Ukraine and Iran

This week we talk about cheap drones, energy resources, and Russia’s invasion of Ukraine.We also discuss the Strait of Hormuz, the war in Iran, and economic asymmetry.Recommended Book: The Age of Extraction by Tim WuTranscriptRussia’s invasion of Ukraine has been pretty universally bad for everyone involved, very much including Russia, which going into the fifth year of this conflict, which it started by massing troops on its neighbor’s border and invading, unprovoked, following years of funding asymmetric military incursions in Ukraine’s southeast. Following their full invasion though, Russia has reportedly suffered around 1.25 million casualties, with more than 400,000 of those casualties suffered in 2025, alone. It’s estimated that Russia has also suffered at least 325,000 deaths, and Ukrainian officials reported confirmed kills of more than 30,000 Russian soldiers just in January 2026.As of early 2026, Russian controlled about 20% of Ukraine, down from the height of its occupation, back in March of 2022, when it controlled 26% of the country.And due to a combination of military spending, intense and expansive international sanctions, and damage inflicted by Ukraine, it’s estimated that Russia has incurred about $1 trillion in damages, about a fifth of that being direct operational expenses, and around a fourth the result of reduced growth and lost assets stemming from all those sanctions.There’s a good chance that all of these numbers, aside from the land controlled, are undercounts, too, as some estimates rely on official figures, and those figures are generally assumed to be partially fabricated to allow Russia to keep face in what is already a pretty humiliating situation—a war they started and which they thought would be a walk in the park, lasting maybe a week, but which has instead gone on to reshape their entire country and present one of the biggest threats to Putin’s control over the Kremlin since he took office.That in mind, a report from last week, at the tail-end of March, suggests that the Kremlin knows things aren’t looking great for them, and they asked Russian oligarchs to donate money to the cause, to help stabilize Russian finances. This report, which is unconfirmed, but has been reported by multiple Russian media entities, arrives at a moment in which the Russian government is also planning cuts to all sorts of spending, including military spending, but also a reported 10% across the board, to all “non-sensitive” matters in its 2026 budget.Despite these fairly abysmal figures, though, there’s some optimism in Russia-supporting circles right now, in large part because the conflict in Iran, and Iran’s near shutting down of the Strait of Hormuz, which is an important channel for the flow of international energy assets, that’s goosed the price of oil and gas, which in turn has goosed Russian income substantially.What I’d like to talk about today are the interconnections between the conflict in Ukraine and the conflict in Iran, and how Ukraine being invaded seems to have put them in a position of relative influence and authority in this new conflict in the Middle East.—From the moment Russia launched its full-scale invasion of Ukraine, the Ukrainian military, and its government, industrial base, and pretty much everyone else, scrambled to find an asymmetric means of keeping a far larger, wealthier, and ostensibly more experienced and better backed foe from just steam-rolling over them.They found that by leveraging lower-cost deterrents, like cheap rockets and drones, they could pay something like $10,000 to take out a tank or other weapons platform that cost Russia a million or ten million dollars. That’s a pretty stellar trade-off, and if you can do that over and over again, eventually you make the cost of the conflict just ridiculously unbalanced, each trade of hardware costing you very little and them a whole lot, which with time can making waging war unsustainable for the side paying orders of magnitudes more.Russia is of course making use of inexpensive drones and rockets, as well. That’s become a norm in modern conflicts, especially over the past five years or so, as cheap but capable and easy to produce models have started rolling of manufacturing lines in Iran and Turkey, allowing them to become popular sources of single-use but quite agile and deadly aerial weaponry.Ukraine has gone further than most other entities, though, as they’re immensely incentivized to get this right, and to put their full support behind anything that gives them the upper-hand against what’s still a powerful and otherwise overwhelming invading force. And this patchwork of companies, independent and government supported, large-ish and tiny enough to operate under constant fire and in wartime conditions, has since scaled-up so that they’re expected to manufacture about 7 million drones of many different varieties in 2026.This scaling has attracted a lot of ...