New Crescent of Power

On June 24, the 12‑Day War between Israel and Iran, which erupted on June 13, 2025 after Israel launched air strikes on Iranian military and nuclear sites killing key nuclear scientists and military commanders, a fragile ceasefire was brokered by the US—hours after Iran had fired missiles at its largest airbase in the Middle East, based in Qatar. The United States entered the military clash on June 22 with bunker-buster strikes on Iran’s Natanz, Fordow and Isfahan nuclear facilities. Quoting a preliminary US intelligence assessment, Reuters reported that the US airstrikes failed to destroy Iran’s nuclear capability and only set it back by a few months. Till today, Israeli genocide continues in Gaza strip even after 600+ days of conflict between Hamas and Israel where over 55,000 Palestinians have been killed.

Since the creation of Israel in 1948 by the USA and its European allies, the month of June seems to be a significant month for the Arabs. The Six-Day War, also known as the June War, was fought between Israel and a coalition of Arab states, primarily Egypt, Syria, and Jordan, from June 5 to 10, 1967. After the war, Israel occupied a total of 70,000 km2 of Arab territory—the Golan Heights from Syria, the West Bank including East Jerusalem from Jordan, and the Gaza Strip and the Sinai Peninsula from Egypt. Though the dust of the ‘12 Day War’ between Israel and Iran has not settled yet, there is a certainty that the tectonic impact of this war will be significant. Developments across the region during the last few days have profoundly shifted the diplomatic landscape and the balance of power in the Middle East, observes Le Monde.

Shifting Balance of Power in MENA

The fall of Constantinople (now Istanbul) to the Turks in 1453 compelled the European traders to explore for an alternative route, and the discovery of a new sea route to Asia by the Portuguese explorers led to the decline of the age-old Silk Road. Contrary to that, a failed attack on Tehran by Israel and the USA is likely to strengthen the historic ties between China and the Islamic countries of the Middle East and North Africa (MENA), triggering the revival of the dormant primordial civilisations of the region. Few signs of change are visible:

Louder and harmonised voice of the Muslim world: MENA consists of 18 countries, although five other countries, including Turkey, are often considered under the MENA region. The Arab League has 22 member states. Except for Israel and Malta (an Island country on the Mediterranean located between Sicily and North Africa), all the MENA countries are members of the Arab League. In a significant development, the Istanbul Declaration adopted by the Heads of Delegation of the 57 Member States of the Organisation of Islamic Cooperation (OIC), after the 51st Session of the Council of Foreign Ministers (CFM), held in Istanbul, Türkiye, on June 21-22, strongly condemned recent Israeli strikes on Iran. Turkish Foreign Minister Hakan Fidan underlined the role of the OIC as the “voice of the Muslim world,” noting that 156 resolutions had been adopted to reflect the shared concerns of member states. “Israel’s aggressive policies pose a threat to all of us,” he added, calling for unity among Muslim nations. Significantly, in addition to the focus on the Middle East, the Istanbul Declaration also raised concern over South Asia, condemning recent military strikes on Pakistan and Pakistan-occupied Jammu & Kashmir. The OIC urged all sides to exercise restraint and stressed the need to respect existing treaties, including the Indus Waters Treaty (IWT).

Middle East’s declining influence on oil prices: The Israel-Iran war highlighted the Middle East’s declining influence on oil prices. The moderate 15 per cent low-to-high swing during this conflict suggests oil traders and investors have slashed the risk premium for geopolitical tensions in the Middle East, observes Reuters. Compared to this, the impact on prices of previous tensions in the region was enormous. The 1973 Arab oil embargo led to a near quadrupling of oil prices. Disruption to Iranian oil output, following the 1979 revolution, led to a doubling of spot prices. Iraq’s invasion of neighbouring Kuwait in August 1990 caused the price of Brent crude to double to USD 40 a barrel by mid-October. And the start of the second Gulf war in 2003 led to a 46 per cent surge in prices.

US dollar’s waning safe-haven status: The Israel-Iran crisis also revealed the US dollar’s waning safe-haven status. The US dollar, once the unchallenged sanctuary in global crises, no longer commands the same automatic confidence. Generally, events like these—volatile, unpredictable, and geopolitical—would have sent investors rushing into the dollar. Though the dollar edged higher following the strikes, the climb was shallow, cautious, and short-lived. This is a striking departure from the past. In the wake of the Gulf War, after 9/11, and during the global financial crisis, capital sought refuge in the dollar almost reflexively. Analysts believe that a big part of the shift lies in the sheer accumulation of economic risk tied to Washington. The dollar has already shed 8.6 per cent this year against a basket of its major peers—a loss that coincides not just with geopolitical uncertainty, but with growing disquiet over US debt, erratic policymaking, and the long shadow of tariffs under President Donald Trump’s administration. It may be recalled that in 1974, during the global crisis, the petrodollar agreement between the United States and Saudi Arabia helped the US dollar to migrate from the ‘Gold Equivalent Standard’ to ‘Crude Equivalent Standard’—dollar got linked to the value of crude oil. The 50-year ‘petrodollar agreement’, which helped retain US dollar’s hegemony on the global economy, expired on Jun 9, 2024.

The US monopoly on the Middle East crude and gas on decline: The US monopoly on the Middle East crude and gas is on decline. Now, China and Arab countries enjoy a comprehensive and in-depth bilateral partnership. In 2024, trade between the two sides reached approximately USD 400 billion, making China the largest trading partner of Arab countries. Statistics show that China and Arab countries have initiated more than 200 major projects in infrastructure, energy and other fields under the Belt and Road Initiative (BRI), benefiting nearly 2 billion people in the two regions. Chinese commerce ministry data shows its direct investments in Iran by the end of 2023 totalled USD 3.9 billion. In addition to Iran, Beijing invested more than USD 8.1 billion in the United Arab Emirates between 2013 and 2022, and almost USD 15 billion in Saudi Arabia between 2007 and 2024.

Ethiopia—a new member of BRICS—is set to debut in the global oil market in September, marking its first crude oil exports, which will put Ethiopia among Africa’s oil-exporting nations, such as Nigeria, Angola, Algeria, and Libya. It is reported that last year, Prime Minister Abiy Ahmed met with officials from Poly-GCL Petroleum Investment Limited—a joint venture between China’s state-owned POLY Group Corporation and Hong Kong-based Golden Concord Group—to formally launch crude oil production testing in the Ogaden region. The Prime Minister Abiy stated that Ethiopia expects to generate up to USD 8 billion annually from natural gas exports once operations reach full capacity.

Beijing backs Tehran against US sanctions: As part of its efforts to deepen its strategic and economic heft in the Middle East, China backed Iran against US sanctions. In 2021, they signed a 25-year cooperation deal. Now China buys 90 per cent of Iran’s crude oil, paying in local currencies, which is roughly 13.6 per cent of China’s crude purchases. Around 65 per cent of total crude and condensate shipped through the Strait of Hormuz off Iran is destined for China. China National Petroleum Corp (CNPC) signed a deal in 2009 to develop the North Azadegan oil field, with the first phase valued at about USD 2 billion. The first cargo of 2 million barrels was shipped to China in 2016. China’s biggest refiner, Sinopec, signed a USD 2 billion deal to develop the Yadavaran oil field in 2007. In 2017, Sinopec signed a contract worth about USD 2.1 billion to upgrade a refinery in Abadan near the Gulf coast. It remains under construction. In 2024, China’s LDK Solar reached a deal with Iran’s Ghadir Investment Group for a large-scale photovoltaic power plant with an investment of around Euro 1 billion. It was expected to generate 2 billion kilowatt-hours of solar power annually.

Tehran—an emerging logistic hub of China’s new Silk Road: China has made substantial investments to improve Iran’s railway system with an eye to develop Teheran as a logistic hub of its new Silk Road for Europe and the MENA region. Iran received the first cargo train from China on February 15, 2016. The train, which carried 32 containers of commercial products, left Yiwu in the northwestern province of Xinjiang in China on January 29 and traversed some 9,500 kilometres passing through Kazakhstan and Turkmenistan before arriving at Tehran railway station. In 2018, China National Machinery Industry Corporation signed a Yuan 5.3 billion deal to expand and renovate a railway network connecting Tehran with the cities of Hamedan and Sanandaj to improve connectivity in western Iran. In the same year, a subsidiary of China Railway Construction Corporation signed a contract worth Yuan 3.5 billion for the 263 km Kermanshah-Khosravi railway project in western Iran. In 2018, China’s Norinco International signed an agreement to build the first tramway line in the Iranian city of Qazvin, at about USD 150 million. As a part of China’s new Silk Road initiative, railway officials from Iran, China, Kazakhstan, Uzbekistan, Turkmenistan, and Türkiye met in Tehran, on May 12, to advance a transcontinental rail network linking Asia to Europe. The six nations agreed on competitive tariffs and operational standards to streamline regional rail services and boost trade connectivity. A new commercial rail route linking China and Iran has been officially launched with the arrival of the cargo train from the eastern Chinese city of Xi’an at Aprin Dry Port near Tehran.

From Petrodollar to Mineral-Yuan: China is using Rare Earth Elements (REE) to challenge US’ global economic hegemony. As an essential component in most of the “green” technology that will fuel the campaign against climate change, REEs represent a global commodity value chain capable of rivalling petroleum and potentially threatening to erode US hegemonic authority. China has successfully ensured its near absolute monopolistic control over the “fuel of the future.” As of 2022, China accounted for 60 per cent of mined production, 85 per cent of processing capacity, and 90 per cent of permanent magnet production.

China has been making quiet but strategic moves across the globe for REE. By 2029, nearly 40 per cent of Africa’s projected rare earth supply will already be tied to Chinese companies. Out of the 17 rare earth minerals, China’s export control is targeting only 7. Of these—like Dysprosium and Samarium—the US production is zero, while China’s market share is well over 95 per cent. But Africa isn’t their only focus. China is also building rare earth “backups” in Central Asia.

While Beijing cements supply chains from Africa to Central Asia, a quiet revolution is underway in Türkiye. A recent National Intelligence Academy (NIA) report confirms that Türkiye’s Eskişehir/Beylikova region holds 694 million-tons of REEs—second only to China’s formidable Mongolian Bayan Obo mine. Most significantly, Saudi Arabian Mining Company, which is one of the world’s fastest growing mining companies, has signed an agreement with MP Materials Corp—an American fully integrated rare earth producer—to explore opportunities to establish a fully integrated, end-to-end rare earth supply chain.

In addition to REEs, Antimony—another important element—is abundantly available in the Middle East. It is estimated that the Middle East’s Antimony market will reach 11,000 tons by 2035, valued at USD 122 million. It is a critical mineral with essential uses in defence, energy, and technology. However, the US has no significant domestic production and depends heavily on imports, mainly from China, which controls most of the world’s antimony supply, both in mining and processing. It has restricted exports of antimony and related products, especially since 2023. It is reported that in March 2025, Iran discovered its largest Antimony reserve, which is estimated to account for roughly 10 per cent of the global Antimony supply.

Reduced importance of Israel to the USA and its Western allies: Israel was primarily created after WW2 to protect the US’ interests in the oil-rich Persian Gulf. As the importance of crude oil and the petrodollar is waning, the Zionist Israel is likely to be a liability to its creators. Moreover, the long history of animosity between Christians and Jews cannot be erased. Over the last thousand years, millions of Jews were persecuted by the Christians across Europe. Israeli genocide in the Gaza Strip has angered many liberals in Europe and the USA. The symbiotic relationship between the USA and Israel is unlikely to last for long.

Promotion of inter-civilisational dialogue: On the occasion of the 34th Arab League Summit in Baghdad, held in May 2025, the Chinese President Xi Jinping sent a congratulatory message to Iraqi President Abdul Latif Rashid—the current chairperson of the Council of Heads of the League of Arab States. Xi reminded him that the vigorous development of relations between China and Arab states in recent years has set an example of unity and cooperation among developing countries. The three pivotal initiatives the Chinese President Xi has put forward—the Global Development Initiative, the Global Security Initiative, and the Global Civilisation Initiative—address the pressing issues of the times.

In the history of human civilisational exchange, the confluence of Islam and Confucianism is generally regarded as a scholarly activity initiated by Chinese-speaking Muslim scholars in the Ming and Qing periods, who creatively interpreted Islamic thought in Confucian terms and promoted a profound Islamic–Confucian dialogue, writes Wei Wang (2022). According to him, from the Yuan to the mid-Ming period, the people of Huihui in mainland China gradually Sinicized in terms of their languages, family names, marriages, costumes, and ethical values. There was close interaction between these Muslims and Confucian scholars in China. Most of the mosque inscriptions in this period were written by Confucian scholars, who were the first to try to interpret Islam in Confucian terms. Around the mid-Ming period, the Chinese language became the lingua franca of Muslims in mainland China, and the teaching of Arabic and Persian classics in Chinese became an urgent need at this time. Promotion of inter-civilisational dialog between the Islamic Confucian scholars and confluence of these two ancient civilisations is the need of the hour for a peaceful and harmonised world.

Observations

In 1500, when a new World was discovered by the sea explorers of Europe, China and India contributed nearly fifty per cent of the world’s GDP. Due to the expansionist policies of the European countries, the old civilisations of China, India, Persia, and North Africa declined. While China has revived its old trade corridors and associates of the Old World, India has decided to align with the Europe-USA-Israel axis and is isolated among the old and trusted friends of the Global South.

In their last meeting, OIC has criticised India’s unilateral stand on the Indus Water Treaty. If India plans to change, as reported by the Times of India, the Ganges Water Sharing Treaty with Bangladesh—a member of OIC—India’s isolation with the two Islamic countries of the South Asian region will be complete.

The writer is a professor of Business Administration who primarily writes on political economy, global trade, and sustainable development.
Views expressed are personal