Empires rarely collapse in a single afternoon. Edward Gibbon needed six volumes to chronicle Rome’s decline. Britain’s imperial retreat took decades of incremental humiliation before one crisis — Suez, 1956 — crystallized what everyone already suspected: the old power could no longer act independently on the world stage. The question now reverberating from Gulf trading floors to Asian foreign ministries is whether the US-Israeli war on Iran represents a comparable inflection point — not the death of American power, but the moment its decline became impossible to deny.
Kashif Hasan Khan, writing in Asia Times, makes the case carefully. The February 2026 strikes have not merely destabilized a region — they have exposed the hollowness of the security guarantees that underwrote American hegemony for seven decades. Gulf states that traded oil in dollars and hosted American bases in exchange for protection discovered, in the space of 96 hours, that the deal no longer works. Iran struck all six GCC capitals, and Washington could not stop it. If that bargain is broken, the entire architecture built on top of it — petrodollar recycling, US military pre-eminence, dollar reserve status — begins to wobble.
The Suez Parallel
The comparison to 1956 is not hyperbole. When Britain and France seized the Suez Canal after Egypt’s Gamal Abdel Nasser nationalized it, the operation succeeded militarily. It failed politically because the United States — then the rising power — forced its allies to withdraw. The humiliation revealed that Britain could no longer project force independently. Within a decade, the empire was gone.
The Iran war inverts the dynamic. This time, it is the hegemon itself that launched a war of choice — without UN authorization, without congressional approval, and without a coalition beyond Israel. The military operation has been devastating: over 5,000 targets struck, Iran’s navy functionally destroyed, its air defenses degraded. But the political and economic fallout has been equally devastating — to the United States. The Strait of Hormuz is shut. Oil has breached $100. Gulf allies are absorbing Iranian missiles they were promised would never come. And the rest of the world is watching the “rules-based order” be dismantled by the country that built it.
At Suez, the lesson was that military victory without political legitimacy is no victory at all. Iran is teaching the same lesson — with the additional twist that the economic weapon is in the hands of the weaker party.
The Petrodollar Cracks
For more than fifty years, the US-Gulf bargain has rested on a simple exchange: Washington provides security; Gulf monarchies price oil in dollars, recycle petrodollar surpluses into US Treasury bonds, and keep energy markets stable. That arrangement made the dollar indispensable and gave the United States what French finance minister Valéry Giscard d’Estaing called an “exorbitant privilege” — the ability to run enormous deficits because the world needed dollars to buy oil.
The war has stressed every link in that chain. Gulf states were not consulted before Operation Epic Fury, were not warned of the timing, and discovered they were targets within hours. Saudi Arabia’s Ras Tanura refinery was hit. Qatar’s LNG exports — 20% of the global market — were shut down. The UAE intercepted over 1,700 Iranian missiles and drones in ten days. A Gulf official told reporters they were “angry that the US military has not defended them enough.”
The Atlantic Council warned before the war that Gulf states were already “hedging their bets” by diversifying partnerships toward China and India. Beijing brokered the Saudi-Iran rapprochement in 2023. Chinese trade with GCC states exceeded $300 billion in 2024. Saudi Arabia has accepted yuan-denominated payments for some oil shipments. The war has accelerated every one of these trends. The real question, as Khan frames it, is not whether Gulf states will abandon the US overnight — they won’t — but whether they will continue to anchor their entire security and economic model on a partner that just made them collateral damage in someone else’s war.
The Credibility Deficit
Khan’s most incisive point concerns what diplomats call “credibility” — the belief that commitments will be honored. The US struck Iran while negotiations were actively underway in Oman. Oman’s foreign minister flew to Washington afterward to tell the White House that Iran had been offering “unprecedented concessions.” The message to every country currently negotiating with the United States was unmistakable: talks can be a prelude to bombs.
This compounds an already severe credibility problem. Trump withdrew from the JCPOA in 2018. He withdrew from the Paris climate agreement — twice. He threatened to annex Greenland from a NATO ally. He abducted Venezuela’s president during what Caracas believed was a diplomatic engagement. Each act individually might be absorbed. Cumulatively, they represent what the Lowy Institute called “the systematic destruction of the institutional trust that underpins American alliance networks.”
For decades, the US anchored an international system that, however imperfect, produced predictability. Countries could plan around American behavior because it was broadly rule-bound. That predictability was itself a form of power — arguably more valuable than any aircraft carrier. When it disappears, so does the willingness of other states to subordinate their interests to American leadership.
The Multipolar Acceleration
The war has given every emerging power a case study in why diversification matters. China’s Foreign Ministry spokesperson called the strikes “a textbook example of how unilateralism destabilizes the global order.” BRICS — now expanded to include Saudi Arabia, the UAE, Egypt, and Ethiopia — issued a joint statement calling for an immediate ceasefire and respect for sovereign equality. India, which imports roughly 85% of its crude oil, has been quietly increasing purchases from Russia while maintaining diplomatic neutrality.
The dollar’s share of global foreign exchange reserves has already fallen from over 70% in the early 2000s to roughly 57%. The IMF reported in 2025 that the decline was accelerating, driven partly by central banks diversifying into gold, the yuan, and other currencies. The war adds momentum. Every sanctions waiver Trump grants to stabilize oil prices — including lifting restrictions on Russian crude — undermines the credibility of the sanctions regime itself. Countries learn that American financial weapons are deployed and withdrawn based on political convenience, not principle.
Still, Khan is careful not to overstate the case. The United States remains the world’s most powerful military actor and occupies a central position in global finance and technology. No alternative reserve currency is ready to replace the dollar. China’s capital controls, Europe’s fragmentation, and the yuan’s limited convertibility all constrain the speed of any transition. Hegemonic systems, as Gibbon documented, erode gradually.
But the pace of erosion matters. Before February 28, the decline of American primacy was a slow-moving trend visible mainly to academics and central bankers. After February 28, it became visible to everyone — to the tanker captains anchored off Oman, to the Gulf finance ministers recalculating risk, to the Asian manufacturers rerouting supply chains, and to the billions of people in the Global South watching the architect of the rules-based order tear up its own blueprints in real time.
Whether 2026 becomes America’s Suez remains uncertain. But the conditions are aligning: a military operation that succeeds tactically and fails strategically, allies who feel betrayed, adversaries who feel vindicated, and a global audience that is quietly building alternatives. The empire isn’t falling. It is being hollowed out — and the war in Iran may be the moment the world noticed.
By ThinkTanksMonitor
