The absence of a plan scares the market

Andreas Cervenka

Reporter and economic commentator

This is a commentary text. Analysis and positions are those of the writer.

Updated 21.50 | Published 21.43

Why has the US attacked Iran right now and what is the goal?

Donald Trump has not been able to give a really good answer to that.

This increases the economic risks dramatically, also for Sweden.

In the event of upheaval, the same phenomenon always occurs: many people cry out for forecasts of what will happen. When the harsh truth is that no one really has any idea.

When it comes to the latest major war in the Middle East, it seems worryingly true that the people who started it also have.

The US government, led by President Donald Trump, has in a few days managed to give several completely different and contradictory versions of what the main purpose of the attacks on Iran is, the Financial Times notes in an article: overthrow the regime, force it to the negotiating table, knock out the country's missile defenses, avenge decades of terrorism around the world. On Tuesday, Trump presented another motive: Iran was about to attack first.

There have also been different signals regarding how long the war might last.

Trump has gone from telling journalists that the war could last a few days to saying it could be four to five weeks or "as long as it takes."

What happens then, and who will take over Iran? The president seems to be groping for answers as much as anyone else.

"We don't know who's leading the country right now, those in Iran don't know who's leading," Donald Trump told CNN.

That sounds reassuring.

At the same time, neither Defense Secretary Pete Hegseth nor Donald Trump have ruled out deploying ground troops, something that has surprised many, not least in the United States.

If the goal was to create maximum uncertainty, the United States and Israel have scored a direct hit.

             

            The oil industry area of ​​Fujairah in the United Arab Emirates is on fire after being hit by debris                  from a drone. Photo: Altaf Qadri / AP

It is not surprising that the world's financial markets reacted even more negatively on Tuesday.

In Stockholm, the stock exchange closed down 2.7 percent, the London Stock Exchange was down about the same amount and the Frankfurt stock exchange totaled a price drop of 3.4 percent.

At the same time, there are more and more signs that the United States has lost control of the development of events.

One such is that the US State Department is urging all American citizens to leave the entire Middle East, a very ominous message.

It now seems likely that this is not a short-term war with a clear end point.

This entails several risks for the economy:

Iran's closure of the Strait of Hormuz and attacks on energy facilities in the Gulf have sent shockwaves through the energy markets. The price of oil continues to rise sharply, as does the price of natural gas, which became another 30 percent more expensive on Tuesday and has now risen by 80 percent in a short time. This in turn has already caused electricity prices in Sweden to climb. 

Rising energy prices could push up inflation in Europe. In the market, investors are beginning to speculate on an upcoming interest rate hike from the European Central Bank (ECB), while a cut had previously been expected. Interest rates are ticking upwards, including in Sweden.

A war that continues for weeks and months with an unclear outcome risks paralyzing the economy. Last year, the Swedish economy slowed down after Donald Trump's tariff moves. Now the same thing could be about to happen again. The timing couldn’t be worse, as 2026 was supposed to be the year the economy took its revenge.

The perception of risk has changed. In 2026, Donald Trump attacked Venezuela, threatened to take over Greenland and started a major war in the Middle East. And it’s only March. What’s next? The talk of “we live in troubled times” has gone from a seminar discussion to a very concrete reality. Increased risk levels are usually bad news for growth.

Trying to predict what will happen in the conflict itself in the near future is impossible. In the best case scenario, the end result will be a free and democratic Iran - a great gain both humanly and economically.

But one thing is certain: a lot can go wrong, as the US's experiences in countries such as Iraq, Afghanistan and Libya have shown.

The longer the conflict goes on, the more the risks of unexpected consequences increase. Countries in Asia that are dependent on oil from the Gulf could come under severe economic pressure if the war drags on. On Tuesday evening, Trump promised to "cut off all trade" with Spain because the country is not supporting the US in the war. What does that mean?

Geopolitics is also being affected. Russia is certainly losing an ally in Iran, but rising oil prices could become a lifeline for the Russian economy. What does that mean for the war in Ukraine and, by extension, for the security of Europe and Sweden?

Following world developments is like sitting in the back seat of a car parked on a steep downhill slope when someone suddenly reaches in and releases the handbrake.

What is frightening is not just the unexpected movement but above all a chilling realization: no one is in control.