Prior to Donald Trump’s Presidential order for the blockade in the Strait of Hormuz, Israel’s recent attack on more than 100 places in Lebanon had violated the long-awaited and most complicated ceasefire agreement between the US and Iran. The seriousness of the Islamabad-brokered peace talk lies in the fact that while Iran considers Lebanon as one of the core parts of the ceasefire proposal, arguing for the complete restoration of peace in the region, the United States of America considers the ‘Strait of Hormuz’ as the central part of this proposed agreement, saying Lebanon is a separate matter of conflict in the Middle East.
Looking at the historical footprints of conflict, it is generally argued by many experts around the world that the major bone of contention between the US and Iran is nuclear enrichment. Given that strait of Hormuz is the central point of discussion in this peace talk, the failure of this talk and the USA’s recent decision to deploy the US Navy in the Strait of Hormuz is a witness to the fact that the US’ attack on Iran was possibly not primarily meant to deal with the Iran’s capability of enriching uranium, but to have a strategic control over the Strait of Hormuz, as this strait being an important gateway to the Gulf (petrodollar system) gives passage to around 20% of global crude oil supply.
Contextually analysing, China used to import more than 90% of Venezuela’s total oil export, and that was traded in Yuan. Later, the US invaded Venezuela and took control of the Venezuelan oil industry, indirectly stopping China from trading in Yuan. In the case of Iran, China also imports around 90% of Iran’s total oil export, which was supposed to take place in Yuan after the US attack on Iran. In this regard, after the failure of the Islamabad-brokered peace talks, the US deployed its Navy in the Strait of Hormuz, announcing that no single ship is to pass through this strait without permission from the US Navy. It can be inferred that the US is again trying to replicate a Venezuelan model here in this region, too, indirectly warning China against trading in Yuan. Whatever the consequences of this war may be, one of the most important aspects is that Iran, particularly the Strait of Hormuz, seems to be turning into a proxy battlefield between the US and China. China has already issued a warning against the US, stating that “it is Iran that controls the Strait of Hormuz, and it is completely open to us”.
China has additionally stated that Chinese vessels will continue to operate in the Strait of Hormuz, as Beijing has bilateral economic ties with Iran. As Trump’s presidential order regarding the blockade in this strait has already come into effect, the question arises whether the US will really allow access to the Chinese vessels carrying crude from Iranian ports. If the US Navy does not allow access to Chinese vessels, it will directly provoke China, and this conflict will most likely unfold into a larger regional conflict, as China will have no other options left, given that its economy is already suffering from supply chain disruptions. If the US Navy allows access to Chinese vessels, the credibility of the presidential order regarding the blockade will be significantly undermined, as it would send a message to the world that China’s economic and military capabilities are far stronger than those of the US.
This would additionally send a message to the world that the US only bullies those countries which are weaker than the US. In this context, whatever decisions the US Navy takes will certainly give Iran an edge in this conflict against the US. While rising crude prices emerging from this new conflict will be beneficial for Iran, Russia and other oil-exporting countries, the overall crisis arising globally from this supply chain disruption will foster negative sentiment towards US policy, whose impact could be seen in the decline of dollar hegemony in the near future. As the US intelligence has already informed that China may be silently supplying weapons to Iran, it would not be wrong to assume that Iran, after Ukraine, has become a new testing ground for newly developed advanced Chinese arms and ammunition. It will also not be inappropriate to assume that China, Russia and Iran may be not in a position to stand against the US’s economic and military capability in a shorter run, these trio will most likely emerge as net gainer in this war in the longer run, as the US will possibly not be able to sustain for a longer period of time with this attitude in this war.
Keeping Trump’s recent America-centric hostile policy in mind, it can be argued that the global sentiment is gradually turning against the US. In this regard, the ultimate sufferer of this war will be none other than the US itself in the long run. Today, the penetration of US dollars in the global economy (international transactions) is so intertwined that no country can afford the collapse of the US economy at this moment. However, the US’s recent policies are gradually becoming a driver of rising multilateralism worldwide, which will eventually lead to the ditching of the dollar and a switch to another mode of international transactions. The phrase “when America sneezes, the world catches a cold” may soon become history in itself, as the gradual declining trend of dollars and the rise of multilateralism may be “the last nail in the coffin” of American economic hegemony.
The reason behind the US’ diversion of attention from Iran’s capability of nuclear enrichment to the Strait of Hormuz is very simple, that this war has now become so important for the US that it cannot afford to lose the grip over the Strait of Hormuz, given that Iran has announced to charge a toll tax on the ships passing through this trait and would also be allowing the trade transactions be conducted in Petroyuan as well the crypto currency.
Given rising multilateralism and negative sentiments towards the dollar, allowing transactions in Petroyuan and cryptocurrency are direct signs of dedollarisation. Once things return to normal and the Petroyuan replaces the petrodollar, the US’s global economic hegemony will be under threat. In this context, it won’t be wrong to assume that, for the US, having control over the Strait of Hormuz is relatively more important than Iran pursuing a nuclear enrichment program, and that is the reason the Strait of Hormuz has become a central point of discussion in the proposed peace talks. Hence, in the upcoming rounds of meetings, issues primarily related to the Strait of Hormuz will definitely continue to dominate the talks.
As geoeconomics is the fundamental aspect of geopolitics, once the US’s economic hegemony declines, its geopolitical hegemony will automatically decline as well. Now, it’s time to wait and watch how long and to what extent the US is going to sustain its self-created war with Iran, which is now likely to become a larger regional conflict in Asia.
