US Treasury secretary says short-term pain worth long-term security
US Secretary of the Treasury: Short-Term Sacrifices for Long-Term Protection
Scott Bessent, the U.S. Treasury Secretary, told the BBC that a limited economic downturn was justified to address the looming danger of Iranian nuclear threats targeting major Western cities. While the International Monetary Fund (IMF) highlighted the potential for the U.S.-Israel conflict with Iran to push the global economy into a recession, Bessent argued that the security gains from preventing such strikes would be more valuable in the long run.
Security Concerns Outweigh Economic Costs
Bessent expressed that the risk of nuclear attacks on global capitals like London could have severe consequences for worldwide GDP. “I’m less focused on immediate economic projections than on the enduring threat Iran poses to international security,” he said. He pointed to Iran’s recent missile activities, including attacks on the U.S. base at Diego Garcia, as evidence of their capability to strike distant targets.
“I wonder what the economic toll would be if a nuclear weapon struck London,” Bessent remarked. “The priority is ensuring long-term stability over temporary setbacks.”
Iran’s Peaceful Nuclear Ambitions
Iran has consistently asserted that its nuclear program is purely for peaceful purposes. The UK government, however, stated there was “no assessment” indicating Iran aimed to target Europe with missiles. Despite this, Bessent emphasized that the risk of nuclear strikes on Western nations justified the economic measures taken.
IMF Warns of Global Economic Impact
In its World Economic Outlook, the IMF outlined a worst-case scenario where surging oil, gas, and food prices persist for two consecutive years, potentially driving global growth below 2% in 2026. This would mark a near miss for a global recession, a phenomenon that has occurred just four times since 1980, most recently during the pandemic.
The war in the Middle East, which began in late February 2026, has already caused energy prices to rise sharply. The IMF warned that prolonged conflict could lead to inflation peaking at 6% next year, forcing central banks to raise interest rates to curb rising costs. Chief economist Pierre-Olivier Gourinchas noted that such a scenario could also elevate unemployment and exacerbate food shortages in certain regions.
Lessening Impact Through Diversification
Gourinchas acknowledged that even if the conflict ended immediately, the disruption to oil supply would still echo the 1970s oil crisis. However, he noted that the world’s reduced reliance on fossil fuels has lessened the blow for consumers. Oil prices had climbed near $120 during the early stages of the conflict but dropped to $95 by Tuesday.
Regional Economic Projections
The IMF predicted that the UK would face the most severe economic fallout from the energy crisis, revising its growth forecast for 2026 to 0.8% from 1.3%. Yet, the country is expected to recover with growth of 1.3% in 2027. Gulf oil-exporting nations, meanwhile, may experience significant slowdowns or even contractions this year, while Iran’s economy is projected to contract by 6.1% before rebounding by 3.2% in 2027, contingent on the war’s swift resolution.
