Iran War Reignites as Washington Faces Institutional Strains

The Iran war flared back to life on Monday. Iran suspended its US-mediated peace talks until Israel halts its operations in Lebanon and Gaza, the IRGC-affiliated Tasnim agency said, and the Revolutionary Guards threatened to keep the Strait of Hormuz closed, "activate" the Bab el-Mandeb and open "new fronts," warning that "crossing the red lines in Lebanon and Gaza" would mean "direct war." Iran's lead negotiator and parliament speaker, Mohammad Bagher Ghalibaf, said "the US blockade of Iran's ports and Israel's war in Lebanon are clear evidence of noncompliance with the ceasefire." Crude futures jumped more than 5 percent and equities slipped, though Wall Street held near records, with the S&P 500 off 0.1 percent.

The rupture followed Israel's capture of Beaufort Castle and Prime Minister Benjamin Netanyahu's order to strike Hezbollah targets in Beirut's southern Dahieh suburb -- an operation an Israeli source told CNN was coordinated with Washington -- sending thousands fleeing. Over the weekend, US forces had struck Iranian radar and drone-command sites at Goruk and on Qeshm Island after Iran downed a US MQ-1 drone; Iran's retaliatory ballistic missiles aimed at the US airbase in Kuwait were intercepted, with no Americans harmed.

The strains were institutional as well as geopolitical. In his first speech since leaving the Federal Reserve, former chair Jerome Powell warned on Sunday that a single act of political interference could "permanently destroy" public trust in the central bank, calling its situation a "stress test." Accepting the John F. Kennedy Profile in Courage award in Boston, Powell said decades of hard-won credibility would be lost if administrations removed officials over policy disagreements -- remarks that landed as the Supreme Court weighs President Trump's attempt, made last August, to fire Fed Governor Lisa Cook.

Abroad, the administration prepared a new front in influence. The State Department is set to issue grants from its Democracy Fund -- which held $205.2 million in 2025 -- to reshape European domestic politics, an effort run by the Bureau of Democracy, Human Rights and Labor under Samuel Samson, a 27-year-old former staffer at the conservative group American Moment. Critics warned the campaign could strain ties with European governments and lend legitimacy to fringe movements.

Domestic tensions flared too. In Newark, Mayor Ras Baraka imposed a nightly 9 p.m. curfew around the Delaney Hall immigration detention center after days of protests and a detainee hunger strike over conditions; Governor Mikie Sherrill said masked demonstrators had attacked police barricades. And at the Minnesota Republican convention in Duluth, delegates held a moment of silence for Derek Chauvin, the former officer convicted of murdering George Floyd -- a gesture that state Attorney General Keith Ellison, who led the prosecution, condemned as "profound cruelty.