Someone recently asked me what mark out of 10 I’d give for the efforts of governments to tackle financial crime. It got me thinking about that one bright spot of recent times — the West’s response to Russia’s full-scale invasion of Ukraine four years ago — and how it is now looking. Back in 2022, a lot of us were pleasantly surprised by the speed and ambition with which Western governments sanctioned the Russian government, state-owned companies and wealthy individuals. While Western pressure did not prevent the war, the asset freezes did impose a real cost on those conducting it. Four years on, however, those sanctions are beginning to look a bit shopsoiled. If they began at 7/10, they’re now scoring a lot lower.

There are reasons for this: Donald Trump does not appear particularly interested in Ukraine; the now former Hungarian prime minister Viktor Orbán has been snarling things up; and so on, as laid out in this analysis from Tom Keatinge. To make things worse, Trump’s latest adventure in Iran has pushed the oil prices sharply higher, earning more money for Russia while also giving Trump cover to lift sanctions, a temporary measure he has recently extended.

Keatinge argues that European countries need to be far more focussed on going after Russia’s payment mechanisms, particularly digital. “The extent to which crypto activity supports Russia’s war effort is clear,” he writes, “yet repeated initiatives to elevate the importance of opening a concerted line of effort on this issue are ignored. This must change.”

I agree, though it won’t be easy, considering the diffuse crypto ecosystem, and the increasing sophistication of Russian involvement in it. As long as Telegram is willing to host markets, the markets will continue to function to some extent whatever Western countries do (see the story of Xinbi, a Chinese-language hub for illicit crypto.) However, it does look like someone somewhere has lost patience with the ease with which Russia is funding itself.

“The sanctioned Russia-linked cryptoasset exchange Grinex announced an immediate suspension of its operations, citing a ‘large-scale cyberattack,’” reports Elliptic. According to the statement, which Kyrgyzstan-registered Grinex posted on Telegram, it lost around $13 million worth of USDT in the hack, blaming the theft on Western intelligence agencies.

“Today the attempts to destabilise our fatherland’s financial sector hit a new level, with the direct theft of the assets of Russian citizens and companies with the involvement of complex cyberattacks,” the statement said. Grinex is the successor to Garantex, which was shut down just over a year ago after years of effort by Western law enforcement. I would be surprised if Western countries had decided to take direct action against Grinex, as the exchange claims they did. Westerners tend to be a bit too legalistic for this kind of smash-and-grab, and I would expect any operation to more closely resemble what worked a year ago, conducted with Tether’s cooperation.

Instead, I suspect this attack is the work of hacktivists, perhaps working for or with the Ukrainians. Whatever the answer, it is embarrassing for the Russians, shows their crypto-security is not impregnable, and has made a noticeable dent in trading volumes of the A7A5 ruble-denominated stablecoin, which has become a key sanctions evasion tool. Three birds with one stone.

The important point is that sanctions were never supposed to be permanent: they are a foreign policy tool, not a law enforcement one. Hundreds of billions of Russian-owned dollars are languishing in various frozen bank accounts, and Western countries need to start thinking about what to do with them. They can confiscate them, investigate them or — if they’re feeling brave — use their potential return as leverage to persuade wealthy Russians to break with the Kremlin. What they shouldn’t do is leave them as they are to gather dust.

Hopefully, now that Orbán is out of the way, European countries will be able to take firmer collective action but they also need to be imaginative, and to start behaving as if they actually want Ukraine to win, rather than just not lose.

A defeat for transparency 

Of course, the United States will have a lot to say about that too, and what it ends up saying about how to tackle the Russian crypto operations will depend on what happens in the midterm elections this year. So, it strikes me as a big deal that crypto firms are once more pouring tens of millions of dollars into campaign vehicles in their quest for, what they euphemistically refer to as, “regulatory clarity.” Among them, of course, is Tether.

If you’re wondering quite how it’s possible to spend that much money on elections, I draw your attention once more to the great Integrity Index, with its records for who’s been spending what. It boggles my mind that, for example, the three Democratic rivals to the Republicans’ Susan Collins for the Maine Senate seat have raised more than $17 million just for the primary. Collins herself has raised over $10.5 million. There really shouldn’t be that much money in politics.

Besides, when it comes to value for money, investing in court cases beats investing in politics every day of the week. I don’t know how much the (ironically) anonymous plaintiffs in the 2022 case against corporate transparency in Luxembourg paid their lawyers, but its effects just seem to keep compounding to the benefit of those who want to hide their wealth from society. 

The European Union’s retreat from revealing the ownership of shell companies has given cover for Britain’s tax havens as they resisted efforts from London to force them to open up their own corporate registries. It looks like those efforts may have finally failed. “We are committed to full transparency, but I don’t think there will be any turning back,” said the British Virgin Islands’ Junior Minister for Financial Services Lorna Smith in comments confirming that the islands are in fact very much not committed to full transparency.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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In 2016, when Peter Thiel killed Gawker, he insisted that he wasn’t attacking journalism writ large. 

On the contrary, he told the New York Times, he’d spent $10 million secretly backing Hulk Hogan’s lawsuit against the news outlet because: “I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest… if I didn’t think Gawker was unique, I wouldn’t have done any of this. If the entire media was more or less like this, this would be like trying to boil the ocean.” 

10 years later with the aid of an “AI tribunal,” a team of intelligence and law enforcement veterans, and a political climate vastly more hostile to press freedom, he is trying to do exactly that, bypassing the courts, short-circuiting the first amendment, and making it much, much cheaper to indulge in the quasi legal harassment of journalists.

Objection.ai is a new startup funded by Thiel, and cofounded by Aron D’Souza, who worked closely with him on the Gawker case. It promises “a fast affordable way to challenge statements in the media.” Anyone can file an objection, which will trigger an investigation by a team hired, the company says, from the CIA, FBI, and British intelligence agencies. Targeted outlets and reporters will have an opportunity to respond, and the results will be fed to an AI model, which will render a verdict. The complainant, and the target, are asked to agree to binding arbitration, with an unspecified range of potential consequences. Financial details are vague, but the company has said the process will cost around $2,000 — far less than the retainer of a crisis communications expert.

An initial slate of cases includes objections against the New York Times, for reporting on how Thiel’s fellow traveller David Sacks, former PayPal chief operating officer and Donald Trump’s former “AI and Crypto Czar,” uses his White House position to benefit Silicon Valley connections; The Wall Street Journal for its revelations about the doodle contributed by Donald Trump to Jeffrey Epstein’s birthday book (a case recently dismissed by a federal judge); and British reporter Hannah Broughton for an aggregated story in the UK tabloid the Mirror about allegations that Amazon workers were told to continue working while a colleague lay dead on the warehouse floor. A smattering of social media provocateurs (Candace Owens) and politicians (Bernie Sanders) round out the roster, but the aggregate effect is indisputable: Thiel’s animus was about journalism all along. Indeed, the Objection.ai team couldn't be clearer about that.

“Gawker was not unique,” writes D’Souza on the company’s website. “It was simply the first large media company to be tested against reality in the age of clicks, outrage, and algorithmic amplification. Since then, the same structural failure has spread everywhere.”

“Peter Thiel and I … did not just fight Gawker,” he goes on. “ — We demonstrated that facts still mattered if someone was willing to enforce them.”

This is worse than revisionism. D’Souza is banking on everyone having forgotten that the Hulk Hogan case had nothing to do with “reality.” It was undisputed that the sex tape published by Gawker was real. The original suit, which failed, was for copyright infringement and the ultimate $140 million award that bankrupted the company was for invasion of privacy and intentional infliction of emotional harm. 

This foundational lie is important, because it is a warning against the temptation to engage Objection.ai on the merits. It would be easy enough to conduct a good faith debate to take at face value D’Souza’s argument that tech platforms and algorithms amplify false claims to millions, that courts are expensive and slow, media ombuds toothless, and fact-checkers partisan. And it would not be hard to demonstrate that he is harnessing widely shared concerns about a disordered information environment to mobilize support for an AI powered justice system controlled by a hyperpartisan private company with a track record of attacking the very institutions that are holding the line on consensus reality.

It would also be a mistake. There is nothing good faith about this effort. Rather, it is classic Thiel: an attempt to hack the principles of accountability, and turn them against journalism. Leave it to his less sophisticated Silicon Valley peers to rail against the media, create in house news outlets or buy them. The PayPal co-founder is going for the heart of the system, and financing infrastructure that will enable anyone who can afford a used Honda Civic to launch a harassment campaign, cloaked in the language of legitimate investigation. James O’Keefe, but with the judicial rather than journalistic process as its governing metaphor.

It will be tempting, too, to question the likely financial sustainability of Objection. That will be the least of its founders' concerns. The for-profit structure supports a story about the company’s purpose. It may work, or not, but its goals are nonfinancial. We reached out to Thiel for comment on Objection.ai before publication and will update this article as soon as he responds.

Providing funding, alongside Thiel, is Balaji Srinivasan, the investor and author of “The Network State,” a book about social networks with “a sense of national consciousness” replacing the nation state. He once outlined an early version of the Objection.ai model in an email to the far right theorist Curtis Yarvin about dealing with critical coverage. "If things get hot,” he suggested “it may be interesting to sic the Dark Enlightenment audience on a single vulnerable hostile reporter to dox them and turn them inside out with hostile reporting sent to *their* advertisers/friends/contacts."

These men understand the limits of the Gawker verdict’s impact. It bankrupted the company, a personal victory for Thiel, but perhaps the least important outcome of the case. At a more systemic level, it struck fear into the hearts of media insurers and newsroom counsel, focusing attention on third party litigation finance as potential threat. 

If people with limitless resources could sponsor litigation against news organizations they disliked, constitutional protections would be no match for the sheer cost and complexity of defense.

Now, they’ve found an AI-assisted way to supercharge those effects. 

The Gawker case routed around the First Amendment by relying on a privacy claim. Objection.ai does so by building a hallucination of the legal process. Any journalist foolish enough to agree to binding arbitration by the company probably deserves what they get, but that will be a vanishingly small minority. For those who don’t, a phone call, or a knock on the door from a former FBI agent, or defense intelligence operative, will be chilling, and an ex-parte verdict rendered by Thiel’s custom-tuned AI will act as a cudgel on social media and via traditional PR. Journalists will be assigned a “trust score” to act as an additional goad.

In an environment of less peril for press freedom, it might be easy to laugh off Objection.ai as the confection of a thin-skinned millenarian. Right now, with the crony capture of broadcast news far advanced, swathes of the tech community openly hostile to journalism, and the White House onside, it would be wise to take it seriously. That starts with seeing it for what it is, and refusing to engage with a process which, unlike the real courts, Peter Thiel has no legal power to compel. 

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Dutch friends like to tell me that their nation’s primary characteristic is bluntness, and the Netherlands’ Court of Audit has done nothing to challenge the stereotype with its bracing assessment of the country’s and, by extension, the world’s failure in fighting money laundering. Published last month, after an extensive analysis of the country’s efforts to stop dirty money, the Court’s report concludes that the system is expensive, discriminatory, and — possibly — completely ineffective. No one has really checked on that last point, so they can’t be sure, which if anything makes it all worse.

The Netherlands hosts the largest port in Europe, and is therefore home to a vast smuggling industry — Dutch politicians not infrequently warn that it’s becoming a narco-state — which requires an equally vast money laundering industry to service its profits. The Court of Audit set out to check the government’s response to this challenge, concluding that it cost banks €1.6 billion a year. It’s a price tag that has increased by almost 17% between 2021 and 2024, during which time the number of reports the banks’ 13,000 compliance officers made more than doubled.

“We think it is important that these employees make a meaningful societal contribution to preventing and combatting money laundering. There is no evidence that shows that they do,” the report witheringly observes.

The court sent surveys out to “politically-exposed people” (PEP is a jargon term meaning anyone in a position of power, or a close relative or associate) asking about their experiences. One person’s 83-year-old mother was asked to explain the source of an inheritance she received after the PEP applied for a loan. It is an eye-opening section, revealing how process is prioritised over any kind of judgement about where the risk of money laundering genuinely lies, but the real shock is in the section about different religious groups, which shows how the transactions of immigrant-focussed churches and mosques are systematically checked more thoroughly than local Protestant or Catholic congregations.

“A bank told a mosque that it was not possible to collect so much money after a prayer meeting,” the report notes. “The mosque’s trustees said the bank could come and see for itself but the bank declined. Feeling powerless and unable to deposit the money with the bank, the trustees hid it in the mosque.”

Imagine if we had an ongoing health crisis. And imagine that the government had created an expensive, intrusive system to tackle it, which was generating an endlessly increasing amount of paperwork, employing thousands of people and actively discriminating against religious and ethnic minorities. Surely, someone would at least put in the hours to check if the system worked, whether it was making people healthier, and assess therefore whether all these bad side effects were justified? 

With anti-money laundering policy, that is simply not happening. It’s based on faith rather than facts: we just need to do more of the same thing, and eventually we’ll get the results we want; if we don’t, we need to do the same thing even more. Interestingly, Texan judge Jeremy Kernodle — fresh from gutting the Corporate Transparency Act — has returned to the fight against anti-money laundering regulation. He has killed Geographic Targeting Orders, which were supposed to collect information around real estate transactions. “FinCEN’s explanations are vague, conclusory, and unpersuasive,” the court ruled. “The fact that some bad actors have conducted non-financed real estate transactions does not make such transactions categorically ‘suspicious.’”

I’m not saying I agree with Mr. Kernodle, because I don’t, but I don’t think pushback on anti-money laundering orthodoxy is necessarily a bad thing, since it obliges us to think more deeply about what actually works, rather than just going along with ineffective old policies. I hope people outside the Netherlands read the Court of Audit’s report and start wondering whether this approach isn’t long past time for a complete overhaul.

How do you solve a problem like crypto?

It’s quite unusual for there to be a divide in the UK’s anti-corruption community, which tends to agree on technocratic solutions to the problems around illicit finance, but one has emerged around the role of cryptocurrencies in political donations. Spotlight on Corruption doesn’t think the government’s moratorium on crypto donations goes far enough. There needs to be a ban, they argue, in primary legislation with additional safeguards. I agree.

The folks at RUSI, on the other hand, think a moratorium on crypto donations is a better idea since it would prime the country to take regulating cryptocurrencies more seriously, and prepare the way for them to be widespread. Take a look, judge for yourself, and let me know what you think. The difference may reflect deeper and unresolvable political differences in how countries should respond to globalisation, but it’s an interesting one to think about.

One thing I think we all agree on is the need for an urgent overhaul of all rules around electoral finance, while there’s still an honest system to approve them.

On that note, interesting news from Cambodia, which has extradited Li Xiong to China. Xiong, who is accused by governments worldwide of playing a key role in the now-collapsed Huione group, which was laundering money for crime syndicates on an industrial scale, with particular expertise in cryptocurrencies. Of course, the criminals have not stood still and have new markets up and running, but it is striking how quickly the extradition went ahead.

In contrast, the legal proceedings around the mammoth tax fraud exposed two decades ago by Sergei Magnitsky grind tortuously on, with the culprits still safe in Russia. They certainly enjoyed themselves in Europe for a while, however, as a court case in Paris shows. “The spending spree included: €668,517, ($771,703) at a Parisian art and antique gallery; €696,015 ($803,445) across two high-end French women’s fashion brands; €96,814 ($111,757) at a luxury jewellery store in Courchevel, an exclusive ski resort in the French Alps; and €127,182 ($146,813) for a Courchevel tour package.”

There are few things that reveal the moral bankruptcy of the regime in the Kremlin more than this case. It’s not enough that corrupt officials could kill a good man who exposed their $230 million theft from the Russian people, but the Russian state then shielded them while they splashed the loot on European luxury holidays, and continues to do so to this day. 

Nothing on the same scale is happening in the United States of course, but still this analysis of how enforcement of the Foreign Corrupt Practices Act is being politicised is a bit grim: “The transformation of U.S. antibribery tools into economic weapons also threatens to undo the global system the United States helped establish to punish business corruption.”

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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A funny thing happened on the day OpenAI announced it was shutting down Sora, its video generation app: Iran went all in on synthetic propaganda and very quickly started winning the global meme war. The timing is a coincidence, no doubt, but it is the kind of coincidence that illuminates. 

Watching the explosive virality of the clips offers a powerful lesson in asymmetric media operations. They deploy cultural sophistication, an understanding of online communities and the enormously powerful creation tools made available by American tech companies, tools that give everyone on the internet access to a personal reality distortion field — drones, but for your feed.

On Wednesday, as Donald Trump was trying desperately to talk down the oil markets with hints of a deal, a stream of videos, carefully calibrated for U.S., regional and third country audiences rolled out on X via embassy accounts, Russia Today, and disaffected Maga influencers. The clips, by broad social media consensus, are good. Some lean heavily on the extremely online grammar of the U.S. right. Some remix Hollywood characters and likenesses in exactly the way that OpenAI’s now nixed billion-dollar deal with Disney was supposed to sanction. Others lean more heavily into Islamic iconography, featuring Donald Trump and Benjamin Netanyahu as worshippers of Baal, the foreign demon god who figures in both the Quran and the Hebrew Bible. The Lego movie is an especially rich resource, but so are TikTok formats, and the kind of idealized AI figures beloved of Trump administration meme makers. You can watch a few of them here.

Notably, faked war footage is far from the dominant format. All of these clips foreground and celebrate their own artificiality: some are sentimental, some triumphal, many are full of the gleeful adolescent wit of gamers on discord forums. 

Researchers have long been warning that generative tools will undercut the authority of visual evidence, compounding and accelerating the damage created by slower, cruder forms of fakery: photoshop, selective editing, even gaming clips passed off as combat footage. Of course, we are already there, and have been for a while. Russia has been the paramount master of this game, in Ukraine and in its ongoing influence operations around the world. But others have learned quickly. Last year, when India and Pakistan were engaged in a brief aerial battle, social media bullshit overwhelmed and compromised traditional coverage. More recently, Israel’s obliteration of Gaza was accompanied by a sustained and comprehensive blizzard of visually compelling misinformation, propaganda, and official lies. 

That continues. On March 28, Israel killed three journalists in a targeted strike in Southern Lebanon, claiming without evidence that one of them, Ali Shoaib, was a member of Hezbollah’s Radwan forces. They later distributed a photograph of him in military fatigues to reinforce the point, but explained to Fox news that in fact, they’d had to photoshop the uniform in because no such picture existed.

Meanwhile, in the Trump administration’s domestic war on immigrants and political opponents, we’ve seen a complete resetting of norms around the tone of official communication and any expectation that it is rooted in fact. Nowhere was that more evident than in the altered footage posted by the White House of the arrest of the prominent Minneapolis activist Nekima Levy Armstrong in January. In the video, shared by the official White House handle, a handcuffed Levy Armstrong is sobbing, her skin visibly darkened. In fact, she had faced arrest calmly. 

Questioned by reporters about this blatant falsification, deputy White House communications director Kaelan Dorr responded: "Enforcement of the law will continue. The memes will continue.” Collapsing the distinction between a meme and the factual record with the aid of AI is the final step in this administration's insistence that its preferred narrative simply is reality.

The problem for the White House and its allies is that their choices in tech policy, official communication, and press freedom level the playing field for information war in ways that Tehran’s media strategists understand and they, for all their immersion in online worlds, do not.

Iranian propagandists know that the currency of visual information online has already been completely debased. They’ve dealt with it plenty, and no doubt practiced it themselves in regional battles for narrative dominance. Their insight is that as cheap and easy as it is to create and distribute fakes, returns on the effort of mobilizing what disinformation researchers call “coordinated inauthentic action” are diminishing. They still do it, but it isn’t where the action is.

Sam Altman, Elon Musk and Mark Zuckerberg have, in a very practical sense, wrought this moment in concert with Peter Thiel, Alex Karp, JD Vance and Donald Trump. At their urging, the U.S. has surrendered unrivaled dominance in scarce, expensive information and cultural assets in exchange for a political economy of media that widely distributes cheap, abundant ones.

Tech leaders and conservative politicians have worked consistently for a decade to deprecate the trustworthiness of American journalism and constrain its liberties. They have smeared its practitioners as “enemies of the people”; they have captured the commanding heights of the broadcast and culture industries through crony deals, and they have launched an assault on both press freedom and standards, two assets that once made American news outlets the envy of the world. Needless to say, the economic collapse of traditional media companies fostered by Google’s  and Meta’s advertising duopoly only served to deepen the damage. Jeff Bezos’s Washington Post shuttered its Middle East bureaus just days before the war began.

Meanwhile, lying from agency podiums and the Oval Office, makes Karoline Leavitt barely distinguishable from Baghdad Bob, Iraq’s minister of information in 2003 whose surreal, truth-dodging press conferences during the U.S.-led invasion made him a global laughingstock. And the DOGEing of both the nominally independent Voice of America, as well as the state department’s Global Engagement Center leaves the administration with neither broadcast nor digital counter-propaganda assets. 

When no one can be trusted with the actual truth, we are left with the AI equivalent of 19th-century editorial cartoons, produced at industrial scale and distributed globally. America has little advantage in that war, particularly when it is at a moral, political and legal nadir.

If anything, Iran, which combines repression with an enormously rich literary culture, film scene and advertising market brings serious capabilities to the fight.

Of course, the ebbing of information power was already under way during the first Trump administration, and during Joe Biden’s term in ways that are indissociable from broader democratic decline. The “trust and safety” architecture adopted by big platform companies was designed — implicitly if not always visibly — to conserve information authority, and ensure that it functioned in broadly pro-democratic ways. 

After the disastrous failures of the Rohingya genocide — which rights groups and UN investigators blamed Facebook for facilitating — and the fears surrounding the manipulation of the U.S. electoral environment in 2016, there was a clear threat to the commercial and political health of Twitter, Facebook and YouTube. Tech companies, governments, researchers and human rights experts devised rules and norms for content moderation grounded in existing standards, tools for detecting coordinated inauthentic behavior, and a framework for crisis response.

The community of practitioners and institutions that sprung up to combat the flesh-eating virus attacking the body politic were working with bandaids in the battlefield hospital even before Covid, a coordinated attack from the right, and the second Trump victory hit them, but they succeeded in imposing some limits. That project now lies in ruins. 

The Stanford Information Laboratory has been shut down. Trust and Safety teams at Meta and X have been disbanded. The national security arm of the project, centered around the State Department is gone, and private funding for countering misinformation has largely dried up.

Where are the hyperscalers, the AI titans, whose tools are being so effectively deployed, in all of this?

The trust and safety people who do work at OpenAI are dutifully putting out reports every few months. They are detailing how they foiled efforts to use ChatGPT for a Chinese influence campaign aimed at Sanae Takaichi, the Japanese prime minister, and exposing a Russian content mill feeding African newspapers. “Pro-tip for governments,” wrote Head of National Security policy Sasha Baker on LinkedIn of the February report. “Please don’t use our products to spread lies online.”

Governments, in the world of Sam Altman’s “democratic AI” do not include that of the United States. OpenAI has not mentioned a single U.S. ally — let alone the administration itself — in these reports. 

OpenAI has hired multiple ex-Clinton, Obama and Biden officials, and in their work a weird, attenuated piece of the old national security approach to information integrity lives on, alongside the project of selling products to the Pentagon. The company’s leaders clearly treat these issues  as a complement to messaging around Western AI, or a picayune adjunct to the bigger questions of AI risk, which are handled way up in the organizational stratosphere, as they are at Anthropic.

Perhaps the larger lesson is that you can’t really shut down Sora, or put AI-generated video back in its box. If you choose to prosecute an illegal war of choice after surrendering the hard-won high ground of a robust, democratic information environment, high tech weaponry will not offset the deficit. On the contrary, you will have compounded the risk of both tactical failure and strategic geopolitical defeat. When that happens, and in some ways it already has, those who made this war, and their enablers in Silicon Valley, will have only themselves to blame.

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One difficulty in writing about corruption is explaining what it is. You’re either too specific — “it’s taking bribes”. Or too vague — “it’s being bad”. Another difficulty is obtaining the raw material to analyse: corrupt people don’t tend to speak openly about it, which means you’re left looking at corruption’s visible manifestations, which is like trying to understand a virus only from its spots.

So huge kudos to Earth League International for producing a detailed, specific and thoughtful report on how corruption facilitates wildlife crime globally, which is packed full of lessons for the study of corruption in general as well. Corruption is a system, everything is connected. It’s the water in which criminals swim, and it will drown the rest of us if we let it.

Earth League International embeds investigators in corrupt networks all over the world, and reveals how it is so much more than just the “abuse of entrusted power for private gain” and their report quotes multiple specific examples. The choice for an official standing in the way of a Transnational Criminal Organisation (TCO) is not between taking a bribe and being honest, it’s between taking a bribe and having a family member killed. 

“Corruption tilts the playing field of justice by turning some officials or even agencies into additional arms of criminal networks, akin to painting a group of white chess pieces red and then commencing a match, giving the criminal side a decided advantage”, notes the report. And, it adds, “Transnational Criminal Organisations are savvy about which officials they approach, assessing weaknesses such as debt or family ties that may make them more vulnerable to financial offers or threats.”

It estimates the value of global wildlife-related crime at over $1 trillion annually, which is an astonishing amount of money, but an important point to take is that this is not a separate form of corruption. The same border officials that wave through illegal shipments of timber or shark fins also help with other forms of smuggling. The money that criminals funnel into politics undermines democracy in all ways. “Corruption is not the sole purview of less wealthy nations. It is everywhere. During investigations into illegal wildlife trafficking for (traditional Chinese medicine) in Europe, for example, Earth League International found enablers in San Marino, Italy, Belgium, and Poland,” notes the report.

There is something grimly ironic that so much of the despoliation that is making things worse for everyone is driven by the trade in “medicine” and thus a desire to make the world better. In reality, of course, pangolin scales and totoaba swim bladders are no more medicinal than my toenail clippings. Perhaps the ultimate expression of this is the demand for hallucinogenic toad venom, as detailed in this excellent article from a few years ago, which supposedly helps us all access the inner divine, but which is meanwhile wiping out the unfortunate toads that secrete it. “Most harvesters don’t have a consciousness about the sacredness of the species”, said a toad practitioner. “It’s just a hustle business.”

On a more geopolitical and less psychedelic level, this report on how Russia is repurposing its influence networks in Europe so as to maintain its fossil fuel exports show that other forms of corruption have huge environmental impact of their own. “The time for polite half-measures is over. Stronger enforcement, embargoes and tariffs on Russian fossil fuels to cripple exports, personal sanctions, and transparency rules are the only way to dismantle Russia’s covert influence architecture,” it concludes.

I’d add to that: we all need to build renewable energy sources like there’s a war on, because there is, and democracies urgently need to gain the freedom to act independently of autocracies’ control of fossil fuel supplies. You can’t act freely if someone’s hands are around your neck.

So, what’s the answer? As so often with financial crime, it’s possible to be overawed by the scale of the challenge. But the important thing is just to start. Here’s a manifesto from a coalition of British environmental groups, which gives some ideas. I particularly approve of this one: “government should introduce comprehensive protections and safeguards for whistleblowers, followed by financial incentives, to enable whistleblowers to disclose evidence of corruption and money laundering”.

Of course, corrupt officials are not just standing still while we agonise about how to stop them. I am particularly alarmed by the potential appeal of modern prediction markets for allowing politicians, military officers or anyone to profit from their privileged access to advance knowledge of government actions. Here’s a remarkable story about how people betting on the specific details of the Iran War sent death threats to a Times of Israel journalist whose reporting threatened to lose them a wager.

U.S. lawmakers have introduced a bill, the BETS OFF Act, for which acronym they deserve credit — to crack down on the markets that encourage this kind of behaviour, which was also observed in the hours leading up to the U.S. attack on Venezuela. “There’s no getting around the fact that any prediction market where somebody knows or controls the outcome of a bet is ripe for corruption,” said Senator Chris Murphy of Connecticut. “When events that involve good and evil, life and death become just another financial product, morality no longer matters and the soul of America is fundamentally corrupted.” 

On that note, I see that someone is trying to juice the price of the $TRUMP memecoin by inviting its biggest holders to dinner at Mar-a-Lago, apparently with a speech by President Donald Trump (or whoever that is in the decidedly weird picture accompanying the announcement — Nigel Farage in a blond wig?), and an exclusive audience for the 29 biggest holders. The president, should he attend, will not, however, be accepting gifts, which is a weight off my mind. I had been worrying that this whole event was a bit dodgy.

The announcement of the event did boost the price of the $TRUMP tokens, as presumably did the announcement that Tether head Paolo Ardoino would be the headlining speaker, a remarkable turnaround for someone whose company was, just 18 months ago, having to vehemently deny it was the subject of a Department of Justice probe. Whether corruption will continue to be seriously investigated and punished, in a newly transactional world order, remains to be seen. The signs, though, are not promising.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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There has never been a better time to be a billionaire. It’s official, Forbes says so, and it’s got the numbers to prove it. Top of the magazine’s annual list is, of course, Elon Musk who is only a Bernaud Arnault (worth about $147 billion) and some change away from being the world’s first trillionaire.

But to get the real headliner, we need to drop down to number 17 where we find Changpeng Zhao ($110 billion, since you ask), founder of cryptocurrency exchange Binance and business partner of the Trump family’s own crypto firm. Centibillionaires are old hat now but CZ is, as far as I can tell, the first centibillionaire on the Forbes list to have been pardoned by the U.S. president for egregious financial criminality. That feels like quite a big deal so congratulations to him.

CZ’s pardon last October was, according to the White House, because his 2023 plea deal and $4.3 billion fine for enabling money laundering on an industrial scale were the result of “an overly prosecuted case by the Biden administration” and part of a war on cryptocurrency.

Awkwardly for all concerned, Binance is now suing the Wall Street Journal after it reported that $1 billion had moved through the company to Iran-backed terror groups. And the Wall Street Journal has not only declined to spike the story, it has doubled down by reporting that the Justice Department is now investigating the firm’s actions. “The Wall Street Journal couldn’t determine whether the Justice Department is investigating Binance itself for potential misconduct, or solely the customers on its platform,” the WSJ said. But either way, considering the White House has committed to wiping out Iran’s support of terror groups and upended the global energy markets in its quest to do so, the news reports alleging that CZ’s company enabled those same groups would surely be embarrassing for all concerned, were any of them the kind of people capable of embarrassment.

After all, the fact that Iran is using crypto on a huge scale to evade the sanctions placed on its activities, and to support foreign proxies like Hezbollah, with the active connivance of some of the biggest companies in the crypto world, could only be a surprise to the most witlessly incurious of numbskulls. Or perhaps, I suppose, they are all making so much money from crypto that they don’t care who else might be.

While we’re on the subject of Trump, he’s at No. 640 on the list of billionaires as I write this, nearly tripling his wealth in just the last two years. Forbes has this very apropos explanation: “Donald Trump has presided over the most lucrative presidency in American history, adding billions to his net worth, largely by cashing in on crypto.” 

But, I hear you ask, what about non-billionaires? How are the few billion of us whose net worth isn’t counted in the billions doing? Well, not great. And I’m beginning to feel a bit concerned about what this all means for democracy. “The widening gap between the rich and the rest is at the same time creating a political deficit that is highly dangerous and unsustainable,” said Oxfam International Executive Director Amitabh Behar back in January, and the situation has gotten worse since then.

The Bank of England’s animal stories 

I spend a lot of time at the moment talking in public about money laundering because of my new book. Top of my list for policy suggestions for tackling financial crime, if anyone were to ask, is that governments should stop printing large denomination bills: $100 bills, €200 notes or — worst of all — Switzerland’s colossal 1,000-france banknote are little used by ordinary people, but extremely helpful for criminals looking to transport large amounts of wealth in a small space.

So, in one way it was great that Britain was temporarily convulsed by controversy around banknotes last week. It’s high time we talked more about them. Could this spell the end of the UK’s own big bill: the £50, of which the Bank of England issued almost an extra 30 million last year, even though pretty much the only people that ever use them are criminals and tax dodgers? Would Britain finally get serious about ending the epidemic of financial crime?

No, of course not, the controversy was entirely about the Bank of England’s decision to replace the pictures of people on its next series of banknotes with pictures of animals. For some reason, badgers were mentioned. Also otters. “It says all you need to know about the lack of seriousness of the Bank,” said former business secretary Sir Jacob Rees-Mogg, without any apparent irony, considering his own spectacular lack of seriousness in agreeing to comment on this absurdly unserious confection.

A sledgehammer that cracks nuts

While researching the anti-money laundering system that has grown over the last few decades, I have come to find it strange that there isn’t more public disquiet over the powers that governments have awarded themselves to check ordinary people’s transactions. When there is concern, it tends to come from crypto/libertarian bores (the kind of people who talk about ‘Operation Choke Point 2.0’), so perhaps no one else wants to be associated with it. But I think the situation would be a bit healthier if more of us engaged with what is being done to us in ways that we can get.

I obviously think that tackling money laundering is of huge importance, but I am coming round to the view that more public pushback over exactly how that is being done would be good. It would force policymakers to justify what they’re doing, and therefore come up with some techniques that actually work, instead of the ineffective but intrusive mess we have at the moment.

To cut a long story short, I found this contribution from the Dutch non-profit organisation ‘Privacy First’ to be interesting. “Instead of managing risk, banks seek to eliminate it by withdrawing altogether from customers or sectors perceived as problematic. The burden of compliance and over-enforcement often falls not on criminals, but on already marginalised communities with limited access to remedies,” it says.

I agree with that, and I agree also with its argument that beneficial ownership transparency should not be absolute. Were there to be opt-outs from ownership registries for vulnerable people, there would be less scope for rich crooks to argue that shell company transparency is a violation of their human rights. 

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Kleptocracy is a global system, which allows crooks, thieves, oligarchs, tycoons, and the like to enjoy their wealth while evading any responsibility to the society where they obtained that wealth. It infects different countries to different extents, and I’ve been very impressed by the Bloomberg investigations into how kleptocratic the Iranian elite has become. If you’d like a shortcut to those investigations, this new video is worth watching. Obviously, Iran’s regime has been vicious and aggressive from the start, but I do think there is a new kind of vicious aggression that develops when a country’s elite becomes kleptocratic, and thus is — in essence — colonising its own country. 

If it is extracting wealth, hiding that wealth offshore and thus secure in its future, it is able to take risks and make decisions without concerning itself about their effect on ordinary people. “While ordinary Iranians contend with a collapsing currency, rising prices, fuel shortages and now war, elites like (Hossein) Shamkhani have translated political lineage into global capital — buying property abroad, securing foreign passports and moving freely through systems that everyday citizens cannot enter,” Bloomberg notes.

Much of the elite’s ability to enrich itself has come from its evasion of Western sanctions, which Iranians have had decades of practice in learning how to dodge. And the role of cryptocurrencies in enabling Iran’s kleptocrats is clearly significant, as demonstrated by this report from Chainalysis. But of course the backbone of the corruption has been the elite’s control over trade, and thus its ability to move value to safe havens like Dubai (that’s not looking as safe as it did of course but, don’t worry, the money can easily find a new home), which gives it the security to fire missiles without worrying too much about retaliation.

In this though, I’m not sure Iran is particularly unusual. A lot of the governments involved in the crisis in the Middle East are a bit like those F. Scott Fitzgerald characters who “smashed up things and creatures and then retreated back into their money or their vast carelessness”.

Israel’s Benjamin Netanyahu has been dancing on the edge of a corruption trial for the best part of a decade, ever since he was indicted in 2019 for, among other things, accepting “hundreds of thousands of pounds in luxury gifts from billionaire friends”. Donald Trump’s family has assets worth more than double what they were just two and a half years ago. The earnings from crypto alone are enough to guarantee the most comfortable of futures. These two are very definitely careless people, as is everyone around them.

If this ill-planned military adventure ends badly, then the elites of none of the combatant countries will end up suffering in the way that ordinary Iranians, Israelis or Americans will. This sense of impunity infects much of the discussion of the war: how, for example, could someone who feels any connection to other people be exulting in their death in the way that U.S. Secretary of War Pete Hegseth does? In this bloodthirstiness, as in so many other aspects of kleptocracy of course, Russia led the way, but the rest of the world is catching up and I don’t think we’re ready for what that will look like.

An important aspect of this, again long visible in Russia with its dreadful public services and military failure in Ukraine, is that corruption does not just enrich elites, it also degrades state capabilities. “Corruption at the top always rolls downhill. Once it becomes open and acknowledged, it leads to corrupt and slovenly acts throughout a system,” as Phillips Payson O’Brien argues, in a piece which builds on another article in which he lays out how the Russian model might be worth applying to much of what’s happening in the United States.

This of course adds fresh weight, not that it’s needed, to the urgency of shoring up defences not just against foreign interference in the democratic processes of those countries that still have them, but to getting big money out too. It’s great that a U.S. politician has, for the first time, taken the Political Integrity Pledge and won (though admittedly only a primary), but just to get to the stage of standing in the general election, he’s had to raise more than $20 million. Too much of that and pretty soon you’re talking about real money.

This week at Tether

Talking about real money, the latest episode of Tether watch is a weird one: our favourite crypto concern has just invested $50 million in a smart mattress company. Now admittedly, that isn’t even two days’ worth of last year’s profits, so it’s not exactly a big deal for CEO Paolo Ardoino but it’s still sufficiently sinister to be worthy of mention.

I find it disturbing enough that tech companies are harvesting our browsing history to make money from, but it’s a whole other level to have Tether — Tether!?! — monitoring what people get up to in bed. It’s all, apparently, about personal sovereignty, which is to say you should stop trusting big companies with your data and instead trust it to Tether, including with what’s happening in your head: “Paolo's $200 million acquisition of a majority stake in brain-computer interface company Blackrock Neurotech may not be because he is optimistic about the size of the brain-computer interface market, but because he does not want the brain-computer interface to be controlled by others”.

Historians are going to be so confused by this; assuming of course that there will still be historians, which may be an over-optimistic assumption about a future with brain-computer interfaces.

The need to know your enemy

I’ve been talking to quite a lot of people about money laundering of late, and one of the enduring problems is the lack of reliable ways to gauge the scale of the problem. We’ve been saying it’s between 2% to 5% of the world economy since the late 1990s, but beyond repeating that age-hallowed guesstimate, how do you measure it? 

Often we turn to other measures, such as how many suspicious activity reports get filed, or how many fines get imposed. So, on that note, is it good or bad that the UK’s Financial Conduct Authority imposed fines last year of just £124 million, a decline of 78% from half a decade earlier? Maybe this means there’s 78% less crime? Or maybe it means that the FCA has stopped investigating 78% of crime? Or maybe 2021 was just a really big year for fines (which it was)? Or maybe something else happened?

The answer to this is that we should properly investigate money laundering not just criminally but also academically, looking at gaps in statistics and devising new methods of measuring how large the criminal economy is, rather than rely on proxies for it. That would not only help us identify what to target, but also help us see what techniques are working as criminal wealth rises and falls. As it stands, it feels like we’re waging a war without a clear idea of where the enemy is, and what the final goal might be, and there’s quite enough of that going on elsewhere at the moment.

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Between them, the United States and Israel struck more than 2,000 targets within the first 24 hours of their war with Iran.

For even the largest militaries, it is an almost impossible task to identify, select and then precisely locate such a high volume of targets. But the U.S. military had some help. Claude, the “next generation AI assistant” built by Anthropic, was used in the planning of ‘Operation Epic Fury’. This, even though the Department of War recently labeled Anthropic a “supply chain risk”.

Anthropic is one of the world’s leading AI companies. Together with Palantir, another Big Tech company, it has been working since 2024 with the Pentagon to embed its systems in military decision-making – creating what is arguably the operating platform of present-day U.S. warfare and intelligence. Even though secretary of defense Pete Hegseth said the company “delivered a master class in arrogance and betrayal” and that the government would “cease all use of Anthropic's technology,” the company is too integrated into modern U.S. warfare for it not to be essential to the U.S. attack on Iran. The question might be not whether companies like Anthropic can ringfence their tech but whether the Pentagon might just commandeer it. 

Craig Jones, an academic who studies automated kill chains at the University of Newcastle, has told reporters that “the AI machine is making recommendations for what to target, which is actually much quicker in some ways than the speed of thought.” Similar AI systems have been used by Israel to coordinate its bombing campaign in Gaza, which is among the most destructive in human history. 

Among the first hits in the United States and Israel’s aerial bombardment of Iran was the Shajarah Tayyebeh primary school for girls, in the southern town of Minab. It was a Saturday morning, and school was in session. According to Iranian state media, at least 165 people were killed, mostly young girls between the ages of seven and 12. Another 96 were severely injured. Eyewitness and open source intelligence reports corroborate the claims of mass civilian casualties. Both Iran and Israel have denied responsibility. The United States has said it is “looking into” allegations that the school was destroyed by one of its missiles. Maybe, given the volume of the bombardment, they’ve lost track. 

It is too soon to know why the school was targeted – or whether it was an error. Either way, the U.S. military’s reliance on AI raises difficult questions.

AIs get things wrong all the time. Maybe it’s an extra finger in an AI-generated image, or a ‘hallucinated’ reference in a research report. Or, maybe, an algorithm sends a missile to the wrong address. That’s why Anthropic CEO Dario Amodei has said that weapons “that take humans out of the loop entirely and automate selecting and engaging targets” are simply not reliable enough. That position — along with Anthropic’s refusal to allow Claude to be used for mass domestic surveillance (although they are just fine with foreign surveillance) — led to the Pentagon cancelling a $200-million contract with the company on Friday, the day before the attacks on Iran began. The Department of War immediately signed a new deal, minus any ethical guardrails, with OpenAI.

Anthropic’s confrontation with the Pentagon has burnished its reputation as an “ethical” AI company. But it may have found its ethical backbone too late. Critics argue that even within Anthropic’s “red lines”, there is enormous potential for abuse, while a “human in the loop” does not necessarily prevent mistakes — raising questions about who, exactly, is responsible when these mistakes result in fatalities. Francesca Albanese, the United Nations special rapporteur for Palestine, accused Amazon, Google and Microsoft in a 2025 of being “complicit in genocide” for providing cloud storage systems to the Israeli military. Anthropic’s integration into the U.S. military has been much deeper.

While Israel and the U.S. are waging an AI-powered war, Iran is responding with a technological revolution of its own. The Islamic Republic has pioneered the production of low-cost one-way attack drones, most notably the Shahed-136, which costs just $34,000 to produce and as much as $4 million to shoot down. These are battle-tested: Russia has launched an estimated 57,000 Shahed-type drones in its war against Ukraine. Despite U.S. reliance on its own high-tech AI-powered systems, an American version of the Shahed also made its debut, alongside Claude, in the attack on Iran. 

In response, Iran has aimed more than 1000 drones at neighboring Gulf states since the war broke out on Saturday. Hundreds have been shot down, but even the most sophisticated air defences struggle with this sheer volume, and dozens have struck their targets, threatening to prolong this war and cause more damage to U.S. allies than anticipated. It is significant that these targets included at least three Amazon data centers in Dubai and Bahrain. Just last month, Amazon announced that it was making Anthropic’s Claude available to its Middle Eastern customers. Claude experienced two global outages this week — it is not clear if these were related to the data center attacks. 

Tech evangelists promise that artificial intelligence will, one day, cure cancer, end poverty and greatly increase our quality of life. But the new technology’s most obvious impact has been on warfare. For those with access to them, AI systems like Claude make it dramatically easier to bomb hundreds of targets at the same time — and much harder to figure out who is accountable when something goes wrong. On Truth Social, Donald Trump — who has promised to stop wars, not start them — posted approvingly that technology and munitions now mean Wars “can be fought ‘forever,’ and very successfully.” 

As the bombing of Iran continues, we are not far from a time when AI not only parses data to select targets, it actually chooses when to pull the trigger. And advanced AI models have far fewer qualms, for instance, about deploying nuclear weapons than humans faced with similar scenarios. One day, when — if — war crimes investigators are able to pin down exactly who is responsible for killing dozens of young girls in Minab, tech bosses may find themselves implicated alongside military and political leaders. “The AI did it” can’t be their defense.

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This is going to be a big year for the Financial Action Task Force, the world’s standard-setter on money laundering regulations, under its new president Giles Thomson. Quite apart from the standard folderol of plenary meetings, reports and publications, it is due to send a mission to assess the United States.

This whole process will not be quick, and there will be the usual abundant opportunity for acronyms, circumlocution and horse-trading. But eventually the hooves are going to have to hit the road. There is simply no way of hiding the fact that, under Donald Trump, the United States has broken its promise to bring greater transparency to shell companies; nor that it has scaled back prosecution of financial crimes, pardoned convicted financial criminals, and unleashed a crypto frenzy.

Throughout its history the FATF, set up by the G7, has been able and willing to overlook transgressions from big countries that it wouldn’t tolerate from smaller ones. It punished the remote island states of Niue and the Marshall Islands in its first ever blacklist for their lack of transparency around shell companies, for example, while merrily tolerating the fact that not even the Federal Bureau of Investigation could figure out who owned a corporation in Nevada. Nauru got punished for moving dirty Russian wealth while the UK and Switzerland didn’t.

The FATF’s structure, which ensures it is dominated by large economies, is a classic example of how, if you’re not at the table, you’re on the menu. But, in the past, those large economies have at least pretended to go along with its recommendations. They’ve made promises, passed legislation, convened working groups, said the right things: all of which has given everyone the diplomatic cover they need to keep each other off the naughty step.

Trump’s not doing any of that, and it’s hard to believe that he’s going to change that habit. If the FATF criticizes his administration, I think we can safely assume Trump won’t take that well, and could — if past behavior is any guide — pull the United States out. But if the FATF doesn’t criticize what he’s been up to, it will lose all credibility. 

Speaking for myself, I think the FATF’s conception, structure and techniques are all flawed, perhaps irreparably, and that it has been part of the problem, rather than part of the solution, for most if not all of its 37-year history. Perhaps, therefore, Giles Thomson should get ahead of the looming fiasco by declaring a complete overhaul of the whole organization, re-examining its recommendations, its memberships, its strategy, and more.

What are the chances of that happening? Well, here’s some news from the Pacific: “Papua New Guinea one step away from being blacklisted, global money laundering watchdog warns”. Is Papua New Guinea the problem? No. Do we get anywhere by pretending that it is? Also no. Will the FATF carry on regardless anyway? I would love to be surprised by the answer to that question.

The need to clean house 

I’m a big fan of this video from Transparency International’s UK chapter, which lays out the inglorious history of corruption in British politics, and urges the government to be more ambitious in its new piece of legislation. TI has pointed out three areas where it thinks the government should go further, and I agree with all of them, but I would also like to see a complete ban on crypto donations, which would help prevent compliance departments being overwhelmed by automated efforts to circumvent donation limits.

I would also urge you to read this comment piece from RUSI about the threat to democracy posed by big funders from the American right, which has significance far beyond British politics. The world’s remaining democracies have been slow to recognize how radically the values of many U.S. billionaires have diverged from what we traditionally associate with conservatism, and to shore up their defences against them. “The task now is to strengthen our democratic guardrails — calmly, transparently and proportionately — before those boundaries are redrawn by others,” the writers Neil Barnett and Eliza Lockhart conclude.

Transparency International’s Russian chapter has been in exile since 2022 for obvious reasons (last year, for example, it had to issue a statement to argue that “fighting corruption is not terrorism”) but it has continued to conduct really valuable investigations into how illicit wealth flows in and out of its home country, including a recent one detailing the use of shell companies in the UK’s tax havens to trade with Russia, and identifying $8 billion worth of transactions.

The worst offender as a source of opaque companies was the British Virgin Islands, though Bermuda was also a problem, moving sanctioned products — including lead and zinc — as well as oil and other fossil fuels, a surprisingly large number of yachts, and a jet that ended up belonging to Chechen strongman Ramzan Kadyrov (whose ill-health is, apparently, once more the subject of speculation, poor chap).

“For many years now, we have observed a dysfunctional equilibrium in which illicit financial flows, tax evasion, sanctions circumvention, and other forms of misconduct are channelled through firms and intermediaries registered in unaccountable jurisdictions,” TI-Russia notes. Fortunately, however, the British government is hosting an illicit finance summit this June and so has the perfect opportunity to set an example by making sure this kind of thing stops happening on the territory it’s responsible for if nowhere else.

Here’s an interesting story from the Netherlands, where luxury firm Louis Vuitton was fined half a million euros for failing to identify customers spending large amounts of cash. This case was part of an investigation into the Chinese money laundering technique known as ‘daigou’, in which value is transferred internationally not via the financial system but by buying expensive objects and then reselling them in China. High-end fashion is often used in the system, and it will be intriguing to see if other countries follow the Dutch lead and investigate unusual cash purchases.

And here’s a piece on our favorite crypto company Tether, which is apparently valued by market participants at between $200 and $350 billion. That is less than estimates made in the summer, but still an awful lot of money. Fun fact: finance firm Cantor Fitzgerald has a five percent stake in Tether, which is thus worth $10 to $17.5 billion, via a convertible bond. Another fun fact: Cantor Fitzgerald is owned by Commerce Secretary Howard Lutnick’s children. 

Interesting question, would the prospect of your family earning a windfall of that size affect how stringently you would approach the regulation of a financial institution accused of involvement in industrial-scale money laundering? Lutnick, who led Cantor Fitzgerald for over 30 years, is of course not the kind of man who would let petty cash cloud his judgement, so this question is of academic interest only, but still, worth thinking about.

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That Iran's Supreme Leader, Ayatollah Ali Khamenei, should disappear, or be disappeared, from the scene was not a novel notion. 

Throughout my nearly five years in Tehran at the turn of this century, speculation about his health and longevity was a near-constant background hum. He was reported, or rumoured, to be mortally stricken by prostate cancer, his constitution already weakened by an assassination attempt in 1981 that left his right arm largely useless. Who would succeed him was far from clear, and the object of further speculation. 

As he lived on into more recent times, reaching the same age of 86 attained by his predecessor – the Islamic Republic's founding father Ayatollah Ruhollah Khomeini – the prospect of his demise became a more immediate issue, though the question of succession remained equally shrouded in uncertainty. As Supreme Leader, Ayatollah Khamenei was the commanding voice behind the ruthless crackdown that took the lives of tens of thousands of citizens early this year in the latest and greatest of many escalating protests, at which the slogan "Marg Bar Diktator!" — Death to the Dictator! — became an increasingly prominent slogan. 

Their wish was confirmed to be true at 5 a.m. local time on Sunday morning by Iranian broadcasters. The previous morning, Khamenei’s compound in Tehran was demolished as the Israeli-American onslaught got under way while the Ayatollah was heading a meeting of the Defence Council. That ensured that top military figures were also killed, including the commander of the Revolutionary Guards, Mohammad Pakpour, the Army Chief of Staff Abdolrahim Musavi, and Khamenei's top military adviser, Ali Shamkhani, who had been wounded but survived the attack in June last year. 

The Iranian leadership appears to have been caught by surprise, as it was last year when the opening Israeli strike, which culled many top military leaders as well as nuclear scientists, was launched between two rounds of indirect negotiations between Iran and the U.S. Oman, which was mediating the talks, was furious then, denouncing Israel as the real destabilising factor in the region. 

Perhaps the Iranian leaders — and the Omani mediators — thought that such a dirty trick could only be pulled once. But it has happened again, with no evidence that the talks in Geneva had broken down. The chief Omani negotiator, Badr Albusaidi, was livid. Only hours before the strike, he was in Washington for meetings “to explain that a peace agreement between the U.S. and Iran is now within reach. No nuclear weapons. Not ever. Zero stockpiling. Comprehensive verification. Peacefully and permanently. Let’s support the negotiators in closing the deal.”

After learning of the attack, he expressed his outrage in another tweet: “I am dismayed. Active and serious negotiations have yet again been undermined. Neither the interests of the United States nor the cause of global peace are well served by this. And I pray for the innocents who will suffer. I urge the United States not to get sucked in further. This is not your war.”

But Donald Trump and the U.S. were already thoroughly sucked in, and it was indeed their war, or at least his. According to the Israelis, the date had been decided jointly weeks before, after months of planning. Which meant that the Geneva negotiations, focused on the nuclear issue, were simply deceptive camouflage designed to give time for the U.S. to complete the marshalling of its biggest naval and air buildup in the region since the 2003 invasion of Iraq. 

Trump and the Israeli prime minister Benjamin Netanyahu soon made it clear that the campaign now had little to do with the niceties of Iran's nuclear programme: the agenda was regime change in Tehran, and a surprise attack to decapitate the regime was an essential element. 

With Iran's air defences largely taken out in last year's 12 days of war, it was like shooting fish in a barrel. Hundreds of air, missile and drone strikes were carried out on missile launchers, military bases and other targets around the country, with inevitable "collateral damage", including a girl's primary school in the southern town of Minab where scores of children were reported killed.

The Iranians did their best to live up to their dire warnings of deadly reprisals against Israel, and against American bases and allies on the Arab side of the Gulf and elsewhere. Missiles hailed down on airports and other installations in Kuwait, Bahrain, the UAE, Saudi Arabia and even Oman, despite its active mediation. While some U.S. bases may have been hit, so too were many civilian sites such as Dubai's iconic Burj al Arab hotel. Explosions too are being heard in Beirut, after Hezbollah fired rockets and drones at northern Israel to "avenge" Khamenei's death and the Israel Defense Forces struck back.

Air traffic was halted throughout a region rich in international hubs, sowing chaos worldwide. Iran's declaration that the strategic Strait of Hormuz was closed to shipping forced cargo shippers to suspend the voyages that transport some 20% of the world's oil and a lot of liquid gas, causing tremors through international markets. Once again, a decision taken by a tiny circle of men in Washington, Jerusalem and Tehran instantly rewired daily life, reminding us who actually gets to pull the global emergency brake.

What all this would do to Iran's relations with the Arab side of the Gulf was one of many open questions. While Oman was actively mediating, the other Arab oil states had been pressing the Americans not to allow a campaign that would predictably destabilise the region, and declaring their airspace not available for any hostilities. But any sympathy for Tehran quickly evaporated when the missiles started flying in: the Gulf Arab states closed ranks.

Trump and the Israelis made it clear that this was not one quick spectacular strike, but an ongoing campaign that would last days, perhaps even weeks. Presumably at the end, Iran would find its missile capabilities "obliterated," in Trump's favourite term, along with any nuclear activities. 

Once the bombs stop falling, Trump and Netanyahu urged, the Iranians should come out of their basements and take over a government that would be theirs for the taking. A historic opportunity that would likely not recur for generations, Iranians were told. 

But it is hard to imagine such regime change being wrought remotely from the skies. The regime lost little time in filling the leadership vacuum, setting up a three-man ruling council in line with the constitution, composed of the President, Masood Pezeshkian, the head of the Judiciary, Gholamhossein Mohseni-Ejei, and Ayatollah Alireza Arafi from the Council of Guardians. All regime loyalists, and the latter two noted hard-liners. So business as usual as far as they are concerned. But the fact is that the assassination of the Supreme Leader and the attendant bludgeoning of the regime's capabilities will inevitably usher in a new and unpredictable phase in Iran's turbulent history.

On the streets, reactions were fractured: jubilation in areas that had long chanted “Death to the dictator”, state-promote mourning in others, but also fear and a grim resignation, an understanding that power vacuums are often filled with fresh repression or civil war.

A smooth transition to a peaceful democracy is about the least likely scenario among the many possibilities. So too is an imminent return of the monarchy, with a comeback by Israeli-backed Reza Pahlavi, son of the Shah ousted by the 1979 revolution. So far there has been no sign visible to the outside world of a split in the ranks of the defenses built up by the Islamic Republic, which still has regular military forces numbering around 400,000, Revolutionary Guards of up to 190,000, and its auxiliary militia enforcers, the Basij, who may be able to mobilise around a million at street level. 

There must be much anger among regime loyalists, which may fall on the heads of any opposition protestors who imagine they can move in and take over the reins of government from the bombed-out wreckage of the Islamic Republic. The U.S. military is not likely to be able to remain engaged in the detail of defanging the regime once the main thrust of the campaign is done. But Israel likely will. Its equivalent of the CIA, the Mossad, has spent years building up formidable intelligence at street level, and will be doing its utmost to continue hamstringing the regime from within and fomenting opposition.Among the many unanswerable questions is whether all this will lead simply to chaos and fragmentation, which is probably Israel's preferred outcome, or to a more compliant regime willing to compromise with the U.S. in order to get crippling economic sanctions lifted. As Trump concedes the war might last weeks, who knows what Iran will eventually emerge from the smoke and the rubble?

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Will he or won't he? The Middle East is on tenterhooks as the U.S. continues to build up a massive and menacing military posture around Iran, threatening an attack that could trigger a conflagration whose tremors would be felt throughout the region. 

If anybody hoped that the man on whose word it all hangs, President Donald Trump, might clarify his intentions in his State of the Union address on Tuesday night, they were disappointed. 

Speaking 36 hours before a third round of indirect and ultimately inconclusive talks with the Iranians in Geneva on Thursday, he said, "My preference is to stop this problem through diplomacy but one thing is for certain, I will never allow the world's number one sponsor of terror, which they are by far, to have a nuclear weapon...they want to make a deal, but we haven't heard those secret (sic) words, 'We will never have a nuclear weapon.’”

In the run-up to the Geneva talks, led on the U.S. side by real estate moguls Steve Witkoff and Trump son-in-law Jared Kushner, Iranian officials voiced optimism that a deal could be struck and insisted they would be flexible on the nuclear issue. Various formulas were being bandied around, such as Iran sending abroad half of its estimated 300kg of highly enriched uranium and diluting the rest under supervision, participating in a regional consortium for peaceful enrichment and so on. 

In theory, for Iran to say "We will never have a nuclear weapon" should not be an issue — it has said all along that it is not pursuing that goal, which is banned by a fatwa. Iranian foreign minister Abbas Araghchi posted on X this week that Tehran “will under no circumstances ever develop a nuclear weapon.” Which begs the question as to why it has enriched uranium to 60% — short of weapons grade but well beyond the levels needed for peaceful civilian purposes.  

Witkoff and Kushner will be vigilant for signs of Iranian duplicity and foot-dragging. But with another set of talks ending with no deal apart from promises of more talks, both sides might simply be playing for time, Iran to delay the feared blow, and the U.S. to finish assembling the assault force, its biggest mobilization of naval and air power in the region since the 2003 invasion of Iraq.

There is strong apprehension in the region that the huge and costly U.S. buildup must mean business. American bombs and missiles would hit Iran. The Iranians would make good on their threat to make it a regional war, not a symbolic retaliation as happened in the 12-day war in June last year after American bunker-buster bombs hit Iran's nuclear facilities in Isfahan, Natanz and Fordow. This time Iranian missiles would target U.S. military assets, bases on the Arab side of the Gulf and elsewhere, and perhaps oil installations. And Israel. The Israelis would hit back hard. Hezbollah in Lebanon would do its best to join in, prompting a further massive Israeli response. 

There were ominous straws in the wind. The U.S. withdrew non-essential personnel from bases in the Gulf, and from its embassy in Beirut. The Israelis reportedly warned Lebanon that if Hezbollah joined in, they would hit back at government targets, including Beirut airport, which were unscathed throughout the earlier hostilities. They stepped up their daily attacks on suspected Hezbollah targets, including a big missile attack on February  20 on the eastern Beqaa valley which left 12 dead, including eight Hezbollahis. Since the November 2024 ceasefire, Hezbollah has not fired so much as a peashooter at Israel while well over 400 of their people have been killed in Israeli attacks on Lebanon.

Does all this mean the doomsday scenario is inexorable? Are the Americans set on a clear game plan, with identified objectives and the means to attain them?

Apparently not. Trump is reportedly receiving divided counsel from his advisers, military and political, some more hawkish and others more cautious than others. Above all, he has an eye on the looming mid-term elections in November. He was elected on a platform of ending the "forever" wars in the Middle East, yet could be on the brink of starting another one, which would not go down well with part of his MAGA base or the public in general. 

The signs are that he was hoping the swashbuckling display of power would intimidate the Iranians into buckling. Witkoff admitted Trump was puzzled that Iran had not capitulated. “Why, under this pressure, with the amount of sea power and naval power over there, why haven’t they come to us and said, ‘We profess we don’t want a weapon, so here’s what we’re prepared to do?’ And, yet, it’s sort of hard to get them to that place,” he told Fox News. Iran's Foreign Minister Abbas Araqchi explained: "It's because we're Iranian."

Trump's adrenalin was clearly set pumping by the adventure in Venezuela, where a similar military buildup culminated in the operation to abduct President Nicolas Maduro. But Iran is not Venezuela. It is a highly militarized regime which has spent 47 years preparing its internal and external defences, and which has different power bases that make it hard simply to decapitate. There is no magic bullet that might not set the region on fire. 

Taking out the Supreme Leader, Ayatollah Ali Khamene'i (who is also a religious leader, and this is Ramadan) would not be likely to bring about a change in regime behavior as in Venezuela. Bringing the regime down altogether would require a prolonged and detailed campaign that the U.S. military machine might not be able to sustain. 

That's where Israel comes in. Some White House advisers reportedly believe it would play better politically for Israel to strike first rather than the U.S., and thus force Iran to retaliate. Like Trump, Israel’s Prime Minister Benjamin Netanyahu is a man with an eye on impending elections (October at the latest) is Prime Minister Benjamin Netanyahu, who makes no secret of his ambition to see the Iranian regime brought down. Netanyahu — backed by almost the entire Israeli political spectrum — is clearly champing at the bit, but aware of the danger of being seen to drag the U.S. into a potentially messy embroilment. One reason perhaps for the unusually discreet nature of Netanyahu's sixth visit to the White House on  February 11 — in through the back door, no lovefest press appearances. 

Which may also actually have been a sign that the two allies might not be on the same strategic page. Plunging Iran into fragmentation and chaos would absolutely fit Israel's playbook, but not necessarily America's. The two are working at cross-purposes in Syria, where the Israelis are pushing against a strong central government which the U.S. is supporting, even against its erstwhile Kurdish allies in the north-east. 

If there are two constants in the current equation, they are that the Iranian people’s disillusionment and rage against the regime will not go away, and neither will Israel's desire to overthrow it. But if Trump does not share that goal, he will have to find a face-saving way to wriggle off the hook he has created with his ostentatious military buildup. 

A version of this story was published in this week’s Coda Currents newsletter.Sign up here.

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