chains producing advanced processors for commercial markets also feed the manufacture of components used in cameras, navigation systems, and edge computing devices (small computers that process data locally rather than in distant cloud servers).
A modern smartphone contains more computing power than many military systems possessed during the Gulf War and cameras that were once reserved for intelligence satellites. Civilian markets created enormous economies of scale for miniaturized inertial measurement units (devices that track location, speed, and direction), GPS receivers, lithium batteries, and optical sensors—technology of the kind that would have previously required state sponsorship.
Sensors illustrate the transformation most clearly. During the Cold War, precision warfare required expensive military reconnaissance systems. Today, commercial satellites provide imagery once available only to governments. High-resolution cameras, thermal sensors, laser range finders, and navigation chips are produced for civilian industries including agriculture and autonomous vehicles. The barriers separating military and civilian technologies have steadily collapsed.
Today’s clashes around the Strait of Hormuz reveal American limitations.
Artificial intelligence accelerated this process further. Large language models, computer vision systems, and open-source software provide capabilities that previously demanded specialized institutions. Massive private investment transformed advanced software into a globally available commodity, with AI-related semiconductor revenues alone exceeding $200 billion in 2025. More broadly, capabilities that once required billion-dollar military programs now can rely upon components purchased through ordinary commercial channels. Small drones assembled from electronics acquired in the commercial market can now produce effects previously associated with sophisticated weapons made only by states.
The Iranian Shahed-136 drone illustrates the transformation. Rather than relying on expensive, exquisite military technology, it combines commercially available navigation chips, inertial measurement units, satellite receivers, communications modules, processors, and software—many originally designed for civilian electronics—with a simple airframe and engine. The result is a precision weapon assembled largely from components made possible by the same global commercial supply chains that power the digital economy. The point is not that the Shahed is technologically sophisticated. The point is that it isn’t.
The same global economy that rewarded efficiency also rewarded accessibility. Firms competed by lowering costs, expanding production, and distributing technology across international markets. Every improvement that made smartphones cheaper, batteries more efficient, and processors more powerful simultaneously increased the capabilities available to weaker states and even nonstate actors.
Yet the same globalization that generated extraordinary prosperity also created interconnected systems in which local disturbances produced global consequences. Highly optimized systems are often fragile: a disruption in one region generates repercussions thousands of miles away. A shortage of semiconductors during the COVID-19 pandemic, for instance,affected automobile production across multiple continents. And in 2024 and 2025, the Iranian-aligned Houthis in Yemen staged numerous attacks on shipping through the Red Sea, which leads to the Suez Canal and connects Europe to Asia, as part of their broader confrontation with Israel. The militants could not defeat their much more powerful adversaries in conventional battles, but they could use precision warfare to impose enormous costs on the global economy. Major shipping companies had to divert vessels around the Cape of Good Hope because of the high costs that came with uncertainty, including the lengthening of transit times and rising insurance rates.
Globalization had helped take the instruments of precision warfare beyond the monopoly of advanced states. By the mid-2020s, the diffusion of precision capabilities was beginning to reverse that relationship and make great powers vulnerable to much weaker foes. In this sense, the success of the post–Cold War order contained an unexpected contradiction: the economic forces that strengthened the system gradually produced many of the technologies that would make sustaining it increasingly expensive.
THINGS FALL APART
Precision-guided weapons appeared to solve one of the oldest problems in military history. Great powers no longer needed to conquer territory in order to achieve strategic objectives. Airpower could substitute for ground power. Technology could substitute for mass. The lesson many observers drew from 1991 was straightforward: if the United States could identify targets, it could suppress resistance without occupying large tracts of territory.
The Iran war has now exposed the limits of that assumption. And it has also signaled the arrival of a second revolution in precision warfare. If the defining image of January 1991 was a laser-guided bomb entering an air shaft in Baghdad, the defining image of the Iran war is that of a small one-way drone, assembled from commercial electronics and launched by a mobile team somewhere along Iran’s southern coastline, soaring toward targets in the Gulf.
The diffusion of new technology supplied inexpensive drones, cruise missiles, commercial sensors, and mobile launch teams. Iran’s objective was never to outright defeat American naval power in the ship-to-ship battles of old. It was to convince commercial actors that American naval power could no longer guarantee their absolute security.
That has proved sufficient. In the weeks after the war began, tankers continued moving through the Gulf, but insurance premiums rose sharply and traffic declined as uncertainty spread through energy markets. During previous crises in both the Strait of Hormuz and the Red Sea, war-risk premiums increased by multiples of their normal levels and shipping companies rerouted vessels thousands of miles around Africa rather than accept growing risks. Modern economies do not simply require oil. They require oil delivered on time, at scale, and under predictable conditions. Once confidence disappears, a waterway can remain physically open even as it becomes strategically unreliable.
Vessels in the Strait of Hormuz, June 2026
Reuters
The American response to Iran’s bid to shut down the Strait of Hormuz followed the traditional logic of great powers. Together with Israel, the United States struck radar sites, missile batteries, drone facilities, and launch areas across southern Iran and destroyed thousands of targets. But replacement systems swiftly appeared. Iran could disperse, hide, and rebuild its mobile launchers faster than those launchers could be eliminated. What initially appeared to be a maritime problem gradually became a territorial problem. The United States could take out a handful of launchers but not clamp down on thousands of square miles of territory. Iran’s downing of a U.S. Apache helicopter in June illustrated the American predicament. With one Shahed drone costing $20,000, Iran destroyed a $35 million advanced military asset. Even the strongest military on the planet cannot eliminate the threat of cheap drones.
Iran’s continued defiance of the United States represents more than a tactical success. More and more, Iran treats separate theaters as components of a single strategic system. It supports the activities of Hezbollah in Lebanon, Iranian-aligned militias in Iraq, and the Houthis in Yemen. It has targeted U.S. bases and critical infrastructure in neighboring Gulf countries. The result is an emerging sphere of Iranian influence built not through conquest but through persistent disruption. The second precision revolution makes such widespread and tenacious disruption possible.
Iran is not fated to become the dominant power in the Middle East. Its economy remains weak, its conventional military remains inferior to that of the United States and to that of Israel, and many Arab governments continue to fear Tehran more than they trust it. But its operational success can generate political opportunity. If governments, markets, and outside powers increasingly conclude that no major decision in the Gulf can occur without accounting for Iranian preferences, Iranian military leverage will gradually become political influence. Insurance markets, energy traders, shipping companies, and regional governments all respond not only to power itself but to shifting expectations about future power. Expectations change first. Institutions usually follow later.
Whether Iran ultimately converts operational leverage into some form of regional primacy remains uncertain, not least because it is far from clear how the current phase of fighting will end. But the diffusion of precision technologies has flipped the script. The swift and emphatic U.S. victory in the Gulf War suggested that precision warfare allowed great powers to control contested territory relatively cheaply. The Iran war, by contrast, suggests that the diffusion of precision technology is confounding great powers and making it much harder to control contested space.
THE NEXT BATTLEFIELD
What has happened in the Strait of Hormuz may occur at an even larger scale in East Asia. The conventional scenario for a conflict over Taiwan assumes that China blockades the island and Taiwan suffers through a siege. But the second precision revolution suggests a more complicated possibility: that Taiwan could use drones, mobile missile batteries, commercial sensors, and artificial intelligence to disrupt and threaten China’s seaborne trade.
Approximately one-fifth of global maritime trade passes through the Taiwan Strait, making it one of the most economically significant waterways in the world. Despite China’s extraordinary economic success, nearly 40 percent of its gross domestic product hinges on trade—and the vast bulk goes by sea. Much as Iran chose to weaponize the chokepoint of the Strait of Hormuz, Taiwan could do the same.
Think of Taiwan as a large, unsinkable launch platform, boasting thousands of drones with ranges up to 750 miles. China’s major seaports lie within that range, including Shanghai Port, Ningbo-Zhoushan Port, and Shenzhen Port. The risk, therefore, is not just to traffic passing through the Taiwan Strait. Taipei could do more to hurt its larger foe and could continuously threaten the commercial approaches to China’s principal ports even in the absence of a formal blockade.
Weaker powers now see that it is possible to defy the United States.
China could reroute some shipping east of Taiwan or through more distant sea lanes near other countries. But like rerouting around the Cape of Good Hope during the Red Sea crisis, the issue is not whether commerce can continue at all. It is whether it can continue predictably and at acceptable costs. Taiwan’s leverage would come from its geographic position astride the maritime approaches to the industrial heart of China and from the island’s ability, owing to the second precision revolution, to make those approaches persistently risky.
Taiwan would not need to sink many ships to produce meaningful consequences for China’s People’s Liberation Army. A handful of successful drone attacks—or even the likelihood of future attacks—could trigger a familiar sequence: insurance rates would surge, commercial carriers would reassess risk, and traffic would decline. Economic disruption would cascade even if the physical destruction remains limited. Given the world’s dependence on Chinese goods, the effect on most countries would be severe and occur within months, risking the contraction of the global economy. China’s trade-dependent economy would likely experience its most severe external shock since it launched significant economic reforms in the 1980s. It would have to grapple with the collapse of confidence on which modern trade depends. Energy imports, manufacturing supply chains, export industries, shipping finance, and foreign investment would all come under simultaneous pressure.
American struggles during the Iran war may actually lead China to recognize the folly of striking Taiwan; the island could repeat Iran’s strategy with immense repercussions for China and the world.
THE NEW RULES OF POWER
Future conflicts could increasingly occur around the world’s principal economic chokepoints—including the Taiwan Strait, the South China Sea, the Strait of Malacca, the Red Sea, and the Strait of Hormuz itself. Higher insurance rates, more expensive shipping, duplicated supply chains, the need to maintain larger inventories and strategic stockpiles, and political pressure for domestic production would gradually raise the costs of international commerce. A world flattened by globalization would once again be creased by bumps and fissures. As a result, a new set of assumptions about and rules for the global system are now coming into view.
American military superiority no longer guarantees political outcomes on the cheap. The United States retains unmatched destructive power. Yet destroying targets and determining outcomes are different things. As much as Washington might be able to punish its enemies, it struggles to compel them. Escalation also no longer automatically favors the United States. Precision weaponry, geography, and dispersed networks allow weaker actors to raise costs faster than stronger powers can suppress them. The United States can escalate with airpower and even use ground troops but it no longer retains escalation dominance.
American intervention, meanwhile, no longer assures economic stability in the targeted region. For three decades, markets assumed that American power helped reduce risks. Today, U.S. interventions instead stoke uncertainty. Globalization created extraordinary prosperity, but it also created vulnerabilities that military power alone cannot easily eliminate. Weaker powers now see that it is possible to defy the United States—that resistance is no longer obviously futile. These actors do not need to defeat the United States in order to frustrate it. They merely need to erode confidence, impose costs, and outlast expectations of their defeat. The objective is no longer conventional victory on the battlefield but rather creating leverage through disruption.
This is not to say that every weaker state can now frustrate the United States today, only that many more states are likely to acquire that ability as the technologies of the second precision revolution continue to diffuse. Geography, strategic objectives, and access to inexpensive precision systems will shape the contours of this new geopolitical environment.
For most of modern history, stronger states converted economic wealth into military superiority and military superiority into political influence. The post–Cold War era appeared to reinforce this relationship. Yet the second precision revolution suggests a different pattern. Economic success leads to the diffusion and broad adoption of new technologies, which helps weaker actors and allows them to impose greater costs on stronger adversaries than they would have been able to in the past. The geopolitical strength of a great power, such as the United States, is less a measure of its capacity to control others than a reflection of the confidence others have in the systems that it maintains and anchors.
The Strait of Hormuz may prove to have been only the beginning. If the same mechanisms appear around Taiwan, the next era of international politics will be defined not by the expansion of globalization but by the costs of protecting it.
Topics & Regions: United States Iran Iraq Kuwait Diplomacy Geopolitics Globalization Security Defense & Military Strategy & Conflict War & Military Strategy U.S. Foreign Policy War in Iran Iraq War
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