[Today’s Iran war post launched before complete because reasons. Please return at 8:00 AM EDT or refresh this page then for a final version]

Too much is happening in what ought to be a summer doldrums period, due to Trump’s preferred mode of operation, that of being a chaos generator in the hope of throwing opponents off balance, instead making his and the US’ poor situation even worse than it would otherwise be. Iran has now said it is fully closing the Strait of Hormuz.1 It is also making new threats about how ferocious its response to any nuclear attack would be, as well as growling at Europe. The Saudi-Ansar Allah conflict is intensifying in Yemen. Israel just struck an airbase in Syria where Israel alleges Turkiye forces were stationed.2 Those who have been following Israel’s overweening Greater Israel plans know that Israel has been openly and repeatedly depicting Turkiye as its next object for subjugation after Iran. Given how well Project Iran is going, one wonders about the probity of yet more overextension by mixing up things with Turkiye right now….save perhaps as what Netanyahu might regard as a voter-pleasing action in the runup to the October elections.

However, the fact that the direction of travel seems to be moving so relentlessly toward more kinetic action is also leading to some misreadings of particular actions and reactions.

We’ll also turn to the rising warning signs that a financial crisis is more likely that ever. However, a lot of non-economists and economists-who-are-not-finance-experts are making particular claims that are off target. Mind you, Great Depression or worse outcomes are all too possible, so I am not disagreeing with the intensity of the alarms. But some specific ideas are wide of the mark.

First to military developments. The Washington Post published a major story suggesting that the US is bowing to the inevitable and is considering a substantial retreat from the Middle East. From Pentagon weighing smaller U.S. military presence in Gulf once Iran war ends:

The Pentagon is evaluating its military footprint in the Middle East in an early sign of the Iran war’s potential to transform the U.S. presence in the region, according to eight people, including officials and others familiar with the matter.

One of the key areas the Defense Department is assessing is whether to pull back troops from the Persian Gulf, where America’s large overseas military bases have been battered by months of Iranian strikes, two people familiar with the ongoing analysis said.

The damage to these facilities has prompted a once-in-a-generation chance for the Pentagon to reconsider its presence in the region.

BWAHAHA. Continuing later in the article:

The evaluation is being led by the Pentagon’s policy office, though a senior Pentagon official, who like others spoke on the condition of anonymity to discuss the sensitive analysis, said that the Joint Staff and U.S. Central Command were also studying the issue

Defense Secretary Pete Hegseth had not yet ordered a formal review of U.S. posture in the region.

This suggests the leak could come from opponents, seeking to rally Iran hawks and other neocons to swing into action.

Back to the story:

Allies in the Gulf have for decades depended on U.S. forces for their defense. Any regional drawdown could leave states unable to defend themselves against Iranian attacks. Investing in domestic capabilities or partnering with other powers to offset the shortfall could take months to years.

People familiar with the Pentagon’s analysis said the issue is likely to intensify a debate between camps within the administration that support military interventions and others that have argued the Pentagon should curtail some of its security commitments to refocus on defending the U.S. homeland or deterring more powerful adversaries, like China.

The discussions have also involved Adm. Bradley Cooper, the head of U.S. Central Command, who supports deliberations about potentially moving U.S. troops west from the Persian Gulf, said a U.S. official.

Cooper has been depicted as much more aggressive than Daniel Caine, the head of the Joint Chief. So Cooper favoring a more prudent posture would mean reality is starting to sink in. Back to the Washington Post:

Allison Minor, who served during the first Trump administration as the director for Arabian Peninsula affairs on the National Security Council, said the Gulf countries could maintain elements of their security partnership with the U.S. — such as arms sales and intelligence sharing — while hosting a smaller troop presence.

“But you need to be discussing all of those comprehensively and not just the question of the sheer number of troops,” she said.

Notably, a pullback of US troops from the Persian Gulf has been one of Iran’s conditions for a deal to end the conflict. Iranian officials have frequently said that they believe this war will lead to a US “retreat” from the region.

Keep in mind that this account comes in parallel with Trump admitting to what Iran has maintained for a very long time, that no negotiations are underway:

More detail from the Iran side:

A source close to Iran's negotiating team, to Fars: "In practice, there were no direct negotiations between Iran and the United States. The talks on control of the Strait of Hormuz were held with Oman. After the U.S. violated the Islamabad Agreement, contact with the American…

— Open Source Intel (@Osint613) August 19, 2026

Trump apparently did not give Kushner the memo Trump was abandoning his “we are talking” broker patter:

Jared Kushner was questioned on Fox News about Iran negotiations saying “we’re not there yet” and that Trump will “make the right deal when the right deal is ready” @esaagar @krystalball pic.twitter.com/gEuhGzFYD5

— Breaking Points (@BreakingPointsx) August 18, 2026

Robert Pape gives a fresh update on the prospects for the war. He argues that Iran is seeking to force Trump to take military action before the midterms. That would almost certainly backfire and make the results even more of a bloodbath for Trump and Republicans than generally anticipated now. Trump would then both lack legitimacy generally and would in particular also be tied down by the barrage of investigations that the Democrats would soon launch.

Iran is seeking to drive home the point that attacking Iran is so destructive to the belligerents as to deter the US and Israel from trying again for at least a generation.

Mind you, if the economic/financial market decay accelerates as a result of Iran clamping down on Strait of Hormuz traffic even hard, in concert with Ansar Allah cutting seriously into Red Sea transits, Trump could very well lash out kinetically to try to reassert his dominance in the face of an economic whirlwind. So we may be destined to have Trump try to Do Something Big yet again regardless. But the Iranians are taking no chances.

From a lightly edited machine transcript:

Now to Iran’s promises to go bigger rather than smaller. From Anadolu Agency in Iranian lawmaker says Tehran would respond in kind if US used nuclear weapon:

An Iranian lawmaker said Tehran would respond in kind if the US used a nuclear weapon against Iran, commenting on a media report about the possibility of such an attack, according to local media on Wednesday.

Fada Hossein Maleki, a member of the Iranian parliament’s National Security and Foreign Policy Commission, made the remarks in an interview with Iranian news outlet Khabar Online.

Asked how likely he considered a US nuclear attack on Iran, Maleki said: “I do not rule out an ill-considered action by (US President Donald) Trump, but I do not think he would dare to do such a thing, because such an action could plunge the world into a dangerous war.”

“If such an action is taken, the Islamic Republic of Iran will also respond, and its reaction will be proportionate to the type of weapon used against Iran,” he added.

Pressed on whether this meant Iran would use a nuclear weapon if the US attacked Iran with one, Maleki replied: “Whatever the US uses, Iran will respond to it.”

Maleki did not explicitly say that Iran possesses nuclear weapons.

The lawmaker also warned Washington against further military action, saying Iran has “multiple options” at its disposal and that any US move could draw a response “at the same level or even beyond.”

“Many of Iran’s weapons and military capabilities have not yet been unveiled,” Maleki said, arguing that Tehran has moved from a defensive posture to what he described as “active and offensive deterrence.”

And the lead story in the Financial Times:

Iran has weighed attacking US military targets in Europe should Donald Trump escalate the war, according to people close to the regime, as Tehran considers its options to increase the stakes of the conflict.

Two regime insiders told the FT that Iranian forces have assessed striking US assets in south-eastern European countries such as Bulgaria, which last month approved the use of its Bezmer air base for US refuelling aircraft.

One of the insiders added that Cyprus, where a British air base was struck by a drone in March, was also among potential targets for retaliation in the event of any renewed US offensive.

The insiders said Iranian forces have separately examined attacking subsea fibre-optic cables in the Strait of Hormuz in the event of an escalation.

Note the too-clever mention of the Cyprus drone attack. There’s no agency but in context a casual reader would assume Iran was the perp. In fact, the UK assessment was that Iran was not responsible. Nevertheless, Cyprus is in range and the UK base there has been used actively by Israel and the US.

In terms of regional escalation, there is a dispute over facts as to what exactly Israel struck when it hit a Syrian airbase.

Türkiye Rejects Israeli Claims Over Troop Deployment to Syria Base | Asia One News#Asiaone #AsiaOneNews #Turkiye #Turkey #Israel #Syria #Ankara #Idlib #MiddleEast pic.twitter.com/E2hwd73wNh

— ASIA ONE NEWS (@AsiaOne_News) August 19, 2026

Turkiye responding to Israeli PM: "We will continue cooperation with the Syrian Government and will never allow Syria to be destabilized."

Since dec. 2024, Turkiye tries to re-build air bases and air defenses in Syria, Israel destroys them, and Turkiye does nothing in turn.

— MenchOsint (@MenchOsint) August 19, 2026

However, Israel has been clear that it intended to hit Turkiye assets, as in escalate against Turkiye:

BREAKING: Türkiye calls on Israeli Premier Netanyahu to abandon "aggressive and coercive" policies and respect international law pic.twitter.com/siFvLwGbnc

— TRT World (@trtworld) August 18, 2026

However, there have been over-reactions to claims of certain Iran attacks on the UAE (as opposed to US operations in the UAE) that Iran has denied. From PressTV in Exclusive: Reports of Iranian missile attack on UAE unfounded; Zionist false flag imprint evident:

Earlier on Tuesday, the UAE defense ministry claimed that its air defences “detected two ballistic missiles launched from Iran toward the country.”

However, a review by Press TV’s reporter found that reports alleging Iranian missile attacks on the UAE are not accurate.

Iran’s conduct throughout the war has shown that whenever it takes an action, it issues a statement and accepts responsibility for it.

And a debunking of the assertions that the UAE had changed its posture regarding economic ties to Iran as a result of the attacks, from Esfandyar Batmanghelidj on Twitter:

I don’t believe there has been a change in UAE policy towards Iran, at least not overnight. Iranian flights are landing at DXB, vessel traffic is unchanged, and the underlying logic of renewed economic engagement remains sound.

There is a lot of confusion about yesterday’s ballistic missile incident and the subsequent MFA statement refuting economic engagement with Iran. The UAE MOD first assessed that two ballistic missiles fired from Iran were heading towards the UAE. It later revised its assessment, stating that the missiles were targeting vessels in the Gulf. For its part, Iran has now denied targeting the UAE.

In any case, the MFA statement was not linked to the missile attacks. It was simply issued on the same day. The statement does not mention the missiles and instead states that in light of “regional escalations… all trade, commercial exchanges, and financial transactions with Iran have been halted until further notice.” This is not actually a description of a shift policy because the UAE never formally announced it was resuming trade ties with Iran….

In other words, the MFA was restating the policy adopted at the outset of the war, pushing back on the recent media reporting that the UAE and Iran have resumed economic relations as part of a narrow détente…

The UAE has been under pressure from the US in light of the Trump administration’s plan to rely on economic pressure to undermine Iran….

In reality, the UAE will maintain this public stance, but will continue to protects its interests by insisting on its own economic sovereignty.

I don't believe there has been a change in UAE policy towards Iran, at least not overnight. Iranian flights are landing at DXB, vessel traffic is unchanged, and the underlying logic of renewed economic engagement remains sound.

There is a lot of confusion about yesterday's…

— Esfandyar Batmanghelidj (@yarbatman) August 19, 2026

1 What that amounts to in practice remains to be seen. It is credible that Iran has not been as aggressive as it could be in attacking Oman-side ship traffic (as in more than traffic-monitoring services like Kpler can see have actually gotten through). But Iran has also shown a tendency to be measured and let ship operator/crew/insurer risk aversion do a lot of the traffic strangulation work for them. So I would expect Iran to increase its attacks gradually and see what new level would suffice to achieve a close to total shutdown.

2 And why is that any sort of justification?