The Mecca Accord

As the author of The Big Reset, I have argued for more than a decade that the postwar American monetary and geopolitical order contained the seeds of its own exhaustion. That order rested on the dollar’s exorbitant privilege and the security architecture underwriting energy flows from the Persian Gulf, the petrodollar system of the mid-1970s.

The past week has delivered interlocking confirmations of the transition: the signing of the Mecca Accord on 7 August 2026, a more than 7% weekly surge in gold to levels last seen in mid-June, the joint U.S.-Japan yen intervention, and the sharpening of Israeli-Turkish strategic rivalry. They mark the accelerating end of American hegemony in the Middle East and the progressive dismantling of the financial arrangements that once sustained it.

In the aftermath of the Iran conflict that began on 28 February 2026, Israeli strategic discourse has shifted markedly. With Iranian capacity degraded, attention has turned to Turkey. Former Prime Minister Naftali Bennett has described Turkey as “the new Iran” and a “new strategic threat,” warning that after Iran “we won’t stay idle.” Diaspora Affairs Minister Amichai Chikli has stated that a direct military encounter between the Israeli and Turkish militaries is “not an impossible scenario” and could occur “even tomorrow morning’’. Defense Minister Israel Katz has pointed to regional security, Syria, and historical analogies, while Prime Minister Benjamin Netanyahu has publicly campaigned against the sale of F-35 aircraft to Ankara, arguing that such aircraft in Turkish hands would “destroy the power balance” and that Erdoğan’s government harbors “aggressive aspirations” and is “not a force for peace and security.”

Israeli officials have also linked Turkish plans for military bases in Syria to potential Israeli countermeasures, including the establishment of Israeli bases on Syrian territory. Energy and Infrastructure Minister Eli Cohen has framed the issue in precisely those terms. Former national security adviser Giora Eiland has observed that while Iran once sought to surround Israel with a Shi’ite “ring of fire,” Turkey increasingly appears interested in constructing a Sunni equivalent. The rhetorical escalation has been matched by diplomatic moves, including the formal recognition by the Israeli cabinet of the 1915 Armenian events as genocide, widely interpreted as a rebuke to Ankara. It takes one to know one :-)

Turkish leaders have not remained silent. President Recep Tayyip Erdoğan stated in June that Israeli attacks on Syria and Lebanon had reached a point where they also threaten Turkey, tying Ankara’s security to that of its southern neighbors. Foreign Minister Hakan Fidan has accused the Netanyahu government of using security concerns “as an excuse to occupy more land” and of pursuing expansionism that destabilizes the region. In Turkish security circles, the National Security Council’s “Red Book” is reported to regard Israeli expansion as a principal threat. The Iran war altered Ankara’s calculus: the priority is no longer solely Kurdish or Gülenist issues, but the longer-term trajectory of Israeli military activism across Syria, Lebanon, and the Eastern Mediterranean.

This all shows we are moving from a uni to a multipolar world. Two significant military powers, one a NATO member with growing defense-industrial autonomy, the other a nuclear-armed state with demonstrated willingness to project force, are locked in a largely non-kinetic but intensifying rivalry over influence in Syria, the Eastern Mediterranean, Cyprus, and broader regional architecture.

Erdoğan’s response has been characteristically strategic. Rather than escalate bilaterally or rely solely on NATO channels of uncertain reliability, he has moved to embed Turkey in a new collective-defense framework. On 7 August in Mecca, Erdoğan, Saudi Crown Prince Mohammed bin Salman, and Pakistani Prime Minister Shehbaz Sharif signed the Makkah Joint Defense Agreement. An armed attack against any one of the three is to be regarded as an attack against all. The pact expands cooperation in the defense industry, counterterrorism, and collective deterrence, and is explicitly open to other states seeking regional stability.

This seems like a great Erdoğan chess move. By aligning NATO’s second-largest army, sophisticated unmanned systems, and electronic-warfare capabilities with Saudi financial resources and geographic centrality, and with Pakistan’s nuclear deterrent and military depth, Ankara acquires strategic depth against potential isolation or pressure. The agreement builds on the earlier Saudi-Pakistani bilateral mutual-defense arrangement of 2025 and reflects months of quiet diplomacy. Turkish officials have emphasized that it is defensive, targets no specific country, and reaffirms the right of self-defense under Article 51 of the UN Charter. Turkey expects Egypt to join at a later stage as well.

Mehmet Çelik has described the resulting formation as an “axis of stability” whose complementary strengths- Saudi capital, Turkish industry and manpower, Pakistani nuclear capability- create a credible deterrent. Mohammed Shoaib Raza has noted that the pact blends hard-power aggregation with civilizational framing of Islamic solidarity while carefully avoiding formal exclusivity. Former U.S. ambassador Christopher Hill has called the accord “one of the more important developments of this war,” observing that it carries “no American fingerprints” and signals a regional judgment that Washington is “becoming unreliable.” Erdoğan has simultaneously kept the door open to additional partners and reiterated a preference for dialogue, while ensuring that Turkey is no longer a solitary actor in a volatile theater.

The same agreement significantly strengthens Crown Prince Mohammed bin Salman’s position. Domestically, MBS has already centralized power to an unprecedented degree since 2015–2017, neutralizing rivals, consolidating control over coercive and financial institutions, and cultivating support among younger generations and women through Vision 2030 reforms. Internationally, the Mecca Accord positions Riyadh as the indispensable financial and geographic anchor of a new Sunni security architecture at a moment when U.S. guarantees appear contingent and Iranian proxy attacks have targeted Gulf energy infrastructure.

By binding Turkish military capacity and Pakistani nuclear deterrence to Saudi interests, MBS gains leverage without ceding autonomy. The pact enhances Saudi deterrence against residual Iranian pressure while diversifying security partnerships beyond traditional American dependence. It also elevates Riyadh’s role in any future regional settlement, whether concerning energy corridors, maritime security, or broader order-building. Analysts tracking Saudi strategy note that MBS has long sought to reduce over-reliance on any single external patron while maximizing the kingdom’s centrality. In an increasingly multipolar World, the ability to convene and underwrite collective arrangements confers status. MBS now sits at the intersection of energy markets, Islamic symbolism, and a nascent defense framework that includes a NATO member and a nuclear state. Washington isn’t very happy about these developments.

These geopolitical shifts unfold against a clear monetary signal. Gold has delivered its strongest weekly gain since January, rising more than 7 percent to levels around $4,340 per ounce, possibly ending this year’s correction. UBS projects gold reaching $5,000 in the first half of 2027. Central-bank purchases remain robust; World Gold Council figures show 290 tonnes acquired in the second quarter of 2026, up 62% year-on-year. So, 2026 could well be the fifth year in a row where central banks accumulated around 1000 tonnes of physical gold. China continues to accumulate on dips, treating price softness as an opportunity while Western markets remain heavily paper-oriented. China also told the markets it has moved more gold holdings from London to Hong Kong, in a clear effort to build an Asian gold trading system. During the first of our OMFIF Gold Working Group, attended by almost a dozen central bankers, we learned more and more of them have started to accumulate or repatriate gold.

Simultaneously, the yen has given back nearly half the gains from the late-July joint U.S.-Japan intervention, the first coordinated yen-buying operation since 1998. Former BOJ official Atsushi Takeuchi has argued that U.S. backing removes constraints on Japanese capacity and that the partners will act again if the yen resumes its slide. The U.S. move is probably in response to the risks the BoJ would face if it needed to start selling Treasuries to support its currency. The White House needs all support possible now that it has to sell/roll-over almost 10 trillion of Treasuries in the next 12 months.

These market moves are not coincidental. They reflect the same loss of confidence in the old arrangements that is driving regional realignments. The petrodollar system- oil priced in dollars, surpluses recycled into U.S. assets, American security guarantees in return- is fraying as we have explained in previous posts. China settles growing volumes in yuan. Sanctioned oil already moves off dollar rails. When security guarantees appear unreliable and regional powers construct alternative frameworks, the structural demand for dollars generated by mandatory recycling weakens. Gold’s rebound and the struggle to defend the yen are monetary expressions of that geopolitical shift.

Robert Kagan’s, one of the core U.S. neocons, has acknowledged the passing of the American-dominated liberal order, describing the Iran confrontation as a strategic setback that could neither be repaired nor ignored. Empires rarely fall solely on the battlefield; they dissolve when the financial arrangements that subsidized their primacy lose credibility.

The Big Reset is not a future binary event. In its geopolitical and monetary dimensions, it is already underway. Those who study the historical pattern of monetary regimes and the power relationships that sustain them will navigate the transition with clearer eyes than those who assume the arrangements of the last fifty years will simply persist.

Grok assisted writing; all additional prompting and editing by Willem Middelkoop