By Rafal Rohozinski

The Treasury secretary’s words were chosen for maximum effect. Scott Bessent, standing in the White House briefing room on Wednesday 16 April 2026, promised that the United States would deliver the “financial equivalent” of the bombing campaign against Iran: a cascade of secondary sanctions aimed at any bank, company, or country that dares to touch Iranian oil money. The language was martial. The logic was familiar. And, like much that passes for financial statecraft in Washington these days, it rests on an assumption about the architecture of global finance that is increasingly out of date.

The assumption is that the dollar is still the only game in town.

The hollow victory in the Gulf

Bessent’s announcement was not without substance. The same day, the US Treasury imposed sanctions on an oil-smuggling network operated by Mohammad Hossein Shamkhani (son of the late Ali Shamkhani, a close adviser to Iran’s former Supreme Leader), targeting more than two dozen individuals, companies, and vessels involved in moving Iranian and Russian oil through UAE-based front companies. More consequentially, Bloomberg reported that two Chinese banks, whose names Treasury declined to disclose, had received letters warning that evidence of Iranian money flowing through their accounts would trigger secondary designation. The temporary waiver that had allowed 140 million barrels of Iranian oil to reach global markets since 20 March expires on 19 April and will not be renewed, as Reuters first reported on Tuesday.

Against this backdrop, the UAE’s own crackdown has real teeth. At the end of March, Iran International reported that UAE authorities had detained dozens of IRGC-linked money changers, shut down associated companies, and told others to leave the country. The arrests were described by Iran International as “one of the most serious blows yet to Tehran’s sanctions-evasion network.” Miad Maleki, a former senior US Treasury sanctions strategist now at the Foundation for Defence of Democracies, explained why. “The UAE is the single most critical jurisdiction in the Iranian regime’s sanctions-evasion architecture,” he told the outlet, adding that the arrested sarraf networks (informal money changers whose “trust-based relationships, bank accounts and corporate structures are not quickly replaceable”) had for years converted Iranian oil proceeds into dollars, dirhams, and euros beyond the reach of the domestic banking system.

The UAE compliance reflects something specific: deep integration into dollar clearing and correspondent banking that makes secondary sanctions a genuine existential threat. For institutions that live and die by their access to the US financial system, the threat is credible. The enforcement logic, within this layer, is sound.

The problem is that Tehran’s most resilient financial channel no longer runs through this layer at all.

The crypto layer that secondary sanctions cannot reach

Iran’s cryptocurrency ecosystem reached $7.78 billion in on-chain activity in 2025, according to Chainalysis, growing at an accelerating pace. IRGC-linked addresses accounted for approximately 50% of total Iranian crypto inflows in the fourth quarter of that year, receiving more than $3 billion over the course of 2025; Chainalysis describes this as a conservative lower bound, covering only wallets already identified through OFAC and Israeli sanctions designations. In early April, Iran extended this logic to maritime trade: Bloomberg first reported on 1 April that the IRGC was already extracting transit tolls from vessels in the Strait of Hormuz, with fees starting around $1 per barrel of oil, payable in yuan or stablecoins via an IRGC-linked intermediary. The Financial Times subsequently quoted a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union confirming that shipping companies would be required to pay in cryptocurrency. Chainalysis assessed in a 10 April report that Iran would likely prioritise stablecoins over Bitcoin for these payments, “consistent with the heavy historical reliance on stablecoins by the regime and its regional proxies to engage in illicit trade and sanctions evasion at scale.”

The preferred instrument is USDT-TRC20, Tether’s dollar-pegged stablecoin operating on the Tron blockchain. It is fast, stable, and denominated in dollars without requiring dollar correspondent banking at any point in the settlement chain. Here the conventional analysis reaches the boundary of its understanding. It is often said that crypto’s “off-ramp dependency” is the binding constraint: you eventually need to convert into fiat, and that fiat conversion layer is where enforcement bites. That is true for dollar-denominated off-ramps. A Kenyan freelancer receiving payment in USDT must eventually cash out through local mobile money infrastructure that remains anchored to the formal banking system. A Gazan aid recipient’s stablecoin wallet ultimately depends on exchange relationships that regulators can squeeze.

For sanctioned state actors whose primary trading partner is China, however, the calculus is fundamentally different. A Chinese independent (“teapot”) refinery purchasing Iranian crude through a Hong Kong intermediary, paying in USDT and converting to yuan, never meaningfully touches the infrastructure that secondary sanctions target. There is no dollar off-ramp because there is no need for one. The yuan is the off-ramp. And that distinction matters enormously: not merely as a tactical observation about sanctions architecture, but as a signal of something much larger.

The chokepoint ceases to exist when the counterparty does not need your currency. For sanctioned state actors whose primary trading partner is China, there is no dollar off-ramp because there is no need for one. The yuan is the off-ramp.

Russia has built the same architecture at industrial scale. The ruble-backed stablecoin A7A5, created by A7 LLC (49% owned by Promsvyazbank, a sanctioned Russian state bank), processed more than $93 billion in transactions in less than a year, according to Chainalysis’s 2026 Crypto Crime Report. TRM Labs analysis found that A7A5 is primarily used for settlements with counterparties in south-east Asia, China, and Iran. Sanctions have been applied to its affiliated entities. Its growth has slowed. But the architecture it proved is not going away: a non-dollar stablecoin can scale to nine-figure daily volumes and carry real-economy trade across sanctioned borders, provided those borders face China.

Senator Elizabeth Warren, the top Democrat on the Banking Committee, pointed to the second-order problem in remarks to the Associated Press on Wednesday: “Instead of circumstances where we can keep sanctions on Iran and constrict their economy, the blockade in the Strait of Hormuz, combined with the sharply rising price of oil, has helped Iran’s economy.” Sanctions attorney Daniel Pickard warned of “diplomatic and economic blowback” from allies, complicating coalition-building. Both concerns are legitimate. But the deeper problem is structural rather than tactical: the financial infrastructure that secondary sanctions are designed to exploit is no longer the only financial infrastructure available to Iran’s key trading partners.

The Deeper Pattern: How Western Finance Built Its Own Replacement

The Iran case is not anomalous. It is illustrative of a pattern that has been developing across the developing and emerging world for the better part of a decade, driven not by ideology but by the grinding, cumulative failure of the formal dollar-based system to serve the populations and states that need it most.

The formal failure has two engines. The first is sanctions: the weaponisation of SWIFT, correspondent banking access, and dollar clearing as primary instruments of US and EU foreign policy. Russia’s disconnection from SWIFT in 2022 was the most dramatic demonstration, but the escalatory logic had been accumulating since Iran’s full exclusion in 2012, North Korea’s in 2017, Venezuela’s progressive isolation, and dozens of more targeted actions against individuals, entities, and sectors. Each deployment of financial exclusion as coercion sharpened the incentive for every sanctioned or sanction-adjacent state to build infrastructure that could not be reached.

The second engine is de-risking: the systematic withdrawal of global banks from correspondent banking relationships in jurisdictions deemed too costly to service. According to CPMI data cited by Deutsche Bank, Melanesia, Polynesia, and the Caribbean have seen correspondent banking relationships fall by 62.6%, 54.0%, and 52.1% respectively between 2011 and 2022. The number of banks providing US dollar clearing globally fell from approximately 100 in 2006 to around 60 in 2022. The World Bank’s foundational 2018 study concluded that de-risking is primarily a profitability decision: correspondent banking is a low-margin, high-compliance-cost activity, and global banks have rationally withdrawn. The unintended consequence is that smaller and poorer countries, along with their populations, are effectively cut off from the dollar system. Not because of what they have done, but because they are not worth the compliance overhead.

Into this vacuum, cryptocurrency has moved.

Every act of financial weaponisation (every SWIFT disconnection, every secondary sanctions threat, every de-risked correspondent banking relationship) is simultaneously an enforcement action and an advertisement for alternatives.

The evidence is now structural rather than anecdotal. Chainalysis’s 2025 Geography of Cryptocurrency report, covering the 12 months to June 2025 and measuring attributed on-chain economic activity rather than total transaction volume, found that Sub-Saharan Africa received $205 billion in on-chain value, up 52% year-on-year. Stablecoins account for 43% of all crypto transaction volume in the region, reflecting genuine commercial and remittance use rather than pure speculation in an economy where 57% of the population remains unbanked. The World Bank reported average remittance fees of 6.49% globally in 2025, reaching 8.78% in Sub-Saharan Africa; a Mercy Corps Ventures pilot in Kenya reduced equivalent transaction costs from 29% to 2% using stablecoins. On 30 April 2025, Onafriq partnered with Circle to integrate USDC across 40 African markets, connecting 1 billion mobile money wallets; at present, 80% of intra-African payments route through banks outside the continent, incurring approximately $5 billion in annual fees that blockchain rails are beginning to displace.

Latin America has moved furthest and fastest, because it has the greatest reason. Chainalysis data for the year to June 2025 show that stablecoin purchases made up over half of all exchange purchases denominated in Colombian pesos, Argentine pesos, and Brazilian reals: not a statement about crypto ideology, but a rational hedge against currencies that have failed their holders. Venezuela, with annual inflation approaching 230% and a bolívar long stripped of credibility, received $44.6 billion in crypto transactions in the period. The New York Times reported that President Maduro had effectively rewired Venezuela’s economy to stablecoins, making it the first nation to manage a large share of its public finances in crypto; residents call them “Binance dollars” because they are more trustworthy than the state alternative. Bolivia, facing its own currency collapse, went further: by the summer of 2025, shops were posting prices in USDT, and the government subsequently authorised banks to offer crypto custody and to accept digital assets for credit products. These are not anecdotes about technology adoption. They are the financial archaeology of states that the dollar system has stopped serving.

The humanitarian evidence is smaller in aggregate but more clarifying in what it reveals. Gaza is the most extreme case: with Israeli and international banks blocking transfers even from legitimate humanitarian donors on counter-terrorism compliance grounds, USDT has become the primary currency of food commerce and aid delivery not by design but by elimination of every other option. Myanmar’s National Unity Government adopted Tether as legal tender in controlled territories for the same reason: the junta controls all conventional banking. Afghanistan is the largest-scale test, where Mercy Corps’ HesabPay platform (built on Algorand) reached over one million people in 2025, distributing WFP and UNHCR cash assistance with a 29% reduction in delivery costs compared to hawala agents, because no other channel existed. The WFP’s Building Blocks platform has delivered over $325 million to more than a million refugees through blockchain rails since 2017. These are significant programmes, still modest in global terms, but they are not pilots any longer. They are operational infrastructure filling a gap that formal finance has decided not to occupy.

The most telling indicator of where adoption is deepest is not transaction volume but desperation. Nigeria, with chronic currency volatility, ranks sixth globally on the Chainalysis adoption index. Turkey, with triple-digit inflation in recent years, leads the MENA region despite sophisticated formal banking infrastructure, because its citizens have stopped trusting the lira. Pakistan and Vietnam, each with large unbanked populations and constrained access to dollar accounts, rank third and fourth globally. Ethiopia and Yemen, both in active conflict and largely excluded from correspondent banking, have entered the top twenty. The common thread is not technology enthusiasm. It is the systematic failure of the formal system, whether through inflation, exclusion, sanctions, or outright state predation on savings.

The dual-use infrastructure problem

The architecture that enables this substitution is the same architecture enabling Iranian sanctions evasion, Russian oil payments, and North Korean weapons procurement. USDT-TRC20 is the settlement layer for Bangladeshi freelancers and IRGC procurement alike. The Tron blockchain carries WFP disbursements to Afghan families and Iranian drone component payments to Chinese suppliers in the same ledger, distinguished only by the wallets involved. This dual-use character is not a bug in the system; it is its defining feature, and it creates a policy dilemma that secondary sanctions cannot resolve.

The critical distinction that Washington’s current posture elides is this: for retail users in low-income economies, the off-ramp from crypto to local currency still runs through regulated infrastructure that can be squeezed. A Nigerian freelancer, an Afghan aid recipient, a Kenyan stablecoin user: each depends on an exchange relationship with the banking system at the point of cash conversion. That dependency means enforcement retains some leverage over them. For sanctioned states whose primary trading counterparty is China, no such leverage exists: the yuan settlement layer is entirely outside the dollar-denominated architecture that secondary sanctions police. The two populations share an infrastructure but face categorically different enforcement exposure. When Washington targets the infrastructure, it pressures the retail user in Lagos or Kabul far more than the procurement officer in Tehran.

Sanctions enforcement that targets the infrastructure layer (the exchanges, the stablecoin rails, the blockchain networks) harms the legitimate users of that infrastructure at least as comprehensively as it harms the sanctioned ones. Unlike the sanctioned actors, who have compliance officers, alternative networks, and state resources to adapt, the Gazan food merchant, the Afghan aid recipient, and the Nigerian freelancer have none of these. They are collateral damage in a financial war being fought over infrastructure they depend on for survival.

This is the deeper significance of Bessent’s “financial equivalent of bombing.” The metaphor is more accurate than he intended. Aerial campaigns, too, destroy the infrastructure of daily life alongside the military targets. The question of proportionality (who bears the costs, and whether the strategic objective justifies them) applies with equal force to financial warfare. It is a question that Washington’s current posture does not appear to be asking.

The new crypto off-ramp: China

Consider the tactical details: the sarraf arrests, the Chinese bank letters, the 19 April waiver expiry. Behind them, a larger argument becomes visible, and its most consequential dimension has little to do with Iran.

The dollar’s dominance of global finance was never merely a matter of military power or economic size. It rested on a network effect: the dollar was the medium of exchange because everyone else used it, which made it rational for each actor to use it too, which reinforced the network. This network effect has been durable, and it remains powerful. The dollar’s share of global foreign exchange reserves, though declining, was still around 58% as of late 2024 according to the IMF. The US financial system remains without peer in depth and liquidity.

But network effects can erode, and they erode fastest when the network’s operator uses its control position to exclude participants for political reasons. Every act of financial weaponisation (every SWIFT disconnection, every secondary sanctions threat, every de-risked correspondent banking relationship) is simultaneously an enforcement action and an advertisement for alternatives. Russia’s A7A5 stablecoin, processing $93 billion in under a year, did not emerge from a vacuum. It emerged from the demonstrated willingness of the United States and its allies to use financial exclusion as a primary foreign policy tool.

Yet the most significant advertisement for an alternative system is not Russia’s stablecoin engineering. It is China’s trade footprint. China has been Africa’s largest trading partner for sixteen consecutive years, with bilateral trade reaching $295 billion in 2024. It is South America’s top trading partner and the primary source of imports for approximately 40% of countries worldwide, including nearly all of Asia, much of Africa and Latin America. Chinese exports to the Global South grew 39-fold between 2000 and 2024, from $34 billion to over $1.3 trillion; China now sells more to the Global South than to the US and Western Europe combined.

This matters for the off-ramp argument in a way that is not yet well understood. The conventional critique of crypto-as-alternative-finance is that it remains dependent on dollar conversion at the point of cash-out: the chokepoint is not the blockchain but the bank on the other side. That critique is correct for the retail user in Lagos or Dhaka. It does not apply to a state or corporate actor whose primary trading counterparty is Chinese and who can therefore settle in yuan, route through A7A5 or direct yuan rails, and never require a dollar at any point in the transaction. China’s capital controls and the relative immaturity of yuan internationalisation mean that yuan itself remains a constrained settlement currency, which is precisely why USDT serves as the bridging instrument rather than the renminbi directly. But the direction of travel is clear: as China’s cross-border payment infrastructure deepens through CIPS, bilateral currency swap agreements, and yuan-denominated commodity contracts, the dollar intermediation step becomes progressively more optional. As China’s share of Global South trade continues to grow, the proportion of international commerce that can be conducted entirely outside dollar rails grows with it. Iran is the proof of concept. It is the leading indicator of a process already underway across a much wider set of economies, conducted by actors whose trading relationships have shifted decisively toward Beijing.

What this means, in time, is that the off-ramp dependency that makes secondary sanctions partially effective today will progressively erode not because crypto infrastructure matures, but because China’s commercial footprint deepens. The dollar off-ramp becomes optional at exactly the pace at which China becomes your primary trading partner. For much of the developing world, that transition is not hypothetical. It has already happened. The question is only whether the financial infrastructure catches up with the trade reality, and the Iran-China crypto corridor suggests that it is.

This is, perhaps, the most consequential and least discussed implication of Washington’s financial statecraft. The stated objective is to squeeze Iran into compliance. The structural effect, compounded across dozens of jurisdictions and a decade of escalating sanctions pressure, is to accelerate the construction of a parallel financial system in which China is the anchor counterparty, yuan settlement displaces dollar clearing, and stablecoin rails carry the trade that correspondent banking used to handle. If that system reaches sufficient scale and depth, it will not merely allow sanctioned states to evade US pressure. It will allow the majority of Global South trade to be conducted without touching the dollar system at all. That is not dollar collapse; the dollar will remain dominant in its own sphere for decades to come. It is dollar marginalisation in an expanding zone of commerce, and it is being built, brick by brick, with every secondary sanctions threat and every de-risked correspondent banking relationship that Washington treats as a cost-free foreign policy tool.

What is new is not that sanctioned states are seeking alternatives. What is new is that the alternatives are now good enough to work: good enough for state oil sales, for IRGC procurement, for humanitarian disbursement, for the savings of 500 million unbanked people, and increasingly for the trillion-dollar trade flows between China and a Global South that has already moved its commercial centre of gravity eastward. The infrastructure that Iran is using to evade Bessent’s secondary sanctions is the same infrastructure that a billion people in the developing world are using to access financial services the formal system denied them, and the same infrastructure through which Beijing is quietly displacing the dollar as the functional currency of South-South trade. Reserve composition and SWIFT payment shares are the lagging indicators. The trade flows are the leading ones, and they are already pointing east.

When the US government targets that infrastructure, it pressures the retail user in Lagos at least as much as the procurement officer in Tehran, while doing nothing to slow the process by which China’s trade dominance makes dollar off-ramps unnecessary. The financial equivalent of bombing may yet prove effective in the short term against the layers it can reach: the UAE sarrafs, the Hong Kong intermediaries, the banks that still depend on dollar clearing. Against the layer it cannot reach, it may prove to be the most effective recruiting advertisement for the alternative financial system it is ostensibly designed to suppress.

Rafal Rohozinski is the founder and CEO of Secdev Group, a senior fellow at the Centre for International Governance Innovation (CIGI), and co-chair of the Canadian AI Sovereignty and Innovation Cluster.

SecDev’s geopolitical risk practice - builds on three decades of fieldwork across 120+ countries industrialized into on-demand strategic advantage. The era of treating geopolitical risk as an externality is over. Supply chains now span hostile borders, critical technologies depend on adversarial states, and market access hinges on diplomatic whims. What was once the domain of foreign ministries has become every CEO’s problem. SecDev’s Intelligence as a Service delivers tiered, contract-free engagement: from real-time assessments that move faster than markets to deep-dive analysis that uncovers the networks and contacts buried in geopolitical complexity. The question isn’t whether geopolitical shocks will hit your business - it’s whether you’ll see them coming.

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Alberta’s separatist surge is more than a regional protest. It is fast becoming a test of American hemispheric ambition, the constitutional force of Indigenous treaties, and Canadian cohesion. What was once a fringe expression of western alienation has moved into a more consequential phase. Elections Alberta approved a referendum proposal and issued the petition, creating a formal legal path toward a province-wide vote if the signature threshold is met and verified. Organizers say they have already surpassed the signature threshold, and if verified, a referendum is pencilled in for October 19, 2026. The petition, however, is still officially listed as active and in progress, not yet publicly certified as successful.

The timing matters. The campaign is unfolding after Donald Trump publicly threatened to use “economic force” to make Canada the “51st state” and while he has again framed Greenland as “imperative for National and World Security [SIC].” In that context, even symbolic contact between Alberta separatists and U.S. officials lands differently than it would have a few years ago. The concern is not that Alberta is about to leave Canada. It is that domestic constitutional conflict is now unfolding inside a geopolitical environment in which border questions, resource leverage, and political signaling have become more volatile.

A movement with a process

The core of the current drive is procedural rather than revolutionary. The notice of intent was received by Elections Alberta on December 11, 2025. The application was approved on December 22, the petition issued on January 2, 2026, and the signature collection period runs until May 2, 2026. The threshold is 177,732 signatures, equal to 10 percent of the votes cast in the previous provincial general election. Organizers claimed on March 31 that they had already crossed it. Multiple news outlets reported that claim. But Elections Alberta’s public page still shows the petition as active and in progress, not yet publicly marked as successful or accompanied by a verified result. Politically, the claim sustains momentum. Legally, it still depends on official validation.

That sequence matters because it gives the separatist campaign official institutional standing without yet proving it can prevail. Meanwhile, the opposition has already shown what large-scale mobilization looks like. The pro-Canada Alberta Forever Canada counter-petition gathered 438,568 signatures, more than double the separatist threshold, before being filed to the provincial legislative assembly in December 2025.

Calls for Alberta independence are not new. They are the sharpest expression of western alienation: resentment over federal fiscal redistribution of its oil wealth, anger at Ottawa’s climate and energy policies, and a broader belief that Alberta’s economic model is constrained by a central Canadian political class that neither understands nor respects it. What is novel is the movement’s attempt to turn grievance into a repeatable legal mechanism.

The economic implications of the Albertan independence drive area are already beginning to show. A March 2026 Calgary Chamber of Commerce poll found that 51 percent of Calgary respondents believed discourse around Alberta’s separation from Canada was affecting the provincial economy, with 93 percent of those respondents describing the impact as negative. Among respondents concerned about the economic effects, 83 percent of respondents believed separatist discourse was increasing the risk of recession, 74 percent said businesses were considering relocation, and 71 percent said it was making it harder to attract workers.

The legislative opening

The most important enabling factor is legislative. Bill 14, which came into force on December 11, 2025, removed the requirement that an initiative proposal not contravene sections 1 to 35.1 of the Constitution Act, 1982, and removed the Chief Electoral Officer’s authority to refer constitutional questions to the Court of King’s Bench before issuing a petition. An earlier measure, Bill 54, also lowered signature thresholds for constitutional referendum proposals to 10 percent of votes cast in the previous general election.

That matters because it changed the function of legal review. Instead of screening out constitutionally defective proposals before petitions are issued, Alberta now allows a broader range of proposals into circulation and leaves more of the conflict to later litigation. The government can say it is letting Albertans speak. Critics can say it weakened guardrails where they mattered most.

What is no longer seriously disputable is that the threshold for getting a separatist question into the political bloodstream has been lowered. The real significance of the petition’s approval is not that Alberta is suddenly on the verge of independence. It is that a formerly fringe objective now sits inside a lawful provincial process with a clear administrative pathway and a live deadline.

The American shadow

The U.S. shadow over Alberta’s separatist push is clearest in the movement’s outreach to Washington. APP leaders have indicated that they were seeking a US$500 billion credit facility from Washington in the event of a successful independence referendum. The State Department described its contacts with APP figures as routine engagement with civil society and said no support was conveyed. Even if no commitments were made, the very fact that Alberta separatists took their case to Washington underscores how quickly a domestic constitutional dispute can acquire an international dimension.

The comments from named U.S. officials are harder to dismiss as routine. Treasury Secretary Scott Bessent, in an interview with a right-wing broadcaster, described Alberta as “a natural partner for the US,” praised the province’s resource wealth and independent character, and said: “I think we should let them come down into the US.” He added that he had heard there may be a referendum soon. These were not anonymous background remarks. They were public comments by a senior U.S. cabinet official speaking sympathetically about Alberta’s separation on a partisan media platform.

Further along the right-wing media ecosystem, Brandon Weichert appeared on Steve Bannon’s War Room podcast in November 2025. Weichert argued that Trump’s “51st state” rhetoric was effectively aimed at Alberta, which he called the “linchpin”in Trump’s Western Hemisphere ambitions. He predicted that Alberta would leave the Canadian union, become an independent state, and then be recognized by the United States, putting it “on the pathway to becoming the fifty-first state.”

Then, in early April 2026, Tucker Carlson published a commentary arguing that the U.S. should exert influence over Canada “by force if necessary,” framing Canada as not truly sovereign and Canadians as needing “liberation.” Russian state broadcaster RT allegedly repackaged the remarks the same day under a “51st state” banner and amplified them across X, Instagram, and Facebook networks. This is not fabricated content. It is authentic material from prominent American voices being laundered through foreign state media for maximum destabilizing effect.

A further domestic signal worth noting. Premier Danielle Smith visited Trump at Mar-a-Lago in January 2025, at a time when most other Canadian leaders were joining hands to oppose his annexation rhetoric. Her current Chief of Staff, Rob Anderson, is a former member of the provincial legislature and a self-described separatist. Alberta separatism does not need formal American backing to benefit from that atmosphere. It needs only enough acknowledgment to make a fringe project feel less fringe. It is getting considerably more than that.

Money, opacity, and the problem of amplification

The financing rules deserve more attention than they have received. Elections Alberta says individuals ordinarily resident in Alberta may contribute up to C$4,600 to a proponent for an initiative petition, while initiative-petition third-party advertisers may receive any amount from eligible Alberta-resident individuals, corporations carrying on business in Alberta, provincial trade unions, and qualifying groups. That does not prove improper funding. It does mean the wider advocacy ecosystem around a petition can be harder for ordinary voters to track than the petition vehicle itself.

That is one reason outside amplification matters even without formal foreign sponsorship. The key risk is not necessarily covert control. It is the way digital mobilization, external attention, and grievance politics reinforce one another. This allows a domestic campaign to feel larger, more credible, and more internationally resonant than its formal institutional base alone would suggest. The Steve Bannon-Tucker Carlson pipeline is the clearest recent illustration of how that mechanism works in practice.

Treaties before provinces

The deepest obstacle to Alberta secession may not be Ottawa but the constitutional force of Indigenous treaty rights. Several First Nations, including Sturgeon Lake Cree Nation (Confederacy of Treaty No. 6), went to court in January 2026 to challenge the referendum pathway. The key injunction hearing started in early April. Their argument is not simply that they oppose separatism politically. It is that Alberta cannot legislate around obligations rooted in treaties and protected by the Constitution.

That challenge has serious legal grounding. Section 35 of the 1982 Constitution Act recognizes and affirms existing Aboriginal and treaty rights. The Supreme Court of Canada’s 1998 Reference re Secession of Quebec also makes clear that secession would require negotiations that reconcile multiple constitutional principles and the rights of multiple parties. Alberta’s territory sits within several of the Numbered Treaties agreed to with First Nations before the province was even created in 1905. Those obligations predate the province. They cannot be dissolved by a provincial legislature or a referendum result.

A provincial referendum can generate political pressure. It cannot by itself create a country, settle borders, or extinguish treaty obligations. Any lawful path to separation would have to confront treaty rights, Indigenous consent, territorial jurisdiction, debt allocation, and the continuity of Crown obligations from the outset. Those questions are not peripheral to secession. They are central to it.

State functions and the pull of hard power

Talk of sovereignty has a predictable gravitational pull toward state functions. The APP’s exploratory request for a $500 billion U.S. credit line is the clearest illustration of this. Once advocates begin discussing currency, border arrangements, and financing mechanisms, they are already speaking the language of state capacity. The hard part of sovereignty is not the vote. It is the machinery that follows such as customs administration, law enforcement coordination, emergency management, defense relationships, debt allocation, and treaty enforcement.

An independent Alberta would also be a landlocked nation bordered entirely by Canada and the United States, with no automatic access to the USMCA trade framework, which applies to sovereign states rather than provinces. Renegotiating market access, rules of origin, and dispute mechanisms would create investment hesitation across energy, agriculture, and manufacturing supply chains at precisely the moment those chains are already under pressure.

This is where much public debate becomes unserious. Any movement that wants to be treated as more than symbolic protest has to explain who would perform state functions, under what law, with what money, and with what legitimacy. Even when separatism is framed as peaceful and democratic, it still carries an implicit claim to build or inherit institutions that normally belong to a sovereign state.

Lawful advocacy and legal limits

None of this means separatist advocacy is unlawful in itself. The Secession Reference is explicit that a clear majority on a clear question in favor of secession would trigger a duty to negotiate, but that unilateral secession is not permitted under Canadian law. Campaigning for constitutional change is one thing. Lawfully creating a new constitutional order is another.

The same distinction applies to the rhetoric of treason. BC Premier David Eby called the APP’s meetings with U.S. officials the “definition of treason.” That is a political charge, not a precise legal description of what has been publicly documented. Meetings, lobbying, and separatist campaigning may be incendiary. They do not automatically amount to criminal conduct. Democratic states make serious mistakes when they answer constitutional speech with legal categories that do not fit.

Why Ottawa is uneasy

Ottawa’s concern is less about immediate breakup than about cumulative destabilization. Committed separatists represent roughly 16 percent of Albertans, according to Ipsos, but that minority now coincides with a lawful route to a referendum, publicized contacts with U.S. officials, named cabinet-level American encouragement, reduced constitutional screening, and a permissive information environment. The issue is not whether Alberta becomes independent this year. It is whether the movement becomes a persistent vector of mistrust, institutional delegitimation, and externally amplified pressure.

The Quebec dimension adds urgency. Élections Québec says the next provincial election is scheduled for October 2026, and recent polling shows the Parti Québécois leading or narrowly leading ahead of the vote. The party has long promised a referendum on sovereignty within a first mandate, though its leader has recently shown more flexibility on timing. Alberta is not the only seam being tested. That is why complacency would be a mistake. It is also why overreaction would be one. Ottawa should not criminalize lawful speech or treat every separatist argument as foreign subversion. But neither should it pretend that a sitting U.S. Treasury Secretary publicly speaking favorably about Alberta joining the United States is politically ordinary.

What Ottawa should do now

The federal response should begin with politics, not punishment. That means engaging Alberta’s grievance portfolio seriously: fiscal federalism, regulatory predictability, energy transition trade-offs, and the practical distribution of risk and reward inside Confederation. A movement built on alienation is best weakened by reducing the share of the public that feels alienated, not by elevating its leaders into martyrs.

Second, transparency rules should be strengthened. Voters should be able to see initiative-related spending and third-party advocacy quickly and clearly. Even where foreign-interference thresholds are not formally met, transparency is the right remedy. It allows citizens to distinguish organic local organizations from broader networks of amplification.

Third, treaty rights have to move from the margins of this debate to the center of it. Any serious discussion of Alberta’s future that treats First Nations as an afterthought is already constitutionally defective. The legal order governing this question is not just federal versus provincial. It is also Crown and treaty nation versus provincial ambition.

For now, Alberta’s separatist surge remains less a credible route to imminent independence than a potent fusion of grievance politics, institutional opportunism, and geopolitical theatre. But that is enough to make it dangerous. It exposes where Canada is vulnerable, how easily outside actors can exploit ambiguity, and how quickly constitutional questions can become strategic ones. External powers do not need to redraw Canada’s borders to weaken Canada. They need only find and widen the seams. The seams are currently being worked — from Washington and from right-wing media — with more coordination than Ottawa has yet publicly acknowledged.

SecDev’s geopolitical risk practice - builds on three decades of fieldwork across 120+ countries industrialized into on-demand strategic advantage. The era of treating geopolitical risk as an externality is over. Supply chains now span hostile borders, critical technologies depend on adversarial states, and market access hinges on diplomatic whims. What was once the domain of foreign ministries has become every CEO’s problem. SecDev’s Intelligence as a Service delivers tiered, contract-free engagement: from real-time assessments that move faster than markets to deep-dive analysis that uncovers the networks and contacts buried in geopolitical complexity. The question isn’t whether geopolitical shocks will hit your business - it’s whether you’ll see them coming.

Learn More

SecDev AI

SecDev AI delivers first-in-class Data as a Service AI solutions combining highly trained models with unique, curated datasets. Our next-generation, precision-built expert systems meet the most demanding requirements. By integrating data curation with advanced machine learning, we provide specialized tools that deliver actionable insights where accuracy and reliability are paramount.

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By Rafal Rohozinski

Cryptocurrency has a reputation problem. To its critics, it remains a speculative casino for technologists with libertarian convictions and a low appetite for regulatory oversight. To its defenders, it represents the first serious challenge to a global financial architecture that has, for decades, served the wealthy, the connected, and the geopolitically convenient - while leaving everyone else to manage with what remains. Both of these characterisations contain truth. Neither captures what cryptocurrency has actually become.

What it has become is a banking system. Not the banking system - not yet, and perhaps never entirely — but a functional, increasingly indispensable financial infrastructure for populations whom the formal system has failed, abandoned, or actively weaponised against. In Gaza, Tether has become the currency of daily commerce because Israeli correspondent banking has rendered the shekel inaccessible. In Afghanistan, blockchain rails now carry UN World Food Programme disbursements to over a million people because the formal banking sector ceased to exist after 2021. In Myanmar, the opposition National Unity Government adopted stablecoins as legal tender because the military junta controls every other payment channel. In Nigeria, stablecoins have become the primary savings instrument for millions because the naira lost most of its value. In Kenya, they carry remittances that used to cost 8% to move and now cost under 2%.

This transformation did not happen by design. It happened by default - driven not by ideology but by the grinding failure of formal financial systems to serve the populations that need them most. And it has happened at precisely the moment when the architecture of global finance is fragmenting rather than converging: when sanctions regimes multiply, when correspondent banking withdraws from jurisdictions deemed too risky, when the dollar’s dominance becomes an instrument of geopolitical coercion rather than a neutral medium of exchange. In a world where the centralised pillars of global finance are increasingly weaponised against the unbanked, the sanctioned, and the politically inconvenient, decentralised alternatives have graduated from curiosity to necessity.

Against this backdrop, a whitepaper published by Google’s Quantum AI team - co-authored with the Ethereum Foundation’s Justin Drake and Stanford cryptographer Dan Boneh - lands with uncommon weight. Its technical argument is precise: future quantum computers may be able to break the cryptographic foundations of Bitcoin, Ethereum, and virtually every major blockchain using roughly 20 times fewer computational resources than the industry had assumed. The machines capable of doing this do not yet exist. But Google believes they could by the end of the decade, and has set 2029 as its own deadline for migrating its systems to quantum-safe cryptography.

For the crypto-curious investor in London or New York, this is a technical problem with a technical solution: migrate to post-quantum cryptography, accept the costs, and move on. For the Afghan family receiving aid through a blockchain wallet, the Gazan food merchant paying suppliers in Bitcoin, or the Kenyan freelancer whose first international payment arrived in stablecoins, the stakes are of a different order entirely. They are not merely exposed to a cryptographic vulnerability. They are exposed to the collapse of the only financial infrastructure that works for them - and they have no migration pathway, no governance forum, and in most cases no awareness that the threat exists.

This is the storyline: the quantum threat to cryptocurrency is not primarily a story about Bitcoin investors facing portfolio losses. It is a story about the fragility of an emergent financial system that has quietly become one of the most consequential tools of development finance and humanitarian response in the world - and about what happens to that system, and to the people who depend on it, when its cryptographic foundations prove less durable than anyone admitted.

The Technical Problem

The cryptography underpinning Bitcoin, Ethereum, and most major blockchains rests on the 256-bit elliptic curve discrete logarithm problem (ECDLP-256): a mathematical challenge so computationally expensive that today’s computers would require billions of years to solve it. Quantum computers, running Shor’s algorithm, could solve it in minutes — provided the machine has enough physical qubits. The question has always been: how many?

Until today, the consensus answer was: millions, placing the threat comfortably in the mid-2030s or beyond. Google’s whitepaper revises that estimate sharply downward. Its team has compiled two optimised quantum circuits for solving ECDLP-256: one using fewer than 1,200 logical qubits and 90 million Toffoli gates; the other fewer than 1,450 logical qubits and 70 million gates. Both are executable on a superconducting architecture with fewer than 500,000 physical qubits — a roughly 20-fold reduction from prior estimates. Given Google’s own hardware roadmap, the company believes a machine of this scale could exist before 2030.

The practical implications follow directly. A future quantum computer of this specification could theoretically derive a Bitcoin private key in approximately nine minutes once a public key is exposed on-chain. Bitcoin’s average block confirmation time is ten minutes. The paper estimates a 41% probability of a successful attack within that window. In cryptography, a 41% success rate against a signature scheme is not a concerning outlier. It is a broken scheme.

The exposure is already substantial. Google estimates roughly 6.9 million Bitcoin - approximately one-third of the total supply - sit in wallets where public keys have already been permanently exposed on-chain. That includes 1.7 million BTC from the network’s earliest years, among them the coins widely attributed to Satoshi Nakamoto. Part of the exposure is self-inflicted: Bitcoin’s 2021 Taproot upgrade, designed to improve privacy and transaction efficiency, also made public keys visible on-chain by default, removing the hash-based protective layer that older address formats had maintained. An upgrade sold as a privacy improvement inadvertently widened the attack surface.

The threat is not confined to coins at rest. Google’s paper introduces the concept of “on-spend” attacks: a future quantum machine intercepts a live transaction in the mempool, derives the private key from the briefly exposed public key, and redirects the funds before the original transaction confirms. This is explicitly a future attack model, not a present capability. But the paper is clear that the margin of safety is “increasingly narrow.”

Ethereum faces a structurally different and in some respects more acute vulnerability. Google maps five distinct quantum attack vectors against Ethereum, putting more than $100 billion in assets at theoretical risk. Unlike Bitcoin, Ethereum permanently exposes a user’s public key the first time they transact, with no ability to rotate it without abandoning the account. The Ethereum Foundation has already launched a post-quantum migration effort, with a multi-fork upgrade roadmap targeting quantum-resistant cryptography by 2029. Bitcoin has not.

Google’s disclosure method is itself significant. Rather than publishing the actual quantum circuits - which would provide a blueprint for adversaries - the team released a zero-knowledge proof, developed in coordination with the US government, that allows independent verification of the claims without revealing the underlying attack details. This is responsible disclosure applied to a domain where the stakes are systemic. When a company of Google’s capability coordinates with the US government before publishing security research and withholds the technical methodology to prevent weaponisation, it is not being overcautious. It is signalling that what it has found is genuinely dangerous.

The governance problem is harder than the technical one. Centralised systems - banks, military networks, government infrastructure - can push software updates to their users. A decentralised blockchain cannot. Bitcoin’s SegWit upgrade, formally proposed in December 2015, did not activate until August 2017 - nearly two years of community negotiation, miner brinkmanship, and threatened forks. Taproot, proposed in January 2018, activated in November 2021: nearly four years. A post-quantum soft fork would be a far more fundamental change, requiring simultaneous consensus across miners, nodes, exchanges, and custodians worldwide. Bitcoin Improvement Proposal 360, which proposes a quantum-resistant output type by removing Taproot’s vulnerable key-path spending, was merged into the BIPs repository only in February. No nodes have upgraded. No activation timeline exists.

Then there are the assets that cannot be migrated at all. Coins in wallets whose private keys have been lost - including Satoshi Nakamoto’s estimated 1.1 million BTC - cannot voluntarily move to quantum-safe addresses. They will sit there, permanently exposed, until a machine powerful enough to reach them arrives. The Google paper proposes a “digital salvage” framework, drawing on maritime salvage law, as one possible governance response. That conversation has not yet begun.

The Deeper Stakes: Finance For The Fragmented World

The technical argument above describes a universal cryptographic vulnerability. But to treat it purely as a technical problem is to miss the more consequential story - one that concerns not the mechanics of elliptic curves but the architecture of a financial system that is quietly reshaping how money moves across the world’s most unstable and excluded spaces.

The formal global financial system was built on an assumption of convergence: that trade liberalisation, capital mobility, and deepening multilateral institutions would gradually extend its benefits to everyone. That assumption is under serious strain. Sanctions regimes have expanded dramatically since 2014, with the US and EU deploying financial exclusion as a primary instrument of foreign policy. Global banks have responded by withdrawing correspondent banking relationships from dozens of jurisdictions - a process known as de-risking - leaving entire countries effectively cut off from the dollar-denominated system. The weaponisation of SWIFT against Russia following the 2022 invasion of Ukraine demonstrated that access to the global payments system is now a geopolitical lever. For countries and populations on the wrong side of that lever, the question of what replaces it is not academic.

Cryptocurrency has begun to provide an answer - imperfect, unregulated, often dangerous, but functional in ways that the formal system is not. The evidence spans three continents and has moved well beyond the theoretical.

In Afghanistan, the collapse of formal banking following the Taliban’s 2021 takeover left 97% of the population below the poverty line and the humanitarian system without a payment channel. The answer came from the blockchain. Mercy Corps’ HesabPay platform, built on Algorand, reached over one million Afghans in 2025, distributing cash assistance from the UN World Food Programme, UNHCR, and the World Bank directly to mobile wallets. A pilot in Paktia province achieved a 29% reduction in delivery costs and cut payment time by ten hours compared to hawala agents — the informal money transfer networks that had previously been the only available channel. This is not a proof of concept. It is operational infrastructure serving over a million people.

In Gaza, the financial system has been destroyed by war and political siege simultaneously. With only two of Gaza’s 94 ATMs still functional as of early 2025, physical banknotes too degraded to use, and Israeli and international banks blocking transfers even from humanitarian donors citing counter-terrorism compliance, USDT has become the currency of daily life. Food merchants pay foreign suppliers in it. Aid organisations transfer it directly to families. “Donations simply couldn’t reach Gaza without cryptocurrencies,” one independent organiser noted. The Atlantic Council has described Palestinian financial agency as the missing piece in most reconstruction plans - and has identified crypto as the de facto backbone of what financial agency remains.

In Myanmar, the National Unity Government formally adopted Tether as legal tender in territories under its control - not ideology but survival, against a junta that controls the central bank and has overseen a kyat losing roughly 75% of its value since the 2021 coup. When a 7.7 magnitude earthquake struck in March 2025, NUGPay became the primary channel for humanitarian assistance to regions the junta had blocked from receiving traditional aid. In Bangladesh, 3.1 million users depend on stablecoin rails as the de facto payment mechanism for 650,000 freelancers who have no other reliable way to receive international income under a comprehensive crypto ban.

The African picture is structural rather than crisis-specific. Nigeria ranks second globally on Chainalysis’s crypto adoption index. The continent received $90.2 billion in remittances in 2023, with traditional corridors charging an average of 8% - fees that consume a significant share of household income for diaspora-dependent families. Stablecoin remittances have reduced those costs by roughly 60%. Stablecoins now account for 43% of all crypto transaction volume in Sub-Saharan Africa - not speculation-driven volume but the daily commerce of populations that are 57% unbanked and have found in mobile-native digital currencies the banking access that formal institutions have not provided. A Mercy Corps pilot in Kenya found that stablecoin micropayments reduced freelancer transaction fees from 29% to 2%, with users saving more and accessing earnings faster - without requiring a bank account.

The WFP’s Building Blocks platform has delivered over $325 million to more than a million refugees since 2017 through blockchain rails in Jordan and Bangladesh. UNHCR delivers emergency funds to displaced families via stablecoin wallets in minutes, with no bank account required. These are not edge cases at the margins of humanitarian innovation. They are operational systems, at scale, doing work that the formal financial system cannot or will not do.

It is worth acknowledging the darker dimension. The same stablecoin rails that carry Rohingya remittances to Cox’s Bazar also carry the proceeds of Myanmar’s Shan State scam compounds. The Tether-on-Tron infrastructure that enables Bangladeshi freelancers to receive international payments also enables pig-butchering fraud networks and money laundering through Lao casino compounds. A loss of confidence in ECDLP-based stablecoins would fall on both the legitimate and the criminal economy simultaneously. There is a perverse case that quantum disruption could accelerate the demise of the corridor’s scam economy - precisely because criminal networks lack the institutional capacity and incentive to migrate to quantum-safe alternatives. But the same disruption would fall with equal force on populations with no alternative at all, and no awareness that the threat exists.

The Asymmetry Of Risk

The quantum threat to cryptocurrency is, in theory, a soluble problem. Post-quantum cryptography is a mature field. NIST has standardised quantum-resistant algorithms. Google has set its migration deadline. Ethereum has a roadmap. The mathematics is understood and the solutions exist.

The problem is not mathematical. It is political and structural. In developed economies, the governance infrastructure to manage a compulsory migration exists: regulators can mandate timelines, exchanges can be required to comply, custodians can be audited. The process will be contentious and expensive, but it can be forced through. For the decentralised communities governing Bitcoin and most major blockchains, no such mechanism exists. Protocol changes require consensus among parties with divergent interests - miners, node operators, exchanges, developers - and that consensus has historically taken years to achieve for upgrades far less complex than a full cryptographic overhaul.

For the populations described above, the asymmetry of risk is acute. The Gazan food merchant who has come to depend on USDT cannot participate in a Bitcoin governance debate. The Afghan family receiving aid through HesabPay cannot request a software update. The Kenyan freelancer receiving her first international payment in stablecoins has no voice in the Ethereum Foundation’s migration roadmap. These people are exposed to the same cryptographic vulnerability as every other user of ECDLP-based systems - but they have no institutional backstop, no regulatory protection, and no migration pathway. If the quantum machine arrives before the protocol upgrades, they lose everything they have stored in it, with no recourse.

There is an additional layer of exposure that the technical literature rarely addresses. Many of the populations most dependent on cryptocurrency are also the most politically exposed. The NUG’s financial infrastructure in Myanmar, the diaspora remittance channels serving communities in conflict zones, the aid payment systems operating under Taliban-controlled territory - these are not merely financial systems. They are, in some cases, the financial nervous system of political resistance movements and the primary channel through which civil society operates in the absence of a functional state. A quantum attack on this infrastructure, whether by a hostile state actor or a criminal network that acquires the capability first, would not merely destroy financial value. It could fund a junta, collapse a resistance, or cut off an aid operation. The stakes of cryptographic failure in these environments are not measured in lost savings. They are measured in lives.

The Unfinished Promise

Step back from the technical detail and the political complexity, and a larger argument becomes visible. Cryptocurrency was not supposed to be a development finance instrument. It was not designed to serve the Rohingya diaspora, the Afghan aid system, or the Nigerian freelance economy. It was designed, by anarchist-adjacent technologists in the aftermath of the 2008 financial crisis, as a censorship-resistant store of value that could not be confiscated, frozen, or inflated away by governments that had abused their monetary authority.

What has happened in the intervening decade and a half is that this infrastructure - built for ideological reasons by people with no particular interest in development finance - has quietly become the most promising instrument of financial inclusion available to the world’s excluded populations. Not because anyone planned it that way, but because the excluded populations found it useful, and because the formal system kept failing them in ways that left no alternative.

The broader context makes this more rather than less important. The world is not converging toward a single, inclusive financial system. It is fragmenting. The network of correspondent banking relationships that made the dollar system function as a neutral infrastructure is contracting. Sanctions have become a primary foreign policy tool, wielded with increasing aggression and decreasing discrimination. The assumption that globalisation would eventually extend formal financial access to everyone has been replaced by the practical reality that it is doing the opposite - that the fragmentation of the geopolitical order is being reproduced, and amplified, in the architecture of global finance.

In this environment, decentralised finance is not a trend. It is an infrastructure necessity. The billion people who lack reliable access to formal financial systems are not waiting for the IMF to issue a report recommending their inclusion. They have found, in cryptocurrency, a system that works for them - imperfect, volatile, often exploited by criminals, but functional in the specific sense that matters: it moves money across borders, preserves value against inflation, and operates independently of the political actors who have the most to gain from controlling it.

Google’s paper is not merely a warning about elliptic curves. It is a warning about the fragility of this entire edifice. The cryptography holding decentralised finance together is the same cryptography that Google has now shown is more vulnerable than the industry was prepared to admit. The window to replace it is open, but narrowing. And the populations who have the most to lose if it closes without action are the ones with the least power to demand that action be taken.

The cryptocurrency economy has a quantum problem. But at its core, it has a governance problem: the infrastructure that serves the world’s most excluded populations is governed by a technical community that did not build it for them, is not primarily accountable to them, and has historically taken years to agree on changes far simpler than a full cryptographic overhaul. Google has provided the technical warning. Whether the governance follows is a political question - and one that will be answered, one way or another, well before the quantum machines arrive.

The quantum tsunami is still offshore. The sea wall, for those with the institutions to build it, is under construction. For the rest, the warning has arrived. The clock is running.

Rafal Rohozinski is the founder and CEO of Secdev Group, a senior fellow at the Centre for International Governance Innovation (CIGI), and co-chair of the Canadian AI Sovereignty and Innovation Cluster.

The Risk Ahead

SecDev’s geopolitical risk practice - builds on three decades of fieldwork across 120+ countries industrialized into on-demand strategic advantage. The era of treating geopolitical risk as an externality is over. Supply chains now span hostile borders, critical technologies depend on adversarial states, and market access hinges on diplomatic whims. What was once the domain of foreign ministries has become every CEO’s problem. SecDev’s Intelligence as a Service delivers tiered, contract-free engagement: from real-time assessments that move faster than markets to deep-dive analysis that uncovers the networks and contacts buried in geopolitical complexity. The question isn’t whether geopolitical shocks will hit your business - it’s whether you’ll see them coming.

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by Robert Muggah

For centuries, chokepoints were the specialist concern of admirals, traders and a small priesthood of supply-chain analysts. The war in Iran has changed that. Narrow passages and concentrated systems are once again shaping conflict escalation, energy prices, and financial stability far from any battlefield. As tensions around the Strait of Hormuz have escalated this month, the old lesson has returned: modern power still runs through a surprisingly small number of vulnerable arteries.

This is not new. In the first world war, the struggle over the Dardanelles was driven by the strategic importance of a narrow waterway linking the Mediterranean to the Black Sea. In the second, the Battle of the Atlantic was essentially a contest over whether Britain and its allies could keep open the sea routes on which the war depended. Chokepoints did not merely influence those conflicts. They helped determine their outcome.

What has changed is not the logic but the object. Chokepoints are no longer just straits, canals and mountain passes. They sit inside server farms, lithography systems, cable landing stations and the processing chains for the minerals feeding the green and digital economy. Geography still matters. So does industrial concentration.

The old map still rules

Start with the obvious. Hormuz remains the clearest bottleneck with global reach. The strait carried roughly one-fifth of global oil and petroleum consumption and a similar share of LNG trade in 2024 and early 2025. That alone would make it critical. But the real vulnerability lies in the dependencies stacked on top of it: petrochemicals, fertiliser feedstocks, shipping insurers and financial expectations all move when Hormuz is threatened. The Iran war has made that abstract interdependence suddenly concrete.

A related vulnerability runs through the Malacca Strait into the South China Sea and the Taiwan Strait. Malacca is the world’s busiest oil transit corridor, linking Gulf producers to east Asia’s industrial economies. The South China Sea carries roughly one-third of global shipping making it one of the world’s most consequential maritime corridors. Any conflict over Taiwan would threaten not just semiconductor production but the maritime routes surrounding it.

The Red Sea offers another reminder. Disruption around Bab el-Mandeb showed how quickly attacks on shipping cascade into freight rates, delivery schedules and food markets. Pressure on Suez and Panama, combined with conflict in the Red Sea, has extended routes, pushed up ton-mile demand and raised costs across global supply chains. Chokepoints do not need to close to matter. It is often enough that they become unreliable.

Climate has entered the equation

Panama has added a distinctly 21st-century twist. For most of the modern era, strategic vulnerability at chokepoints was associated with war, piracy or blockades. In Panama, the problem has been drought. Reduced water levels constrained canal traffic and forced shippers to reroute or wait — precisely the kind of friction that tightly optimised supply chains handle badly. Climate stress is now a first-order geopolitical variable. A canal does not need to be bombed to become a strategic liability. It can simply run out of water.

That matters because it broadens the risk map. Investors and policymakers are accustomed to treating geopolitical shocks as exceptional events. They are far less comfortable with a world in which the same chokepoint can be stressed by missiles one year and rainfall patterns the next. That is now the operating reality.

Silicon has its own straits

The more profound shift lies beyond maritime geography. Taiwan is the most striking example. The island dominates global foundry capacity and produces most of the world’s most advanced logic chips. That has turned the Taiwan Strait into a double chokepoint: a shipping corridor on one side, a fabrication bottleneck on the other. A war there would not just imperil trade routes. It would cut the supply of components underpinning everything from smartphones and cloud computing to missiles and modern vehicles.

South Korea is a critical node in memory — particularly high-bandwidth memory, the technology enabling advanced AI systems. And in the Netherlands, ASML occupies an even more refined bottleneck: it remains the sole commercial supplier of extreme ultraviolet lithography machines, without which the most advanced semiconductors cannot be mass-produced. The geography is different. The logic is identical. A narrow strait is not the only place where small interruptions produce very large consequences.

What once would have been described as an industrial policy issue is now plainly strategic. The map of vulnerability no longer ends at the shoreline. It extends into clean rooms, equipment supply chains, and a handful of firms that are not easily substituted.

The new battle for materials

The same concentration runs through critical minerals. The IEA has warned that China is the leading refiner for 19 of 20 important strategic minerals. That is not a commercial statistic. It means that the industries meant to define the coming era — batteries, electric vehicles, wind turbines, defence electronics — are exposed to a small set of processing hubs and policy decisions made in Beijing.

China is not just a chokepoint in mineral refining. It is also a chokepoint in the manufacturing systems of the clean-energy transition. From rare-earth magnets used in electric vehicles, wind turbines, drones and missiles to solar panels manufacturing and battery cells. China occupies commanding positions across the industrial supply chains meant to power the next era.

This is why a discussion of chokepoints can no longer stop at oil. Rare-earth magnets, cobalt processing, lithium chemicals and graphite anodes do not have the drama of the Suez Canal or Hormuz. But they have something almost as consequential which is the capacity to halt industrial systems upstream. A tanker blocked in a strait is visible. A refined mineral that fails to arrive at a cathode plant is not. The damage can be just as severe.

Data now travels through narrow gates too

The world imagines the internet as diffuse and decentralized. Its physical infrastructure is anything but. Subsea cables carry the overwhelming majority of intercontinental traffic, and Egypt has become one of the critical passage points for cables linking Europe and Asia. By one estimate, more than 90% of Europe-Asia subsea cable capacity runs through the Red Sea cable corridor. This is a chokepoint of a different kind, one whose disruption would ripple through finance, cloud infrastructure, and government operations.

That should change how governments think about resilience. Ports, canals and pipelines still matter. So do cable landing stations, data centres and logistics hubs like Singapore, Rotterdam and Dubai, where physical and digital systems are increasingly fused. A modern economy does not distinguish neatly between commodity flows and information flows. It depends on both arriving reliably.

Vulnerability is the point

The strategic significance of chokepoints lies not just in their throughput but in the absence of substitutes. A route becomes dangerous when detours are costly, spare capacity limited and downstream systems tightly coupled. That is why a missile strike in the Gulf can feed into food prices in Africa, factory schedules in Europe and monetary anxiety in Washington. It is also why a crisis in Taiwan would go global fast.

The war in Iran has done more than issue a regional warning. It has exposed, again, the fragility of a global order built on narrow corridors and concentrated capabilities. In quieter times, these chokepoints are easy to overlook — efficiency disguises dependence. In wartime, or even prolonged crisis, they reappear as what they always were: hidden levers of escalation.

That was true at Gallipoli and in the Atlantic. It is true now in Hormuz, Suez and the South China Sea. The difference is that today’s chokepoints also include chip fabs, lithography tools and fibre-optic cables on the ocean floor. The map of vulnerability has widened. The underlying logic has not.

What does Polymarket have to say?

* A version of this article was originally published as an opinion piece by the World Economic Forum.

Robert Muggah Robert Muggah is co-founder and principal of the SecDev Group and co-founder of the Igarapé Institute, a Brazil-based think and do tank ranked the world’s top social policy organisation in 2019. A political economist with a doctorate from Oxford, he has spent three decades advising governments, F100 companies, the UN, the World Bank and the Inter-American Development Bank on public security, organised crime, smart cities, and climate and nature-based solutions across more than 50 countries.

SecDev’s geopolitical risk practice - builds on three decades of fieldwork across 120+ countries industrialized into on-demand strategic advantage. The era of treating geopolitical risk as an externality is over. Supply chains now span hostile borders, critical technologies depend on adversarial states, and market access hinges on diplomatic whims. What was once the domain of foreign ministries has become every CEO’s problem. SecDev’s Intelligence as a Service delivers tiered, contract-free engagement: from real-time assessments that move faster than markets to deep-dive analysis that uncovers the networks and contacts buried in geopolitical complexity. The question isn’t whether geopolitical shocks will hit your business - it’s whether you’ll see them coming.

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On 28 February 2026, the United States and Israel launched the largest coordinated military strike on a sovereign state since the invasion of Iraq. In the process, they killed Iran’s supreme leader and set off a chain of events that has since closed the world’s most important oil chokepoint, sent energy prices surging, and left the global economy teetering on the edge of a supply shock with no obvious end in sight. The war is now in its fourth week. It has no agreed purpose, no exit ramp, and no clear winner. What it does have is momentum - and several tripwires that could push it from a dangerous but bounded confrontation into something far worse.

Applying a game-theoretic lens to that question, this assessment places the probability of broader regional conventional escalation at roughly 45 to 50% over the next three to six months. This scenario entails more strikes, more retaliation, a widening Lebanon front, and continued Hormuz disruption, but it still falls short of regime change or nuclear use. The prospects of a grinding but bounded war sits at 30 to 35%, a fragile externally-pressured pause at 25 to 30%, and nuclear use remains an extreme tail risk at 1 to 3%. Trump’s 23 March decision to extend the Hormuz ultimatum by five days modestly improves the odds of a temporary pause, but not of a stable settlement. The central danger is that this war now has a logic of its own — and that logic points toward escalation.

A game-theoretic approach to escalation risk

Game theory is concerned with how actors make strategic choices when the outcomes of those choices depend on what others decide simultaneously. Each actor is assumed to have a set of available strategies, a set of preferences over possible outcomes, and some degree of information about the choices and likely responses of the other parties. The theory does not require that actors always behave optimally; it does assume that they respond, at least partly, to incentives, costs, and perceived threats.

Applied to armed conflict, this lens shifts the analytical question from what is happening to why each party is making the choices it is, and what conditions would cause those choices to change. It asks: what does each party want, what can it credibly threaten or promise, what does it believe about its adversary’s resolve and internal cohesion, and under what conditions would any actor prefer to continue fighting, pause, or escalate sharply? These questions are particularly important for a conflict like this one because many of the most dangerous dynamics, including brinkmanship, deterrence failure, and inadvertent escalation, cannot be understood by looking at one actor in isolation. They emerge from the interaction among multiple parties whose choices are mutually conditioning.

The U.S.-Israel-Iran war is an unusually complex multi-player game. There are at minimum three principal belligerents, each with distinct domestic pressures, varying risk tolerances, and different time horizons for acceptable outcomes. There are also several secondary actors, including China, Russia, the Gulf states, and European governments, whose preferences and possible interventions shape the strategic environment without being fully within any single party’s control. The conflict involves both incomplete information, since each side is uncertain about the other’s true resolve, military capacity, and internal cohesion, and the persistent risk of miscalculation, where an actor misjudges how an adversary will respond to a given move. These are precisely the conditions under which game-theoretic reasoning adds the most analytical value.

This assessment uses a qualitative rather than formal quantitative version of that framework. It does not specify utility functions or compute equilibria in the strict mathematical sense; a crisis of this pace and opacity does not permit that degree of formalisation. Instead, it uses game-theoretic reasoning to structure the analysis: identifying the main players, mapping their most plausible strategies and constraints, assessing the credibility of threats and commitments, and estimating how different shock events could shift incentives across all relevant parties. The resulting probability bands reflect structured judgements calibrated against observable signals, not outputs of a statistical model.

The shape of the conflict

The U.S.-Israel-Iran conflict began on February 28, 2026 and has already become both a military crisis and a systemic economic shock. The Strait of Hormuz, through which roughly 20% of global oil flows, sits at the center of the confrontation. This assessment applies a game-theoretic lens to examine the most likely escalation pathways over the next 3 to 6 months as of March 23 2026. (1) The scenarios below are best understood as overlapping pathways rather than mutually exclusive end states. Several can unfold simultaneously or in sequence. Internal fragmentation in Iran, for instance, could emerge within a broader regional escalation, while a nuclear threshold event remains a tail risk that could be triggered by multiple different scenarios rather than arising independently. These are structured likelihood bands, not clean additive probabilities. The goal is to clarify the most plausible trajectories, flag the key tripwires, and map the spillover effects as of 23 March 2026.

Scenario probabilities

The most likely trajectory over the next 3 to 6 months is broader regional conventional escalation, which this assessment places at roughly 45 to 50%. This still falls short of regime change or nuclear war, but it represents a qualitative step up from the current baseline in both scale and geography. In this scenario, the war does not simply continue at its present intensity. It becomes bigger, harsher, and more regionally expansive. Expect more U.S. and Israeli strikes on hardened Iranian targets, more Iranian missile and drone attacks on Israel and Gulf infrastructure, continued Hormuz disruption, and a widening Lebanon front. A closure or severe disruption of Hormuz would not only affect oil and gas supply chains. It would also disrupt shipments of helium, petrochemicals, pharmaceuticals, fertilizers, and food supplies, with wider global spillover effects. The risk is elevated because the war is now in its fourth week, public reporting indicates more than 16,000 targets have been struck, Iranian retaliatory strikes have reached areas near Dimona and Arad, and attacks on water and electricity systems are increasing the scope for reciprocal infrastructure warfare. The U.S. has also reportedly deployed 4,500 marines to the region. The White House appears to have softened the timing of threatened strikes without clearly stepping back from the capability to escalate quickly. Washington may have stepped back from immediate action, but it has not stepped back from escalation dominance or from preserving military options in theater.

The second most likely scenario is a grinding but still bounded war, at roughly 30 to 35%. This differs from the first scenario in that the conflict remains intense but does not decisively widen into a broader regional campaign. Israel continues striking Iranian military, proxy, and dual use targets; Iran sustains missile, drone, cyber, and maritime pressure; and Washington alternates between coercive threats and selective restraint. This remains plausible because U.S. behavior still looks more consistent with short, visible bursts of force than with a disciplined, open-ended campaign, even as deployments and escalatory signaling continue. Discussion of U.S. special forces, marines, shipping escorts, and insurance backstops may signal planning for limited coercive control missions around chokepoints, but these steps are more likely to increase operational friction and miscalculation risk than to provide a durable solution.(2)

Third is an unstable freeze or partial pause, at roughly 25 to 30%. This would not be a genuine peace settlement. It would look more like exhaustion under pressure, with some reopening of Hormuz, a lower tempo of long range strikes, renewed mediation, and public declarations of success by all parties. The pressure for such a pause comes as much from outside the battlefield as from within it. Beijing and Washington both have strong reasons to avoid a prolonged conflict, even if they approach the crisis from different strategic positions. Moscow, by contrast, benefits from sustained energy disruption and higher prices, an odd strategic disjuncture among the major powers. Europe’s interest is overwhelmingly in de-escalation and economic containment, not an escalatory coalition. (3) Gulf states want direct strikes on critical infrastructure halted, and exposed Asian economies such as Japan, India and South Korea need to contain inflationary and growth shocks. The sheer scale of energy disruption raises the incentive for a pause, even where the political conditions for a stable settlement remain weak. (4) Trump’s March 23 decision to extend the Hormuz ultimatum by five days and suspend threatened attacks on Iranian power plants modestly strengthens this scenario. The existence of informal regional intermediaries, including reported messages passing through Turkey, Egypt, and Pakistan, suggests that the current opening is more than rhetorical, but it is still better understood as a tactical pause inside a coercive bargaining cycle than as evidence of a durable diplomatic breakthrough.

A short, sharp regime targeting campaign sits at roughly 6 to 10%. It would most likely be triggered by a major shock, such as a sustained Hormuz closure despite U.S. ultimatums, mass U.S. casualties, a successful strike on a major U.S. naval platform, a major Iran linked terrorist attack, or compelling evidence of Iranian nuclear breakout. This is still not the base case. U.S. allies remain reluctant to join a wider war, and Washington itself appears divided between coercion and exit. (5) The war already features public threats to devastate core Iranian infrastructure, reported use of heavy ground penetrating bunker buster ordnance, discussion of limited U.S. force deployments around chokepoints (e.g. Kharg island), and an escalation ladder that now clearly includes strikes on hardened underground targets. That does not mean a move to non-strategic nuclear weapons is likely, but it does mean the conflict has already climbed into a more dangerous band of military signaling.(6)

A fifth scenario is internal breakdown or fragmentation in Iran, placed at roughly 4 to 8% over a 3 to 6 month horizon. This would not necessarily take the form of externally imposed regime change. Rather, it would involve severe internal destabilization driven by cumulative military losses, leadership decapitation, fragmentation within the security apparatus, and worsening social or sectarian tensions. If Washington actively supports insurgent activity inside Iran, including through Kurdish militias, the more likely result would be not a clean collapse of the regime but a sharper and more fragmented conflict that strengthens hardliners in the short term, intensifies repression, and raises the risk of spillover into Iraq and neighboring states. In that case, Sunni Shia tensions could sharpen inside Iran and reverberate across Bahrain, Kuwait, Saudi Arabia, and Pakistan, producing a second order regional crisis layered on top of the war itself. This remains a secondary scenario because the Iranian state has shown significant resilience under extreme pressure, but active destabilization efforts make internal fragmentation more plausible than a lower baseline might suggest.(7) Such efforts are more likely to intensify repression and fragmentation than to produce a clean transition.

The lowest probability but highest consequence scenario remains nuclear use or a catastrophic nuclear threshold event, placed at roughly 1 to 3% overall over a three-to-six month horizon. Deliberate U.S. first use remains below 1% given conventional alternatives, but Israeli first use is a more serious outer bound risk if Israeli leaders conclude they face a genuine existential breakdown. Recent reporting describes missile strikes near Dimona and explicit Iranian threats involving Israel’s nuclear infrastructure, which increases the salience of this scenario even if it does not make first use likely today. Israel is still far from exhausting its conventional options, and there is no public evidence that it is preparing to cross the nuclear threshold now. But Israel’s opaque nuclear posture is widely understood as a last resort survival hedge rather than a warfighting doctrine, so the key issue is not routine escalation but whether decision makers begin to believe that conventional defenses can no longer guarantee state survival. The March 23 shift toward temporary bargaining does not materially reduce this risk, particularly due to Natanz attack, Dimona-related signalling, and ongoing attacks on strategic infrastructure. The concern here is less routine nuclear escalation than the possibility that repeated strikes on sensitive sites and worsening perceptions of vulnerability push decision makers toward last-resort logic.

Scenario probabilities as of 23 March 2026 6

The nuclear file

The nuclear file nonetheless remains central to all these scenarios The IAEA reported that Iran had accumulated 440.9 kg of uranium enriched up to 60% U-235 by the time of the 2025 military attacks, and verification of that inventory lapsed after inspectors were withdrawn for safety reasons. That does not mean Iran definitely has a bomb within weeks, but it does mean breakout concerns remain serious enough to keep preemption pressure alive in both Washington and Jerusalem. In practical terms, the nuclear issue raises the ceiling of the war even if it does not make nuclear use likely. It sharpens Israeli threat perceptions, sustains incentives on both sides to consider further strikes on hardened nuclear related targets, and increases the risk that misperception, panic, or a last resort survival logic could push the conflict across a far more dangerous threshold. (8) It also raises the likelihood of limited special forces use for reconnaissance, site exploitation, battle damage assessment, or control of especially sensitive nodes if air strikes are judged insufficient.

US domestic politics and escalation pressure

U.S. domestic politics make the forecast more unstable in ways that are difficult to model cleanly. Weak political standing and the November midterms likely reduce tolerance for a long, inflationary war, but they also increase the incentive for visible, discrete demonstrations of resolve that can be packaged as success. This dynamic may be reinforced by competing priorities closer to home - Cuba, Nicaragua, Colombia, Greenland, Canada. If the White House sees the Middle East as a distraction, the temptation will be to pursue a fast, high-visibility military outcome that can be declared a victory and handed-off to others to manage. That points to shorter decision horizons, a higher appetite for symbolic force, and lower appetite for prolonged entanglement. Domestic pressure is therefore more likely to generate abrupt escalation spikes than clean restraint. Trump’s long standing aversion to nuclear weapons may act as a modest brake on deliberate nuclear use, but it does not materially reduce the risk of heavy conventional escalation.

Domestic politics in both Israel and Iran push toward harder outcomes for different but structurally parallel reasons. For Israel, the war is being experienced as immediate and existential. Iranian strikes are reaching southern areas near sensitive nuclear linked sites, and operations are widening into Lebanon. For Iran, the war also looks existential: U.S. and Israeli leaders have threatened devastating retaliation and implied regime crippling goals. Iran has clearly been degraded by sustained strikes and leadership losses, but the structure of the IRGC suggests that hardliners remain resilient and decentralized command networks retain significant missile, drone, and sea denial capacity. Heavy losses have not produced capitulation. They may instead have reinforced the leadership’s conviction that continued resistance and leverage over Hormuz are politically necessary for survival.

Both sides are therefore, in game-theoretic terms, in a situation where the domestic cost of appearing to back down may exceed the strategic cost of continued escalation. That is precisely the condition under which coercive bargaining becomes most dangerous: neither party can accept a settlement that looks like defeat, and neither can credibly commit to restraint without risking internal legitimacy.

Tripwires and tail risks

What makes this war genuinely dangerous is not the baseline trajectory but the presence of tripwires that could sharply shift the distribution of outcomes. The conflict is no longer a smooth bargaining process. Certain shocks could rapidly shift it into a far more severe phase: Iran or a proxy hitting a U.S. aircraft carrier or causing mass U.S. casualties; a terrorist attack on U.S. interests credibly linked to Tehran; a prolonged failure to reopen Hormuz despite U.S. ultimatums; or a strike on a reactor or nuclear related site generating meltdown or radiological release fears. These are low frequency events, but their impact would be disproportionate. Conditional on any one of them occurring, the probability of a sharp U.S. Israeli punitive campaign rises substantially. The same holds for direct U.S. force deployments around maritime chokepoints, which create more contact points and hence more opportunities for escalation by miscalculation rather than by deliberate decision.

Concentric circles of risk

The final layer of analysis concerns the concentric circles of risk that surround the core confrontation. The inner circle is the Israel, Iran, and U.S. battlefield. The next is the Gulf and eastern Mediterranean. The third is the global energy and trade ring, where China is the pivotal actor. As one of the largest end markets for Gulf oil, Beijing has a strong interest in rapidly restoring Hormuz flows and may be one of the few outside powers with real leverage to press Tehran toward a partial reopening. The outer circle takes in Europe and NATO, where any major Middle East escalation intersects with the still active Russia Ukraine war, alliance force posture, missile defense readiness, and political cohesion. Europe is more likely to support containment, maritime security, and crisis management than a wider escalatory coalition. China is more central to any unstable freeze because of its role in energy demand, trade stability, and diplomatic leverage. Russia, by contrast, has stronger incentives to see a longer conflict if that sustains energy disruption and weakens Western strategic focus.

One further assumption underlying this entire assessment deserves explicit qualification. The model assumes that most decision-makers are broadly responsive to costs, deterrence, and strategic incentives. That assumption may be complicated by the influence of eschatological, messianic, or apocalyptic worldviews among some political, military, and clerical factions in all three principal belligerents. In the U.S., recent scrutiny of senior officials has highlighted the growing visibility of Christian nationalist and providential rhetoric in parts of the national security establishment. In Iran, there are Mahdist currents among segments of the regime’s hard-core base and the IRGC orbit. In Israel, religious nationalist and messianic strands have become more visible in the wider political climate surrounding existential war. These currents do not displace standard strategic logic, but they can complicate a rational utility model by increasing tolerance for risk, reframing sacrifice as redemptive, and making compromise harder when actors interpret the conflict in civilisational or prophetic terms rather than only material ones. A game-theoretic framework that does not account for this dimension will systematically underestimate the probability of choices that appear strategically irrational but are internally coherent within a different normative frame.

Driver matrix as of 23 March 2026

*Score is a qualitative weight from 1 = minor influence to 5 = dominant influence.

Conclusion

The game-theoretic framing of this conflict yields a conclusion that is both more precise and more disturbing than a simple narrative account would suggest. The most probable outcome is not peace, not decisive victory, and not catastrophic nuclear escalation. It is a war that gets worse in familiar ways: harder conventional strikes, wider geographic scope, deeper economic disruption, and a gradually degrading set of conditions for any negotiated pause. The modal scenario, broader regional conventional escalation at 45 to 50%, describes a conflict that continues to intensify without crossing into a new category of violence. That is cold comfort. A war that stays conventional can still destroy economies, destabilise governments, and produce cascading humanitarian consequences across the region and beyond.

The deeper insight from applying a game-theoretic lens is structural. All three principal belligerents are trapped in a coercive bargaining dynamic in which the domestic cost of being seen to concede may now exceed the strategic cost of continued escalation. That is the condition under which wars prolong themselves even when all parties would, in the abstract, prefer a settlement. None of the three can accept a pause that looks like capitulation to their domestic audiences; none can make a binding commitment to restraint that their adversaries would find credible; and each has incentives to use the next round of military action to improve their bargaining position before any talks begin. Trump’s 23 March extension is best read within that logic: it is not evidence of a diplomatic breakthrough but of a bargaining cycle that has not yet found its floor.

What the analysis cannot resolve is when and whether any of the identified tripwires will fire. A carrier strike, a reactor incident, or a mass-casualty event could shift the entire probability distribution within hours. The driver matrix shows a system under extreme stress, with nearly every escalation driver running at high or very high levels and only limited countervailing pressures from allied reluctance, European preferences for restraint, and external economic coercion. The window for a durable pause exists, but it is narrow, contingent on intermediaries that lack enforcement capacity, and vulnerable to a single shock event that forecloses it. Policymakers seeking to reduce escalation risk should therefore focus less on the diplomatic track, which is real but fragile, and more on reducing the probability of the tripwire events themselves: protecting high-value military assets from opportunistic attack, maintaining deconfliction channels around sensitive nuclear sites, and sustaining economic pressure on all parties to keep the incentive for a partial pause alive. The game is still in play. But the margin for error is shrinking.

Annex: A Note on Methodology

This assessment draws on a qualitative game-theoretic risk model combined with scenario analysis. It treats the war as a multi-actor coercive bargaining game under uncertainty, in which the United States, Israel, and Iran are each seeking to improve their strategic position while also managing battlefield realities, domestic politics, alliance pressures, economic shocks, and perceived red lines. The model is designed to do three things: identify the most plausible escalation pathways over a three-to-six-month horizon, estimate likelihood bands for each, and distinguish central scenarios from tail risks. It assumes that most actors behave broadly strategically, while also allowing for misperception, organisational fragmentation, ideological constraint, and accidental escalation, all of which can push outcomes well beyond what a simple rational utility-maximising model would predict.

Methodologically, the assessment combines structured judgement, escalation ladder analysis, and comparative scenario weighting. The scenarios are treated as overlapping rather than mutually exclusive: internal fragmentation, external escalation, and nuclear threshold risks can emerge in parallel or in sequence. The analysis is grounded in open-source reporting, including major international media; official statements from the White House, Pentagon, NATO, and foreign ministries; technical reporting from the International Atomic Energy Agency; energy market analysis from the International Energy Agency; prediction market data (9); and publicly available assessments of military posture, force deployments, political rhetoric, shipping disruption, and macroeconomic spillovers. These sources anchor the probability bands but cannot substitute for the granular internal intelligence available to national security agencies or military planners.

A more rigorous assessment could deploy formal non-cooperative game models, Bayesian updating, agent-based simulations, crisis instability models, or Monte Carlo scenario testing that iterates across thousands of combinations of shocks, responses, and signalling failures. These approaches would allow for more explicit treatment of incomplete information, sequencing effects, and cross-theatre interactions. Even so, they would still depend heavily on the quality of underlying assumptions, particularly around leadership psychology, clandestine action, and regime resilience. Analytical sophistication is no substitute for good inputs.

Three blind spots deserve particular attention. The model cannot directly observe private signalling, covert operations, leadership psychology, or hidden diplomatic bargains, the very variables that most often determine how crises break. It depends on public reporting that may be incomplete, politicised, or overtaken by events faster than any open-source assessment can track. And it is most vulnerable precisely where the stakes are highest: misperception inside decision-making circles, concealed military degradation or unexpected resilience, and ambiguous shock events that can suddenly dominate outcomes with little warning.

Endnotes:

(1) This assessment uses a qualitative game theoretic risk model combined with scenario analysis. It treats the conflict as a multi-actor coercive bargaining game under uncertainty and estimates overlapping likelihood bands based on strategic interaction, escalation dynamics, domestic politics, external pressures, and tripwires, rather than as a formal statistical forecast or a set of mutually exclusive outcomes.

(2) Prediction market pricing also points in this direction. It implies a meaningful probability of some form of U.S. force entry or narrow ground involvement, but not necessarily a full regime change campaign, while simultaneously assigning a rising chance of a ceasefire over the coming months. That combination is more consistent with bounded escalation followed by pressured bargaining than with either immediate de escalation or open ended occupation.

(3) A sectoral pause such as a maritime arrangement around Hormuz or tacit limit on energy and civilian infrastructure strikes and deconfliction channel related to nuclear facilities are more likely than a peace settlement or even a ceasefire. The EU is reportedly actively exploring such options, analogous to the Black Sea grain deal. China is likewise pushing for mediation. However, none of these countries offers enforcement guarantees and Europe has explicitly declined joining militarily while the war continues.

(4) A further possibility within this scenario is a ‘declaration of victory’ variant, in which Washington uses heavy punitive force, leadership decapitation, and symbolic coercion to claim strategic success, then shifts the burden of stabilization onto regional actors and allies while refocusing on priorities closer to the Western Hemisphere. In that case, the result would be less a coherent regime change campaign than a violent but strategically incomplete outcome, with the United States disengaging before the political and security consequences inside Iran have been resolved.

(5) But it has become more plausible following the March 20 ultimatum to reopen the Strait within 48 hours and explicit threats to destroy major Iranian power infrastructure if Tehran refuses.

(6) The March 23 postponement issued by Trump lowers the immediate probability of this scenario relative to the 48 hour ultimatum phase, but it leaves the option very much alive if talks fail or if Iran continues to challenge Hormuz after the extension expires.

(7) The March 23 diplomatic pause issued by Trump does little to change this structural risk, especially as infrastructure attacks, repression, and leadership attrition continue.

(8) It also raises the probability of limited special forces use, not for a large occupation, but for reconnaissance, targeting support, battle damage assessment, site exploitation, or temporary control of especially sensitive nodes if U.S. leaders conclude that air strikes alone cannot manage the breakout risk or secure key chokepoints.

(9) Prediction market data, including Polymarket contracts on U.S. force entry into Iran and ceasefire timing, can help sharpen the timing signal in this assessment, but they should be treated as secondary indicators rather than as the base model. Market prices are useful as crowd weighted sentiment measures, especially for near term escalation and bargaining expectations, but they are sensitive to contract wording, liquidity, and rapidly changing headlines.

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