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In business there is a fundamental concept called the ‘sunk cost fallacy.’ The idea is simple: when you assess what to do in the future, make sure not to be blinded by the costs of the past. Those costs have been sunk already, and they can’t figure into your calculus. Otherwise, you’d just be wasting good money in pursuit of what is already lost.

In war, there is an echo of the same concept. We say, “If we don’t do X, then all those men would have died for nothing.” If we held true to the mathematical reality of the sunk cost fallacy it would be smarter to say, “Let’s ignore all those boys who died already, and focus on what we can achieve from this point forward.”

That was the thought that occurred to me when I heard the Israeli government had withdrawn a large number of troops from Gaza. Israel was up against a wall and was forced to withdraw by threats from the United States. The result was a complete recasting of the war effort to date. Instead of the war being about replacing Hamas, recovering the hostages, and finding a better way forward, the war has become one enormous retaliatory strike.

From Hamas’ perspective all those people – Hamas fighters and Gazan civilians – died to show that the Hamas terror-state can survive Israel (unlike the Islamic State in Iraq and Syria). It was a worthy investment as you may see from the victory dance they will do if things stay as they are.

But from the Israeli perspective? From the Israeli perspective, those roughly 30,000 people died for nothing. We killed tens of thousands and we achieved nothing. After all, the ineffectiveness of retaliatory strikes was already demonstrated by Oct 7^th.

If things remain as they are, then Hamas will have achieved a complete victory. They still hold well over a hundred hostages with no incentive to hand them over. Their enemy, Israel, is under threat of arms embargoes that encourage those seeking the worst genocide since the Holocaust – as a natural followup to the largest geographic ethnic cleansing in history (99.8% of Jews were cleansed from the vast Arab world). Hamas’ use of the press, especially through their Qatari sponsors and allies, was masterful. Just as one example, 260 aid workers were killed in other conflicts around the world in 2023. Not one warranted front-page news and condemnations by the White House.

For Hamas and its Iranian sponsors, it is clear. October 7th was an historical achievement and a remarkable victory. There is a reason 70% of Palestinians see it as a good move – and did so prior to the latest news. Hamas and Hezbollah will rebuild, retrench, and repeat. Every repetition of this formula by Hezbollah and Hamas, including the small wars in 2006, 2014, 2021 and the constant hostilities in between, has yielded concrete gains. Israel has been further restrained, Hamas and Hezbollah have seen their reputations enhanced, their holds in the territories they can control have been redoubled, and their military capabilities have grown. For people motivated by a mission greater than life itself, they are winners. What is their next step? At this point, they can do anything they want except give back the hostages for free.

By contrast, for the American allies in Saudi Arabia and Egypt, the present outcome of the war is a catastrophe, and it is very unclear what they should do next.

The Muslim Brotherhood, of which Hamas is a part, represents a massive danger to the Egyptian government – which came to power due to a counter-democratic coup against that same Muslim Brotherhood. The Egyptian government can’t say it explicitly, but Hamas’ reputational gain threatens the stability of the Egyptian government (as well as the peace with Israel). It obviously threatens Christian populations in Egypt as well (a minority of somewhere around 6 million people). The shipping constraints through the Bab-al-Mandeb strait – carried without any serious consequences for the Iran-backed Houthis – has hit the bankrupt Egyptian government in the pocketbook and will not be easily recovered from.

For Saudi Arabia, abandoned in near-historical fashion after the massive Iranian attacks on its oil facilities, Iran is the enemy, and the ayatollahs have been emboldened. The most oil-rich areas of Saudi Arabia are in the Eastern Province, where 30% of the population is Shia and has strong sympathies for the Iranian regime. These dynamics are why Saudi troops rolled into Bahrain to support the Sunni government there. From the Saudi perspective, an Iranian sponsored Shia rebellion could not be allowed to spread. This outcome is extremely negative for them. The Saudis lost in a war against the Houthis and now their enemy will strengthen their position on both their southern and northern borders. Everybody loves a winner.

For the United States the war has also been a loss. It isn’t catastrophic, though. The reputational losses incurred by the abandonment of an ally have already been incurred elsewhere. American inactions in Kurdistan (after the 1991 Iraq war), Saudi Arabia, Iraq, Afghanistan, and even Ukraine (which wasn’t technically an ally) have all shown how unreliable the United States is – under administrations from both parties. The administration had to know the costs of a war in Gaza on the population of Gaza; the only surprise in this invasion was the relatively low number of Israelis killed. Nonetheless, when those costs were seen (or perhaps when too few Israelis were killed to satisfy their calculus of shared suffering), they withdrew support. This is despite the fact that Israel is a resolute ally with a pro-American population, caught in a conflict that requires no American boots on the ground. This fecklessness, combined with the inability of the United States to even build new Coast Guard cutters to support their outreach in the Pacific, fundamentally undermines their credibility as an ally.

On the domestic front, the US has become no stranger to ‘peaceful riots’, as shown with the George Floyd protests. The continuation of calls for violent upheaval by the radical left and their new allies, the far-right Islamists, are just that – a continuation. Both of these movements have been accompanied by a dramatic rise in anti-Jewish incidents. ADL figures show a 360% rise in anti-Jewish attacks after 10/7. This, in turn, followed a five-fold increase from 2013-2022. Even if you disagree with their measurement criteria, the scale of the change is clear. As is normal in a society experiencing an upswing in anti-semitism, the US is in massive cultural decline. This is best manifested by a drug death rate that is now more than twice as high as any other country on earth. Support for Israel wouldn’t have limited these riots or these problems. However, the prevarication reinforces the sense that the United States is a country entirely adrift.

The natural response from potential international allies is to get what short-term benefits they can from the US – but to in no way hitch themselves to the US unless the other options are erasure. Australia signed an alliance with the US but now sees the fruits of that alliance, top-tier submarines, delayed by 2-3 years. Predictably, they have left their most strategic port in Chinese hands. The Philippines whipsaw back and forth between US and Chinese support. The UAE maintains strong ties with Russia. India has cut Russian arms imports in the wake of the Ukrainian failures, but Russia remains the largest supplier. Relationships with the United States are thus becoming relationships of convenience – not relationships of principle and not relationships that can be relied on.

Israel may soon be exploring an alliance with Saudi Arabia. Not under the aegis of the United States, but contrary to it.

Although it may not feel like it, the post-Cold War period has been one of the greatest periods of peace history has ever known. From 1946 to 1991 (the Cold War), war deaths averaged 349,000 a year. From 1991-2020 (Pax America), that dipped to 96,000. Roughly 1 in 70,000 was killed in interstate war. Since 2021, the average has risen to 250,000 – a dramatic rise. Given the aspirations of China, Iran, and Russia, and the failure of the free world to do more than deliver stirring speeches, things are only likely to get worse.

This little war has seen total deaths that are roughly 1/10^th of the average since 2021. Nonetheless, it will recast the entire region and the global order. The disappearance of the Pax Americana will be accelerated. The Egyptian government may fall, the Saudis will be fundamentally threatened, and the Iranian march across the Arab world will continue. Unless something dramatic changes, the anti-free alliance of Chinese, Russian and Iranian forces, emboldened by the fecklessness of the West in the face of Hamas, will extend their incredible advances of the past year.

While Israel might yet go into Rafah and finish their work against Hamas, the US has put the final nail in the coffin of their own credibility. Even a 180-degree turn by the United States would not change that reality.

Given all of this, what hope is there for improvement in the future?

For that you’ll have to read Part II.

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