In the second and final part of an exclusive interview with TIMES of Bangladesh, Dr Syed Mahmud Ali, a distinguished research fellow at the Global Governance Institution, Beijing, candidly expressed his thoughts and analysed the evolving geopolitical landscape of the Middle East and its global repercussions.
He explains how the United States maintains its regional military presence primarily to protect Israel and secure energy routes, despite a growing shift toward domestic energy production. The discussion highlights the decline of the petrodollar system and the rising influence of the Chinese yuan as trust in Western financial institutions wavers.
Dr Ali further examines how Iran utilises asymmetric warfare to disrupt global supply chains and inflate oil prices, creating significant economic pressure on a global scale. Finally, he addresses the domestic challenges facing Bangladesh, urging a shift from elite-centred governance toward national resilience and public welfare.
The interview was taken by Shiamak Ali, a writer on geopolitics and international affairs.
Could the US be looking to shift their bases from the Middle East to South Asia?
Well, I think only one country has asked so far. Let me give you a bit of background. In the early 2000s, the United States had almost 800 bases, facilities, and military footprints outside its own territory. That number has since been reduced, with many facilities consolidated into full-fledged bases. A few have been added—eight in the Philippines, and perhaps one or two in Japan—but overall, the trend has been reduction and consolidation.
At the same time, they have rebuilt bases in the Pacific—along the second and third island chains—which were originally used during the Second World War. These have been refurbished and reactivated. So, the Americans still maintain well over 750 foreign bases and can also project power from within the continental United States, including toward Iran, without necessarily building new bases.
The Gulf countries have historically supported this system. Earlier, the United States depended heavily on external oil, but with the rise of shale oil and hydraulic fracturing, it became one of the world’s largest producers. This reduced dependence on the Gulf, with supplies increasingly coming from within the US and from Canada.
Previously, the Gulf was strategically vital—both to secure hydrocarbons for the West and to defend against the Soviet Union. Since 1956, it also became important for protecting Israel. Today, while the Soviet threat is gone and Russia is unlikely to invade the Gulf, protection of Israel remains a fundamental reason for continued US presence.
The Gulf states themselves are monarchies. Despite promoting democracy globally, the United States does not emphasize it in the Gulf. The six GCC countries are absolute monarchies with limited political rights, yet they host American bases because they depend heavily on US security guarantees.
If those guarantees appear unreliable, these countries may reconsider hosting US forces. But will America depart? I’m not so sure. I think they would like to retain some bases. Qatar is the only country which has asked for the departure of some American personnel. But not the entire Gulf.
Another point is that these states are, in many ways, dynastic systems where ruling families control territory and resources and the benefits flow to those particular families. These are dynastic systems. They are not democratic, they are not representative, and in that sense they are quite artificial.
As such, it is not seen as a great loss to anyone in political terms. What matters, however, is their importance to global supply chains and energy. And now we know it is not just oil and gas, but also fertilisers and a range of other products that depend on these flows.
Therefore, very large chunks of the global economy depend on the smooth running of traffic through the Strait of Hormuz. So for the Americans — and indeed the rest of the world — now we know just how critical that is.
Trump recently told allies like the UK, Japan and South Korea to secure their own oil through the Strait of Hormuz. At the same time, Iran says the Strait isn’t closed—but access may come with conditions, including reports of settlement in Chinese yuan. Does this suggest a weakening of the US’ ability to control global commerce? And how does this fit into the broader systemic transition?
One important starting point is the early 1970s. In 1971, due to the strain of the Vietnam War, the United States could no longer maintain the dollar’s link to gold. So Richard Nixon took the unexpected step of ending that linkage, allowing the dollar’s value to be managed more flexibly.
In 1974, the US reached a crucial agreement with Saudi Arabia. In exchange for security guarantees, Saudi Arabia agreed to trade oil globally in US dollars and reinvest surplus revenues back into the American financial system. This created global demand for dollars, strengthening the US economy and establishing what became known as the petrodollar system.
This system formed a self-reinforcing cycle: countries needed dollars to buy oil, Gulf states accumulated dollars and reinvested them in the US, and American financial dominance expanded. It ensured the dollar’s central role even without gold backing and gave the US significant control over global finance. It reinforced two things. It reinforced the dollar’s position in the absence of a gold linkage, and it also gave America control over the global financial system. Everybody needed dollars.
The American economy prospered despite often running large deficits — to the extent that the deficit has now reached around 30 trillion dollars. It is massive. In fact, it is roughly comparable to GDP — about 100% of GDP in debt. It remains manageable because the dollar is still the world’s reserve currency.
However, this arrangement effectively ended in 2024 when it was not renewed. Following that, China began conducting energy transactions with Saudi Arabia and Iran in yuan. Other countries have started exploring similar arrangements, reducing exclusive reliance on the dollar.
That said, the dollar still dominates—accounting for roughly 75–80% of global transactions. The yuan remains much smaller, around 8%, though it has grown significantly from near zero.
The shift is currently more psychological than practical. Governments and major financial actors are beginning to question the reliability of the dollar, particularly due to inconsistent US policies and the use of financial sanctions—such as the freezing of Russian reserves by the US and Europe and they are considering it to giving it to Ukraine.
This has eroded trust in the broader Western financial system, including institutions like the World Bank and the International Monetary Fund. As confidence declines, countries are gradually exploring alternatives.
So, while the dollar remains dominant, the foundations of that dominance are beginning to shift. The move away from it is still in early stages—more a change in mindset than in full practice—but once perceptions change, policy tends to follow.
Iran doesn’t have the military depth to go head-to-head with the United States, but it has managed to hit where it matters—energy flows, shipping routes, markets. By squeezing the Strait of Hormuz, it has created economic disruption that even a superpower struggles to control. Some analysts call this a redefinition of asymmetric warfare—imposing systemic cost rather than winning militarily. Do you see this as a turning point in how power is exercised?
We’ve heard the phrase asymmetric warfare for many years, but more recently the concept of “grey operations” has become important. This combines conventional conflict with less visible tools—cyber operations, economic coercion, sanctions, and indirect pressure. Both sides are engaging in strategic coercion.
From the American and Israeli perspective, actions are more direct—targeting leadership, infrastructure, and state capacity. Iran, with more limited military reach, is responding differently. As you noted, it is using economic leverage effectively. Oil prices have surged past $100 per barrel, affecting fuel costs across the United States, Europe, and globally.
For countries without domestic energy production, the situation is severe. Even if the Strait were reopened quickly and infrastructure repaired within months, recovery to pre-crisis levels would take much longer. Supplies are already depleted, prices have risen, subsidies increased, and government revenues are under strain.
The global economic impact is significant. Growth has slowed, and there is rising concern about recession, even depression. Much depends on how long Iran can maintain pressure on this chokepoint. If disruption continues, risks escalate further.
There is also the possibility of escalation. With Nato countries reluctant to join direct military action, Israel and the United States may consider more forceful steps—potentially including operations targeting key points like Kharg Island or nearby territories. The United States has already concentrated forces in the region. Any land operation would likely be costly, with significant casualties. I am sure Iran would try to resist such a move. They have said, “we are ready to burn you,” and I think the counter-response from the United States would be very severe.
At present, the outlook remains negative unless negotiations produce a compromise. I do not see that happening yet. But if crude oil prices were to reach, say, $130 a barrel, which they might, then the pressure on the United States to reopen Hormuz would rise significantly. And I think Donald Trump may rethink his strategy at that point, depending on where Iran stands at the time. So it remains very fluid, and it is not looking good for anyone at all.
Do you think the present government has gone soft on India?
I’m not sure, because I don’t know the details, so I cannot pass judgment. However, Bangladesh’s primary concern remains how it manages its relationship with India. In doing so, it must also indirectly engage with India’s key partners—the United States and Israel—which, although secondary, are highly significant actors.
So Bangladesh must not only manage its relations with India, but also with the United States, Israel, and other global players. This requires a very careful, deliberate, and sophisticated diplomatic approach.
How can Bangladesh, as an import-dependent country, hedge against such volatility?
Because Bangladesh produces very little oil and limited gas, it remains heavily dependent on imports. This exposes its vulnerability and forces a reassessment of national priorities—ultimately tied to economic and societal survival. Bangladesh is still a poor country, despite perceptions among elites.
There is a disconnect between elite perspectives and the lived reality of the majority. Those with access to global opportunities often fail to grasp the conditions faced by most of the country’s 170 million people.
If the state is to function meaningfully, it must focus on improving the well-being of the majority, not just the elite. That requires a shift in governance priorities—toward public service, economic resilience, and basic needs.
Historically, governments have operated within an elite-driven framework, where policymakers also benefit from their own policies. This has limited broader societal progress.
Now, with a democratically elected government, there is an opportunity to reorient priorities toward the people—improving livelihoods, providing essential services, and building domestic capacity in education, healthcare, and economic opportunity. For them, we need indigenous home-based services of high quality, of reasonably high quality, that gives them human life. So, if that is the government’s purpose, then your policy priorities will change significantly.
However, at this point, I do not yet see clear signs of such a shift taking place.
