Corporate Diplomacy Led to War in Iran, and America Faces The Bill
Since Saturday, the 28th of February, much has developed with the War in Iran. The United States and Israel have struck more than 2,000 targets across Iran. Tehran has retaliated across the region. What was once framed as a contained, targeted operation has, with startling speed, collapsed into a full-scale regional war.
The picture on the ground is already historic in its severity:
The confirmed Iranian death toll from US-Israeli strikes has risen to 1,045, with the deadliest single incident a strike on an elementary girls' school in the city of Minab, which killed approximately 180 children.¹
Iran has retaliated with strikes across nine countries — Bahrain, Iraq, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, the UAE, and Israel — and an Iranian drone struck a runway at a UK military base in Cyprus.¹
Supreme Leader Ali Khamenei has been killed; his wife died of injuries on the 2nd of March. The army chief of staff, the defence minister, and multiple IRGC commanders have also been confirmed dead, leaving it currently unclear who is ruling Iran, though Khamenei's son is widely reported as the favoured successor.²
The Iraqi Shia militia Saraya Awliya al-Dam has claimed drone attacks on US troops at Baghdad airport and a US air base in Irbil in northern Iraq.
Hezbollah — Iran's proxy in Lebanon — launched projectiles on the 2nd of March into northern Israel for the first time since the November 2024 ceasefire, targeting a missile defence site south of Haifa.
At least 30,000 civilians have been displaced in Lebanon since Monday alone, with UNHCR reporting people sleeping in cars and on roadsides.
One year into his second term, Trump has ordered military strikes on more countries than any modern president — the majority of which have occurred during this term.³
The surface logic is seductive: Iran is a rogue state — of course, it cannot be permitted a nuclear weapon. But the academic and policy record tells a considerably more complicated story. In an interview with Ezra Klein, Ben Rhodes — former Deputy National Security Advisor to President Obama — was asked, in so many words, why the Obama administration did not bomb Iran. Rhodes explained that, having run extensive war-game scenarios, they concluded that a strike from above could only set back Iran's nuclear development by, at most, one year. The Iranians had long prepared for precisely that scenario. To risk the region's stability, further destabilise the country, and deepen Iranian hostility, all for a single year's delay, was a cost that could not be justified. The viable alternative, they concluded, was diplomacy: fostering a relationship sufficiently functional to produce enforceable constraints by third parties. It was that conclusion which produced the Iran Nuclear Deal (the Joint Comprehensive Plan of Action (JCPOA)), prohibiting Iran from developing nuclear weapons. President Trump withdrew from it in 2018.
The distance between that reasoning and the current administration's conduct is not merely strategic. It is a completely different value in their worldview.
Trump's senior negotiators — Jared Kushner, Steve Witkoff, and the president himself — are real estate men. They are trained in corporate negotiation and short-cycle private gain. It is this instinct, transposed onto the world stage, that has come to define this administration's decision-making culture. In doing so, they have given modern institutional form to a concept with profound implications for global order: entrusting public diplomacy to private figures. This is corporate diplomacy. When diplomacy is led by corporate actors, one gets corporate-focused solutions. These figures do not weigh the burdens they place on leaders to come, nor the systems they will leave behind. They are optimising their choices for short-term impact on the current "investors" of U.S. imperial ambition. Executing the strategy by looping in the media cycle, the market opening, and the impact on the largest stakeholder.
This distinction is crucial. The corporate world seeks short-term, measurable returns, while politicians rooted in democratic principles should consider the long-term impact on the systems they serve. A politician weighs the broader consequences of decisions; a corporate diplomat values immediate results.
The other critical story here is what this war does to an already deepening legitimacy crisis, one that the United States was facing long before the first bomb fell on Tehran.
As of early February 2026, the United States' gross national debt stood at $38.56 trillion, rising at approximately $6.43 billion per day.⁴ Annual interest payments on that debt now approach $970 billion; a figure that has nearly tripled since 2020 and already exceeds what the federal government spends on national defence or Medicaid.⁵ The Congressional Budget Office projects the debt will reach 120 per cent of GDP by 2036 and 175 per cent by 2056.⁶
The war with Iran is dramatically accelerating this trajectory. Kent Smetters, Director of the Penn Wharton Budget Model and former deputy assistant secretary for economic policy at the US Treasury, estimates the direct budgetary cost of ‘Operation Epic Fury’ at between $40 and $95 billion, with $65 billion his central projection. Adding broader economic losses, trade disruption, energy market volatility, and financial contagion could raise total costs to the American economy to $50 billion to $210 billion. ⁷
The fiscal consequences, however, extend well beyond the operational cost line. Foreign creditors — China and the Gulf states among them, both of which have already been diversifying away from US Treasuries over the past year — are now implicated in this conflict, either through proxies or directly. A meaningful reduction in their holdings of U.S. government debt would place upward pressure on U.S. interest rates, compounding the fiscal cost of the military operation through the debt service channel. This is the precise mechanism by which military adventurism and fiscal deterioration link directly: not merely through operational expenditure, but through the signal such a war sends to sovereign debt markets about the reliability and sustainability of American institutional commitments. An unreliable debtor sees its fiscal credibility deteriorate. It is that credibility that underwrites the United States' position as the world's fiscal hegemon and, more broadly, as a superpower.
Structural buffers remain, of course. Technological leadership, dollar reserve status, and alliance depth give the United States unique protection. But as Adam Tooze has argued, America's fiscal dominance is simultaneously its greatest source of power and its most significant structural vulnerability.⁸ The debt accumulation, combined with a political dysfunction that makes fiscal consolidation democratically impossible, erodes the institutional credibility on which dollar dominance ultimately rests. Countries are already self-insuring through investment in alternative fiscal mechanisms. From the BRICS+ payment system to the digital euro, the digital yuan, and bilateral swap and repo lines. The war with Iran makes both problems, political unpredictability and debt accumulation, considerably larger.
The bigger issue is the legitimacy crisis the United States now faces, from multiple angles. A dollar credibility scare and a fast-consolidating international reputation as a rogue actor. One that strikes while negotiations are ongoing, that deems one of its own AI firms a “supply chain risk” one week and starts a war using the same AI firm’s model the next. Nobody truly trusts a deal made with a rogue actor. Nobody wants to be fiscally dependent on one.
This is corporate diplomacy. It does not serve global stability.
References
CBS News, "Iran War Death Toll," March 2–3, 2026
NBC News, "Khamenei Confirmed Dead," March 2, 2026.
Axios, "Trump Military Strikes Count," 2026; ACLED data via Military Times, January 4, 2026.
Joint Economic Committee, Monthly Debt Update, February 4, 2026, https://www.jec.senate.gov.
Committee for a Responsible Federal Budget, cited in Fortune, March 2, 2026, https://fortune.com/2026/03/02/how-much-interest-on-national-debt-do-taxpayers-pay/.
Congressional Budget Office, Budget and Economic Outlook: 2026 to 2036, February 11, 2026; Committee for a Responsible Federal Budget, "Debt Rises to 175% of GDP Under CBO's Long-Term Outlook," March 2, 2026.
Kent Smetters (Penn Wharton Budget Model), cited in Fortune, March 2, 2026, https://fortune.com/2026/03/02/how-much-trump-iran-war-operation-epic-fury-cost-taxpayers/; Elaine McCusker (American Enterprise Institute), cited in Wall Street Journal, February 2026.
Adam Tooze, Chartbook (Substack), ongoing; see also Tooze, Crashed: How a Decade of Financial Crises Changed the World (New York: Viking, 2018).