US Treasury Secretary: Short-Term Economic Pain Justified for Long-Term Security Against Iran

The US Treasury Secretary Scott Bessent stated in an interview with the BBC that a "small bit of economic pain" is worthwhile to achieve long-term international security. He emphasized that the conflict aims to eliminate the threat of Iranian nuclear strikes on Western capitals.

Bessent expressed less concern about short-term economic forecasts compared to the risks posed by Iran to global security.

Bessent noted that the biggest risk is an unknown one, pointing to Iran's possession of mid-range intercontinental ballistic missiles capable of reaching London. He added that US and Israeli strikes have removed the tail risk of Iranian nuclear strikes against Western countries.

At the start of the war, Iran possessed uranium enriched to 60%, which could be quickly further enriched to weapons-grade levels, though the country does not currently have nuclear weapons.

Iran does not possess nuclear weapons, and a UK government spokesperson stated there is no assessment that Iran is trying to target Europe with missiles. The spokesperson added that the UK has the military capability needed to keep Britain safe from attacks, whether on its soil or from abroad. The UK is prepared to defend the country against any threat.

The BBC has reported that the threat of Iranian ballistic missiles to London remains remote. As previously covered by the BBC, this assessment aligns with official evaluations of the situation. The International Monetary Fund (IMF) warned in its World Economic Outlook report that the US-Israel war with Iran could plunge the global economy into recession.

In a worst-case scenario involving sustained spikes in oil, gas, and food prices, global growth could fall below 2% in 2026. The IMF noted that such a recession has occurred only four times since 1980, most recently during the Covid pandemic. Energy prices have soared since the war began more than six weeks ago, following the effective closure of the key Strait of Hormuz shipping route and the failure of peace talks between the US and Iran.

Oil prices rose close to $120 per barrel during the conflict but have since fallen back, with a barrel of crude costing $95 on Tuesday. The IMF stated that the global economy is threatened by this outbreak of war in the Middle East at the end of February 2026.

The IMF outlined that severe conditions, such as oil prices averaging $110 per barrel this year and reaching $125 in 2027, could lead to inflation as high as 6% next year.

This might prompt central banks to raise interest rates to curb price rises. The IMF's chief economist told the BBC that a prolonged conflict would result in spiraling inflation, higher unemployment, and food insecurity in some countries. Even if the conflict ended immediately, the impact on oil supply could be comparable to the 1970s oil crisis, when Arab oil producers imposed an embargo on the US and other countries supporting Israel during the Yom Kippur war.

However, the IMF noted that the world is now less dependent on oil and fossil fuels, potentially making the consumer impact less severe than in the past. The IMF indicated that the risk of recession would rise only if severe conditions persist over two years. 3%.

2%. Among advanced economies, the IMF forecasts the UK to be the hardest hit by the energy shock from the Iran war. 3%. Food prices have risen in countries such as Iraq during the conflict. The stakes involve balancing immediate economic disruptions with efforts to mitigate long-term security threats.

Next steps could involve ongoing peace talks or further military actions, depending on developments in the region.