Could Iran Beat the U.S. in a War?

In this episode, we examine a provocative and complex question: Could Iran realistically defeat the United States in a military conflict? We explore the military capabilities, strategic advantages, cyber warfare potential, regional influence, and unconventional tactics employed by both nations. Drawing from defense analyses, geopolitical case studies, and historical tensions, we dissect how an asymmetrical conflict might unfold and what a full-scale war could mean for the Middle East and the world.

Episode Transcript

Speaker 1 (00:10):
The global stage feels like it's constantly shifting beneath our feet,
doesn't it, Especially recently, I mean with the profound seismic
shifts triggered by military actions in the Middle East. You
might see a headline, glance at an infographic maybe, and
feel like you've got the gist. But what if I
told you that what you're seeing is often just a fraction,
a tiny sliver of the full, intricate story.

Speaker 2 (00:33):
Oh It's absolutely true. The real impact, the complex web
of cause and effect, it often remains obscured beneath the
surface of our daily news cycles. To truly be well informed,
to move beyond just awareness and into while genuine understanding,
you really need to go far beyond those initial glimpses.

Speaker 1 (00:50):
And that's precisely what we do here at Beyond Infographics Welcome.
Our mission is pretty straightforward. We take complex global issues,
the kind that can feel really overwhelming, and we deep dive.
We strip away the noise, filter out the distractions, and
get straight to the most important nuggets of knowledge and inside.
Today our mission is to cut through the swirling headlines

(01:11):
and truly understand the ripple effects of the recent US
strikes on Iran's nuclear facilities.

Speaker 2 (01:16):
Yeah, we're going to unpack what these strikes mean, not
just for the immediate region, but really for the world
at large. That includes exploring Iran's potential responses, It's deeply
layered and often surprising military doctrine, the critical choke points
of global trade that hang in the balance, and even
the often overlooked humanitarian challenges that invariably arise in such

(01:38):
a high stakes environment.

Speaker 1 (01:39):
And here's where it gets particularly insightful. I think we'll
even look at some truly innovative solutions being explored to
navigate these complexities, solutions that you might not expect. If
you've ever felt overwhelmed by the sheer volume of information
coming at you, or wished for a shortcut to truly
grasp what's going on, this deep dive is absolutely for you.
We aim to give you those aha moments that make

(02:01):
you feel genuinely well informed.

Speaker 2 (02:03):
Indeed, we'll delve into the specific sites that were targeted,
the surprising military options Iran has at its disposal, the
immense strategic importance of a narrow strait that holds well
a significant portion of the world's energy supply captive, and
even how global finance grapples with the unintended consequences of sanctions.

(02:24):
It's a journey into the intricate layers of geopolitical strategy
that dictates so much of our world.

Speaker 1 (02:29):
Okay, before we plunge into the details, a quick note.
If you're finding our deep dies valuable and insightful, please
take a moment to give us a five star rating.
It truly helps us reach more curious minds like yours,
allowing us to keep bringing you these in depth analyzes.
Now let's begin. Let's start by unpacking the immediate aftermath, specifically,
the catalyst for this current situation, the US military strikes

(02:51):
on June twenty two to twenty twenty five. Can you
walk us through what precisely happened on that day?

Speaker 2 (02:55):
Certainly so. On June twenty second, the United States launched
military strikes against three critical Iranian nuclear facilities four dau
Natenes and Isfahan. This marked a significant escalation of US
military intervention against Iran. What's particularly notable are the methods used.
It was the first ever reported operational use of these

(03:15):
thirty thousand pound bunk or buster bombs, specifically on Fodah. Now,
this facility is known for being a deeply buried enrichment
site constructed literally under a mountain, specifically designed to withstand
conventional attacks. The strikes also utilized submarine launched cruise missiles
on the Natanz and Isfahan sites.

Speaker 1 (03:32):
Right, and what was the immediate assessment of the damage
from these strikes? How effective were they thought to be?

Speaker 3 (03:37):
Well?

Speaker 2 (03:37):
The Pentagon reported severe damage to these targets. However, the
full extent of the damage on Foordo, especially given its hardened,
deep underground location, isn't immediately apparent. It's tricky. The US
and its allies are heavily relying on intelligence, which is
always a complex and ongoing process to truly gauge the
long term success of that part of the operation. It's

(03:58):
also important to underscore the stated objective here, it was
curbing Iran's nuclear capabilities. Administration officials were very careful to
state that the goal was explicitly not regime change in Iran,
but rather a limited operation focused specifically on degrading that
nuclear program.

Speaker 1 (04:16):
Okay, so Iran had issued these very strong warnings about
dire consequences for the entire region if the US intervened.
Now facing these strikes, it seems Tehran is in a
truly stark dilemma. What are their choices and what's at
stake for them both domestically and you know, internationally.

Speaker 2 (04:33):
Indeed, it's a critical crossroads for Tehran. Iran's credibility both
at home and on the international stage has taken what's
been described as an unprecedented blow. This is due to
the perceived failure to shield its nuclear program from these attacks.
It looks bad for them, so now they face a
stark choice retaliate and risk a wider, potentially devastating conflict

(04:54):
with punishing reprisals, or pause, you know, try to consolidate internally,
which would mean and accepting a significant blow to their
long standing vows to protect their nuclear program at all costs.
This inaction, however necessary for consolidation, it would undermine years
of their stated policy and their domestic narrative. It's a
tough spot. Their ultimate response will be heavily shaped by

(05:16):
the remaining capabilities and crucially, the willingness of their allies
to actually provide tangible support beyond just words.

Speaker 1 (05:23):
And speaking of capabilities. Iran has faced a lot of
pressure in military action even before these latest strikes. How constrained.
Are the response options right now? Are they weaker than
they appear?

Speaker 2 (05:32):
They are quite constrained. Actually, there's been a significant erosion
of Iran's military capabilities, not just from these recent US strikes,
but also from previous Israeli operations and earlier interventions. Throughout
twenty twenty four. Their military and paramilitary leadership has been
severely disrupted at the command level some reports use the
word to capitate it, and their ballistic missile capabilities have

(05:54):
also taken significant hits. It's not just about the number
of missiles, but the infrastructure and command structure too. On
their internal forces, they are so called axis of resistance
is well, it's the shadow of its former self.

Speaker 1 (06:05):
How so what about groups like Hamas or Hesbola.

Speaker 2 (06:08):
Well, groups like Hamas and Islamic Jihad have been severely
diminished by Israel's twenty month conflict in Gaza. They just
don't have the same capacity. And Hesba and Lebanon was mauled,
as one analysis put it, by Israel last fall. They
lost most of their top leadership and saw much of
southern Lebanon devastated. This makes their deep involvement in a

(06:28):
new conflict highly unlikely they need to rebuild. Their weakness
was further exacerbated by the collapse of the ASAD regime
in Syria, which disrupted key supply lines that ran through
Syria to Hesbola. Those routes are much less reliable now, so.

Speaker 1 (06:41):
Their traditional proxies are significantly weakened. What about their state
allies like Russia are they stepping up?

Speaker 2 (06:47):
Well? Key allies like Russia, while offering rhetorical support, condemning
the strikes and so on, have so far not offered
much more than that just words. Mostly, this lack of
robust external support or further limits Iran's options. They can't
count on significant outside military help right now. Furthermore, Iran
has been trying to build or perhaps rebuild warming ties

(07:10):
with its Gulf air of neighbors, so it will likely
try to thread the needle with any response to avoid
provoking them too much. They don't want to undermine the
security or economies of countries like Saudi Arabia or the UAE,
who themselves are treading a very delicate path calling for
restraint without outright condemning the US strikes. Everyone's walking on eggshells.

Speaker 1 (07:29):
Okay, so what does this all mean for the US.
Despite stating that regime change isn't the goal, there are
still significant escalation risks here, aren't there?

Speaker 2 (07:37):
Absolutely huge risks? First, in Iranian response is considered virtually assured,
whether it's a conventional attack or perhaps more likely, asymmetric warfare.
This almost guarantees a cycle of strikes and counter strikes,
potentially drawing the US deeper into the conflict than intended.
Tit for tat can spiral fast. Second, even contain tensions

(07:57):
could negatively affect global energy markets. We could see spiking
gas prices, especially as we head into the summer driving season.
That would hit American pocketbooks directly, and you know how
politically sensitive that is. And Third, despite US assurances that
regime change is not the objective, conflict dynamics can spiral
in unintended ways. It's happened before. We saw this in

(08:17):
the twenty eleven Libya intervention. Right. It started as a
no fly zone intended to protect civilians, but it evolved
into regime change, leaving Libya a failed state for years.
President Obama himself called that intervention the worst mistake of
his presidency, highlighting how easily intentions can be overtaken by
events in war.

Speaker 1 (08:33):
Wow. Yeah, that's a sobering reminder. This immediate situation really
reveals a fundamental truth about international relations. Every action has multiple,
often unintended consequences. For you, our listener, what does Iran's
current dilemma tell us about the future of the Middle East?
What's a big takeaway here?

Speaker 2 (08:53):
I think it tells us that the decision Iran makes
in the coming days and weeks will be a critical
signpost for the future of the entire Middle East. It's
a real inflection point. This isn't just about a few
nuclear facilities being hit. It's about a delicate balance of power, credibility,
and deterrence that could tip the region into a much wider,
more unpredictable conflict. Understanding these immediate dynamics is key to

(09:14):
grasping the monumental stakes at play. It highlights how even
seemingly surgical military actions can open a Pandora's box of
political and economic challenges far beyond their initial scope.

Speaker 1 (09:24):
Okay, so, with Iran now facing this dark dilemma, the
question becomes how might they respond? What tools do they
actually have? And I understand that we need to look
at their unique military doctrine often called mosaic defense. Can
you tell us about this concept? Who came up with it?

Speaker 2 (09:38):
Yes? This is a truly fascinating aspect of Iran strategy.
Mosaic defense is a flexible, layered defense concept. It was
primarily developed at General Mohamma Jafari, who later became the
commander of the Islamic Revolutionary Guard Corps or IRGC, a
key figure. The core idea is to leverage Iran's unique geography,
its mountains, deserts, and its strategic depth to counter a

(10:01):
technologically superior enemy. Rather than meeting a conventional force head
on in a battle they know they likely can't win,
they aim to make the terrain itself an adversary, use
the land against the invader.

Speaker 1 (10:11):
So how does Uron's geography plan into this imagine? The
country's landscape isn't exactly an easy terrain for large scale invasions.

Speaker 2 (10:18):
Precisely, Iran's terrain is characterized by extensive mountain ranges, vast
arid deserts, and even flood zones. It's incredibly diverse and challenging.
These features make it extremely difficult for large heavy military
units like tank divisions to operate effectively. They get bogged down.
This forces what's described as discrete fighting, where military control

(10:40):
becomes a patchwork of alternating zones. You can't just draw
a neat front line. It relies more on limited air
mobile units and armed convoys for supply rather than massive
ground pushes. Heavy armoured vehicles are severely limited in their
utility in many areas. Instead, the emphasis is on mobile
tactical groups, infantry, airborne artillery and engineering units supported by

(11:01):
tactical aircraft. Where possible thinks smaller, more agile forces.

Speaker 1 (11:05):
And what does this layered defense structure look like in practice?
How do their different military branches like the army and
the IRGC fit into this mosaic.

Speaker 2 (11:12):
It's designed to wear down an enemy over time, creating
a series of obstacles, almost like defensive layers onion skin style.
The first line of defense consists of their regular army units,
often reinforced with armored and mechanized divisions where the terrain allows.
Their role is to repel initial attacks blunt the spearhead
behind them. The IRGC troops form the second line. They

(11:33):
move from the interior to cover key operational directions, delivering
counter attacks, hitting flanks and generally exhausting the enemy. Then
you have the popular resistance layer, primarily the Bossige militia
and other paramilitary forces. They form the core of popular resistance,
ready to replenish regular IRGC units and conduct ambushes, raids, sabotage.

(11:54):
This is especially crucial in urban areas where an adversary's
mobility and air support are severely hampered. Think protracted messi
urban warfare. It's all about drawing the enemy into a protracted,
costly engagement on Iran's terms, bleeding them slowly. They also
emphasize passive protection measures like extensive camouflage and misinformation, trying
to hide their forces and mislead the enemy to increased

(12:16):
troop survival rates.

Speaker 1 (12:17):
That makes a lot of sense strategically, so given this doctrine,
their naval capabilities aren't about building a massive bluewater fleet
to challenge the US Navy directly, but rather focusing on
asymmetric warfare exactly.

Speaker 2 (12:29):
Iran's naval doctrine is a direct lesson learned from the
tanker war back in the nineteen eighties. They learned they
couldn't win a direct ship to ship confrontation with a
superior force like the US Navy. So their goal isn't
decisive defeat of the enemy fleet, but rather inflicting unacceptable damage,
making the price of victory simply too high for an
aggressor to bear the turrens through pain. Essentially, their assets

(12:52):
are designed specifically for this, a vast number of naval
minds thousands potentially that can be secretly installed by small
boats or even discus commercial vessels very hard to detect deployment.
They also have land based and sea based anti ship
cruise missiles, hundreds of small high speed boats designed for
swarm operations and suicide attacks, and domestically produced or possibly

(13:13):
North Korean submarines that are ideal for the shallow waters
the Persian Gulf or large nuclear sub struggle.

Speaker 1 (13:18):
The geography of the Persian Gulf must really play into
this asymmetric approach, particularly given how narrow and crowded it is.

Speaker 2 (13:27):
It's a absolutely key factor. The Persian Gulf is surprisingly
limited and crowded, under one hundred nautical miles wide in
some places. This makes it incredibly difficult for large enemy
ships like aircraft carriers to maneuver safely. They become big,
vulnerable targets. This creates favorable conditions for Iran's smaller, faster,
more agile forces. They can hide, strike quickly, and disappear.

(13:50):
The Northern Gulf coast is also dotted with rocky inlets
and islands, offering ideal camouflage for their bases and anti
ship missile positions. Furthermore, Iran has heavily fortified strategic islands
right at the mouth of the Persian Gulf, places like Hormas, Larak, Kisham,
hengum A Greater and lesser Tombs Abu Musa. These form
a critical first defense arc that can project fire across

(14:12):
the Strait of Hormus. They can essentially control access. They
even have, according to some reports, around fifteen hundred combat
ready special operations groups, each with just five to eighteen
people specifically trained to target and destroy US naval based
infrastructure in the region.

Speaker 1 (14:26):
Wow, Okay, what about their missile forces. They're often highlighted
as a potent deterrent, maybe the most visible one.

Speaker 2 (14:32):
They absolutely are. Iran possesses the largest ballistic missile stockpile
in the Middle East. It's a significant capability. These forces
are directly controlled by the IRGC, and they are constantly
being developed, modernized, and their range increased. It's a high
priority for them now. While their accuracy can be limited
compared to say US or Israeli missiles, making them less

(14:53):
precise for surgical strits on small targets, they are primarily
intended for large area targets cities, major oil production or
refining facilities, ports, desalination plants, or large concentrations of troops
and warships. Saturation over precision. Their strategy focuses on quantity
and saturation, aiming to overwhelm enemy defenses through sheer numbers.

Speaker 1 (15:15):
Are there examples of the different types of missiles they possess.
In their general capabilities, what can they actually hit?

Speaker 2 (15:20):
Yes, they have a pretty wide range of capabilities. At
the shorter end, they have tactical missiles like the Nausea
and zels All series with ranges from maybe eighty to
three hundred kilometers. These are suitable for targeting US bases
in nearby countries like Qatar, Bahrain, or Rock maybe even
Afghanistan depending on launch location. Then there are their medium
range deterrens like the Shehab one and Shehab two, which

(15:43):
can reach up to perhaps seven hundred kilometers, extending their
threat radius considerably across the region, and at the longer end,
they possess strategic capabilities like the Shehab three and its variants,
which can reportedly reach up to two thousand kilometers. These
have cluster warhead options and are clearly intended to hold
targets further afield, including potentially all of Israeli territory at risk.

(16:05):
The strategy isn't just launching from Iran either. It envisions
simultaneous massive strikes for Iranian territory and from directly bordering
areas where their proxies operate. That could include Lebanon via Hezbola,
perhaps the Gaza Strip via Hamas remnants, and potentially Syria
using various tactical and SCUD type missiles deployed there. The
whole idea is to overwhelm air and missile defenses like

(16:26):
Israel's Iron Dome and arrow systems through sheer volume and
attacking from multiple directions at once.

Speaker 1 (16:32):
So Iran's military doctrine and capabilities clearly lean heavily into
asymmetric warfare, making them a formidable, if unconventional opponent. This
leads us to another rapidly developing area for them, unmanned
aerial vehicles or UAV's drones. What's their progress like here
and what makes these simple but efficient drome such a
new aerial threat.

Speaker 2 (16:51):
Iran has indeed made rapid and frankly significant progress in
UAV technology. They're often described accurately, I think as simple
but efficient. These drones typically fly low, slow, and often
incorporate some stealth features, making them genuinely difficult to detect
and intercept, especially for older air defense systems. Their missions
can range from intelligence gathering, ISR reconnaissance surveillance, to dropping

(17:16):
munitions and increasingly kamikaze or one way attack suicide missions.
What's truly remarkable about Uran's approach and how they got
so good so fast, is its catch up strategy based
on reverse engineering. Instead of spending billions and decades on
R and D from scratch, they've focused on recovering and
analyzing downed Western UAVs. When US and Israeli UAVs have

(17:38):
been downed or crashed in the region over the years,
Iran has reportedly recovered them, meticulously analyzed them down to
the component level, and then copied the designs.

Speaker 1 (17:46):
So they're basically taking advanced Western nor Israeli designs and
replicating them without all the original development costs, the MutS
have saved them years in a fortune.

Speaker 2 (17:54):
Exactly, it's a shortcut. For example, the now infamous Shaheed
on thirty six, which has been so prominent in the
war in Ukraine, is reportedly based heavily on an Israeli
Elbit system's UAV design, possibly the Harpy or Hurrap. Similarly,
other Iranian drones like the Shahid one forty one and
Shahid one ninety seven are believed to be based on
the US RQ one seventy Sentinel stealth drone that was

(18:16):
captured by Iran back in twenty eleven. This reverse engineering
has saved them years of research, development, testing and evaluation.
It allowed them to rapidly move to serial production of
various UAD types across different ranges and capabilities. What also
facilitated this rapid advancement despite heavy international sanctions is the
surprising availability of commercially available off the shelf products or

(18:37):
co hets, like components you can just buy online essentially. Yes,
components like onboard computers, communications sets, navigation devices like GPS modules,
and even encryption devices which were once the exclusive domain
of a few superpowers, can now often be purchased from
civilian suppliers, sometimes dual use tech to get around sanctions.

(18:58):
Iran reportedly as stables bablished a whole network of procurement
companies and front entities specifically to acquire these COTSIS products
globally and then ship them to Iran for integration into
their UAV programs. This enabled large volume cereal manufacturer even
under sanctions pressure. It's quite resourceful if illicit.

Speaker 1 (19:17):
That's a clever way to bypass sanctions and accelerate development.
But I understand they're not just producing these for themselves, right,
They're also transferring manufacturing capabilities to their proxies across the region.
Why do that?

Speaker 2 (19:27):
That's a critical point. Yes, This transfersors multiple strategic purposes
for Iran. Firstly, it proliferates their military capabilities, giving their
allies cheap, effective strike options. Secondly, it significantly increases their
overall production floor space, boosting numbers. And thirdly, crucially, it
helps overcome the challenging bottleneck of physically shipping arms to

(19:48):
various operational theaters, especially in places like Syria or Lebanon,
where Israel, for example, has actively interdicted Iranian arms shipments
for years building them locally bypassed is that problem. So
they've transferred manufacturing capabilities or at lease assembly kits and
expertise to groups like the Huthis and Yemen, various Sheite
militias in Iraq and Syria, and Hesbola and Lebanon.

Speaker 1 (20:11):
And it seems Iran has gone beyond just supplying its proxies.
It's emerged as a kind of super distributor of these
capabilities to other countries, even actual superpowers. Russia immediately comes
to mind.

Speaker 2 (20:21):
Russia is indeed the prime example, and it's a remarkable
geopolitical shift. A global military superpower, Russia found itself seeking
aid from Iran for UAV capabilities, particularly after its initial
setbacks in Ukraine. This started with direct procurement of Iranian
drones like the Shahid on thirty six, and has now
reportedly moved to actual license production on Russian soil. The

(20:44):
Shahid one thirty six, now often known as the Juran
TII in Russia, is a testament to this cooperation. Russia
has reportedly acquired approximately one thousand or more UAVs directly
from Iran at a surprisingly low price point, maybe around
forty thousand dollars each according to some estimates, and they
plan to produce thousands more domestically. This creates a solid
connection between the global antagonist Russia and the regional antagonist Iran,

(21:07):
which is a significant geopolitical development. It's a fascinating shift
in traditional power dynamics seeing technology flow this way.

Speaker 1 (21:13):
That's a truly remarkable shift in global military dynamics. If
you're listening to Beyond infographics and finding this deep dive insightful,
please consider giving us a five star rating. It truly
helps us bring these unique perspectives to more curious minds
like yours. Now, let's quickly touch on Iran's air defense capabilities.
How do they protect themselves against air attacks, especially with

(21:34):
all these advanced threats flying around.

Speaker 2 (21:36):
Iran's air defense system is organized geographically by zone and facility,
and it's quite layered, involving three main lines of defense.
These are assigned to the IRGC, the regular Army, and
even the Law Enforcement Force or LF. The inclusion of
LF units and air defense tasks is a relatively new trend. Apparently,

(21:56):
they've formed air defense groups within their structure, armed mostly
with anti aircraft artillery and man portable air defense systems, manpads,
short range stuff. The overall aim is to minimize damage
under conditions of massive enemy aircraft and cruise missile use
by having overlapping fields of fire and multiple layers. Crucially,
they use Russian systems like the tore M one short

(22:17):
range system and the much longer range S three hundred
air defet systems. When combined, these can create a reasonably
stable defense. The S three hundred provides the long arm
capability hitting targets at significant distances and altitudes, while the
tour complexes handle closer range threats things that get through
the outer layer, especially cruise missiles and aircraft within about
twelve kilometers. It offers reliable point defense. There have also

(22:39):
been reports, though harder to verify, that they formed a
suicide pilot detachment within the IRGC Air Force using repaired
old Iraqi aircraft that flew to Iran during Operation Desert
Storm back in ninety one, supposedly for attacks on enemy
ships and coastal infrastructure. Unconventional to say the least.

Speaker 1 (22:57):
So what does this tell us ultimately about Iran's overall
military strategy? What's the big picture here?

Speaker 2 (23:02):
What this tells us I think is that Iran, despite
facing militarily superior powers like the US and Israel, has
cultivated a very sophisticated asymmetric hybrid warfare strategy. They are
not looking for a head on conventional fight. They know
they probably can't win. That's not the goal. Instead, their
objective is to inflict a price of victory that is

(23:22):
simply unacceptable to any aggressor. It's about deterrence through cost
and position. They leverage their geography, their diverse arsenal, missiles, drones, mines,
fast boats, their proxies, and their willingness to engage in
unconventional tactics. This reveals a profound strategic reality. In an
age of overwhelming technological dominance by some powers, asymmetric capabilities

(23:45):
remain a potent counterbalance. It forces even superpowers to think
very carefully about the true cost of intervention.

Speaker 1 (23:52):
That brings us perfectly to a geographic feature that often
serves as Iran's ultimate leverage point, The Strait of Horror moves.
When we talk about global significance, this narrow stretch of
water comes up again and again. Why is it so
absolutely crucial?

Speaker 2 (24:04):
The street of Wurmuz is the narrow mouth of the
Persian Gulf, connecting it to the Gulf of Oman and
then out into the broader Indian Ocean. Geographically, it's tiny
but mighty. It's consistently described as one of the most
important blue water passages globally, and that's not an exaggeration.
Its significance really can't be overstated. Roughly twenty percent of
all oil traded globally and a staggering thirty five percent

(24:27):
of the total oil transport by tankers worldwide passes through
this single straight every single day.

Speaker 1 (24:33):
Thirty five percent. That's huge. Yeah, what does that translate
to in barrels?

Speaker 2 (24:37):
We're talking about seventeen to nineteen million barrels of oil daily.
It is unequivocally the world's most important crude oil artery.
This is precisely why global superpowers like the US, with
its fifth fleet headquartered in nearby bah Rain, spend billions
of dollars annually just to ensure its freedom of navigation.
The steaks are.

Speaker 1 (24:56):
Immense, and Iron clearly understands this strategic importance. They've reported
called it their winner card in a crisis. What exactly
is their horror moves factor? And how do the envision
using it?

Speaker 2 (25:05):
Iran considers itself the main owner or guaranteur of security
in this sector, and they have explicitly and repeatedly stated
their ability to shut down the strait during a conflict.
Doing so would potentially halt up to thirty percent of
global oil supplies almost overnight. This is their ultimate leverage,
their ace in the hole. Their methods of disruption are

(25:26):
varied and designed for asymmetric impact, leveraging the geography we discussed.
They could deploy their fleet of fast attack boats for
swarm attacks, harassing and damaging tankers. They could deploy those
thousands of naval minds we mentioned, making the street impassable
at least for a time. Mind clearance is slow, dangerous work.
They could also fire anti ship missiles from their long

(25:47):
Persian Gulf coastline or from those fortified islands, much like
the houthy actions we've seen disrupt shipping in the Red Sea.
There's even speculation they could try to physically block the
narrow Fairway by deliberately sinking large, old tankers. There are
reports of outdated Iranian tankers lingering near Larac Island, possibly
positioned for just such a contingency.

Speaker 1 (26:07):
So even a brief disruption or just a firefight in
the Strait could have massive consequences, not just regionally but globally,
hitting the economies everywhere.

Speaker 2 (26:16):
Absolutely. Even a relatively brief disruption or just a short
firefight could paralyze shipping traffic almost immediately and definitely spoop
investors worldwide insurance rates with skyrocket. This would almost certainly
send oil prices soaring worldwide and directly hit American pocketbooks
through higher gas prices. That generates immense international pressure very

(26:38):
quickly for a ceasefire, which might be exactly what Iran wants.
A sustained blockage, even for a few weeks, would lead
to a spike in oil prices that could cause the
global economy to begin to decline. From Iran's perspective, this
represents a very high price that Western countries will have
to pay for aggression against Iran its economic warfare. It's
also important to note, though, that for Iran its self,

(27:00):
attempting to close the Strait is a double edged sword.
It would also lead to the closure of critical Iranian
ports like Bandarabas, on which Iran is basically one hundred
percent dependent for its own oil exports, So they hurt
themselves too, but they might see it as worth the
cost in a major conflict.

Speaker 1 (27:15):
Okay, Given this critical vulnerability, this single point of failure,
almost have Western countries or the Gulf oil exporters explored
serious alternatives to reduce reliance on the Strait of Hormos.

Speaker 2 (27:28):
They certainly have, yes. Various pipeline initiatives have been proposed
over the years, and some have been built, though often
with limitations. For example, Saudi Arabia has the Petrol Line pipeline,
which can transport between two and maybe up to five
million barrels per day across the peninsula to the Red
Sea bypassing Hormuz. There's also the old Trans Arabian Pipeline Tapline,

(27:50):
largely abandoned but potentially could be revived, and the Sumann
pipeline connects the Red Sea to the Mediterranean via Egypt.
Iraq has the Kokokxahan pipeline running north to Turkey, with
a capacity of perhaps one point six million barrels per day,
but it's notoriously prone to attacks and disruptions. There's also
an Iraqi pipeline route towards Banias and Syria, but again

(28:11):
regional instability makes that problematic.

Speaker 1 (28:13):
So there are alternatives, but why aren't they enough to
bypass the Strait of Hormoves completely. What's the catch?

Speaker 2 (28:18):
The problem is really one of scale and economics. Even
if you add up all these alternative pipelines, assuming they
were fully operational and secure, which is a big if,
the largest amount of oil that could realistically be transported
through them might be about four point five to five
million barrels per day. That falls far far short of
the seventeen to nineteen million barrels per day currently going

(28:39):
through Hormos. You'd still have a massive shortfall of maybe
thirteen million barrels per day that global markets would suddenly lose. Furthermore,
exporting oil via tanker through the Strait of Hormoz is
generally much more economic cheaper than using long distance pipelines,
especially for reaching Asian markets. So for normal trade, the
reliance on the strait persists because it's efficient. Ironically, Iran

(29:02):
itself is in a somewhat unique position here. It's arguably
the only oil exporting country that has the best position
to bypass the Strait of Hormus entirely by potentially transferring
oil north to the Caspian Sea via pipeline swaps and
then onwards to global markets through Central Asia or Russia,
though this capacity is limited compared to its massive golf exports.

Speaker 1 (29:21):
It's clear the Strait of Hormuz is a key piece
of leverage for Iran, and they've recently been showcasing their
capabilities and partnerships in that area with naval drills, haven't they.
What can you tell us about the maritime Security Belt
twenty twenty four drill?

Speaker 2 (29:34):
Yes, that drill held back in March twenty twenty four
on the Gulf of Oman and the Arabian Sea was
quite significant. It was a display of power projection in action.
It involved a notable contingent of Chinese, Russian and Iranian
naval vessels around twenty ships in total, including destroyers like
China's Type zero five two d Urumki frigates and Russia's

(29:55):
Pacific fleet flagship, the Cruiser of Verrag. This was the
second such trial lateral drill in two years, signaling an
increasing level of coordination among these nations. Even if it's
not a formal military alliance like NATO, the message seemed
clear a signal to the West, particularly the US and UK,
who traditionally patrol these waters, that they are not the
only powers in town in this strategically vital region. It

(30:17):
challenges that dominance.

Speaker 1 (30:19):
Interesting. Was there a secondary, perhaps more subtle purpose to
this drill beyond just general power projection.

Speaker 2 (30:24):
Their strong suggestion yes, that it had a more specific
secondary role, potentially protecting the alleged Iranian spy ship or
intelligence gathering vessel, the Bishad. This vessel is widely thought
to be stationed in the region, possibly in the Red
Sea or Gulf of Avon, providing targeting intelligence to Huthi
ribbels for their attacks on commercial shipping. Conducting major naval
drills with Chinese and Russian warships near the Bashad's suspected

(30:47):
operating area sends a pretty clear hands off the Bishad message.
It indicates that any attempt by Western forces to interfere
with or neutralize this Iranian vessel could risk escalating into
a confrontation involving these combined names forces adds another layer
of complexity for.

Speaker 1 (31:03):
You, our listener. What this reveals about the straight of
horror moves is truly profound. It's not just about lines
on a map. It's about grasping a critical vulnerability baked
into the global energy supply chain. The horror Moos factor
is Iran's primary asymmetric leverage in a crisis. Their willingness
to use it, even threatening to use it, could send
economic shockways across the globe, impacting everything from the price

(31:25):
you pay for gas at your local pump to the
overall stability of the global economy. It highlights how a
single seemingly small geographic point holds immense geopolitical weight, capable
of dictating global economic fortunes. Okay, we've talked a lot
about military might, strategy, and strategic choke points, but now
let's pivot to a critical, often unseen cost of these

(31:46):
geopolitical tensions, the humanitarian fallout and the global financial challenges
that arise. What is this humanitarian gap in sanctions regimes
and how did it even come about? Weren't sanctions supposed
to avoid hurting ordinary people?

Speaker 2 (31:58):
That's a critical question, and yes, that the intention, but
the reality is different. This humanitarian gap is a major,
often overlooked dimension historically, after the really disastrous humanitarian consequences
we saw from comprehensive sanctions back in the nineteen nineties,
Think about a rock under the oil for food program,
which led to widespread suffering and child mortality. The international community,

(32:20):
particularly after nine to eleven, tried to shift towards targeted
or smart sanctions. The explicit aim was to hit specific
bad actors terrorists, weapons proliferators, specific government officials without harming
civilian populations. In theory, this meant vital goods like food
and medicine would be explicitly exempt from the sanctions.

Speaker 3 (32:40):
That was the idea, but.

Speaker 1 (32:41):
The reality on the ground, particularly in places like Iran
that have been under heavy sanctions, seems to be quite different.
The exemptions don't seem to be working effectively.

Speaker 2 (32:49):
Unfortunately. Yes, that's exactly right. Despite the initial intent, the
supposedly targeted sanctions have been applied increasingly comprehensively in practice
since the mid two thousands. We've seen this attern clearly
in Iran, but also in North Korea, Syria, Venezuela and elsewhere.
In Iran's specific case, particularly after the US pulled out
of the JCPOA nuclear deal and reimposed sanctions, eventually sanctioning

(33:12):
all Iranian oil exports in May twenty nineteen, the flow
of vital goods has been severely affected. Despite those theoretical exemptions.
Even previous rounds of sanctions reportedly led to critical shortages
of essential medical supplies, including life saving cancer treatments and
drugs for conditions like multiple sclerosis. This is in a
country where imported medical supplies made up a significant portion,

(33:33):
maybe thirty percent of its roughly three billion dollars pharmaceutical sector.
They rely on imports for complex drugs.

Speaker 1 (33:40):
Can you give us a specific example of this humanitarian
impact in Iran? Something concrete?

Speaker 2 (33:44):
Yes, there's a particularly poignant example involving the m a
Hack charity, which is a well respected organization supporting children
with cancer in Iran. Back in November twenty eighteen, they
publicly reported experiencing severe drug shortages and massive price increase
is for essential oncology drugs due to the sanctions chilling
effect on trade. They explicitly warned that this disruption would

(34:07):
inevitably lead to a decrease in survival of children with cancer,
potentially impacting the thousands of children, including those with leukemia
they treat annually. And this impact isn't limited just to pharmaceuticals.
It extends to medical equipment, things like components for radiation
therapy machines, and even essential food imports like meat, eggs,
and milk have been affected at times. So what looks

(34:29):
like a precise tool of statecraft from Afar can have
these widespread, devastating and often unintended human consequences on the ground.

Speaker 1 (34:36):
This raises a really important question. If there's supposed to
be humanitarian exemptions written into the sanctions laws, why are
global banks not processing these legitimate transactions for food in medicine?
Why are they taking this zero risk approach.

Speaker 2 (34:49):
This is where the intricate, often opaque world of global
finance meets the blunt force of geopolitical pressure. It's a
complex interaction. The primary cause of this humanitarian gap isn't
usually the law itself, but the behavior of the major
global banks. They've largely abandoned a risk based approach where
they'd carefully assess the specific risk of each individual transaction,

(35:11):
in favor of a blanket zero risk approach for almost
anything involving sanctioned jurisdictions like Iran, Even if the transaction
is theoretically permissible, they just won't touch it. There are
several key reasons for this extreme risk aversion by the banks.

Speaker 1 (35:25):
Okay, what are those reasons? Why? Are they so scared?

Speaker 2 (35:28):
First, there's complexity. It's incredibly difficult, time consuming, and expensive
for banks compliance departments to definitively determine which entities in
a sanctioned country are truly legitimate and which might be
indirectly linked to or remotely controlled by designated entities like
say the ier GC or its front companies. The ownership
structures can be incredibly opaque. The lines are simply too

(35:49):
blurry for compliance officers to be certain they won't make
a mistake, so.

Speaker 1 (35:53):
They're essentially word about accidental violations because it's too hard
to be sure who they're dealing with precisely.

Speaker 2 (35:58):
And that leads directly to the second and perhaps biggest
reason regulatory fear overwhelming fear of penalties. Public regulators, particularly
in the US Treasury's Office of Foreign Assets Control oh fact,
are often seen as unwilling to share the burden of
responsibility or provide clear, unambiguous guidance. Banks fear absolutely massive

(36:20):
US fines and even worse, the potential exclusion from the
incredibly lucrative US financial market if they get caught violating sanctions,
even accidentally. We've seen staggering examples that put the fear
into them. HSBC was find nearly two billion dollars one
point nine two billion dollars, and the French bank BNP
Parabis was hit with an almost nine billion dollar eight
point nine billion dollar penalty for sanctions violations, mostly related

(36:43):
to Iran and Sudan. The slet of such penalties is
simply devastating to a bank's bottom line, its reputation, and
its fundamental ability to operate globally, and the.

Speaker 1 (36:52):
US seemed to have unique power in this area compared
to other countries sanctions regimes. Why is that it.

Speaker 2 (36:57):
Does due to two key aspects of US US regulatory
power that give it enormous reach. First is a centrality
of the US dollar in global finance. Any transaction denominated
in US dollars, even if it involves non US banks
and doesn't physically take place on US soil, becomes subject
to US jurisdiction and law if it clears through the
US financial system, which most dollar transactions do, typically in

(37:19):
New York. This gives the US vast oversight. Second, and
perhaps even more potent, is the use of secondary sanctions.
This is where the US government threatens to cut foreign
banks off from the entire US financial market if they
do business with designated entities or sectors in sanctioned countries,
even if that business has no direct US link, that
threat is truly devastating. As one analysis called it, access

(37:42):
to the US market is existentially important for almost any
major international bank. It's a sort of damicles hanging over them.

Speaker 1 (37:48):
So the banks are essentially overcomplying, going far beyond what
the sanctions might technically require, just to avoid any possible risk.

Speaker 2 (37:55):
That's exactly what over compliance or derisking means in practice.
It's a rational, if unfortunate business decision from their perspective.
Imagine like a restaurant owner who, to avoid any possibility
of a health code violation, decides to stop serving all
food imported from a certain country, even if ninety nine
percent of it is perfectly safe, just because the penalty

(38:17):
for getting one bad ingredient is simply too high to risk.
That's banks d risking. They proactively cut off entire categories
of customers or transactions perceived as high risk, rather than
trying to navigate the incredibly complex and costly Know your
customer KYC, know your customers customers KYCC, and know your
transaction KYT due diligence procedures required. They simply d risk

(38:39):
by driping customers, refusing to open accounts for people from
certain countries, or declining transactions with correspondent banks if they're
remotely connected to sanction jurisdictions, even for legitimate, licensed humanitarian trade.
This fear is often exacerbated by what are called sticky sanctions,
things like deferred prosecution agreements DPAs that many large banks
entered into after previous violations. These mean the banks are

(39:00):
often still under strict US government supervision and hyper sensitive
to any misstep. From the bank's point of view, the
potential profit from facilitating, say a small humanitarian transaction with
r ON is minuscule compared to the potential multi billion
dollar fine if something goes wrong, The risk reward is
totally skewed. It even affects personnel. US citizens working abroad

(39:21):
for global banks in London or Frankfurt are still subject
to US law and could be personally liable for criminal
offenses if they facilitate unauthorized Iranian activities, adding another layer
of caution, and this.

Speaker 1 (39:32):
De risking doesn't just stop at the big global banks,
does it. It creates a kind of domino effect down
the financial chain.

Speaker 2 (39:39):
It absolutely does. It's a chain reaction. The large global
banks then put pressure on the smaller regional or local
banks they work with in Europe, Asia, the Middle East
to also cut ties with Iranian clients or other clients
in perceived high risk jurisdictions. They might threaten to cut
off the smaller banks access to dollar clearing if they
don't comply. This leads to a wide spread d risking

(40:01):
trend that has been well documented by major international bodies
like the International Monetary Fund IMF, the Financial Action Task
Force FATF, and the World Bank. They've all flagged this
as a growing problem. The ultimate consequences are dire for
the people on the ground. Legitimate trade for vital goods
like medicine and food either grinds to a halt because

(40:21):
no bank will process the payment, or it's forced into
murky informal channels the black market, essentially where it fetches
vastly inflated prices. This ends up lining the pockets of
shady middlemen or criminals instead of efficiently reaching those in
desperate need.

Speaker 1 (40:36):
Wow for you, our listener, This highlights a critical, often
completely overlooked dimension of how sanctions actually work or fail
to work in the real world. What looks like a
precise surgical tool designed to target regimes on paper can
have these widespread, devastating, and completely unintended humanitarian consequences. This
isn't just about the policy intent. It's about the intricate,

(40:57):
interconnected web of global finance, concentration of regulatory power, and
the pervasive fear of severe penalties, which collectively create an
almost impenetrable barrier for vital humanitarian trade even when it's
supposed to be allowed. It reveals a fundamental flaw, a
gap in how global finance interacts with humanitarian needs, a
gap that traditional approaches simply haven't been able to bridge effectively.

(41:20):
That's a stark reminder of the broader human impact that
often gets lost in geopolitical analysis. Now, moving towards potential solutions,
exploit new paths forward, perhaps using technology to enable humanitarian
aid despite sanctions, it's clear that traditional approaches and even
these supposedly smart sanctions have this significant unintended humanitarian gap.
What are some of the current mitigation strategies being discussed,

(41:42):
even if they might just be patchwork fixes.

Speaker 2 (41:44):
Well, some of the ideas floating around focus on trying
to make it easier or less risky for banks to
comply with the existing rules, basically reducing their compliance costs
and fears. This includes initiatives like promoting better information sharing
between governments and banks about legitimate versus risky entities. Some
have suggested creating national registries of suspicious clients that could

(42:06):
be shared among banks, although that raises privacy concerns. Others
advocate for softer punishments for banks that voluntarily self disclose
in inbutant sanctions violations, encouraging transparency rather than just hiding mistakes.
There's also a push for more direct business to business
payment channels that might bypass some traditional banking intermediaries, potentially

(42:26):
utilizing new financial technologies or fintech solutions.

Speaker 1 (42:30):
Okay, those sound like steps in the right direction, maybe
improving the margins, but perhaps not a complete solution to
the core problem of bank d risking. What about instecs,
the instrument in support of trade exchanges that was attempted
by the EU three, France, Germany and the UK. That
seemed like a much more ambitious attempt to create a
dedicated channel in.

Speaker 2 (42:49):
STEX, which was launched back in January twenty nineteen, was
indeed a much more ambitious attempt.

Speaker 3 (42:53):
You're right.

Speaker 2 (42:54):
It was set up as a special purpose vehicle or SPV. Essentially,
it was designed as a sophisticated clearing mechani a kind
of barter system, almost to facilitate legitimate trade, primarily in
vital goods like food and medicine, with Iran, without involving
direct cross border financial payments. The idea was quite clever
in theory. Think of it like a global credit exchange system,

(43:15):
specifically for Iran trade. How it was supposed to work
was a European company importing something from Iran would pay
money into the insetex account in Europe. Then insects would
use that credit to pay European company exporting something to Iran. Simultaneously,
a mirror Iranian SPV would handle the payments within Iran.
So an Iranian importer pays the Iranian SPV and that

(43:37):
SPV pays the Iranian export. All the values match up,
but no actual money ever crosses the Iranian border or
goes through traditional international banking channels that US sanctions might target.
It effectively triangulates the payments internally on both sides.

Speaker 1 (43:49):
Okay, so it cleverly bypasses the direct international banking link
that triggers the sanctions fear. What were shortcomings? Then? Why
didn't it really take off well?

Speaker 2 (43:59):
Despite clever design, Instects faced significant shortcomings and never really
achieved meaningful transaction volumes. First, and perhaps most importantly, its
viability was always uncertain because of potential US non compliance
or even active opposition. It was never clear if the
US would tolerate instacs or eventually target instects itself or
companies using it with secondary sanctions, which created a chilling effect. Second,

(44:24):
there was considerable technical complexity. Even without direct payments, it
still required extensive know your Customer KYC and know your
Customer's customer KYCC information across multiple parties on both the
European and Iranian sides. This brought back many of the
same compliance burdens banks were trying to avoid. Third, and
this was a major sticking point for the US. The

(44:44):
designated Iranian Mirror SBV counterpart to instacts involved entities that
were themselves under US sanctions, like the Central Bank of Iran.
This immediately raised red flags for the US Treasury and
likely doomed the mechanism in USIS from the start, and finally,
on a practical level, it didn't saw of Iran's chronic
trade imbalance with the EU. Iran earns most of its
foreign currency by selling oil primarily to Asian countries, not

(45:07):
the EU, but INSTAX was mainly designed for EU or
Iran trade. This made it hard to balance the books
within the clearing mechanism. There wasn't enough Iranian export revenue
flowing into the EU side of instecs to offset the
European exports going out. So it gave the appearance of
a technical solution, but it couldn't really overcome the fundamental
political obstacles and economic imbalances.

Speaker 1 (45:28):
Right, so the multilateral EU approach didn't quite work. What
about bilateral approaches? I recall Switzerland tried something directly with
the US, didn't they.

Speaker 2 (45:36):
Yes, Switzerland did indeed try a direct bilateral approach. They
actively sought an explicit specific waiver or comfort letter from OFAC,
the US Treasury's Office of Foreign Assets Control for Swiss
companies exporting food and medicine to Iran. This was a
significant issue for Switzerland because humanitarian goods represented a large portion,

(45:57):
maybe sixty percent back in twenty seventeen of their total
exports to Iran. However, they were largely unsuccessful in getting
that specific, dedicated Swiss channel approved by OPHAK. The US
was reluctant to grant bespoke exemptions. What OPHAC did later
in November twenty nineteen was broad in its existing general
humanitarian exemptions to explicitly include non US companies, not just

(46:18):
US ones. While this seemingly opened the door, it effectively
meant that OPHAK was claiming a kind of global hedgemon
role in deciding which non US humanitari transactions with Iran
were permissible worldwide?

Speaker 1 (46:28):
And what are the challenges or problems with OPHAK essentially
becoming the global arbiter for humanitarian exemptions.

Speaker 2 (46:34):
The challenges with relying solely on OPHAC general licenses, even
for non US actors are numerous. Firstly, navigating the OPAC
licensing process is notoriously time consuming and impractical, especially given
the sheer volume of potential humanitarian transactions worldwide. Getting specific
licenses or even clarity on general licenses for US companies
already takes a very long time, often over a year.

(46:56):
Expending that globally is difficult. Secondly, it care. There is
the inherent risk of sudden US policy shifts. A general
license can be revoked or amended by Ophact with little warning,
leaving companies that relied on it suddenly exposed. This uncertainty
deters banks and businesses, and Thirdly, demonstrating eligibility for these
exemptions often requires intrusive levels of transparency and data sharing

(47:19):
from the Iranian importers and end users, which Iran might resist. Furthermore,
other governments might balk at submitting their national companies to
the regulatory authority and scrutiny of the US Treasury's Opact. Essentially,
it centralizes immense control within one country's agency Opact in
a way that many other nations find politically unacceptable and
practically cumbersome, despite the stated humanitarian intent.

Speaker 3 (47:40):
Okay, So, if these patchwork solutions, the ambitious instacts, and
even bilateral attempts with the o fact have fallen short,
what's the path forward? You've mentioned advocating for a multilateral framework?
Why is this potentially the most acceptable and effective solution?

Speaker 2 (47:54):
A truly multilateral approach, we believe is the most promising
path forward, precisely because it addresses the un underlying issues
of legitimacy, trust, and burden sharing that plague the unilateral
or ad hoc approaches. We propose the creation of a
G twenty plus multilateral institution, perhaps envisioned as a standing
panel composed of senior treasury or finance ministry officials from

(48:16):
key economies, crucially including o FAC from the US, but
operating under an international banner. This body would be specifically
tasked with administering global sanctions exemptions for humanitarian trade. The
benefits would be significant. Firstly, it would greatly increase acceptability
among nations compared to relying solely on US decrees, it

(48:36):
would feel more like a global standard. Secondly, it could
eliminate the judicial uncertainty that currently paralyzes banks and companies
globally by providing clear, internationally backed guidance and pre approval.
And Thirdly, it could foster much needed harmonization of licensing
codes and definitions. This is vital because different nations currently
have slightly different interpretations of what precisely constitutes humanitarian goods.

(48:59):
For example, does a sophisticated X ray machine count under
what specific end use conditions? A multilateral body could build
consensus and create clear predictable rules of.

Speaker 1 (49:08):
The road, and this would also put a certain amount
of pressure back on the US to participate constructively, wouldn't it.

Speaker 2 (49:13):
Potentially Yes, the US has perceived unwillingness to be fully
transparent or seed some control over its sanctions enforcement power
is arguably accelerating global de dollarization efforts as other countries
actively seek ways to circumvent a system they perceive as
potentially arbitrary or overly dominant. Creating a robust, credible, multilateral

(49:33):
system for humanitarian exemptions might actually be the only way
in the long run to preserve the efficacy and legitimacy
of targeted sanctions themselves by ensuring they remain truly targeted
and less prone to these devastating, unintended humanitarian consequences. It
could provide a legitimate, internationally backed framework for exemptions that
everyone can buy into.

Speaker 4 (49:53):
Okay, this is where we get to the truly innovative part,
the kind of forward thinking solution that really makes you
think beyond infogram, moving beyond just analyzing the problem. You're
proposing a novel, quite radical solution, a blockchain based safecore
coin administered perhaps by G twenty plus public private partnership.

Speaker 1 (50:11):
Can you walk us through this.

Speaker 4 (50:12):
Concept A dedicated digital currency for aid, Yes, exactly.

Speaker 2 (50:16):
This is an idea aimed at leveraging new technology to
overcome the fundamental flaws of the current system. We call
it the safecore coin concept. The core idea is to
create a single purpose digital currency or SPDC. Think of
it like a digital token or voucher that has a
very specific, restricted use. In this system, financial transactions involving

(50:38):
pre approved vital goods like food, medicine, medical equipment would
be locked in a circuit of exchange. This means the
safecore coin would be usable only for purchasing authorized vital
goods from approved foreign suppliers, and it would be convertible
back into regular currency only outside the sanctioned territory after
the goods have been delivered and verified. Imagine it as
a dedicated, secure trace digital token designed exclusively for facilitating

(51:02):
humanitarian trade, administered by a trusted international body. It's a
radical reimagining of how we might ethically separate humanitarian needs
from the crossfire of geopolitical conflict, using technology to enforce
that ethical boundary.

Speaker 1 (51:15):
Okay, so how does this single purpose nature give it
a critical advantage over using traditional fiat currencies like the
US dollar, even those dollars are theoretically met for humanitarian purposes.

Speaker 2 (51:26):
That's the key difference. Traditional fiat currencies like the US
dollar or the Euro are inherently dual use from a
financial crime perspective. A dollar can buy medicine, but it
can also buy weapons or fund illicit activities. Because of
this dual use nature, for every single transaction involving fiat
currency in a high risk, sanctioned jurisdiction, banks feel compelled

(51:48):
to engage in those incredibly costly, complex and often inconclusive
know your Customer KYC, know your customer's customer KYCC, and
Know your Transaction KYDS procedures to try and ensure the
funds aren't somehow linked to illicit activities or designated entities
down the line, and as we discussed, they often just
give up because it's too hard and risky. The safecore coin,

(52:11):
by being designed from the ground up as single purpose,
automatically establishes a clean economic circuit dedicated only to vital
goods trade. The token itself can only be spent on
approved goods from approved vendors. This dramatically lowers the compliance
burden and costs. The international organization administering the coin would
only need to perform thorough vetting and authorization of legitimate
importers and exporters at the entry point into the system.

(52:33):
After that, they can rely on the blockchain's transparent and
traceable digital ledger for monitoring, perhaps performing random controls rather
than scrutinizing every single transaction trail like they have to
with fiat currency. It could also help create a more
balanced straight circuit by directly linking the value generated from, say,
internationally approves sales of oil or other commodities from a

(52:53):
sanctioned country directly into this locked safecore coin system, ensuring
the funds generated are earmarks solely for future vital goods purchases.
It creates a sustainable, closed loop.

Speaker 1 (53:05):
That sounds potentially transformative. And how would the safecore coin
concept be superior to something like instex, which also tried
to create a kind of workaround for payments without using
dollars directly.

Speaker 2 (53:16):
The safecore coin concept offers several potentially significant advantages over
a mechanism like instx. First, its inherent locking and effects
are much stronger because the digital coin itself is single purpose.
It provides a much higher degree of assurance that the
funds will be exclusively used for authorized vital goods. This
significantly lowers transaction costs and processing times compared to Instex's

(53:38):
complex balancing act with fiat currencies. With instas, there was
still a theoretical risk that Fiat money within the system
could be diverted. Second, it could offer low extra territorial
jurisdiction ETJ risks for users because the entities participating importers,
exporters banks facilitating conversion outside would be pre approved within
a multilateral G twenty plus frame work, ideally including OPHAC.

(54:01):
If the US participated, it should significantly reduce the fear
of future US penalties or secondary sanctions that ultimately plugged
Instex users would operate with the confidence that their transactions
are pre approved x ant by OPACT and global regulators
participating in the scheme. Third, it could promote balance trade
more effectively by potentially pulling trade flows from many participating

(54:23):
donor states and multiple sanctioned jurisdictions within one system. It
could ensure greater liquidity and sustainability for the overall mechanism,
overcoming the bilateral imbalance issues in STEX faced. Finally, leveraging
cybersecurity inherent in blockchain technology, a decentralized, distributed digital ledger
could offer far greater resilience against hacking, data breaches, and

(54:44):
disruption than a centralized ledger system like the one in
STEX would have relied on.

Speaker 1 (54:48):
Fascinating so for you, our listener, try to imagine a
world where essential humanitarian aid, food for the hungary, medicine
for the sick is in held hostage by geopolitical tensions,
ancient's regimes, and the complexities of global financial red tape.
Technologies like this proposed safecore coin offer a tangible glimpse
into how innovative financial solutions, when combined with genuine international

(55:12):
cooperation and political will, could potentially create safe, transparent, and
efficient corridors from vital trade. This could ensure that the
most vulnerable populations aren't inadvertently caught in the devastating crossfire
of economic warfare. And that truly is thinking beyond infographics,
moving from just diagnosing the problem to exploring practical, forward looking,

(55:32):
potentially game changing solutions. And there you have it. We've
taken quite a journey today, haven't we from the immediate
consequences and calculations following the US strikes on Iran, to
exploring Iran's complex layered and asymmetric defense strategies, grappling with
the immense geopolitical leverage packed into the narrowstraate of Hormoves,
and finally uncovering the surprising and often tragic humanitarian impacts

(55:55):
of global financial sanctions, and even exploring potential high tech solutions.

Speaker 2 (55:59):
You should now have we have hopefully a much deeper
and more nuanced understanding of the multi layered complexities at
play here, far beyond what any single news reporter or
simple infographic could possibly convey. The future of this volatile
region and its significant global implications for energy, security and
economics really hinges on these intricate dynamics, on the decisions

(56:21):
made in Tehran, in Washington, and indeed across the world
in the coming weeks and months.

Speaker 1 (56:27):
As we wrap up this deep dive, here's a final
provocative thought for you to chew on, something to m
all over. Could a purely technical solution like a sophisticated
digital currency truly bridge the deep political chasms and mistrust
that ultimately create these humanitarian crises steming from sanctions or
its true lasting change always fundamentally dependent on diplomatic will,
on political courage, and on finding common ground the old

(56:49):
fashioned way. Can tech solve a political problem?

Speaker 2 (56:52):
It's a really profound question, isn't it. It challenges us
to think about the potential but also the inherent limits
of technology when faced with the deep complexities of human nature,
national interests, and international relations. It really asks if we
can engineer our way out of problems that at their
core are fundamentally about trust, power and political choices. Something

(57:14):
worth pondering.

Speaker 1 (57:16):
Thank you so much for joining us on this deep
dive on beyond infographics. If you found this discussion insightful
and valuable, please do share with someone else you know
who loves to learn and understand the world more deeply,
And please don't forget to leave us that five star rating.
Your support genuinely helps us keep these in depth explorations coming.

Speaker 2 (57:33):
Until next time. Keep exploring the complexities, keep questioning the
easy answers, and always keep going beyond infographics.