The world economy is being held hostage as Iran plays gatekeeper in Hormuz

The Straits have been the focal point of the current conflict. Initially, Iran closed the straits totally, sending the world economy into panic mode. Airlines cut flight routes, and central banks warned of incoming pain. But Iran has found a way to make the blockade even more strategically advantageous – by having a partial blockade.

The butchers in Tehran have no problem inflicting pain, as drone attacks on neutral countries that sent holidaymakers scrambling for shelters have demonstrated. But Iran, along with its ally Russia, has come up with a much more devious strategy.

Rather than fully blocking the Straits of Hormuz, Iran will instead apply a partial blockade. Under this plan, countries willing to bow the knee to the mullahs will be allowed passage, while those which do not will be barred.

Under this selective blockade, Iran will be the final arbiter of who may and may not pass through the Straits. In essence, the gatekeeper of one of the world’s most critical trade arteries is one of the world’s worst tyrannies. And this has serious implications, especially for the US.

The world sees a strange situation; on the one hand, the US is enforcing a blockade, but Iran seems to be in charge. Ships from China have slipped through without challenge.

Last week, a superyacht belonging to a Russian oligarch crossed the straits. Iran looks at ships linked to its fellow tyrannies and gives them the greenlight for passage. By not engaging the ships, the US is in a dilemma. Does it engage and escalate? Or does it allow Iran to be the gatekeeper?

Strategically, the balance has shifted towards Tehran and its fellow autocracy, Russia. Both parties have an interest in weakening the US, and both see the power of manipulating energy flows to do it. While the US is largely energy self-sufficient, most of the world, including its democratic allies in Europe, are not.

Furthermore, the stock market responds to energy shocks in a very panicked way, wiping out value and shattering the business confidence the wider economy depends on.

The US is now on the backfoot. Loud declarations of victory or everything being under control from the White House change nothing about the reality on the ground (or sea in this case).

If the US ordered a blockade, but Iran, backed by Russia can violate it, then signals are sent about who is really in control of the Straits. And the free world may not like what those signals are telling us.

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Michael McManus is the Director of Research at the Henry Jackson Society

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