World Affairs in Context Podcast
March 25, 2026
LENA PETROVA: Welcome, everybody. Thank you so much for joining us. I'm Lena Petrova with a new episode of World Affairs in Context. Today, I'm honored to welcome back Professor Michael Hudson, a renowned economist, distinguished research professor of economics, and author. By the way, I'm currently reading one of Michael's books titled Superimperialism: The Economic Strategy of American Empire. I actually have it right here—it's become one of my favorite books. This book is absolutely fascinating, and I would say that it is so appropriate for anyone seeking to gain a deeper understanding of current events in the world. This is the book to read. I highly recommend it. Please follow Michael on Patreon as well as his website—I will link both in the video description below.
Professor Hudson, welcome back to the program. It's so great to see you again.
MICHAEL HUDSON: Well, it's good to be back here with so much happening in the world.
LENA PETROVA: Yes, it's great to have you. By now, I think the majority of us would agree that Iran has masterfully used the Strait of Hormuz as leverage against the aggression of the United States and Israel. In recent days, there have been reports of Iran charging $2 million for the safe passage of vessels that are not linked to the United States and Israel. There are allegedly negotiations between Iran and several other states to settle Iranian crude oil sales in Chinese renminbi as well. And I thought that was a fascinating sort of turn of events. Can the US dollar survive the Iran war, and can it remain a global reserve currency ? What is your interpretation of Iran retaliating, not just militarily, but also economically, and doing it so powerfully?
MICHAEL HUDSON: Well, closing the Strait of Hormuz always has been recognized as Iran's first and most obvious response way back in the 1970s. We were talking about that. First of all, the Strait of Hormuz has remained open all of this time. All of Trump's threats that were going to need an army to reopen it are irrelevant because Iran is, as you just pointed out, letting ships from India, Japan, and other countries use it, so there's been no need to liberate it. That's not what the imminent attack on Iran is all about. It's not about opening the Strait of Hormuz. It's not about stopping Iran from having an atom bomb, which it wasn't aiming for in all these past decades. And it's not even about stopping Iran from having missiles and dismantling them. It's always about a strategy that the United States has been planning and announced formally in 2003 when Wesley Clark, the general, said that America was going to occupy five countries in seven years, ending with Iran. The whole aim of America's using the Middle East to control the major source of oil exports is centered upon removing oil, Iran, from the picture, at least removing Iran's nationalistic leadership that overthrew the Shah from the picture. With Iran out of the picture, the United States can easily control the Arab OPEC countries as it's done now. So this whole pretense that the fight that's going to occur this weekend, Friday evening near Eastern time and Saturday morning U.S. time, is about sending troops to occupy an island in the strait or to force open the strait. That's all a diversionary effect.
But what Iran has done so far, since you mentioned it, is put in place a very simple strategy. First of all, by charging $2 million for OPEC Arab ships going through, it's made an advance payment on what it's going to be charging for reparations, for the damage that's already been done by the United States and Israel against itself. And it will simply use these charges to rebuild Iran. So, first of all, this has laid the groundwork for how Iran is going to impose reparations. Secondly, this prevents Trump from threatening the use of force because if ships are going in and out through the strait, it isn't closed; it's only closed to Iran's enemies. So Trump is really trying to say, let our OPEC companies export without having to pay you any money at all. We want OPEC countries to have all the money so that they can do what they want as part of the American dollarized economic system. Third, pricing the oils in RMB has turned the tables on the United States by using its control of the world oil trade as a means of supporting the dollar. In this case, henceforth, the oil trade is going to be spent on non-dollar currencies, the nightmare of America's dollarization. And fourth, just turns the tables also on U.S. government policy by using the threat of closing off oil as a means of imposing sanctions on other countries. The United States has been able to use the threat of closing OPEC oil to say that it can turn off the energy flow to countries that do not agree to follow policies that follow the United States leadership. Well, here it's Iran that's imposing sanctions on these countries, saying that America's allies are saying, well, if you're going to ally yourself with the United States and don't meet the terms for us breaking the U.S. control over the entire Middle East and its oil exports, then we're not going to let you conduct this trade. So this is the big issue. Iranian strategy that has led the United States to make all the threats that it's been making.
Using the Hormuz is just one of the excuses that is going to back what, apparently, Trump is going to announce this weekend.
LENA PETROVA: Trump threatened to destroy Iran's energy infrastructure several days ago, and he gave Iran 48 hours. And then on Monday, first thing, he delayed the attack for five days. Earlier today, Trump also said that there is progress in talks with Iran. He went as far as to say, "We already won the war". Although, of course, Iran keeps denying that any such talks are taking place and that there's any sort of negotiation between the United States, Israel, and Iran. But what's interesting is that in the meantime, sort of in the backdrop of all of these events that I think are very much meant to distract and confuse Iran, Trump's five-day pause in the war is the exact amount of time that it takes for thousands of U.S. Marines to arrive in the region. So is Trump simply trying to sort of buy time, keep a lid on oil prices, and manipulate the stock market ? Or is he actually setting the scene for yet another escalation ? As you said, you are expecting one this coming weekend.
MICHAEL HUDSON: There's been a lot of wonderful commentary on that. Yesterday's Naked Capitalism had an article on its Coffee Break, Trump's taco designed to manipulate the markets. Matt Stoller has an explanation of how this whole charade of, first of all, threatening last Friday to create chaos in the world economy, crashing the markets, pushing oil prices up, and stock prices down. And then just a few minutes before the New York financial markets opened on Monday morning, saying, "Oh, we don't have to attack anyway. Iran has agreed to peaceful relations. We're on the way to an agreement. There's no reason for the markets to be upset." Well, that led, of course, to the markets jumping 1100 points at one point on the New York Stock Exchange for the Dow Jones Industrial Average, and other averages followed. Well, it turns out that there were a lot of insider trades. Apparently, by Trump's cronies, who were aware of exactly what Trump was going to do. And it's as if Trump had orchestrated this whole threat and then solved the threat on Monday morning to enable his associates to bet half a billion dollars in buying positions to make a killing when the stock prices went up, oil prices went back down, and it's all been a financial maneuver to enrich themselves. This is the most ostensibly, invisibly, and even proudly corrupt regime in American history, at least on the national scale. I suppose the Tammany Hall regime in New York was an example, but now you have Tammany Hall Tammany Hall going big, as it were.
I think that this coming weekend has sort of softened up the market for saying, well, maybe Trump is going to try to make another market manipulation. He's going to attack Iran, and then he's going to suddenly, on Monday morning, maybe he'll pull back and say, well, we've settled everything. Iran said, don't hurt us anymore. We're going to settle, and everything will be okay. And it'll make another run up. I don't think that's the plan this time. I think the main plan is generally to throw everything they have against Iran. This has been reviewed by almost all of the military commentators that I watch, and probably most of your own viewers watch, and they are saying this is going to be suicidal for the United States. But it's a plan that, after all, the United States has been preparing for more than two decades. How are they going to militarily defeat Iran ? Well, obviously, they've refined it again and again since 2003 to take account of all of the changes in military technology, changes in Iran's buildup. Based on last summer's U.S. and Israeli attack on Iran, they think that they've got a pretty good profile on how Iran is going to defend itself, but I don't think Iran showed its full hand at all in this profile. So I think that for this weekend, Trump really is not going to back off. He may try to back off if and when the U.S. attack is a disaster, but I think this is the last chance that the United States has to try to really follow through with this plan that it has never given up on attacking Iran.
So I think in terms of the stock market people, I think that a lot of investors are going to say when the attack begins on New York time Saturday morning, they'll say, "Well, fool me once, shame on you, fool me twice, shame on me." We're not going to get involved. And it's not going to be a stock market operation. It's going to be a real military operation for all of this. So there's going to be a real reason for the markets to be scared after this weekend, if indeed America follows through on Trump's say, well, we're giving you five days. In other words, let's let all of the stock market respond, and let's hear what the response from other countries is. And it looks like other countries are saying, well, this isn't our war. We're standing on the sidelines.
LENA PETROVA: It does feel as though this war has been eye-opening from many different perspectives. Not only does it prove that the United States government is, for the most part, subservient to the interests of a foreign actor, Israel, but it also emphasizes the incompetence, the pure incompetence in Washington. In fact, Washington destroyed its own credibility by attacking Iran not once, but twice during high-level negotiations. So it will be very naive to think that this time we'll be different.So arguably, the credibility and the trustworthiness of a state are highly valuable assets. And I think it would be fair to say the United States has lost both of those assets. And it effectively proved itself to be the major destabilizing force in the world. And many view this war as an opening act of the collapse of the U.S. empire. Would you agree with that perspective, Professor Hudson?
MICHAEL HUDSON: There was no incompetence in American diplomacy in the last few weeks. It was all a fake. And you know that when the United States made what it thought were unacceptable demands on Iran. They wanted Iran to remember what the lead-up to February 28th was. The lead-up was that they wanted Iran to agree to turn over its enriched uranium to prove that it could not build an atom bomb, as if that was the whole thing that they were negotiating about, which it wasn't. And Iran agreed to so many other of the U.S. demands that it looked at as if there was going to be no reason for the American pretended reason for war with Iran, because if it was giving up its uranium and letting it be sent somewhere else and agreeing to some sort of oversight of its missiles, Well, that was what the United States said. And the Umani referee for these came out and said, you know, now there's really a basis for peace. That terrified the United States because Iran called America's bluff. They said, " Okay, it's not worth having a war, and we know that we can win it, but we also know that in winning it, we're going to suffer a lot of damage by the US and Israeli air attacks on our oil, our infrastructure, and our population. We're willing to pay a real heavy price to avoid the war, so we're agreeing. Well, this panicked the United States so much that they said, we've got to immediately attack Iran so that it cannot say there's no need for an attack. The United States was dead set already that the aim of these negotiations was just a pretense, a public relations exercise to justify the attack on Iran, and Iran prevented that. And that was the trigger.
I wrote all about this in the articles that I've been doing for Democracy Collaborative and putting on my site and on other sites as well. Bluffing is not really a negotiation. America never came out with saying outright, what is it we want from Iran ? Well, of course it hasn't. What it wants from Iran is to control the entire Near East, not only Iran, but the entire Middle Eastern oil trade, so that it can get a choke point, a stranglehold on the world supply of oil exports, so it can continue to use that as one of the fundamental levers of weaponizing its foreign trade policy and its foreign monetary policy. And all that was countered very adeptly by Iran.
LENA PETROVA: The United States is fighting against any country that is focused on achieving self-sufficiency in terms of energy security, in terms of food security, and of course, information technology. AI is a big deal. It's being used in the military and in so many other areas. So are we effectively seeing a sign of an empire in decline, sort of that last stage of the U.S. empire in decline, when it needs to destroy others in order to stay in power and to survive?
MICHAEL HUDSON: Well, it's destroying others by an attack on international law. What the United States is doing is violating all the rules of war, all the rules that were laid down in the United Nations Charter. This is not simply a war against Iran. The United States knows very well that the result of fighting Iran is going to be to close off the OPEC oil trade for the rest of the year, probably well into next year, mainly due to war. This is the beginning of a long-term war to determine whether the United States can still maintain unipolar control of the world economy and prevent other countries, as you pointed out, from expressing their own sovereignty when the idea of national sovereignty is the basis for all international law so all of the countries of the world are threatened by this this is what makes the war in Iran and last February twenty eighth the official opening of world war three. It's a world war because the entire world needs energy and is going to be affected by the cutback in oil exports, gas exports, fertilizer exports, and all of the production that is based on energy, electricity, oil for plastics, helium gas also because the cutters, helium, plants have been destroyed by Iran, and that has already caused cutbacks in the use medical scanning devices that need them. Helium is also used for computer chips. Frozen cryogenic helium is needed in order for the ultra-low-violet lithography to etch a computer chip in a hard enough, cold enough form that it doesn't just spill all over. So the entire strain of the world economy that has been based on interdependence with free oil exports is now being thrown into chaos, and this is going to affect the supply of fertilizer and hence agricultural yields, which will probably affect the Global South countries more than anyone else.
And it's not only chaos, but there's never chaos at the end of a revolution. And so the chaos is America's idea of putting it in a position where, because America is so self-sufficient in oil, food, and other materials, it can come out ahead stronger than Asian countries or Global South countries and will be able to use its economic strength to control world diplomacy in the same way that it did after World War II. It's an attack by the United States, not only on all other countries, but on the very principles that civilization was held to uphold. The idea of sovereignty, of no undeclared war, that if you are going to have a war, no attacks on civilians, especially on hospitals and basic infrastructure, every rule of war and of international law has been broken by the United States. So the other countries, I think, are stunned into cognitive dissonance. They can't believe what they have to do to defend themselves because as the chaos unfolds over the course of the coming year, the only defense is to create an entirely new system of international diplomacy, to replace the United Nations in its present form, to replace the IMF and the World Bank, to replace all of the institutions that the United States have put in place as means of control, including the Trump's tariffs that can just manipulate foreign access to the US market. The rest of the world has to become independent of the United States. And what that will lead to is essentially isolating the United States instead of the United States being able to isolate what it calls its adversaries, the rest of the world, who do not follow its own policy. So this is really as much of a civilizational fight as, if not more, than World War II was.
LENA PETROVA: Certainly. Michael, you mentioned many times that at the core of the US aggression is the desire to control energy as a way to leverage power and as a way to control other states and their access to energy. The damage that has been done to the Gulf Cooperation Council infrastructure is enormous, and to Iran's infrastructure is enormous. And certainly it would take years to rebuild, to sort of go back to the same levels of production that have been sort of normal to them, to where they satisfy the demand. What's interesting is that US news outlets are now openly admitting that we are seeing early warnings of stagflation ahead. So are we looking at stagflation, though, or are we looking at something much worse, such as a global depression, for example?
MICHAEL HUDSON: Yeah, it's a depression. Depressions are not inflationary as such. They're deflationary. So the whole idea, the whole pretense that, oh, oil prices are going to go up, that's going to increase the price level, and that reduces the ability of financial claims and bond holdings to have command over commodities. That's all ideology. That's all this free market libertarian ideology. The oil prices, gas prices, helium prices, and fertilizer prices will go up, but that's going to cause whole industries to close down. And that's going to put labor and these industries out of business. And depression is the opposite of an inflationary situation. So the stock markets don't have a clue about how money and prices are affected through the economy. And there's no analysis of how the balance of payments is affected by all this. So the stock market, instead of having a realistic point of view of how to cope with what's going to happen, all they think is, well, the trend is my friend. If people are buying stocks, then jump on the bandwagon and try to ride it up, and jump out on time. And if markets are going down, then sell everything, sell them short, and then try to buy in at the bottom. That's the extent of their tunnel vision when it comes to understanding what's really going to happen. So the stock market is only a narrow slice of the economy without understanding the whole context within which prices, wealth, asset values, wage levels, and purchasing power Evolve.
LENA PETROVA: Iran has been under sanctions for decades, and it is a regional middle power. I think that would be an appropriate way to describe it. And Iran has taken on a great power state, the United States, that's working hand-in-hand with the nuclear-armed Israel, which also has the strongest military in the Middle East. It goes without saying that to support war efforts, any state—whether it is the United States, Iran, or any other state- needs economic resources. And it's absolutely remarkable that after being subjected to Western sanctions for nearly four decades, Iran has proven itself to be such a strong adversary. It's in the driver's seat right now, as you pointed out. It has the leverage that it needs. And arguably, it established at least partial deterrence because Trump was forced to call off his 48-hour ultimatum. So what does the Iran war reveal about the United States' ability to compete militarily or economically with not just middle powers such as Iran, but great powers such as China and Russia?
MICHAEL HUDSON: Well, we're going to find out this weekend that there must be some plan in place for what they're going to do with these battleships they have there. Excuse me, the aircraft carriers, all of the troops that are there. We know that the United States can send bombs. I'm not sure they can send bombers because Iran has defenses against a lot of bombers. You mentioned Israel military. Israel is not going to get involved in this war. It's willing to fight to the last American in this war, but I don't think you're going to have The Israeli army is busy carving out Lebanon, so the Israelis will have a place to go after Israel's all bombed up, and the Israeli military defense is spent. They don't have any more defense. The whole idea of the Golden Dome was fictitious. It was all junk. All of the American arms it has were not arms to really fight with. And the arms that the Gulf countries had were not arms that really work. They were prestige arms. They were to have a parade, sort of like having an expensive Mercedes automobile, but not actually to fight because they're ineffective. against the Iranian arms. So there really isn't any American defense and military except trying to actually land all of these Marines to fight to the last Marine.
Well, according to all of the military commentators that I've been reading on almost every site, they all say these Marines whether they're landing in the Strait of Hormuz and the Persian Gulf, or whether they're landing on the southern coast of Iran or in Balochistan or moving from Azerbaijan or the Kurdish territories, wherever they are, they're going to be eaten up. And the generals must be aware of that because I don't think they have a clue as to just how thorough the Iranians have been able to defend themselves. I don't know. Nobody knows, because it's a secret. That's what they've said. We're going to find out, but I think the United States says, all right, this is going to be our Alamo. Just as the Americans said, remember the Alamo for the great defeat of the Alamo, to try to mobilize patriotic support for the war. Let's get vengeance on it. I think the American idea must be, well, let's get vengeance on what the Iranians have done to the American army and the Israeli bombs. Well, I don't think there's going to be any patriotic, remember-the-Alamo feeling, either in America or in Europe. Europe has already said, this isn't our war. You didn't consult us. You didn't make us part of the planning. We don't have a clue as to what you're doing. And the American public is not in favor of the war, and more, I think, the American public, when they see the chaos and the expense that there's going to be here, including on their own pocketbooks, not only for gasoline, but for agricultural products and for all of the products that we've been talking about that use oil and gas and other OPEC exports, they're going to say, well, this was Trump's war. This was the neocons' war. Some will say this is Israel's war, although it really is as much America's war as Israel's war. And they're not going to be supportive, and it does not bode well for the fortunes of Trump or the Republicans or the Democrats that are just as pro-war, just as in favor of this as the Republicans, as you can see in Congress's refusal to do anything at all to try to stop this war.
LENA PETROVA: Michael, and maybe the last question for today. With November midterms coming up, I would imagine that Republicans ought to be in panic mode. Donald Trump's approval ratings are underwater on every single issue, according to the most recent poll. Voters are juggling higher prices, economic instability, and of course, a widening war with Iran. its consequences. And as we know from history, that kind of environment rarely favors the party in power. So Republicans are definitely on that hot seat. How much political will or political appetite is there in Washington, do you think, to continue this war of choice, given that gasoline prices are rising, food prices are rising, and those two things are sort of the most sensitive areas for the U.S. population?
MICHAEL HUDSON: What is Washington ? What do you mean by Washington?
LENA PETROVA: The foreign policy establishment
MICHAEL HUDSON: Right now, it's a one-man band. It's Trump and his coterie. He's appointed a cabinet that's completely loyal to himself. You have the Republican-controlled Senate in the South, the senator from South Alabama. They're all in favor of the suicide march. They're like lemmings. They're not going to protest. They're all afraid of going against Trump. There is obviously a whole wing of the Republican Party, the isolationist wing that's always been part of the Republican Party, but they seem to be in quite a minority. You just don't have many people. The Southerners are South Carolina and the others. They are all in favor of it, and the democrats all are. If you look at who is paying for the campaigns of America's senators and Republicans, it's a pack, and they all want what they seem to only care about: their paychecks. They don't care about who wins the war. They want their paychecks. That's what they've shown, the utter corruption of the Senate and the Republicans, and the result of the Supreme Court's ruling that there's no limit on private contributions to campaigns has been essentially to privatize and financialize the election process in the United States. So the elections for the campaign that are determined by what politicians can raise the most campaign funding are all open to the highest bidder, and Congress has set up a circular flow between the United States and Israel. The United States will give enormous amounts of money to Israel that will turn around and siphon some percentage of this back into its own lobbyists to reward the senators and the representatives that have voted in its favor so by essentially voting for the war and support of Israel as America's foreign legion along with isis and Al-Qaeda as its second foreign legion in the middle east you have a sort of self-financing, self-promotion way for the Congress people to get rich, including no doubt all of those insiders who made a killing last weekend on Trump's charade that we've just been discussing.
LENA PETROVA Absolutely. These are very interesting times, right ? Professor Michael Hudson, thank you so much for joining us. And thank you so much for sharing your perspective on these events. I hope that you come back for a new episode. And I know our viewers are looking forward to seeing you here again.
MICHAEL HUDSON: Well, thanks for having me. It's been a good discussion, and we'll see what happens this weekend.
Photo by Maxim Hopman on Unsplash