[BUG] API timeout retry regression in 1.0.8

Environment

• Platform (select one):
• [X] Anthropic API
• Claude CLI version: 1.0.8
• Operating System: Ubuntu 24.04
• Terminal: gnome-terminal

Bug Description

Claude Code no longer retries automatically after API timeouts. Previous versions did retries with exponential backup, but 1.0.8 just gives up immediately. Example:

╭───────────────────────────────────────────────────╮
│ ✻ Welcome to Claude Code!                         │
│                                                   │
│   /help for help, /status for your current setup  │
│                                                   │
│   cwd: my_cwd       │
╰───────────────────────────────────────────────────╯


 What's new:
  • Fixed Vertex AI region fallback when using CLOUD_ML_REGION
  • Increased default otel interval from 1s -> 5s
  • Fixed edge cases where MCP_TIMEOUT and MCP_TOOL_TIMEOUT weren't being respected
  • Fixed a regression where search tools unnecessarily asked for permissions
  • Added support for triggering thinking non-English languages

> git commit the staged changes
  ⎿  API Error: Request timed out.

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