The Geoeconomic Implications of the Iran War: An Early Examination

Key points

• Globalisation has rested on a set of functions long treated as background conditions: transit through maritime choke points, insurability, dollar settlement, critical material inputs and protection by a hegemonic power. In practice, each is an excludable asset held by an identifiable actor, and the Iran war has demonstrated that they can be withheld and monetised.
• The war followed the failure of the most ambitious campaign of economic coercion yet attempted. In this campaign, sanctions functioned as an antechamber to military action rather than as its substitute, and the resort to a naval blockade to halt Iranian oil exports amounted to an admission that the financial coercion strategy had failed.
• Iran’s monetisation of the Strait of Hormuz followed a path already opened by US tariffs and export controls, and by Chinese restrictions on critical materials. Access to global infrastructure and choke points may increasingly be monetised and made conditional, based on future political alignment.
• Actors dependent on infrastructure they do not control are substituting redundancy for efficiency, and European governments appear among the most exposed and least prepared.