“One hand, one million dollars, no tears,” was how Salomon Brothers CEO John Gutfreund challenged a trader, as recounted by Michael Lewis in the book Liar’s Poker. The game itself, in which players make bets based on the serial numbers printed on dollar bills, is centered on rewarding those capable of analyzing risk under uncertainty while projecting confidence, absorbing pressure, and intimidating opponents through sheer force of will. In many ways, the Iran war has resembled a geopolitical version of liar’s poker.
For one hundred days, nations, markets, intelligence agencies, and military planners have attempted to determine not only capabilities, but intentions. Every missile strike, diplomatic statement, military deployment, and oil price movement has contained both signal and theater. The central question has not simply been who possesses power, but who is willing to absorb pain, tolerate risk, and continue escalating when conventional logic suggests restraint. The problem with wars, much like games of liar’s poker, is that misreading your opponent can become catastrophically expensive.
Witness what happened this week: Iran downed a US Apache helicopter near the Strait of Hormuz, leading to exchanges of strikes from both primary combatants. Then on Thursday, US President Donald Trump backed off his threats to escalate further and announced that a deal had been “approved” by the US, Iran, Israel, Gulf countries, and others—though details are scarce so far. This conflict is not defined by a single table with only two players. There are multiple actors, both state and non-state, each possessing different objectives, incentives, and tolerances for risk. Israel, the Gulf Arab states, the United States, financial markets, energy markets, and foreign exchange markets are all simultaneously participants and observers. Their interests overlap at times, but they are not identical.
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The United States and Israel are already diverging on both strategy and timing. Gulf Arab states also have differences regarding escalation, diplomacy, regional stability, and economic exposure.
Yet perhaps the most consequential actors in this conflict are not governments at all, but global financial and energy markets. Markets are far more difficult to bluff because they aggregate collective judgment in real time. When conviction and consensus form around a particular outcome, the response can be both instantaneous and global.
Negotiations between the United States and Iran have therefore been shaped not merely by military calculations, but by the market consequences of prolonged uncertainty, something the markets generally dislike. Therefore, discussions surrounding the Strait of Hormuz, Iran’s nuclear ambitions, sanctions relief, and access to frozen capital are ultimately attempts to manage geopolitical and financial risk simultaneously.
Former US Secretary of State Condoleezza Rice recently wrote in The Wall Street Journal: “Strategic patience is hard, and it isn’t always satisfying. But time is on the side of the U.S. and its allies. Reaching no deal is fine. Reaching a bad deal isn’t.”
I believe the opposite may be true.
Time may not favor the United States because Iran has repeatedly demonstrated an extraordinary ability to absorb pain, endure isolation, and tolerate economic hardship in pursuit of strategic objectives. Simultaneously, markets possess an extraordinary ability to discount low-probability catastrophic outcomes until the moment they suddenly become unavoidable realities.
The United States should seek the best imperfect deal achievable because the pursuit of an idealized outcome may ultimately increase the probability of a catastrophic one. What has transpired thus far is already a sunk cost. The challenge for both parties is determining when the costs of continued confrontation exceed the benefits of compromise. If Iran persists in pursuing a maximalist position, the United States will have little choice but to raise the economic, diplomatic, and military costs of continued defiance. That’s what Trump did this week, after accusing Tehran of “playing us for suckers” in negotiations. Then he backed off—at least for now.
At the same time, the United States must continue to play the long game. Its central strategic objective should remain ensuring that Iran never possesses a nuclear weapon. Achieving that objective will require a combination of deterrence, economic pressure, diplomacy, intelligence capabilities, regional alignment, and strategic patience.
This necessarily includes preserving the option of future kinetic engagement, but only when such action improves the long-term strategic position of the United States and its allies, rather than serving as a visceral response to provocation or a symbolic demonstration of strength.
As Michael Lewis observed in Liar’s Poker, “Knowing about markets is knowing about other people’s weaknesses.” But in moments of geopolitical crisis, wisdom also requires understanding your own.
Khalid Azim is the director of the MENA Futures Lab at the Atlantic Council’s Rafik Hariri Center for the Middle East. He has led nonprofit efforts advancing financial and professional engagement across the MENA region, worked as a global capital markets banker at Morgan Stanley in New York and Hong Kong, and began his career as a US Navy officer during the First Gulf War.
Further reading
Thu, Jun 11, 2026
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Expect the war to weaken the Iranian regime, keep the US in the Middle East, harm Israel's standing in the region, and more.
Thu, Apr 23, 2026
When negotiating with Iran, factor in the regime’s ‘marginal propensity for pain’
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Gradual pressure will not work on Iran, so the United States should either deliver a decisive escalation or cut a diplomatic deal.
Image: U.S. President Donald Trump speaks to the media as he departs Joint Base Andrews for the United States Coast Guard Academy in Connecticut, in Maryland, U.S., May 20, 2026. REUTERS/Evelyn Hockstein