Volume II · After Gold · Money Research

06 — Wars, Invasions and Money, 1971–2026

How the fiat era changed the financing of war

Governments have financed wars through combinations of taxation, borrowing, monetary expansion and changes to convertibility; the mix has varied across countries and periods. After 1971, the United States had no dollar–gold parity to restore, but war spending still had to be funded and could affect debt, interest rates and prices through different channels. Oil disruptions in the Middle East have sometimes raised world energy prices, but not every war produced the same price response. Financial sanctions can restrict access to foreign-currency claims or payment services; Swift is a messaging network rather than a settlement asset. The 2022 immobilisation of Russian central-bank assets raised questions about reserve access, distinct from an outright transfer of ownership.

Vietnam and the Yom Kippur War (1965–74)

Vietnam spending strained US fiscal policy alongside Great Society programmes; Federal Reserve History describes rising inflation and official dollar-to-gold conversions as additional pressures before the 15 August 1971 suspension (“The Break, 1971–1976”). The war was part of that background, rather than a sole demonstrated cause of the gold-window decision. The Yom Kippur War of October 1973 and the OPEC embargo then disrupted oil supply and prices after major currencies had begun floating (“Oil, Petrodollars and Stagflation, 1973–1982”). Oil invoicing and later recycling of exporter receipts were not a replacement convertibility anchor for the dollar. Federal Reserve History, “The Great Inflation”; Federal Reserve History, “Oil Shock of 1973–74”; GAO, US–Saudi Joint Commission, 1979.

The Soviet–Afghan War and the Iran–Iraq War (1979–89)

The Soviet invasion of Afghanistan in December 1979, the Iranian Revolution and the Iran–Iraq War (September 1980–August 1988) put military and political pressure on an oil-producing region. Attacks on tankers and shipping in the Gulf during the Iran–Iraq War drew US naval escort operations in 1987–88. US Navy history, Operation Earnest Will. The 1979–80 oil-price rise and the sharp 1986 decline belong to different episodes; neither alone establishes that oil prices caused the Volcker recession, Soviet insolvency or the end of the Cold War (“Oil, Petrodollars and Stagflation, 1973–1982”). A measured account of Soviet war spending, oil-export receipts and external debt requires separate official series.

The Gulf War (1990–91)

Iraq invaded Kuwait on 2 August 1990. The invasion and coalition response disrupted oil markets, but assigning the 1990–91 recessions to the oil shock alone needs a separate causal assessment. The US-led coalition's campaign ran from 17 January to 28 February 1991. US budget officials estimated about $60–61 billion in incremental operation costs, while the Government Accountability Office warned that estimates, funding needs and actual obligations were different measures. Allies pledged about $54 billion; by 31 July 1991, they had contributed about $44.5 billion in cash and in-kind support, with a further $1.6 billion received by the Defense Department. That is not evidence that $54 billion had been paid or that the operation produced a fiscal surplus. GAO, *Cost of Operation Desert Shield and Desert Storm and Allied Contributions*, highlights; GAO, *Allied Contributions*, highlights. UN sanctions and the later oil-for-food programme altered Iraq's oil trade; the separate claim about the timing and significance of euro invoicing remains to be verified.

The Yugoslav wars (1991–99)

The wars of Yugoslavia's dissolution included fighting in Slovenia in 1991, Croatia in 1991–95, Bosnia in 1992–95 and Kosovo in 1998–99. War finance, fiscal disruption and monetary expansion under sanctions contributed to Yugoslavia's 1994 hyperinflation (“The Cold War Ends”), but a single-cause account is too strong. NATO's 1999 air campaign was not the first war in Europe since 1945: the earlier Yugoslav wars were themselves fought in Europe. Bosnia and Kosovo later used different currency arrangements; neither should be described simply as a protectorate created by that campaign.

9/11, Afghanistan and Iraq (2001–21)

The US campaigns in Afghanistan and Iraq followed the attacks of 11 September 2001 and extended over many years. On 25 June 2003 the Federal Open Market Committee reduced its target federal-funds rate to 1%; its statement cited economic weakness and concern about too little inflation, rather than claiming that this rate caused the later housing bubble (“The Financial Crisis and the Age of Quantitative Easing, 2007–2019”). Federal Reserve FOMC statement, 25 June 2003. A September 2021 Costs of War study estimated $5.843 trillion of US war appropriations and war-related spending through FY2022, plus about $2.2 trillion of future veterans' medical and disability obligations through FY2050, for a composite $8.043 trillion. Its defined total includes overseas operations, estimated interest on war borrowing, increases to the base defence budget and homeland-security spending; it is not an Afghanistan-and-Iraq operations bill already paid by 2021. The study says the wars were not financed with a special war tax or mass war-bond sales, and it includes estimated interest on borrowing. Costs of War, *US Budgetary Costs of the Post-9/11 Wars*, Table 1 and pp. 7–8. Dollar–euro changes and the 2001–08 oil-price rise cannot be assigned to this war finance or a single demand source without matched market series and causal evidence.

Financial restrictions became a prominent part of US and European policy toward Iran. Under EU regulation, Swift disconnected designated Iranian banks in March 2012; this restricted a messaging service, while banking, trade and oil measures operated through other channels. The effects of sanctions and the path to the 2015 nuclear agreement need separate evidence and cannot be inferred from a single oil-export percentage. China and Russia later developed domestic payment and messaging systems, but their timing and motives cannot be reduced to one sanctions response. Nor does this chronology show that every US rival bought gold because of sanctions. Swift, 15 March 2012 Iranian-bank disconnection statement.

Georgia, Crimea and the road to 2022 (2008–21)

Russia's five-day war in Georgia in August 2008 coincided with the financial crisis. The annexation of Crimea in March 2014 and the war in Donbas brought Western restrictions on named persons, selected banks' external financing and oil technology. Russia also faced a sharp oil-price decline and ruble depreciation in 2014–16, so the exchange-rate move should not be attributed to sanctions alone. The Russian central bank increased its gold holdings and Russia developed domestic card and financial-message systems during the following years. Those observations do not establish a single motive for reserve purchases, a global “first,” or a template that other countries necessarily followed. Bank of Russia, international reserves statistics; IMF, “Gold in the IMF”.

Ukraine (2022–present)

Russia invaded Ukraine on 24 February 2022. Sanctioning jurisdictions immobilised Russian central-bank assets within their reach and restricted selected Russian banks' access to Swift messaging. These measures affected access to claims and services, but immobilisation did not itself confiscate principal or transfer ownership. Energy-market disruption, oil sanctions and European inflation had several interacting causes (“Pandemic, Inflation and Weaponised Reserves, 2020–2026”); the specific figures and attribution need matched sources. In June 2024 G7 leaders announced approximately $50 billion in loans for Ukraine to be serviced and repaid from extraordinary revenues associated with immobilised Russian sovereign assets. The EU's October 2024 implementing measures distinguish those revenues from the underlying principal; the $50 billion was a commitment, not evidence that the full amount had already been disbursed. Council of the EU, ERA loan mechanism, 23 October 2024.

The 2022 reserve restrictions showed that access to foreign-currency claims can be restricted in the jurisdictions where they are held; domestically vaulted gold avoids that particular issuer-access risk but has custody and liquidity risks of its own. The World Gold Council's USD series reached a record $5,405/oz on 29 January 2026, but the price path alone does not establish how much of the rise was caused by the freezes. WGC July 2026, table 1. This chapter does not independently verify a peace-process chronology through September 2026.

Gaza, the Red Sea and the twelve-day war (2023–25)

Hamas's attack on 7 October 2023 was followed by Israel's war in Gaza. UNRWA, 7 October situation report. The International Maritime Organization recorded attacks on commercial vessels in the Red Sea beginning in November 2023. In a separately defined shipping measure, UNCTAD reported that June 2024 Suez Canal vessel transits were 70% below the mid-December 2023 average, while ship arrivals at the Cape of Good Hope increased; those observations do not measure Egypt's canal revenue or the total world-market effect. IMO, Red Sea attacks statement; UNCTAD, *Review of Maritime Transport 2024*, chokepoints section. In June 2025 Israel and Iran exchanged strikes, and the United States reported strikes on Iran's Fordow, Natanz and Isfahan nuclear facilities on 22 June. UN Security Council briefing, 22 June 2025; US letter to the UN Security Council. A Gaza ceasefire entered into effect on 10 October 2025, according to the UN Secretary-General's report. UN, S/2025/807, October implementation chronology. These different conflicts and shipping observations do not establish a single lead-up or measured oil-price response to the 2026 Hormuz disruption.

The 2026 Iran war and the closure of Hormuz

The Middle East conflict that began on 28 February 2026 impeded oil flows through the Strait of Hormuz. On 11 March the International Energy Agency reported that crude and refined-product export volumes through the strait were below 10% of pre-conflict levels at that date and that its 32 member countries had agreed to make 400 million barrels from emergency reserves available—the largest coordinated IEA stock-release decision to date, rather than proof that all barrels had already reached the market. In its 22 June supply assessment the IEA described the disruption as the largest in global energy-market history and estimated Hormuz flows at an average 2.7 million barrels per day for March–May, compared with around 20 million before the conflict. These are dated IEA estimates, not a verified September shipping condition or a single oil-price peak. IEA, 11 March announcement; IEA, 22 June supply assessment.

The IMF's July 2026 World Economic Outlook Update projected global growth of 3.0% for 2026 and 3.4% for 2027. It described uneven effects: the war shock weighed on energy importers while AI-related demand supported economies linked to the technology supply chain. A projection is not an observed growth outcome, and that aggregate account does not verify the precise September shipping, oil-price or central-bank-decision chronology formerly stated here. IMF, July 2026 WEO Update, overview.

Patterns

These cases show several monetary channels: war spending can increase borrowing, attacks on energy supply can raise prices, and sanctions can restrict access to financial claims or services. Their effects differ by conflict and economy. The immobilisation of Russian reserves in 2022 is a distinct action from confiscation; any causal claim that it alone drove subsequent gold buying requires more than a before-and-after comparison. The 2026 Hormuz disruption was described by the International Energy Agency as the largest oil-supply disruption in the market's history, a specific finding rather than a rule about every Gulf war. IEA, March 2026 stock-release announcement.

Key takeaways

War finance has used taxes, borrowing and monetary expansion in different proportions; prices and currencies do not move uniformly after wars. The 2026 Hormuz disruption was exceptionally large by the IEA's oil-supply measure, and IEA members agreed to make 400 million barrels from emergency reserves available. Financial restrictions may target bank access, messaging services or reserve claims; freezing assets is not the same as confiscating them. The effect of these measures on later central-bank gold purchases remains an inference that needs matched evidence. IEA, 11 March 2026 announcement.