In this episode, journalist and author Puja Mehra speaks with Safi Rizvi, National Security Expert, Risk Analyst, Former top Intelligence Officer and Former IPS officer, about how the ongoing conflict involving Iran, the United States and its allies is reshaping the foundations of the global economic and geopolitical order. They discuss how the post-Cold War system—built on multilateral institutions, bilateral diplomacy and a broadly rules-based framework—is now giving way to a more fragmented, power-driven world.

Rizvi explains how the erosion of multilateralism and the breakdown of negotiation channels are altering the way conflicts unfold, making them longer, less predictable and more economically disruptive. He also examines how recent wars—from Ukraine to West Asia—are exposing gaps in military strategy, accelerating shifts in defence technologies, and strengthening the global military-industrial complex.

They explore how the centre of gravity in energy markets has shifted from the West to Asia, and why disruptions around critical chokepoints like the Strait of Hormuz now pose far greater risks for countries like India, China, Japan and South Korea.

What does this mean for energy security, global trade flows and the ability of emerging economies to navigate prolonged geopolitical instability?

Tune in for insights into how this conflict could reshape markets, energy dynamics and the global balance of power.

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TRANSCRIPT

NOTE: This transcript is done by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Puja Mehra: Safi, thank you so much for coming to the show.

Safi Rizvi: Thank you. Thank you, Puja. Thank you for inviting me.

Puja Mehra: You know, markets, most of us might be underestimating the seriousness of the conflict in and around Iran. But a more accurate assessment of it is necessary for us to have some assessment of what the intensity, duration and spread of the economic consequences fallout would be. So could I request you to help us understand how serious this conflict is?

Do you think de-escalation is possible? What are the things that must align for de-escalation to take place? And other such questions, if a peace deal will happen, will it sustain or will a stable situation emerge out of that?

All of such questions.

Safi Rizvi: So those are lots of questions. So if we could take them one by one. But yes, on the point about what is so different about this conflict and will it sustain, I can start with that.

So the sustain part is that you see, when this conflict started, although for a period of time, we have been seeing the de-multilateralization of the world. Like we heard of the word de-globalisation and we've never heard of the word de-liberalisation. But this is a new word which has been created, that of de-multilateralization.

So which means that there are so many multilateral institutions which have been created. The JCPOA was a multilateral institution created by the United States, written off by one president and the other president wanted it to come back and the one before was the one who brought it in, but that has been completely dumped. That was one very good chance for peace in that region on that specific count of nuclear weapons.

Then there's de-bilateralization also. So while the United States and Iran were in conversation through Qatar, the deal was going on, there was talking going on and they just came and bombed the table. This is really not Operation Epic Shoot, it's basically a bombing by US and Israel, which has been responded to by Iran.

So these two big changes, multilateralism out of the window, no United Nations, nobody's heard of it, nobody's even seems to be approaching it as if the United Nations is dead, whereas it formally exists in everybody's covenants. And bilateralization also out of the window. So these are two very serious issues which are going to somehow order the next few years or decades in the world where there is nobody there who, if anybody has power enough to fight, he'll fight.

And if he doesn't, he'll just get bashed up. So this is a big change, a structural change. And the only way to bring it back from the brink is when countries like ours, like India and various others, start raising the voice for peace and pushing that the real dividend is in peace and it's our energy security.

That is why we need to get along doing this. Then the second big thing that has happened is that over the last three big conflicts, that is Ukraine and Russia, I mean, we've not seen such intense conflicts in a very long time in the last several decades, Ukraine and Russia and the involvement of the US in it. Then Israel and Gaza, the involvement of the US and US-Israel versus Iran with the involvement of the United States in it.

So we have seen the involvement of Russia clearly in the Ukraine one. And we are hearing of various news reports which talk about Russia bringing in its intelligence targeting for the Iranians into this war. So you have one erstwhile superpower, one current superpower, all of them are involved in this conflict.

And it has started showing chinks in the American armour. Now, the more you get involved, the very reason why the Chinese don't seem to be getting involved in the actual kinetic work is because whenever you get involved, chinks will show. So the chinks are showing.

You started getting into this war by saying we are going to bomb the daylights or whatever we want to. There was initial information that 10,000 targets have been, I mean, this was put out in various channels together. So we obviously understand it's coming from somewhere within the system that 10,000 targets were identified by AI and AI did such a great job.

After that, we haven't really heard of AI. That's another very interesting point to be discussed, especially for the AI watchers, is that AI was only talked about with regard to those 10,000 targets. Now we hear from the US president that 3,554 targets still remain.

So why were you not able to wipe out the 6,456 targets, which you had claimed you would do in a weekend? That has showed a bit of a chink. Number one, that were you able to actually find out the targets or was there something wrong in your targeting given that one of the schools was wiped out, which possibly was not your intention?

So was there something wrong in the autonomous AI that you had started using? That is something which is coming out a lot. So for all these autonomous AI people, especially the AI companies which have received so much of private equity funding and venture capital funding right now that they are like really, really rich, they need to talk up their AI so that they can get richer and richer and the current private equity can get its exit at a much higher price.

So the talking up is being done by AI companies. But I haven't seen any more evidence of this. That's one business side of this.

The second point I'd like to make about this war. The third point is that the extended nature of this conflict, where a superpower thought if the job would be over in two days, it's now 30.

Puja Mehra: Did you expect it to go on for so long?

Safi Rizvi: So given that the Russia-Ukraine conflict has gone on for so long, despite the fact that the original statements made by the US administration under Mr. Biden were very different, that we will make it very expensive for Russia and everything. Russia's happily continuing to fight this war. They've increased their number of missiles, drones and whatever else it is used in the conflict.

Their military industrial complex seems to be thriving now. And they are also now claiming that they would start helping the Iranians, whereas the Iranians were helping them with their drones till now. So the military industrial complex in Russia has thrived with oil moving to 110 or 100 dollars, whatever, 120.

It's basically Russia, which is going to get an extra amount of money from wherever it sells its oil from. So the point about extended conflict has shocked a lot of people. The military industrial complex in the United States is working overtime.

Orders must have increased by several fold to fill up the munitions gap. We've read so many stories about how there aren't enough Patriot missiles and there aren't any other interceptors which are available. Why is that?

Because the planning was never done for an extended conflict like this. So if the defence establishment of a superpower is unable to intelligence wise, intelligence from its civilian intelligence and intelligence from its military side, unable to gauge the kind of resistance that would be put up by a middling power like Iran, which was already cobbled with sanctions, intense sanctions from the last 10 years. It is a cause for worry for the military intelligence complex of the United States.

They need to really worry about this. So this is a gap that the Chinese are watching. This is the gap that the Indians are watching.

This is the gap that the Russians are watching. So that's the third assessment that I would make out of this extended conflict. Fourth is something that is crazily written about is about the $20,000 Shaheed drone being taken out by a million or two million dollar interceptor.

So this has increased talk about attritive munitions and attritable munitions. So attritive is the Shaheed drone and attritable ones are that your million dollar, two million dollar interceptor should also be a 20,000 interceptor. So this is a whole new game for the military industrial complex of the Western world, whereas the Russians already seem to be working on things like this.

And I'm sure the Chinese must be already working on it. The Indian defence establishment will definitely be thinking about it. So the point between attritable and attritive munitions is a very important point, which is opening up an entire new industry.

Now, from the business point of view, all these wars are outstanding for businesses which are working on the defence line. Whether if you're a munitions worker, you're an ammo worker, you're a solid rocket fuel motor worker, you're a rocket maker, there are thousands of such industries that work on this. These industries are definitely going to benefit.

However, what is going to happen to energy? The big change that is happening on energy has already happened. What does that change?

That till about two decades ago, the United States and Europe was getting a fair bit of their oil and gas from the Gulf region flowing through the Strait of Hormuz. The big change in these 20, 25 years has been the growth of China, India, South Korea and the much faster growth of Japan. So these four countries in Asia have replaced the buyers of the West, have been replaced by buyers of the East, mostly in oil and a lot so in gas.

Now, this is something which these four countries need to really look at very carefully because the war that is currently being perpetrated by the United States, they do not get affected by the energy insecurity that these four countries are currently facing. They are not affected. So they are happy to create as much problem as they want and they don't really care whether the Strait of Hormuz is opened or not.

So when Iran starts bombing the AWS centres and the various data centres, when Iran starts threatening all kinds of business that is residing currently in the Gulf nations, that becomes a very serious port of call, especially for businesses which work outside the military domain in the Western world. So opening up all the sectors of the economy with various different proportions and with various different probabilities of damage is not a very wise international global thing to do for a superpower. It is best that they now stop, declare their victory that we have degraded Iran's ballistic missile capability or whichever other capability they wish to declare and come to the talks table.

The preparation for a ground war is going to cause even more damage. Let us not forget it took them 20 years to get in and get out of Afghanistan. It took them eight years to get in and get out of Iraq.

It took them God knows, I forget how many years to get in and get out of Vietnam. If these three examples are not enough, they learned. That is why they did not get into Ukraine to push the Russian forces out.

So why are they planning to do this again? So it could be two reasons. One is that they are actually preparing for a ground invasion and that to not an invasion of all of Iran, but possibly specific areas, specific islands or whatever else they must be planning.

And the other part is this could just be posturing just to get Iran on a talks table. Because as has been written about so commonly now that the Americans won 15 points and the Iranians won five points. And so nobody knows whether you reach 15.5 or whether you reach 0.5. Let us see how that goes out. So that is an answer to several questions of yours. I wonder if I've left anything out.

Puja Mehra: So weren't they already speaking with Iran to negotiate a deal when the US and Israel started bombing Iran? So if a deal is all again they want to look at, how does that help us understand the nature of this conflict and the duration of this conflict?

Safi Rizvi: By bombing the negotiation table, the US and Israel basically have shown that we are not interested in talking, which is why despite all the statements that came from President Trump on Truth Social in the last 20 odd days were ignored by Iran in a vociferous manner. They came out and vocally said that we do not agree with this. So the belief in one party of this set of mediation is very poor.

They're starting on a very poor trust note. Then the other important factor, because of which talks will not, I don't think will reach anywhere in a short time frame, is that Israel is not even a part of these discussions. We are only guessing as to how much control the United States has over Israel to make them agree to whatever they agree, if they agree at all.

So the very fact that these talks appear to be leading somewhere is still a remote possibility. I don't see this thing stopping very soon. And all of us seem to have read that Goldman Sachs prediction that if this war is currently done four weeks, if it does six weeks, oil is at 160 dollars.

And if there is damage to producing facilities, which is irreversible in the short time frame, then oil may never go back under 100. However, the same thing can happen to natural gas and must be already happening. If you look at the prices, like you initially said in your question, if you look in the prices in the Ukraine crisis, the oil and gas prices, oil had gone up by 100 percent and gas had moved up by about 600 percent.

Back, all of it came down and all got priced in in six to eight to 12 months. So all of it came down to its regular levels eventually when everybody discovered their own ways and means of figuring out where their demand would come from, where their supply would go. The same has happened here.

The spike is not that high in oil, which is definitely higher in gas. It was high, but it has slowly come down a bit. So now in gas, I think overall, globally, we are 50 percent up, except for in the US where the 1.7, 1.8 dollars is up to 3.4, 3.5. So it is a problem for the United States, whether they have a threshold of 4 or they had a threshold of 3.5, you may not never know. So I don't see this war ending very easily. And even if it stops with a testy ceasefire, the point that you were mentioning about Iran continuing to become a serious hazard for pass by shipping in the Strait of Hormuz, that risk will continue. It is like the risk with the Houthis.

Once the Houthis started bombing Bab-el-Endem and everything that was passing there, the ones they chose to, eventually the Western powers had to do a little bit of a deal with that. Only then the Houthis went quiet on the Red Sea. So for the past one plus year, they've been quiet, but one plus year earlier, they were not.

So some deal has to be struck at the end of the day. But that end of the day is not very close. It is going to continue first in this hot war and then slowly in a simmering war, which is something that we are going to see for a fairly long period of time.

So we have to, as businesses, price it all in and build new ways of filling our demands, especially these four countries on the Asian side.

Puja Mehra: You talked about Goldman Sachs. I recall that at the time of the global financial crisis, at some point, I can't remember when, they had said that oil prices will go up to $200 a barrel. So I don't know how right they are this time about their prediction.

But that aside, what are the conditions that must be met or what are the conditions in which even you said a testy deal, you know, we could get to that point, what all must align?

Safi Rizvi: What needs to align is, number one, the US should be able to explain to Israel, number one point, most important, that this is the deal X that we are doing with Iran, number one. Number two, Iran's much degraded leadership. You may know who you're talking to, but you may never even have scoped out who this person is and what his background is, because they are now new people.

They are people who were not in prominence in the previous regime or other regimes. They, as President Trump has said, we've taken out the first layer, we've taken out the second layer, we're left with the third layer. So the very fact that you're taking out all the layers means you don't want to talk, you just want to destroy.

So that is the background of the situation. Now, if at all they come to peace, the only thing they seem to be now targeting is opening up the Strait of Hormuz. They means US, I'm not even including Israel in that.

So they're targeting opening up a Strait of Hormuz and possible peace over there, possibly militarily or possibly through force or possibly through talks. Their focus will surely be Strait of Hormuz. They have added the 440 kgs of enriched uranium.

If you note, they don't talk anywhere of nuclear weapons and they have alleged that they have nuclear weapons, but there is no mention now of nuclear weapons. It's all about Strait of Hormuz. Earlier, it was about we'll take out their launchers, we'll take out this, we'll take out that, we've taken out the air force, we've taken out their navy.

Now we've changed the objective to, OK, we've got to open up the Strait of Hormuz. So it is going to be a testy deal, whatever it is, but it's going to be focused on the Strait of Hormuz, which will be beneficial to us and to China, South Korea and Japan. Here, a very important point needs to be made that when the four of us are so badly impacted from the energy security point of view, the fertiliser security point of view, the helium point of view, why are we, four of us, we may have individual issues with each other, but why don't the four of us get together and create a table where these guys need to come to talks?

We are the biggest buyers of oil and gas in that region. So all the Gulf nations and Iran will listen to us. And China, India has $130 billion of import trade with the US.

Japan has much more. China has much more. Korea has a lot.

So the four of us are very important trade dealers with the United States, which is one of the main countries. I'm not even talking about personal relationships of leadership. I'm only talking of the economic linkages.

So why should the four of us and why individually, why not all together forget about the old things that the foreign policy experts talk about, Quad and BRICS and SCO and all those. Forget about those. Make a new formation.

That is an OPEC plus, which is an oligopoly for the sellers. What about an OPEC plus for the buyers? Where is that?

That should have been there. India had initiated this thought several years ago, but it somehow doesn't seem to have gone anywhere.

Puja Mehra: In fact, that brings me to a question which I wasn't planning to initially ask you. But India's sort of very reserved and measured response to what is going on. We did not condemn the bombing of the school you earlier mentioned in which nearly 180 little girls lost their lives.

We did not speak enough about the Iranian frigate which got bombed and the seamen on it lost their lives. Our response to the taking out of the Ayatollah also has been commented upon by people who know about these things much more than I do. What exactly is the position India is taking in all of this?

And is that also of consequence to the seriousness and duration of this conflict?

Safi Rizvi: So India's position, latest position is that what the prime minister said in parliament where he called for peace and it was a very good speech that he made. So call for peace is something that we must continue to strive for because whether we have already, there's a lot of pain being felt by the lower income groups, especially with regard to sourcing of cooking gas. Now, if that pain is already being felt, it's going to get worse by the week.

Even though we may have developed alternative means, we may be looking for better means and different means that may take a bit of a time, which is medium term. So the fastest way of resolving this problem, that is obviously our objective of resolving the problem. We need to stop this unnecessary fighting.

We are the land of Mahatma Gandhi. So we need to use that, stand up and say what the prime minister said every day at every hour of the day. All of us think tanks and journalists and everybody else should start asking this question.

And not of the Indian leadership, but of the international leadership that please come together with this call for peace. And let's get and talk to these guys.

Puja Mehra: I'm sorry, I may come across as very ignorant about these things. But why did the Americans and the Israelis not foresee the situation where their whole goal would shift to the reopening of the state of Hormuz? Why did they not imagine that Iran will begin to disrupt this very important state of Hormuz for maritime traffic?

Safi Rizvi: So whether they did or did not is difficult to say, but it is sure that even if they did, it was disregarded and possibly the counter voices when whoever must have raised it in the internal meetings, when all this was being planned, the counter voices must have said, oh, don't worry, we'll do it in two days. There will be no problem and the entire military capacity of Iran will be degraded.

Puja Mehra: So that raises questions also about whether they will listen to Indian leadership and other countries making these points. And that essentially makes us ask questions about how are these decisions getting taken?

Safi Rizvi: So you see, in this very transactional new world where it's not a rules based order, but a power based order. What is that power? The power is not personal power.

The power is to some extent position power. And the third extent of power is the financial power, which is why I am reiterating that the very fact that we are four big buyers of oil and gas, the Gulf nations and Iran and Iraq, they'll all listen to us, number one. Number two, when we have four big nations with massive trade implications for even the Gulf nations and also for the United States, they will listen to us.

So we have financial and trade power, buyer power, trade power. That is the power we should use. We are not, I'm not talking of request power, request or please listen to me.

Not that. I'm not talking of Gandhiji's solution that put up a photograph of Gandhiji and say because we have peace, the eyes come to us. But look at the power that the Scandinavian countries have exerted over the world in various different ways.

Not in this war, but the Scandinavian countries grew their GDP so high that they had seriously investable sovereign wealth funds. Those sovereign wealth funds have become a very powerful voice, especially for reducing climate emissions. So the manner in which they built their power was through money, through the trade and the sovereign wealth fund and the investment potential that they had.

We already have that. All I'm saying is we should exploit it.

Puja Mehra: President Donald Trump is known to backtrack from a lot of decisions that he takes in the financial markets. That phenomenon is called taco. Trump always chickens out.

He did that, for instance, when he said that he wanted Greenland. How much is his personality a factor and how do you assess his personality? Is this a personality issue at play also at some level?

Safi Rizvi: Yes, for sure. I mean, a personality that people make fun of, Mr. Trump, that, you know, maybe he doesn't know what he's saying. I don't somehow agree with that because a president of the United States has a serious amount of intelligence and information coming to his table.

And there's a serious amount of top class people, just like in India, who come and brief you and they give you the right picture. So it is for the president to take the final call. That is always the case.

Now, with regard to changing his statements, one is that he's changing his statements. He forgot what he said yesterday. He said something new today.

The other part is that a lot of it, a lot of the changing statements is actually posturing. Now, if you're posturing in a way, doing whatever you want to, but you're spreading confusion through your statements, that's also a kind of military strategy. It's an economic strategy to first create deterrence by making people afraid.

It's like people are sitting in a room and they speak in a loud voice and they scare everybody. So of the 10 people in the room, the five guys were slightly timid. They will maybe not make the point they were thinking of making.

The other five may just make the point, but they're still on the back foot. This is the aggressive defensive strategy, which our NSA, Mr. Doval, has spoken of so many times. The Israelis practise it, the United States is practising it.

So it's an aggressive defensive strategy. It's more psychological than a military strategy. So he does that.

But there are some very permanent changes that have happened with regard to Mr. Trump and what he has been saying in the last 15 months since he ascended to power a second time. Number one is that he started with, I am going to go for a third term. Now you don't hear the third term again.

And you hear that the vice president, Mr. Vance, has for the first time in this war been put forward as the person who will speak and mediate. So Mr. Vance is the obvious choice for the president-elect of the Republican Party and the choice for which will start somewhere early next year. So he is being seen to be pushing Vice President Vance and he's out of the picture.

That's a permanent change. So this is, from the market's point of view, this can be seen as a way of long term or rather medium term stability in the markets. Now, whatever you have to say about Vice President Vance and what he has said about economics and all is a different matter.

That is for further analysis. Then second part is that if you see the three new things he mentioned, five things he would do on the kinetic front. One was Venezuela.

For the longest time, he has spoken about Venezuela. He had spoken about Iran. He has spoken about Cuba, Greenland.

And the fifth one he had spoken about was Canada as the 51st state. Now, two of them, he has walked his talk. He's walked his talk on Venezuela, howsoever it was done, and on Iran, and howsoever it has turned out.

So Cuba has already been blockaded three times. Just yesterday, or was it today, they've been allowed one ship, one ship has been allowed. So Cuba is again in the 1960s situation where the US and Russia are in some kind of face off, a very mild one possibly.

But there is something going on in Cuba. So is that his next target? Is just landing troops in Greenland, is that another target?

We may never know. But those three things are there. So he might just back off.

He might just do them. He might choose another one. On tariff, he walked his talk.

He said liberation day will come when it came. What it did to the markets, we've all seen. Many people lost 20 percent of their portfolios from April 1 to April 10.

But at the end of the day, markets eventually came back. Markets have this way of relearning and adjusting to the way the things are moving. But on a permanent basis, this big change has happened.

He doesn't seem to be seeking a third term. He seems to be on a not a good wicket with 36 percent approval ratings in the coming midterm. He may just back off of these three other walk but talks he is planning.

The Supreme Court has pushed the tariff story back from a range of 0 to 145 percent and individual deals with every country to a broad base 10 to 15 percent, which shows that the Supreme Court, despite six of the nine judges having been brought in by the Republican administrations, have taken a very judicial and proper jurisdictional view of the matter. So these are all positive signs in the medium term. Short term, not good.

Puja Mehra: It does seem to me after this conversation that the world as we knew it has changed. We are not very sure where this will all settle, but we do know that the interim, it is quite disruptive. It seems quite bleak.

Anything you want to add to that? This is what I have sort of taken away from this conversation.

Safi Rizvi: One last thing I'd like to add, why this whole thing with the current situation in the short term is still very bleak is because the resilience of Iran is something that I did not speak about. The resilience of Iran, I mean, they've been through a long process of adjusting to the oil, that oil wealth that they got. In 1908 was the first time they discovered oil.

And by the First World War, Iran was the Abadan refinery, the biggest in this side of the world at that time, was supplying half the Royal Navy's needs east of Suez, half. So Iran was a very important epicentre of the World War One, 14 to 19. Then Iran continued to the Second World War, growing in its production from a few lakh tonnes in a year.

They grew to a few lakh barrels a year to a few million barrels a year. By the time the Second World War came, they became the intrinsic and most strategic asset of the British Empire between the two wars and during the Second World War. Then what happened was within Iran, there was a lot of reaction to the Reza Shah Pehlvi, the first one, and then the second one, who eventually got three-prone.

The second one came to power somewhere around after the Second World War. So the second one was under great pressure that you've sold out Iran's interests to the oil company, which is called Aglo-Persian, but it's actually largely owned and run by the Brits. So that caused a nationalist movement within Iran.

But that nationalist movement is not the first. There was a constitutional movement in Iran, 1905 to 11, on similar selling of rights to British explorers and inventors, including tobacco rights and various other things in the late 1800s. So a nationalist sentiment has always been there in Iran.

The Safavid dynasty from 1600 to mid-1700s, they established the system of Shia jurisprudence, the Twelvers. There are three kinds of Shias. The main segment is the Twelver Shias.

So the concept of Twelver Shias was ingrained during the Safavid dynasty and continued into the Pehlvi dynasty and continues till today. So that's how Rohullah Khomeini came up. That's how again on the nationalist movement, he rode against the Shah.

So there is a serious amount of resilience in Iran, number one, because of the word nationalism, two, because of the commonality of the Twelver Shiaism within their blood, within their rituals, within their culture, within their daily practise. So the resilience, the pride is something which most likely the invaders have not really factored in properly. So which is why I am saying not just because of the staying power of US and Israel, but because of the resistance power of Iran, this is a short term problem that's not going away in a hurry.

Puja Mehra: And also clearly, as you've already said, because of the inability of the powers and the players attacking Iran to take everything they should take into their assessment, they did not expect this to be a long drawn conflict, like you're saying. So that makes the current situation even more bleak for us.

Safi Rizvi: Yes, absolutely. It's very bleak because I mean, if you're a superpower and you say two days and it lasts 30 days and there's no end in sight, the rest of the world is definitely wondering about your abilities.

Puja Mehra: Thank you. Thank you for this conversation.

Safi Rizvi: Thank you, Puja. It was very nice talking with you.