The Iran War is Now in Our Own Courtyard

 

In the last two parts of the article on the Iran War, we saw the events leading up to the current war in the Gulf.  We concluded the second part with a promise to crystal-gaze at how the war would impact all of us, especially us in India.  

A Quick Recap 

The USA had engineered the fall of the Rial in Iran. Its economy, already weighed down by years of US sanctions, made it even worse. It soon triggered public unrest, but did not result in the regime change America wanted. Meanwhile, America had demanded the capping of Iran’s nuclear capabilities. The indirect talks in the Omani Embassy in Geneva between Mr Abbas Araghchi, Iran’s Foreign Minister and Mr Steve Witkoff, the U.S. special envoy, with adviser Jared Kushner, a businessman and President Trump’s son-in-law of the United States, were mediated by Badr bin Hamad Al Busaidi, the Foreign Minister of Oman. On 26 Feb, they parted ways, agreeing to meet in Vienna, Austria, in early March. The technical-level meeting was intended to iron out the nuclear framework and the sanction issues. 

Then, on 28 February 2026, in a joint operation, the USA and Israel struck at the very heart of Iranian authority.  The aggressor immediately shifted the war’s aim from capping Iran’s nuclear capabilities to regime change.  Both the US President and Israeli Prime Minister announced it to the world. The intended regime change did not go the way America had planned. Despite claims by the American president that they will decide the new regime, Iran decided on Mojtaba Khamenei, son of the assassinated supreme leader, as the new supreme leader. The transition of authority seems to have taken place in the manner Iran wanted. Now we have news coming in that the USA and Israel have managed to injure him, too. Given the manner in which Iran is being targeted, there is certainly someone providing detailed and precise intelligence inputs to the USA and Israel.

Missiles are flying from both sides.

Why is Iran pounding other Gulf states? 

At first sight, Iran's attack on other Gulf countries looks almost suicidal and a sure way to make enemies out of enemies. The generally informed would say that Iran has no other way of hitting the US because of the distances involved. Therefore, they attack the US bases nearby. It is not that straight. Iran is deliberately destroying the ring of early-warning systems the US has laid around it. They are decimating the US radar systems in the region, and for a purpose. 

The radar in Al Udeid Air Base, Qatar, with a range of 5,000 km, is part of the $1.1-billion long-range missile detection system of the USA. This radar was an eye for the US missile-defence network in the Gulf, feeding data to the Patriot and THAAD systems. Iran relentlessly attacked it. 65 missiles and 12 drones were intercepted, but two missiles found their target and did their job. Iran continues its attack on the site. The Radar in Al Dhafra Air Base of the UAE, which supports HAAD missile defence batteries, was also attacked and damaged. Riyadh, Saudi Arabia, came in for special treatment from Iran. There were strong reasons to target it. Riyadh is the hub of Saudi Arabia’s national air-defence network. They work as part of the US missile defence systems and house the AN/MPQ-65 phased-array radar, part of the Patriot missile defence system, to detect ballistic missiles, cruise missiles, and drones. Bahrain, too, received a large share of the assault. The US naval command for the Gulf is located in Manama and hosts the US Fifth Fleet Headquarters. This headquarters controls US naval operations in the Persian Gulf, Arabian Sea, Red Sea and Gulf of Oman. The US destroyers operating from Bahrain provide mobile missile-tracking radars and ballistic missile defence coverage. Manama also has the Patriot batteries. The  NATO Radar in Kürecik, Turkey, which provides early warning of Iranian missiles, was also attacked. Iran sent missiles to Jordan because it hosts U.S. radar and missile-defence systems that detect Iranian missiles. Iran suspected that Azerbaijan was sharing military intelligence with Israel. Therefore, it was also attacked. In both these cases, the damage was limited, but the messaging was clear.

America had spent billions of dollars and many years constructing them. While these radars keep a watch on the sky and the sea in the region, they are also vital to the communications, keeping American ships and planes in the region connected to CENTCOM and the Pentagon. They are also the most vital part of the US-Israel anti-missile systems. Situated close to Iran, these radars provide very early warning to both the US and Israel about the missiles that have taken off from Iran. Destroying these military assets was an imperative for the Iranian operations. As a consequence of this well-planned offensive, the early warning time in Tel Aviv against Iranian missile attacks has come down drastically. Now the public has just about a minute or two to get into shelters. Some media have covered the instance where Israel has informed its citizens that they should not expect early warning. This has put considerable pressure on the people of Israel. 

Balance Sheet 

In war, truth is the first casualty. Nobody gives the true figures. What we have is only what is claimed. The media gives inputs that suit them, and driven by confirmation bias, we lap it up, further strengthening our beliefs or biases. Sending pictures of any damage or missile attacks in Israel is legally prohibited. So we do not get to see the real picture there. We also know that the flow of information from the Gulf bases is tightly controlled. Yet, let us make some objective sense of what is happening there, with whatever we have. 

We know that the USA-Israel combine has a very powerful array of weapons that is being put to use against Iran. They put the Tomahawk Cruise Missile to work. Launched by the United States Navy from destroyers and submarines, the Cruise missiles fly low, evading radars and reach targets 1,600 km away to deliver precision strikes. They normally target command centres, radar, and air defence. Most of the time, they have found their intended targets. The Israeli Air Force uses Delilah Cruise Missiles that are capable of changing targets mid-flight. In their arsenal, there are the AGM-158 JASSM (AGM means Air-to-Ground Missile, and JASSM means Joint Air-to-Surface Standoff Missile), a long-range stealth Cruise missile with ranges between 370–900 km, AGM-88 HARM (High-speed Anti-Radiation Missile), all delivered through different platforms. In addition, there is Jericho III, a long-range ballistic missile with an estimated range of 4,000–6,500 km employed by Israel. They also use the MQ-9 Reaper, a US armed drone that can fire AGM-114 Hellfire missiles and the IAI Harop, an Israeli suicide drone. 

Iran counters them with their short-range missiles and Shahid series of drones. Shahed‑136, Iran’s most versatile drone with a range of 1,500–2,500 km and carrying a warhead of 40 to 50 kg, is a loitering munition (often called a kamikaze drone). The Shahed‑131, a smaller version of the Shahed-136, has a shorter range and smaller warhead but is used in swarm attacks. The Shahed‑129, on the other hand, has an endurance of  24 hours with a range up to 1,700 km and can carry guided missiles. Iran also has hypersonic missiles capable of reaching 15 Mach speeds. While technically they can be intercepted, there is no record of such a successful interception. How much is left in Iran’s arsenal is not known.  

People often ask why hypersonic missiles are hard to intercept. While a typical ballistic missile can reach speeds between Mach 3 and 10, Iran claims that the Fattah Hypersonic Missiles attain speeds of Mach 13 to 15. This speed lets it reach its target 1,000 km away in less than 8 minutes after launch, giving Air Defence systems very little reaction time. Moreover, unlike the traditional ballistic missiles, which follow a predictable path, hypersonic glide vehicles can alter their direction in flight and altitude.  This high-speed manoeuvrability makes it difficult for anti-missile systems like Arrow 3 and THAAD, which take on missiles on a predetermined trajectory to intercept them, with radar tracking and interceptor calculations. Their low flight path altitude allows them to appear later on radars. Moreover, it is claimed that the plasma cloud formed around the Mach 15 missile reduces radar detection.  Iran also doesn't fire these missiles in solitary mode. They come with other low-cost, high-volume swarm options. This helps the very high-speed missiles to get through the missile defence shields.

 Surely, the USA and Israel will be frantically looking to neutralise the missiles and their launchers before they can take to the air.  However, these highly valuable assets are stored in deep underground facilities often called missile cities. These are tunnels excavated inside mountains and hardened against air strikes. The solid fuel missiles are easy to store, move and launch.  

The war has now entered a phase of how long Iran can sustain its fight against how long the USA-Israel combine can continue bombing. The cost of engagement is loaded heavily against the USA-Israel combine because they use very costly and sophisticated weapon systems. Moreover, for each launch by Iran, dirt-cheap projectiles in comparison to what the USA-Israel combine expends, they are forced to deploy much costlier missile defence interceptors. Both sides are depleting their stocks, one from a huge pile and the other from a limited stock held close. Although the USA-Israel combine has claimed that Iran has been crippled, Iran continues to fire into Israel and the US bases in the Gulf. 

America has claimed that the war will soon be over, but it vacillates too often for confidence. Once boisterous, Israel too seems to have gone silent. Iran has been categorical in stating that it will end the war on its terms, and they are not in a hurry.

We have no option other than leaving it to them to fight till either of the two finds the end state they are looking for.

End State?

Wars commence for some reasons and finish when one party decides they have reached the end state they wanted. What could be the desired end state for the USA?

Capping of Nuclear capability?  No. For that, the war was not required. They had already come to a broad agreement.

Regime change? It was the second claim. Not achieved. Can it happen? Yes, maybe, but uncertain. But as of now, not at all.

Control of Oil supply? Very likely. But who will control the oil supply? Will it be the oil producers? The USA?  Or would Iran control the oil supply from the Gulf origin?

Control of the region? Very likely. Will the USA assert its control in the region? If so, how? Will the Arabs come together as one? 

Nobody knows.  But we will see, later, how it plays out. 

Impact on India

One thing is certain. The war has already started pinching us Indians. Restaurants in Bangalore are closing down or scaling down operations. The local daily has announced that hotels in town are restricting menus because they do not have the LPG for cooking.  Although the government has announced that there is nothing to worry about, they have introduced a 25-day restriction on the booking of LPG cylinders to prevent hoarding and black marketing. Assurances aside, there is a looming fear of an LPG shortage and a spike in fuel costs. That is the least of the worries. The bigger issue at hand has to do with both macroeconomics and microeconomics. Let us see how the evolving situation could impact us.

Our monsoon-dependent economy is heavily dependent on the quantity of crude we import and also on our foreign remittances. Let us take one by one. It will take a little mathematics to understand the enormity.

India is importing approximately 4.5 to 5 million barrels of crude every day. An increase of $10 per barrel will increase our daily outflow of foreign exchange by $450 to 500 Lakh dollars (4.5X10,00,000x10). This will increase the Current Account Deficit (CAD) by 0.3 to 0.4% of GDP. CAD, to understand in simple terms, is the money going out in comparison to the money coming in. It is a deficit when the net is negative and a credit when positive. It means that the balance of payment is adversely impacted. A $10 increase per barrel of crude is likely to increase inflation levels by 0.3 to 0.4% and reduce GDP by 0.2 to 0.3 %.

Higher CAD also means more external borrowings and a weaker rupee. Unfortunately, we are now spending a lot more than ever before on servicing our debts. 

In 2013, we had 43 Lakh Crores as internal borrowings and 2.5 Lakh Crores as external borrowings.  We were paying 3.8 Lakh crores as interest payments then. In 2025, the figures stood at 176 Lakh Crores against internal borrowings, 6.2 Lakh Crores as external debts. We also required 13.0 Lakh Crores to service our debts. To make sense of these figures, just understand that in 2025, about 62% of our GDP, that is, whatever the nation produces, goes towards paying off interest on our debts. Remember, it is only paying off the interests and not repaying the debts. Are we already in a debt trap?

If the oil prices go up, inflation hits, and the rupee falls, it can lead to serious economic difficulties. If that was not enough, Russia, our all-weather friends, who were giving us oil at a discounted price, has now asked a premium for the oil they supply. That is not good news.  On 31 December 2025, the US Dollar was trading at ₹89.98. On 12 Mar 2026, it is trading at ₹92.32. On its own, devaluation can be a burden. 

It is amidst this scenario that I read the news that the US has hit Iran’s desalination plant. Retribution cannot be ruled out. If Iran decides to hit the desalination plant of the GCC countries, it can create a major crisis in the Gulf region because Bahrain, Kuwait, and Saudi Arabia draw most of their water requirements through desalination. If something like that happens, then a human tragedy is bound to follow. The bulk of the expatriates will have to leave these countries and head back home. We have 90 lakh Indians living and working in the country, contributing hugely to the country's GDP.  Luckily, Iran seems to be very measured and more sane in their response to the adversaries.

Cost of crude is one thing, but availability is another. Propaganda and claims aside, the marine traffic through the Strait of Hormuz has a lot to do with what Iran decides to do. Iran has agreed to allow Indian Flags to sail through. However, the shortage is already hitting home, hard. Many medium-sized restaurants are shutting down due to the unavailability of LPG. Crude plays a huge role in the Indian economy. Shortage or nonavailability has a cascading effect and even unforeseen consequences. 

The war may be fought in the Gulf, but it is adversely impacting all of us in India. 

Who benefits from this war?

Let us see that in the next article. 

Meanwhile, look at how social media is being used by America and Israel.