The fog of war is a universal description of confusion that typically accompanies the early stages of most warfare. From the outset of the U.S.-Israeli attacks on Iran, commencing on February 28, 2026, with airstrikes on military and government targets, Iran responded in what appeared to be erratic ways by striking back on countries that were not part of the hostilities — countries called the “Gulf States” that included Saudi Arabia, Bahrain, Oman, Kuwait, Qatar, and the United Arab Emirates (UAE).
Missile and drone strikes against the Gulf States continued into late March. But upon deeper quantitative analysis, the targeting of one particular nation, the UAE, with 537 ballistic missiles and 2,256 drones, and 26 cruise missile attacks, was more than four times greater than the attacks on other Gulf States. In fact, Iran bombed the UAE more than it bombed Israel. Why?
According to a leading international and geopolitical analyst, Martin Armstrong, the likely reason for Iran’s intense targeting of the UAE was to precipitate a financial debt crisis. What most do not know is that the UAE became the “Switzerland” of the Middle East after the outbreak of the Ukraine War in 2022, when the Swiss abandoned their longstanding neutrality and began favoring Ukraine and discriminating against the Russians. With the UAE’s pledge to maintain neutrality, enormous sums of money were moved out of Swiss institutions and into the banks and financial markets in Dubai, the largest city in the UAE, the undisputed #1 financial center of the Middle East, reaching a #7 ranking among global financial hubs in 2026, anchored by the Dubai International Financial Centre (DIFC). The DIFC ecosystem now has 8,844 active registered firms and a workforce of over 50,200 professionals, with a $27 billion building expansion plan, which could double its capacity when completed.
Most people assume Middle Eastern oil-exporting countries like the UAE have high levels of cash from being flush with oil sales. But when the UAE oil exports were curtailed after missile strikes from Iran, its banking system was also shut down for a week. What all the Gulf states have in common is vulnerability to a debt crisis if they cannot monetize their oil. And that is the most plausible reason for Iran’s brutal attacks on UAE’s oil refineries and infrastructure, including the Dubai International Financial Centre. The UAE was particularly targeted not only for being one of the larger Gulf State exporters, after Saudi Arabia and Iraq, but also because of its oversized and central role in banking and finance in the Middle East.
Armstrong, who may be more esteemed in international financial capitals than he is in the United States, is on record noting that “we are on the verge of a sovereign debt crisis globally.” International debt has now reached $110 trillion, with over $200 trillion in unfunded pension, entitlement and other obligations, an aggregate amount which can never be paid off. In the United States, our national debt service expenditure now exceeds our military spending. And the Trump administration has proposed raising our military budget for next year by $500 billion.
Debt crises can lead to financial contagion (or sovereign contagion when it specifically involves government debt). Financial contagion broadly refers to a situation where instability in a specific market or country is transmitted to one or several others with unprecedented speed, breadth, and scope.
A related metaphor sometimes used is the "domino effect," which is an epidemiological framing, like a virus spreading through interconnected parties. The lesson learned from the Thai baht currency devaluation crisis in July 1997 is that under the right circumstances, localized financial problems can morph into a global crisis with startling speed. The Thai baht devaluation crisis quickly spread to the Philippines, Malaysia, Indonesia, and South Korea, with several countries’ currencies losing half their former purchasing power value within just a few months.
Clearly, the risk of financial contagion increases with decreased oil exports from a protracted military conflict with Iran.
Many rightly ask, how it is that Iran remains a military threat when its entire navy, air force, air defense, land-based missile sites, and defense industry manufacturing capability have been destroyed?
What sustains Iran is its hidden mosquito fleet of small high-speed attack boats, its hidden underground “missile and drone cities” in the mountainous rock formations of Iran, along the Persian Gulf, combined with Iran’s obtaining rearmament weapons and materiel from its allies—notably China and Russia.
In the last week, the U.S. Navy took deceptive actions luring much of the remaining “hidden city” Iranian military assets to reveal their location, which allowed advanced U.S. satellite and high-tech surveillance capabilities to map those remaining Iranian military assets along the Persian Gulf.
It is time to bring closure and victory to our conflict with Iran with two final steps. First, we need to foil Iran’s rearmament by taking out bridges and overland entry points into Iran, primarily from Pakistan. Second, with U.S. mapping of hidden underground “military cities,” the U.S. can now deploy hypersonic weapons, which can collapse and destroy these sites with near nuclear bomb capability, but without emitting radiation.
When the finish line of decisive victory is so close, while the risk of financial contagion increases with time and uncertainty of oil exports from one or more Gulf states, it is worth remembering the succinct, clear-eyed wisdom of General Douglas MacArthur, who said, "In war, there is no substitute for victory."
Scott S. Powell is senior fellow at Discovery Institute and a member of the Committee on the Present Danger-China. His timeless book, Rediscovering America, was a #1 Amazon New Release in the history genre for eight weeks. https://www.amazon.com/dp/1637581599. Reach him at scottp@discovery.org