As Iran war cools, China rises & Europe shifts away | Fareed's Take roundup

Here's my take.Well into the second month of the U .S.-Israeli war, it is worth taking stock of where things stand.Here's what things looked like in Iran and its neighborhood before the war began in late February.In June 2025, Iran's nuclear enrichment facilities had been, in President Trump's words, completely and totally obliterated by a 12 -day bombing campaign by U .

S.and Israeli forces using American stealth bombers and 30 ,000 -pound bunker -busting bombs.The head of Israel's defense forces agreed with Trump, saying, we have set Iran's nuclear project back by years and the same goes for its missile program.That conclusion was reiterated by Israel's Atomic Energy Commission, which added that the achievement can continue indefinitely as long as Iran did not get access to nuclear materials and that access was actively being denied.Iran's military capabilities had been substantially weakened by separate Israeli air campaigns in 2024, which killed key Revolutionary Guard leaders, destroyed air defenses, and struck ballistic missile facilities.Israel also heavily bombed Iran's most deadly militia ally, Hezbollah, killing several layers of its top leadership, and by many analyses, crippling the military strength of the organization.

It had already taken apart Hamas in Gaza.Finally, Israel's campaign against the Iran -backed militias that supported the Syrian government played a part in the collapse of that regime in December 2024.In other words, Iran was in very bad shape militarily.In addition, its economy was a mess, destroyed by the tightening of sanctions and its own corrupt regime.Hardly anyone could argue that Iran posed a threat to its neighbors, let alone to the United States, which sits roughly 6 ,000 miles away.Donald Trump effectively admitted this on Wednesday.

We don't have to be there, but we're there to help our allies.

It's worth noting that none of America's European or Asian allies were consulted, and many have spoken out against the war.In fact, reports suggest that Prime Minister Bibi Netanyahu sold Trump on this war not because Iran was an imminent threat, but because its unprecedented weakness provided an opportunity to strike hard to effect regime change.Why else would Trump have closed his brief announcement at the start of the war by urging the Iranian people to rise up and overthrow the regime?A call echoed by Netanyahu in his own message.So far, aside from devastating Iran and crippling its already weak military, which was predictable in such a one -sided contest, few of the desired results have been achieved.The regime has not fallen.

Key leaders have changed, for the worse.The 86 -year -old Ayatollah Khamenei, who famously banned the development of nuclear weapons, was killed and replaced by his son, who is said to be more hardline than his father.In general, the Revolutionary Guards, who have always been more militant, seem to be ascendant, which makes sense in times of war.The Strait of Hormuz, which was free and open despite many threats through 47 years of U .S.-Iran tensions, is now blocked by the new leadership, whom Trump terms much more reasonable.

President Trump says that after a few more bombing runs, the Strait will open naturally because Iran will want to export its own oil.This misreads the situation.The strait is not closed.It is open to Iranian oil, which is flowing freely, especially to China.The net result of the war is that Iran now makes about twice as much on its daily oil supply.sales compared to before the conflict.

In addition, if it continues to charge a reported $2 million per passing ship, Tehran will make hundreds of millions of dollars in additional revenue every month, enough to rebuild its military and more.America's Gulf allies now face a far more unstable and tense environment than they did before the war.Their business models require peace, stability, and economic integration.Saudi Arabia's crown prince, Mohammed bin Salman, had mended ties with Iran in 2023 because he wanted to calm geopolitical waters to pursue his ambitious program of modernization.Today, all that progress is in jeopardy as oil exports are crippled and the region has gone from having a path to be an oasis of stability rather than a cauldron of conflict.The obvious winner is Russia, which will make billions of extra dollars every month as the price of oil rises and America waives sanctions against it.

Ukraine loses as weapons it needs are diverted to the Middle East.Europe loses as it faces crushing energy costs.And Trump demands that NATO fight his war and threatens to pull out of the organization if it doesn't.It's worth noting that NATO is a defensive alliance and did not fight in the wars in Korea, Vietnam or Iraq.China gains as America gets mired in another Middle Eastern conflict and loses its focus on Asia.Meanwhile, Beijing's massive investments in green technology shield it from many of the costs of this war.

And it appears to the world as a more responsible, less disruptive superpower.Of course, things could change.Wars are unpredictable.But so far, has any American military action ever racked up so many costs for so few gains?It's a beautiful thing, Donald Trump said recently, musing about a joint venture with Iran to act as the gatekeepers of the Strait of Hormuz.The same day he posted on Truth Social, big money will be made dealing with the traffic buildup there.

These are revealing remarks, not because they are outrageous, Trump has said many outrageous things, but because they distill a worldview.They suggest a shift in how the United States might see its role, not as the guarantor of a system, but as the participant in a deal.For most of its history, the U .S.has taken a different view.Freedom of navigation has been treated not as a privilege to be sold, but as a right to be defended.

The young republic's first military intervention, the quasi -war with France, was fought in part over interference with American shipping.Soon after, the U .S.confronted the Barbary pirates, refusing to pay tribute for safe passage, and instead using force to establish the principle that commerce should move freely across the seas.That commitment deepened over time.In the modern era, the United States has patrolled the world's oceans, ensuring that critical choke points from the Strait of Hormuz to the Strait of Malacca remain open.

It has done so at great expense not to extract tolls, but to sustain a global commons.Open seas would underpin open trade, which in turn would foster growth, stability, and ultimately peace.That is not how Donald Trump thinks.In his view, the Strait of Hormuz is not a global artery, but an asset, something to be monetized.Why provide security as a public good when it can be turned into a business venture?Why underwrite a system when you can charge admission?

This instinct runs deeper than a few words.It reflects his broader worldview that sees international relations less as the management of a shared order and of values and more as a series of transactions.In that world, every commitment is negotiable, every alliance conditional, every public good a potential profit center.After World War II, the U .S.emerged not just as the most powerful nation on earth, but as the but as the architect of an international system built on rules, openness, and cooperation.

Washington promoted free trade, supported multilateral institutions, and maintained a security umbrella that extended far beyond its shores.It didn't do so out of altruism, but because it understood that such a system would serve its interests.And they did.A world of open markets and secure sea lanes allowed global commerce to flourish, with the United States at its center.American companies thrived.The dollar became the dominant currency, keeping interest rates low for Americans as the country has borrowed more and more from foreigners.

U .S.influence extended across continents, not through coercion, but through attraction and interdependence.And when Washington did coerce, its power often shrank rather than grew.All this required a certain mentality.It meant looking beyond immediate gains to long -term advantages.

It meant accepting that some investments in security and institutions and alliances would not yield quick returns, but would pay dividends over decades.It meant understanding that legitimacy and trust are strategic assets.Trump's approach flips that logic.It prioritizes the immediate over the enduring, the tangible over the intangible.If allies can be bullied into paying more, that's a win.If trade partners can be squeezed for concessions, that's success.

If strategic commitments can be turned into revenue streams, so much the better.The costs in diminished credibility, frayed alliances, lost trust, and a weakened overall system are diffused and deferred.The gains are immediate and visible.The scholar Stephen Walt has called this behavior that of a predatory hegemon.The truth is, most hegemons were predatory.Great powers have taxed trade routes, extracted tribute, and leveraged dominance for direct gain.

Rome did it.The Habsburgs did it.Napoleon's France and Imperial Germany did it.Even Britain, often seen as liberal, ruled its empire in ways that enriched the metropole.What made the United States different was not that it lacked self -interest, but that it pursued it in a broader way.It built a system others could join.

because it offered wide benefits.It restrained its power even as it exercised it.It chose, in other words, to be an enlightened hegemon, one that understood that the surest way to sustain dominance was to make it acceptable.That choice is now in question.To treat the Strait of Hormuz as a toe boot rather than a global commons is to misunderstand both history and strategy.The U .

S.benefits most not from charging per ship for access, but from building a world in which commerce flows freely and Washington's central position is reinforced.To abandon that model for short -term extraction is to trade a durable advantage for a fleeting gain.If the U .S.becomes just another predatory hegemon, it will discover what history has long shown.

Such power is feared, resented, and ultimately resisted.And in time, it is not sustained, but overturned.Something puzzling is happening on the world stage.The United States has been infuriating much of the world by being reckless, erratic, and lawless, launching unilateral military actions, roiling the global economy, upending alliances, and treating long -held norms as inconveniences.And yet China, the world's rising superpower, has not piled on with thunderous denunciations and proclaimed itself the responsible alternative to an unreliable America.Understanding why will help us better grasp Beijing's long game.

I spent the last week in China and was struck by how many people there felt differently about this latest American war in the Middle East compared to the last major one.During the Iraq War, Chinese strategists seemed almost gleeful at the spectacle of America mired in the desert.This time, officials, think tank scholars, and business leaders were mostly bewildered by America's chaotic policy, worried about it, and deeply uncertain about what Trump might do next.Some of this is self -interest.China needs the oil and gas that pass through the Strait of Hormuz.More broadly, The country is not a rogue state like Russia.

It understands that its growth depends on open sea lanes, functioning markets, and steady rules of the game.Chinese officials repeatedly told me, echoing Xi Jinping, that the United States was taking the world back to the law of the jungle.It's less a moral critique than a strategic anxiety.In a globalized world, when the reigning hegemon becomes utterly unpredictable, it's bad for everyone.Chinese officials claimtheir country does not want to replace the United States.

Its business leaders insisted that America remains the more innovative economy.Even though America has soured on China, those leaders continue to admire Silicon Valley, America's great universities, and the scale and sophistication of the U .S.market.China's strategy is to use this crisis to build its economic strength and global influence.China is doubling down on the frontier technologies that it believes will define the next era of growth.

Green energy, robotics, artificial intelligence applied to real industries, advanced manufacturing and services.Its dominance in some of these sectors is already staggering.It produces 80 % of the world's solar panels, about 60 % of the wind turbines, and 75 % of the batteries.It supplies 70 % of all electric vehicles on the planet.China has used the last three economic shocks to further its dominance.During the pandemic, Chinese firms surged to supply much of the world with medical equipment.

As the artificial intelligence boom swelled, China became central to its physical buildup.The metals, electrical equipment, batteries, cooling systems and industrial components needed for data centers.Now the Iran war has produced a global scramble for new energy.Here again, China is the indispensable power.It dominates the green technologies, solar, wind, batteries, electric vehicles that countries will need to reduce dependence on imported oil and gas.Beijing turns these industrial strengths into influence.

It offers financing, infrastructure and supply chains.It locks countries into China's-made systems.It shows governments that America brings volatility, while China brings equipment, credit, and continuity.From 2000 to 2025, Beijing financed projects and ports in 90 countries around the world.Last month, Beijing even offered Taiwan a deal of sorts.

Accept peaceful reunification?and the mainland will guarantee your energy security.China's next expansion of influence is crucial.Xi recently made explicit Beijing's ambition to turn the renminbi into a global reserve currency.One former official explained how China would steadily expand its bond market and financial infrastructure so that if investors came to see America as risky, they would have an alternative.Recent weeks have brought an obscure but ominous sign.

Institutions like the World Bank and the European Investment Bank have been able to issue debt at rates essentially as low as those offered by U .S.treasuries.This threatens to end what has been called America's exorbitant privilege of having the world's reserve currency.If that erodes, America will get a very painful shock when its government and its households can no longer borrow so much so cheaply.China is using this moment to burnish its reputation, but mostly to build its power.

If the correlation of forces moves steadily in its favor, if America continues to squander its global influence, one day Beijing might decide that, after all, it does want to take on the mantle of the world's leading power.And at that point, it will be too late for Washington to do anything about it.I was recently in Shanghai.the heart of China's industrial machine, talking to one of that country's legendary businessmen.I asked him about the Iran war, and his response surprised me.He said, quote, for us, Trump's attack on Iran is less consequential than his threat to attack Greenland.

When he did that to America's oldest allies, I knew that Europe would not follow America's approach to China, unquote.In the US, Trump's periodic insults hurled toward Europe tend to get treated as routine tantrums, part of the reality TV show that is now the White House.But in Europe, the accumulation of abuse has reached a tipping point.Daniel DePietris recently wrote in The Spectator, a conservative and usually ardently pro -American magazine, the war in Iran has forced Europe to grow a spine.European leaders are no longer interested in dropping to their knees and groveling to stay on Trump's good side.Europe is moving from words to actions.

The EU's Rearm Europe Readiness 2030 plan is to invest some 800 billion euros in defense in the coming years.The old model was that America took care of European security and Europeans spent generously on American arms.Now Europeans want more of their money to stay at home.to build European firms and supply chains, and thus gain strategic autonomy from Washington.The same logic is spreading beyond defense.The European Payments Initiative is building a continent -wide alternative to Visa and MasterCard.

European institutions are seeking alternatives to Swift, PayPal, and other U .S.-dominated financial platforms.France has moved gold reserves fromNew York to Paris.Politicians in Germany and Italy have debated whether their countries should do the same.

European governments are looking for alternatives to American software, fearing that US firms might one day be ordered to cut off critical services.This can all be dismissed as posturing, but let's remember, Europe is collectively the world's second largest economy.with the second most widely used reserve currency.Its actions matter.Perhaps the most revealing change is on the European right.Anti -Americanism used to be a doctrine of the left.

Paris intellectuals, student radicals, anti -war parties.The right was instinctively Atlanticist.And Europe's populist right once saw Trump as its patron saint.But Greenland, Iran, and Trump's general contempt for Europe have made him politically toxic across the political spectrum.The Washington Post reported that figures such as Nigel Farage, Marine Le Pen, Georgia Maloney, and Germany's AFD party have all been distancing themselves from Trump and American policy.Even in Hungary, JD Vance's speeches for Viktor Orban may have hurt Orban's electoral prospects.

It goes beyond Europe.In Canada, Prime Minister Mark Carney has explicitly set out to reduce his country's dependence on the U .S.market.He has already signed more than 20 economic and security deals, including with China, to grow exports beyond the U .S.

Canadians, for their part, are buying less American and vacationing less in the U .S.Europe and Canada are not about to embrace China.They have serious conflicts with Beijing over Ukraine, subsidies, electric vehicles, critical minerals, market access, but both will play their part.China where they can.They will hedge.

They'll deal with Washington when they must, Beijing when it suits them, and others whenever possible.A recent foreign affairs essay by Chinese scholar Da Wei argues that for Beijing, the great new geopolitical fact is there is now a deep Europe -America divide ready to be exploited.In Asia, America's allies have been hit harder than anyone.More than 80 % of the oil and gas that passed through the Strait of Hormuz went to Asia.Now many countries on that continent are reeling from their worst energy crisis in half a century, perhaps in history.As a result, American allies like Japan and South Korea have had to go hat in hand to adversaries like Russia and Iran to negotiate for enough fuel to keep the lights on at home, adding insult to injury, They have had to endure abuse from Trump, who has denounced them because, despite never having been consulted, they have not eagerly jumped to join America's war.

Many of them are now in talks with Beijing about energy security and green technology.One of the recurring questions about Donald Trump's foreign policy has been, how permanent are its effects?Could the United States recover from the loss of trust with its allies?As we can see, countries have started making long -term policy shifts, and these will soon take on a life of their own.They realized that they had entrusted their security and well -being to Washington, and it has used this dependence to squeeze them hard.So they've decided to buy insurance to protect themselves from an unreliable America.

And who can blame them?