Five storylines broke through the usual August lull this week: Iran squeezed into economic submission, a new Gulf order displacing the United States, China poised to exploit American overextension, a breakthrough toward ending the Russia-Ukraine war, and Democrats reversing course on Israel. In each case, the underlying reality is less dramatic than the headline.
Iran: “Economic D-Day” Will Not Deliver the Squeeze Trump Wants
Treasury Secretary Scott Bessent announced an escalation of economic pressure on Iran this month, “Economic D-Day,” aimed at cutting off Iranian commerce enough to force Tehran back to the table. The initiative itself is a tell: it underscores how little progress has been made, militarily and diplomatically. Despite claims the Strait of Hormuz is open, tankers still transit at night, transponders off, under US Navy escort.
Of course, success depends on squeezing China and India, the largest buyers of Iranian crude, but China has already shown it can dial back consumption when it chooses. The harder problem is Turkey, Pakistan, and Iraq, major conduits for Iran-linked commerce, where it is unclear whether Washington has the will to sanction, or whether those transactions even clear in dollars (the UAE already shut major trade lines). Absent both, “Economic D-Day” is branding more than a mechanism.
The Turkey-Pakistan-Saudi Pact Is a Marriage of Convenience, Not a New Order
The trilateral defense pact signed in Mecca last month has drawn commentary about a new Gulf security framework separate from the US. We view it differently. This pact gives Saudi Arabia access to Turkish defense technology it cannot import from the United States, and strengthens Riyadh’s back channel to Tehran through Ankara and Islamabad, both of which maintain active dialogue with Iran; Pakistan already funnels Saudi money to Islamic Revolutionary Guard Corps leaders. Neither country could actually defend Saudi Arabia, or substitute for the US relationship.
Riyadh still wants Washington engaged as the primary regional guarantor. It is frustrated by Trump’s unpredictability, disappointed that a nuclear cooperation deal has stalled, and unsettled by a future Democratic approach. The pact reflects the Kingdom creating optionality, not abandoning Washington: the moment for companies and investors to reengage Saudi leadership directly, not pull back.
China Will Not Exploit a Weakened US, at Least Not Yet
The United States is arguably at its weakest position in Asia in decades: munitions redirected to the Middle East, Navy assets tied down around the Hormuz operation, and the two-front war doctrine under visible strain.
Still, we do not expect Beijing to move drastically in the near term. Beijing wants calm ahead of Xi Jinping’s upcoming diplomatic engagements, and Xi is managing friction with the People’s Liberation Army after purging senior generals, undercutting the trust his public posture suggests. Taiwan’s defenses have also improved, via a $40 billion package (the T-Dome air defense system, asymmetric and drone capabilities) and deeper coordination with US forces through a new Joint Firepower Cooperation Center, raising the cost of any Chinese move. China may ultimately benefit from a weakened United States, but that is a long-term dynamic, not one likely this fall.
Ratcliffe’s Moscow Trip Could Signal a Real Push on Ukraine
Reporting over the weekend indicates CIA Director John Ratcliffe’s Moscow trip was not primarily a warning about NATO territory, as first characterized, but an effort to open a channel toward ending the war, including floating a possible Trump-Putin-Zelensky summit, the first time Ratcliffe has personally entered the diplomatic fray. That suggests the administration sees him as capable of delivering what Special Envoys Witkoff and Kushner have not.
There is a real basis for Ukrainian openness: a severe Patriot interceptor shortage, record Russian missile strikes over the summer, and continued domestic pressure on Zelensky. Yet Ukrainian officials remain skeptical of Putin’s intentions and say they have intelligence Russia is preparing a renewed offensive in northern Ukraine. If progress materializes, expect Ratcliffe to take a larger role on Iran too.
Israel: Congress Moves to Oversight, Not a Course Change
Democrats will make Israel primarily an oversight issue this fall, not a vehicle for changing policy outright. The push will center on conditioning military aid over alleged human rights abuses; recent imagery of an attack on an NBC film crew will likely strengthen it. This is a meaningful shift in scrutiny but falls well short of a break in the relationship. The same holds for Gulf and Asian partners: the isolationist tone of a few prominent Democratic candidates is not a wholesale party shift.
What’s Next
Foreign partners are testing the edges of the status quo, not abandoning it. Trump needs a win, for the midterms and his legacy. Capstone expects a major push on Ukraine, warmer overtures to Kim Jong Un, and continued attention to Venezuela as a vehicle for lowering gas prices.
Read more from Capstone’s National Security and Defense Team:
Graham Russia Sanctions Bill: Hurdles, Impact and Questions
Running on Empty: The Prolonged Energy Market Fallout from the Iran War
Why Iran Will Retain Control of the Strait While Negotiations Continue Indefinitely
