The battlefield is in Iran. The geo-economic crosshairs are on Europe.

For Europe’s institutional investors, one question can no longer be deferred: should reducing dollar exposure now become a systematic part of geopolitical risk management? This article argues that the war around Iran is not only an energy shock — it is a reminder that monetary exposure and strategic dependence have become inseparable. These risks will increasingly be priced not only into portfolios and insurance premia, but also into the financing conditions of European firms, and increasingly in response to US policy decisions rather than ECB guidance. Large corporates will face greater borrowing costs and more selective access The bombs falling on Tehran do not strike everyone equally. Operation Epic Fury has triggered an energy shock whose impact is distributed with striking asymmetry. For the United States, the economic fallout is comparatively containable. For Europe, it is proving severe. The European reference gas price nearly doubled. Already weak growth prospects for the eurozone are absorbing another blow, as inflation re-accelerates and purchasing power comes under renewed pressure.

By Prof. Dr. Patrick Vanhoudt, Dean of LSB