So, the Iranian government, which is the consolidated result of the most radical elements of Iran, is now apparently planning on tolling all traffic through the Persian Gulf. I expect them to try to strangle the Arab states of the Gulf, the Gulf Cooperation Council (GCC) states, which they regard as heretics. So long freedom of navigation.
This will have wider implications. China is dreaming of controlling the South China Sea and the Taiwan Strait. Economist Paul Krugman comments:
So are we learning that the Persian Gulf is a uniquely crucial choke point for the world economy? I don’t think so. It’s certainly an important choke point. But it’s not unique. […] Over the past 40 years or so we’ve built a world in which national economies are so interdependent that there are potential choke points everywhere you look. […] Terrifying as the Hormuz crisis is, I worry that it may be only the beginning.
It seems we are entering into a world in which trade wars are the norm and interfering with trade at choke points is also a norm. I don't see anything the United States can now do to prevent this. In this brave new world, what states will do well? It seems large countries and trading blocs like China, the EU, and the United States that can trade internally. Small powers, or members of trading blocs unlucky enough to be at the mercy of an enemy that can choke off their trade will fare poorly.
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