THE MATH OF DEFEAT
Hedge fund manager on the inevitability of US defeat in Iran
Hedge fund manager by day, Substacker by night, Anusar Farooqui has a background in military history and holds a PhD in black hole geometry.
Just one week into the start of the Iran war, Farooqui published “Why the US is facing strategic defeat“ on his popular Substack, Policy Tensor. The piece argued what was clear to him at the time: that the United States could not win the war by any definition of success.
As Trump alternates between teasing a deal and resuming strikes, according to Farooqi, the realities of geography and drone warfare have already determined the outcome.
The Oracle spoke with him about how he developed his call, the destruction of American bases in the Gulf, and why Iran now controls the most powerful strategic weapon in the world.
This interview has been edited for length. All answers are his own.
Your "US Strategic Defeat" piece went viral on March 6, one week into the war. What did you see that others didn't?
Courtesy of Policy Tensor
By the end of the first 72 hours, the decapitation path to a US win had closed. If you could take out Iran’s leadership and shatter its ability to coordinate, you’d have a path to victory. But Iran isn’t a power structure like Saddam’s or Assad’s. It’s not one junta. It’s a deeply institutionalized regime with many centers, and they had spent years hardening it against exactly this kind of strike. So that was gone.
That left two ways to win. One was coercion: bomb the enemy into submission, destroy his will to fight. That’s the original fantasy of air power, and it has never worked, not once. Robert Pape documented at length that no coercion campaign has ever succeeded this way. The defense establishment knew the history perfectly well. What they were claiming was that precision strike is now so good, we can see and track everything, that maybe it works this time. That’s protecting a failed hypothesis. In reality, there was no possibility of air coercion yielding capitulation.
So the only serious theory left was interdiction, the official Air Force theory. You destroy the enemy’s ability to field and supply its forces. In this case, that meant destroying Iran’s capacity to make and launch drones and missiles faster than Iran could rebuild it. So I built a model. Very simple, attrition-style. You look at the rates each side needs. How fast can the US destroy these sites? And how fast can the Iranians rebuild them? When I ran the numbers, the rates required for the US to prevail were not plausible. Not even close. I was able to make a high-confidence call very early, and I may have been the only analyst who flipped to “we lose” who hadn’t already believed it going in.
So this wasn’t your prior view going in?
No. Like the rest of the defense community, I believed the United States was certainly powerful enough to defeat Iran. I was wrong. I corrected my thinking because that’s what the math told me.
So why did interdiction fail?
Two reasons. First, people assume cost is the problem. It isn’t. The United States is so bloody rich that cost-exchange ratios can’t defeat us. We can spend two hundred dollars for every cent Iran spends and still win. Money was never the issue.
The issue is physical. Iran’s drones are technically loitering munitions, not reusable drones. The Shahed-136 is a poor man’s cruise missile — an air-breathing weapon, slow, extremely cheap, and extremely effective. They can be made in a basement. And it’s nearly impossible to find from satellite reconnaissance. You cannot identify where these things are being made. You cannot interdict the process by which Iran generates strike capability. If it had been drones alone, you might pour everything into defense and manage it.
But it wasn’t just drones. The missiles were the bigger story. According to JINSA, a reliable Israeli source, Iran fired roughly 2,200 medium- and short-range ballistic missiles. That’s as many as the Pentagon told Congress were in China’s arsenal last year. . And Iran still has 70% of its missiles left. We had catastrophically underestimated Iranian power. Iran is a great missile power, a technological and quantitative leader in precision mass, and we simply hadn’t priced that in.
You’ve said the most telling early signal was the radars. Why?
Because of what they are. They hit more than a dozen radars, including four AN/TPY-2 radars that power the THAAD system, the most exquisite missile-defense system in the world. These are not soft targets. An AN/TPY-2 is one of the most sophisticated objects on earth; the radar engineers who build them are rarer than rocket engineers. And it isn’t defended by itself alone; it’s ringed by Patriot batteries firing dozens of interceptors at anything that comes near it. It is the most well-defended fixed object on the planet.
If Iran can get a hard kill on that radar, what can it not get a hard kill on? Once you see that, the rest of the counter-force picture falls into place.
There were reports of US bases being destroyed across the Gulf. How bad was it?
Iran destroyed all US bases on the Gulf littoral. Kuwait, UAE, Bahrain, Qatar, Oman, even as far away as central Saudi Arabia. The biggest losses were at Prince Sultan Airbase, which is where we lost the E-3 Sentry airborne command post. Once you understand that Iran is a great missile power conducting a deliberate counter-base war against American assets, and then you look at how that played out, it was catastrophic for the United States.
There was also a report about an aircraft carrier leaving the area due to a laundry room fire. Do you buy that?
Absolutely not. And I think the Ford was likely hit and it’s being covered up. Aircraft carriers are specifically designed and tested for fire risk. Fire is the single biggest threat to a ship; there’s an entire regime of regulations and inspections built around it. These vessels are supposed to function in the middle of a war with a great power. A laundry room fire forcing a carrier out of the theater is a six-sigma event. When was the last time a laundry room fire emptied a building in New York City? It does not add up.
The downed-pilot story is the same. There was an enormous amount of talk about a heroically rescued airman, and then he simply vanished. Where is he? Look at the scale of that episode: never fewer than 150 aircraft involved. You don’t surge 150 aircraft to recover one pilot. That was an operation, almost certainly near the buried enriched uranium, which would have been a major prize for the United States. It failed, and we took heavy losses. The down-pilot story was the front; the laundry fire, the down pilot, the Kuwaiti ace supposedly downing three F-15Es in a single sortie: these are all information operations. The details in each one collapse the moment you ask basic questions. And the reporters carrying these stories aren’t asking them.
What about the threats to bomb the infrastructure? Is that what is bringing Iran to the table?
That’s the counter-value theory: destroy the power plants, the water treatment plants, the running water, push them back to the Stone Age, make Iran look like Gaza. It assumed a one-sided war of punishment. It was not one-sided. It was a two-sided war of punishment, and the exposure was, if anything, rigged against the Gulf.
Iran had escalation dominance from day one. You attack Iranian oil facilities, Iran destroys Gulf oil facilities. You attack water desalination plants in Iran, Iran destroys the Gulf desalination systems that supply 70% of the region’s water. The proof came when Israel hit Iran’s South Pars gas field, the largest in Iran, and Iran immediately struck the largest gas field in Qatar, plus fields in Saudi and the UAE. That’s a huge chunk of the world’s energy infrastructure. It spooked Trump, and within hours he went on Twitter and said he had forbidden Israel from attacking any more Iranian energy facilities. That was direct proof that Iran had established escalation dominance.
You model the US and Israel as separate actors. Where do they diverge?
The high-agency actor here was Netanyahu — in many ways the Americans were the NPC, at least at the start. But on the goals, this White House and the Israelis completely agreed: first-best is topple Iran and install a client regime; second-best is disarm it so it can’t threaten anyone and Israel rules it from the air; third is just push it back and reduce its capacity to threaten Israel and the Gulf protectorates.
The disagreement was never about objectives. It was about risk appetite and pain tolerance. The Israelis have gone completely mad — they’re willing to run down the American magazine and disarm the United States in the attempt to disarm Iran. The US is obviously not interested in blowing up its own position in an extended effort to gut Iran. So the divergence was predictable and predicted: the US would move to sue for peace, and that would be opposed by Israel and the lobby. Which is exactly what’s happened.
Is there any military path to reopening Hormuz??
No. This has now been conceded by essentially all serious military people. The clever stratagems they reached for, naval escorts, convoys, seizing Kharg island — were never workable, because the convoys are themselves at risk and the marines holding territory that close to Iran would be very vulnerable. The best the US can do is the double blockade it’s running now. There is no path to taking the Hormuz weapon back from Iran.
And this isn’t just a tactical or operational fact — it’s a strategic one, with implications not for weeks or months but for years and decades. Even if Iran never imposes a permanent toll, even if traffic returns to normal, everyone now knows Iran retains this weapon and that the United States cannot take it away. Gideon Rachman at the FT was one of the first in the mainstream press to grasp the full implications back in mid-March.
What does that mean in practice?
It makes Iran a world power, as Robert Pape has been saying. Without the Hormuz weapon, it’s hard to see how Iranian influence extends much beyond the Gulf. With it, the reach is global.
Iran can coerce any state, inside the Gulf or far outside it. Germany can no longer sanction Iran — Iran would shut off German energy access through the Gulf. India just told its shippers to obey IRGC instructions categorically; Reuters interviewed them and the line was, “we’ve been told to just obey, and that’s what we’re doing.” Think about what that means: India is vastly larger than Iran, the country you’d expect to be the great power — but the balance of leverage is such that the Indians can’t push the Iranians around, and neither can the Koreans, the French, or the British. The West will have to abandon the idea that it can put Iran back in a box the way it did Saddam. The use cases of the Hormuz weapon are still being discovered.
The Hormuz normalization market is pricing this low — around 35% and falling when we looked, resolving off the IMF PortWatch data, which shows only a few ships a day. But there are reports of dozens of ships transiting under Iranian escort. Is more getting through than meets the eye?
Both things are true. The IRGC is in effective control, and we’ve seen Western press reports of dozens of ships passing after paying the tolls. The American blockade is very porous — they’re intercepting a few vessels based on flag, whether they think it’s an Iranian ship, but they’re not stopping everyone. Ships are getting through.
The open question is whether that amounts to the end of the blockade. I wouldn’t call it that yet — the flux of vessels through Hormuz is still low enough that we can’t say effective post-war Iranian control of the Gulf has arrived. We’re not at that stage. But what’s striking is that the Iranians have already built the architecture for it.
Where does this end?
The Iranians have put in place the architecture for post-war control of the Gulf. There’s a new transit authority, it’s already on Twitter, and they’ve passed legislation governing Hormuz. They’re in negotiations for joint custody with Oman, and that’s probably going forward because the Saudis have given the green light. The Americans and Israelis are opposed, and that’s part of what’s being haggled over in the negotiations. But the leverage has shifted in a way that is now very difficult to reverse.
I wrote a little paperlet that used game theory to analyze armed bargaining in Islamabad. I found that a deal obtains in equilibrium. It looks very much like this is where this is headed. The only question is whether it will be a thin deal that merely reopens Hormuz, or a thick deal that ties the hands of both sides, with the Iranians cooperating on enrichment and the Americans offering sanctions relief. The risk of a thin deal is that Iran is likely to get the bomb. The US really does not want that. The problem is that the power of the lobby in Washington makes sanctions relief very challenging. But that’s the price if you want to prevent Iran from getting the bomb. We’ll see how it plays out.
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Most retarded thing I’ve read all day.
You say defeat but base it on what, your definition of defeat? It’s not clearly defined first of all.
Anusar simply sounds like a conspiracy theorist. He can’t simply accept any official U.S. communication at face value and claims literally everything is a cover up. He makes bold claims that aren’t proven and are unverified and unsourced like the destruction of all U.S. bases in the region but attempts to pass them as absolute facts with no credible sourcing.
Anusar either despises Donald Trump or is simply an Iranian sympathizer.
this analysis is completely off base as to what is happening. It's a naval blockade of a country almost completely dependent on oil for its government revenue. With only remnants of an already unpopular government, how long until the economic pressure forces change? Meanwhile, strategically the US benefits by illustrating its control over oil flows to the Chinese, and by redirecting global purchase patterns towards US production.