US Treasury secretary says short-term pain worth long-term security

US Treasury Secretary Emphasizes Long-Term Security Over Short-Term Economic Setbacks

As tensions escalate in the Middle East, US Treasury Secretary Scott Bessent has defended the necessity of accepting minor economic challenges to secure long-term protection against potential Iranian nuclear threats. This stance comes amid warnings from the International Monetary Fund (IMF) that the ongoing conflict between the US and Iran could disrupt global economic stability, possibly leading to a recession.

“I wonder what the impact on global GDP would be if a nuclear strike hit London,” Bessent remarked. “My focus is on ensuring long-term security, even if it means tolerating some short-term economic costs.”

The IMF highlighted in its World Economic Outlook report that a worst-case scenario—characterized by sustained spikes in oil, gas, and food prices—could see global growth dip below 2% in 2026. Such a decline would bring the world economy to the brink of a recession, a phenomenon that has occurred only four times since 1980, most recently during the pandemic.

Despite the economic forecasts, Bessent stressed that the threat of Iranian nuclear strikes demands prioritization. He cited evidence of Iran’s mid-range intercontinental ballistic missiles, which can reach Western capitals, and its strategic ambitions. “We now recognize the risk, and that’s what matters most,” he said.

The UK government has maintained that there is no current assessment of Iran targeting Europe with missiles. However, it remains prepared to defend its territory against any potential attacks. A spokesperson noted: “We have the military capabilities to safeguard Britain, regardless of the threat source.”

IMF chief economist Pierre-Olivier Gourinchas warned that a prolonged conflict could exacerbate inflation, raise unemployment, and threaten food supplies. Even if the war ended immediately, the disruption to oil markets would mirror the effects of the 1970s oil crisis. Yet, Gourinchas added that the world’s reduced reliance on fossil fuels has mitigated consumer impact compared to past events.

Energy prices have fluctuated since the Iran-US conflict began, with oil reaching near $120 before retreating to $95. The IMF cautioned that prolonged severe conditions could worsen the risk of recession. If the conflict resolves swiftly and Middle Eastern energy production stabilizes by mid-year, global growth might ease to 3.1% in 2026, slightly below earlier projections.

Among advanced economies, the UK is expected to face the most significant strain from the energy shock. The IMF revised its growth forecast for the UK from 1.3% to 0.8% for this year. However, it anticipates a recovery with 1.3% expansion next year. Meanwhile, Gulf oil-exporting nations may experience economic contractions, while Iran’s economy is projected to shrink by 6.1% this year.

On Sunday, US President Donald Trump announced a blockade of Iranian ports to s