Gulf War III Or Cold War II: Iran Truth And Consequences

- It is Friday, March 6th, 2026, and welcome back to GoodFellows, a Hoover Institution broadcast, examining history, economics, and geopolitics. I'm Bill Whalen, I'm a Hoover Distinguished Policy fellow, I'll be your moderator today. It's my great honor to be joined by three very distinguished gentlemen here at the Hoover Institution, our good fellows, as we like to call them. I'm referring to the historian Sir Niall Ferguson, economist John Cochrane, and Lieutenant General H.R. McMaster, former Presidential National Security Advisor. Niall, John, and H.R. are Hoover senior fellows. Gentlemen, this is the Domino's version of "GoodFellows." Today, we're gonna try to deliver a show in 30 minutes. So, here goes. I want our listeners and viewers to know that Niall has written a just tremendous piece in "The Free Press." Its title is, "Could this be the start of World War III?" And in it, Niall details 10 questions related to the situation in Iran. I'm not gonna read them all, but H.R., I wanna go to you and I want you to answer question six and five, which are, "How widespread will the war get?" And, "At what point does the Iranian regime alteration happen," keeping in mind that the president today, President Trump moved the goalpost and called for Iran's unconditional surrender. Go ahead, sure.

- Yeah. I think it's reached his peak in terms of how wide it's gotten. I think, now, the capacity of Iran to widen the war, to continue to attack new countries or to even sustain the attacks on, you know, the 10 or so countries, it's attacked with ballistic missiles and drones, is gonna be greatly diminished. I think, also, their ability to affect shipping in the Strait of Hormuz and the Persian Gulf is also gonna be greatly diminished. But what else can they try? What else are they gonna try to get going? Well, trying to expand to other... The use of their proxies. We see that with Hezbollah already, and Hezbollah now promising yesterday, "Hey, we're gonna try to attack US assets in the region," with, kind of, the franchises that Hezbollah has in the region. So we'll see a continued terrorist threat. You see countries in the Gulf and in Europe acting preemptively against these cells associated with the IRGC and the MOIS, the intel arm of the Iranians. But I think in terms of the scope of this war, the geographic scope of this war, it's waning. And what you're gonna see, their capacity for them to continue to strike, it's just gonna drop off a cliff here with a sustained air campaign. And now the ability to have... As what, you know, the Chairman of the Joint Chiefs called, Dan Caine said, "Hey, the stand-in attacks of having, you know, fourth-generation fighters, bombers, you know, patrolling continuously across the country, striking now these missile launch storage facilities, the underground Shahed drone storage facilities." So, hey, I think we're gonna be okay. And, I think also, in terms of the air defense, it's gonna be okay as well. I mean, estimates vary, maybe 1500 interceptors fired, about one-fifth of the stocks of the US, Israel, and the Gulf states against these maybe, what is it, 2000 drones so far, 600 or so ballistic missiles. But again, that's gonna drop, that's gonna drop off, and you'll have, kind of, a reopening of shipping. You know, I think we've hit the, you know, the nadir of the crisis on gas and oil supplies.

- Mm-hmm. So, Niall, to the question, "Will it be the start of World War III?" The answer is what, a definite maybe?

- No, it's not World War III, though I don't think it's a stupid question, as I point out in the piece. World War II didn't just all begin with a bang, it was several distinct wars that coalesced in late 1941. And, we already have one war raging in Eastern Europe. Now we have a war that has... Began really in 2023, but it really escalated in the past week. But I said in the piece, and I think this is where I stand, this is Gulf War III. And it has to be understood in the context of Cold War II. Gulf War III, I think I wholly agree with H.R., is gonna look a lot more like Gulf War I than Gulf War II, i.e., it's a Desert Storm-type scenario. It's something that takes weeks as opposed to what happened after 2003, where we ended up with eight years of being bogged down in the Iraqi insurgency. So this is gonna be much more like 1990-91. I think H.R. is dead right, that the total dominance of the skies has now been established, and it's gonna be very, very hard for the various different armed elements of the Iranian regime to survive. And I think, in short order, there will be a steep... There already is a steep decline in the missiles that they can fire. And I think, the drones too will tend to dwindle. So I agree with H.R.'s military analysis. What is harder, is to say anything clear about the political future of Iran. Unlike Desert Storm, where the goal was, kick Saddam out of Kuwait and restore the Kuwaiti regime, what we're doing here, is we decapitated the Islamic Republic, and we've not just killed Khamenei we've killed a substantial part. I say we, I should say the US and Israel have killed a substantial part of the leadership elite of the regime and more will be killed. But we have not specified what comes next. And it's very hard to get any Iranian expert to say with any degree of confidence what will come next. That's the part that's uncertain.

- Mm-hmm, John.

- Yeah, let me chime in. I agree this isn't World War III. It becomes World War III if another major power comes in on the side of Iran, and no one's doing that, not even China, who's losing access to a lot of oil here. I mean, that's when World War III breaks out. And more importantly, nobody likes China. You know, in our great fight against communism, World War II, Cold War II... Cold War I is different from Cold War II. There was the ideological component. Some people liked the Soviet Union's model. Nobody likes the Chinese model, it's a military confrontation. I do think though, the focus on what's gonna happen next, I think is misplaced. So the lesson I'm getting from this is, how America operates in the absence of an ideological competition with China. Is the... We are happy to let you screw up your country. Afghanistan, Syria, you know, Somalia, do whatever you want in your country, no matter how horrible it is, we don't like it, but we're not gonna interfere unless you start causing trouble internationally. And then we're gonna come in and we're gonna kick you out of power. And we don't care what happens next. I think, it's pretty clear the US doesn't really care what happens next. And that's... If you're going to actually interfere and say, look, you gotta stop this international... You know, causing trouble to your neighbors. If you're bound to, we can only do it if we have a plan to restore democracy, you're never gonna do it. And the US has figured out that it's not in our interest. In our interest is, we can come in, regime modification, regime change, whatever you want. We don't care if we leave a mess behind so long as you don't bother your your neighbors. This is not a very moral, ideological, beautiful thing, but it is the way that the US will now be able to fight these little things on the edges of the world scene.

- Well, H.R., John is suggesting we will essentially cut and run at some point. And here's my question, can you achieve what we wanna achieve with air power alone? Our experience in Iraq in 2003, we had shock and awe, but then we sent in what, a quarter of a million troops after that. What if the regime does go down, and then, what if Iran turns into a version of Iraq where you have sectarian violence and a civil war, would we be compelled to go in at that point?

- Well, you know, I see, kind of, three alternatives here. You know, alternative one is, that there is a weakened Islamic Republic, right? A theocratic dictatorship that stays in power, you know, with the IRGC running for their lives, operating, as they are now, out of schools and hospitals, you know, for example, because all of their headquarters are getting blown up and they're being hunted down. The second, I think, alternative is that there's kind of a fissure, a fracture within the security apparatus. And then somebody emerges and says, "Okay, enough of this," you know? Contacts the United States and says, "Hey, I'm your guy," you know? "I've put together this group to splitter off and we're gonna establish an alternative, a transitional government, something like that." And I think, the CIA, I would hope, I'm sure they are, is working overtime to identify those people who can use existing security force capacity to transition away from the Islamic Republic into something else. The third would be a devolution into some form of a civil war. And I think, the first and third of those are bad options, you know? And, what we wanna make sure we don't do is set conditions for a destructive civil war, kind of like in Libya, except many orders of magnitude larger than Libya. This is why I'm, kind of, concerned, you know, about this idea of arming the Kurds. You know, not a new idea, right? The Brits tried it, you know, in the early 20th century, but, you know, I think what that will do is create deep anxiety among the Persian population and other elements of the population, and, you know, really reduce their enthusiasm, which they have now, for just ending the Islamic Republic. So, anyway, I mean, it's tough to do this remotely, you know? And you can't control it. You can influence it, but you've gotta find, really, essentially, somebody on the ground, groups on the ground, who can begin to affect this transition as you continue to weaken the repressive arms of the regime. And that's kind of the new class of targets that are coming on now, are really going, as Niall alluded to already, to weaken the security apparatus.

- The challenge, it seems to me, is, the Venezuelan analogy doesn't fit too well because that's, kind of, what has motivated at least a part of President Trump's thinking, that what worked in Caracas can work in Tehran. Now, I give great credit to Dan Caine, the Chairman of the Joint Chiefs. He clearly warned the president, this would not be like Venezuela, it would be a great deal more difficult. And it's worth just pondering as to why that is. And I think it's partly that there is a degree of ideological radicalism which is greater. The Chavista regime had its ideology, but it wasn't remotely like the radical Shia Islam on which the Iranian revolution was based. The other difference is the neighborhood. It's the fact that chaos in Iran spills over into the Gulf. And I hope you're right, H.R., that we'll see normal service resumed in the Strait of Hormuz pretty soon. If we don't, and I'm throwing this to John Cochrane, if we don't see normal service resumed in the Strait of Hormuz pretty quickly, then the world is going to be on the receiving end of one of the biggest energy shocks of our lifetimes. The potential supply disruption is much greater than anything we have seen this century. It would be greater than anything that occurred at the time of Desert Storm. We're looking at the 1970s because of the sheer volume of oil, not mention natural gas, that goes through the Strait of Hormuz. So, the reason it's not Venezuela is that the stakes are much, much higher. It's gonna be hard to find the Delcy Rodríguez amongst the IRGC generals. Maybe at some point, somebody comes out and says, "I'll sign the instrument of surrender. Where do I sign? I'll do that over getting killed." But that person is immediately going to be denounced by the surviving remnants of the theocratic regime. I think the tough thing, H.R., see if you agree, the tough thing here is to make it sufficiently stable that the traffic in the Strait of Hormuz can resume. And my impression is that the shipping and insurance interests are nervous as hell. It's not like a ton of ordinance was raining down on the strait, that many people were hurt or ships were damaged, there's just a fear of what can be done. And until that fear is removed, there's going to be a significant economic shock. Actually, I wanna get John's thoughts on this.

- Yeah, John, let me add here, in Palo Alto, my gasoline is already up 10%. There are dire prophecies of gasoline going to 8-9 dollars a gallon, but...

- Yeah, this is like the nightmare for the inflation hawk, that we end up getting on top of all the, kind of, monetary and fiscal kindling, we get the gasoline of an oil price shock, alas, '73, '74 or '79. John, are you worried that we're about to revisit the seventies because of this?

- Well, always, especially considering the bad fashions of the time. So, I do think this partly explains... I think, the military objective is simply, either that they're unwilling or unable, get rid of all their military assets, and then who cares if they turn into another Libya, as I think, the attitude. But, boy, it's hard to get rid of, you know, all the... It only takes one Shahed drone to keep an oil tanker out of the Strait of Hormuz. So, I'm not sure if... You know, maybe, we keep pumping this one around, but I'm not sure you can do it by just removing all of their military assets and then letting them rot. Yeah, so let's do the economic fun. And Niall posted a great graph that I copied and passed on, on how inflation in this recent period looks exactly like the 1970s. And here we are, just about at the exact time when the Iranian revolution happened and set in big oil price shocks. So yeah, there's reason to worry, I think less so than 1970s. Our economy is less dependent on oil than it was in the 1970s. We are an oil exporter. So, although, you know, higher oil prices hurt our economy, they also, you know, help our balance the trade. We make money, we weren't as export-dependent. China is the one who... You know, they got most of their oil from Iran or Venezuela, also some from Russia. So it's gonna hurt them in the short run more than it hurts us. And, you know, my hope that this doesn't last as long as the last one did. But, yeah, if the Strait of Hormuz closed for a long time, I think it could be. And you're seeing the beginnings of stagflation now. The latest jobs report is weak and the latest inflation is up. So get out those bell-bottom jeans, still I don't think that's baked in. And I do think the resilience of the American economy, the fact that we produce a lot and we're less dependent on oil, lots more domestic production means the outlook is not as severe.

- H.R. made a defend the seventies, it gave us the birth of funk. So, it wasn't entirely bad. I have a question for you General McMaster. Roaring Lion, the Israeli operation, the first wave of Roaring Lion takes out the supreme leader and 40 of his friends, who for reasons, historians one day tell us, decided it was a good idea to have a meeting above ground in Tehran. Not a good idea, fellas. But this is a departure, we are used to shanghaiing foreign leaders we don't like. We take Maduro out of Venezuela, we take Noriega out of Panama, we put 'em on trial. Now we've been part of an operation that dropped a missile and killed a leader. So, two questions. As Niall would say, "Is this cricket?" And secondly, H.R., there are probably people out there thinking, "Well, if we did this to a supreme leader, but a lot of other bad actors as well we should probably ghost, so why aren't we doing it to Putin? Why aren't we doing it to Kim Jong Un?"

- Yeah, I think what changed the calculus for, probably, President Trump and those around him, although it was an Israeli strike that took out that large group of leaders, was that they had just murdered over 30,000 of their own people in a 48-hour period. I mean, I think that really changed the perspective, you know, from the period of the 12-day war when President Trump was like, "Hey, let's get a ceasefire," after the strikes against Fordow. And really, a lot of Iranians were, you know, up in arms about that because they're like, "Why did you guys stop," you know? I mean... And so, I think... I think that the biggest difference was the degree to which the regime had inflicted so much, you know, suffering, death, you know, on their own people.

- You don't assassinate foreign leaders in two circumstances. One is, when they could assassinate yours, and this is sort of an agreement, we don't go this way. Or when you can't do it. I think we would've happily dropped a bomb on Hitler's bunker in World War II if we had any... You know, if we had precision munitions, and would've saved an enormous number of lives in doing so.

- And they did try to kill President Trump also.

- Yeah.

- I mean, you know, right? And that he did say, "I got him before he got me."

- Zelensky and Putin are just the... The lack of means rather than politeness that's stopping that one.

- Let's bring it back to the Cold War II Because China's situation, in many ways, is the thing that people aren't talking enough about. I do believe that part of what we have seen this year has been a conscious flexing of American military might in Venezuela and now in Iran, both, in effect, client states of Beijing, both suppliers of contraband sanctioned oil to China. And, it seems to me that a part of the goal here is to communicate to the Chinese Communist Party, do not mess with America. And I think that message has got through, but there is a kind of another side to this, which I think H.R. will have thoughts on. We are conducting extraordinarily fast-paced naval and air operations as we dismantle the military capabilities of the Iranian regime. We do not have an infinite supply of the precision weapons that are being used. John's right, this is a kind of precision that didn't exist in the first age of air power, didn't really come into existence until quite recently. The problem is, these are beautifully and extremely expensively-made weapons, and there's a finite stock of them. The Chinese are sitting, thinking to themselves, "Do we rely on the United States to keep the Strait of Hormuz open and our flows of oil and gas coming?" You know, "What does that mean? Are we simply going to accept that position? Are we going to be next?" And this is an important question that I am sure they're asking themselves in Beijing, "Is the United States now so unbound, so unrestrained, that it may contemplate preemptive action against us too?" If that's their thinking, and it wouldn't surprise me given what we know about Xi Jinping and communism generally, then they will say to themselves, "We should not hang around and wait for that preemptive strike. On the contrary, we should be acting when the United States has depleted its capabilities before they've been replaced, and while it is entangled, not only in Iran, but entangled in its western hemisphere strategy and still playing some role in the war in Ukraine." So I worry about how this is going over in Beijing. And you know what's really, really kind of eerie? They've said so little. By comparison with the wolf warrior diplomacy we got accustomed to, they have been very quiet indeed. All of the flights that they have been doing in recent months in the vicinity of Taiwan have stopped. Now there are a bunch of explanations for this, none of them wholly compelling. Are they just making nice because there's a summit coming up at the end of this month between Xi and Trump? Maybe. Or is something else going on here? And I think it's the unintended consequences of military action that you need to worry about. The consequences of a war between the United States and Iran were entirely predictable. Iran was gonna lose. I think we underestimated the impact on the energy markets. The insurance plan, I thought, John, was cobbled together, and wasn't convincing. I think we underestimated the Shaheds, which we did not have defenses against, nor did the Gulf states. So the unintended consequences in Asia are the thing that I'm thinking a lot about. Xi Jinping's very quiet. What's he thinking? Nobody knows.

- I add to that, you said the word "preemptive," and that's right. You know, people talk about "Why now?" I think it was very clear that Iran was arming itself quickly and it was making ballistic missiles, ballistic missiles faster than we could make interceptors, and it was kind of now or never. And you're right, that points to a now or never moment for China. On the other hand, two thoughts on this. What about, where are the Europeans? This sort of seems to signal the end of NATO that they are busily getting together to have a meeting to talk about a joint declaration maybe a couple of weeks from now. But we certainly have cleaved a big one between us and NATO here. And a final thought, I've gotta... You know, in the last decades, so many institutions of American government have shown themselves completely incompetent, but the amazing job our military has done, just worth calling out, and they're Israelis on top of it. H.R., I don't know how your buddies stay so amazingly good at what they do, but hats off to them.

- Well, you know, it's cultural. You know, in our organization, you know, in our military to just be at a high level of readiness. And, we train really hard, you know? And realistically, in our training centers and so forth. And, in this case, you know, we've had, you know, decades of preparation in terms of planning against this particular enemy. You know, I'll just say for Niall's point about, like, capacity, we are rushing to triple the annual manufacturing capacity of some of the key weapon systems. So the big ones here are, you know, the patriot missiles, which are, like, the PAC-3 or the interceptors from those, the THAAD systems. You know, the SM-3's, SM-6's... You know, so that we're racing to do it, but back-at-the-envelope math here, and this might not be accurate, but we might have fired about one-fifth of our interceptor stockpile in three days, you know? And so, that gives you an idea of how much you have to build up now for stockpiles to recover from. But I think China would make a mistake if they would think to act now 'cause we still have, you know, a pretty significant amount, especially with this, about 90% reduction in the launch rate, which is probably gonna fall off the cliff even further here in the next couple of days. Yeah, so I think that, you know, it does highlight though, the lack of depth in our industrial base. The degree to which we... Yeah, we need to make our supply chains more resilient, you know, stockpile some of the components and precursors for some of these weapon systems. And all of that is underway, under the Trump administration right now. You know, it's just, "Hey, will it be too late?" We don't know. So we gotta keep rushing to build up this capacity. But also I think, overall, the capacity of our armed force is too small. You know, we assumed for way too long that we could just do like one thing at a time. And what you're seeing now is how interconnected these theaters are, okay? You know, Venezuela was... You know, it was China and Russia's main platform, and Iran's actually too, in the western hemisphere. Now we're seeing, you know, this is of import, as Niall has mentioned, to China, 'cause, you know, China doesn't want us to have the keys to its gas station. And I think, from a geopolitical perspective, these two actions have been very beneficial. I hope we can capitalize on that diplomatically. I would like to see a lot less of, you know, the chest beating, you know, in briefings and a lot more of just a clear-headed articulation about why this was necessary. Hey, well, ex post facto, you know, they just fired 2 million drones and 600 ballistic missiles at 10 different countries. So was that a threat? Hell, yeah, I guess it was. So, maybe it was smart to do something about this, but then also now, what you've seen is, because of the attacks on the Gulf States, the US is seen as, really, the only reliable partner for security in the region. You know, China, one of its big entrees in the Middle East was, "Hey, I've got influence over the Iranians, you need me." You know, in the Middle East. That's gone now, or potentially gone. So I just think that, you know, what has happened is, under the Biden administration, the axis of aggressors coalesced. They were the protagonists, they were setting the terms. Go back to April '23, when Xi Jinping turns to Putin, he goes, "Ah, Vladimir, we're seeing changes like we haven't seen in a hundred years, and you and I, we're driving those changes." And Putin smiles, he goes, "Oh, yeah, yeah, you're right, you're right." Hey man, they're not in the driver's seat anymore, you know? And I think, you know, what Trump deserves probably the most credit for is regaining the initiative over this axis of aggressors who thought, they were conditioned to think, that they could act against us with impunity. That we were weak, decadent, divided, feckless, you know? So, there's this huge opportunity here. I would like us to be, you know, a little more diplomatic, you know, and understand our audiences. And on Europe, hey, Europe better get a wake up here 'cause you know what, those Iranian missiles, they could reach Europe. What is the state of European missile defense? Not as good as it needs to be, right? The drone threat Niall mentioned. You know, this is... This goes back, there's continuity here. This is the V-1, V-2 threat to London, in many ways, but now it's coming home to everybody. And so we have to be ready for this kind of emerging and new threat, you know, to all of our security.

- A couple of points that I just wanna make, which are important. I don't think John's right about NATO because actually, Friedrich Merz, who's the chancellor of Germany, and therefore, in many ways the most important NATO leader, has made it clear that he's supportive of what the US and Israel have done. The leader who's most out of line is the British Prime Minister Keir Starmer who has had a disastrous week in diplomatic terms because he's playing to a domestic audience that is largely opposed to the war, but this is gonna really hurt relations between the US and the UK. The second point that's important is the law of unintended consequences. Once again, one of the main beneficiaries of the events of the past six days is Russia. First of all, because we don't have a ton of spare crude oil to take the place of that which is no longer flowing through the Strait of Hormuz, we've had to ease sanctions on the Russians, make it possible for the Indians to buy Russian oil. Russia's already reaping a benefit in the higher oil prices, it's a dual benefit in the sanctions being eased. Secondly, Ukraine is a loser because Ukraine's access to air defense systems was already compromised. They need them desperately because they're attacked nightly by Russian missiles and drones. Ukraine can say goodbye to any sophisticated air defenses like the Patriots 'cause those are going to the Gulf if they're going anywhere. So, although I agree with you, H.R., the axis of authoritarians has had a terrible 12 months and President Trump has changed the game, he sees the initiative, he's undone much of the damage of the previous administration, but there are ways in which the big players in that axis, Russia and above all China, are not necessarily beaten here. Venezuela, beaten. Certainly, Iran, beaten. Russia, not so much. China, watch very carefully what comes in the next weeks. I think it'll be a relatively harmonious summit because I think the Chinese are still biding their time, and they have absolutely no military leadership at this point. So I think we can probably rule out a Taiwan crisis this year. Next year, I'm not so sure.

- And then, Taiwan election, again, being a huge turning point for that decision.

- Maybe, 2028's the year.

- Running outta time here, guys, let me ask you one quick exit question before we go. We're doing another "GoodFellows" in five days. So, tell me one thing you're looking for between now and the next five days, H.R.?

- Well, I'm looking at some sort of a diplomatic outreach from some element within the Iranian government. Or reach out to one of our intelligence agencies, you know, to, sort of, negotiate some kind of an end to this, because... I'll tell you, I mean, the strikes are gonna go up by orders of magnitude, you know, until they just run out of targets, you know? And they're gonna be relentlessly hunting down the IRGC.

- Mm-hmm, John.

- Yeah, some sense of what the end game is. I was cynical about, we're going in and we don't care what the end game was, which I think, we went in not caring, but it matters tremendously. So does this turn into, you know, Kurdistan gets established in the north, ethnic dismemberment of the country, a civil war, some horrible part of the IRGC manages to stay in place, I think we'll learn a lot more about that in the next five days. I hope it's good.

- [Bill] Niall.

- I'm counting tankers. I'm just counting tankers in the Strait of Hormuz. There's a reason for them to start risking sailing again, and that is the depletion of the regime's destructive capability and the gradual emergence of some kind of solution to the insurer's problem. If that volume starts to really pick up and it turns out that you can get through the strait safely, then I think this is all gonna turn out pretty well. If not, then we go back to John's nightmare of flares and kipper ties returning.

- Alright, gentlemen, great conversation. We'll leave it there. As I mentioned, we're doing another "GoodFellows." I will record it on March the 11th and our guest will be the Hoover Institution's Director, former Secretary of State, Condoleezza Rice, so you don't wanna miss that. On behalf of the "GoodFellows," so Niall Ferguson, John Cochrane, Lieutenant General H.R. McMaster, hope you enjoyed the show. Till next time, take care. Thanks again for watching.

- [Announcer] If you enjoyed this show and are interested in watching more content featuring H.R. McMaster, watch "Battlegrounds," also available at hoover.org.