News that U.S. President Donald Trump has ordered military strikes against Iran broke early Saturday morning, February 28, and a few days later, more than 10 countriesNews that U.S. President Donald Trump has ordered military strikes against Iran broke early Saturday morning, February 28, and a few days later, more than 10 countries

Nobel economist: Trump getting a major reality check

2026/03/05 02:37
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News that U.S. President Donald Trump has ordered military strikes against Iran broke early Saturday morning, February 28, and a few days later, more than 10 countries had been pulled into the conflict in some way. Axios' Herb Scribner described the scope of the war in an article published on March 3, noting that Iran had fired strikes against U.S. installations in Saudi Arabia, Qatar, Kuwait, Jordan, Bahrain, Oman and other Middle Eastern countries. And while Israel was firing missiles at Iran, the Hezbollah militia in Lebanon, Scribner reported, "entered the war on Iran's side, launching missiles and drones at Israel on Monday."

The European Union (EU), according to Scribner, was "pulled into the conflict" when "drones struck the British Royal Air Force base at Akrotiri in Cyprus" and Cyprus Mail reported that the strikes probably came from Hezbollah.

In an article published on March 4, liberal economist Paul Krugman stresses that the conflict is giving Trump a major reality check — as it will certainly have a significant impact on both energy and the economy.

"The bad news comes in two parts," Krugman warns. "First, any hopes that this war might be extremely brief are fading. The Trump Administration may have imagined that decapitating the Iranian government would bring swift regime change, but the Islamic state isn't a government of mere thugs — yes, they're evil thugs, but they're also serious religious fanatics facing what, for them, is an existential threat. And their grip on power isn't that easy to break…. Second, war in the middle of the world's most important oil-producing region — which is also a key source of liquefied natural gas — inevitably has major consequences for energy prices."

Krugman continues, "Once upon a time, U.S. and Israeli air superiority might have contained Iran's ability to harm its neighbors. But in an age in which even third-rate powers have the ability to launch missiles and drones, Iran has a huge stockpile of drones and also has ballistic missiles that are destructive, hard to intercept, and have a 1200-mile range…. The potential targets at risk include key parts of the region's energy infrastructure. Above all, the war threatens tanker traffic through the Strait of Hormuz, which is how the bulk of Middle Eastern oil and gas normally reaches world markets. And the risk of Iranian attacks has effectively closed the Strait."

Krugman notes, however, that there is also some "good news" from both an economic standpoint and an energy standpoint.

"Even if oil prices go much higher, to $100 a barrel and beyond," the former New York Times columnist observes, "it won't necessarily trigger an economic crisis. I explained why on Monday: The United States and other advanced nations are far less oil-dependent than they were in the 1970s, when oil shocks did cause major economic disruption."

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