Original Title: It All Comes Down to Who Controls the Straight of Hormuz: The "Final Battle"
Original Author: Ray Dalio
Translation: Peggy, BlockBeats
Editor's Note: In most wars, disagreements and uncertainties are often the norm. But in this conflict surrounding Iran, the criteria for victory and defeat are unusually clear: who controls the Strait of Hormuz.
This is not only a transportation route for energy but also a "valve" for global capital flows and geopolitical power structures. Once the right of passage is weaponized, its impact will quickly spill over to oil prices, inflation, financial markets, and even the entire international order.
Author Ray Dalio gives a fairly straightforward judgment in this article: if Iran retains control over Hormuz (even just using it as a negotiating chip), this war will be seen as a failure for the United States in terms of results. The significance of this failure goes far beyond the gains and losses of a military operation.
Starting from historical comparisons, the author points out that similar moments often correspond to turning points in power structures; and on this basis, places this conflict within a larger "historical cycle," believing that the current situation in the Middle East is merely a part of the intertwined evolution of debt, politics, and geopolitics.
When the outcome of a war can be measured by whether a strait is open, its significance extends beyond the Middle East, pointing to the next stage of the entire world order.
The following is the original text:
Comparing what is happening now with similar historical situations, and calibrating my thinking with the judgments of more informed and mature decision-makers and experts has always helped me make better decisions.
I find that there is often huge disagreement and surprises about the future direction. However, regarding this conflict, there is one judgment that is almost undisputed: the key lies in one point, who controls the Strait of Hormuz.
The consensus I hear from officials in various governments, geopolitical experts, and observers from different regions of the world is: if Iran still holds control over the passage of the Strait of Hormuz, even if merely retaining the ability to use it as a bargaining chip, then
The general view I hear from officials in various governments, geopolitical experts, and people from around the world is that if Iran continues to control access to the Strait of Hormuz, even if only retaining it for negotiation, then:
The U.S. will lose, Iran will win
The U.S. will be seen as having lost this war, while Iran will be viewed as the winner. The reason is simple. If Iran can utilize the Strait of Hormuz as a "weapon," it means the U.S. is unable to resolve this issue.
This strait is one of the world's most critical energy corridors and should be safeguarded at all costs. Because once it is blocked by Iran, the damage will not only affect the United States, but also its Gulf allies, countries that depend on oil transport, the global economy, and even the entire international order.
In terms of outcomes, the victory or defeat of this war can almost be measured by one indicator: whether security passage through Hormuz can be ensured. If Trump and the U.S. cannot "win" this war, they will not only be viewed as losers, but also seen as having created an untenable situation.
As for why they cannot win, it is unimportant. Is it the domestic anti-war sentiment affecting midterm elections? Is it American society's unwillingness to bear the costs of war? Is it insufficient military capabilities? Or is it the inability to rally allies to maintain open shipping lanes?
These are unimportant. There is only one outcome: America lost.
Historically, the significance of such a failure could be very severe. Losing control of the Strait of Hormuz for the U.S. could be like Britain's loss of leverage during the Suez Canal Crisis in 1956 (when it was forced to concede on the canal issue, leading to a global power shift) or like Spain in the 17th century (lost its advantage due to financial overreach and weakened naval power), or the Netherlands in the 18th century (suffered decline as its trading and financial center was replaced by Britain), all are iconic moments marking the decline of empires.
History often repeats similar scripts: a seemingly weaker nation challenges the dominant power over a key trade route; the strong power threatens, the whole world watches the outcome; then, based on the results, positions and capital are redistributed.
This "key battle" to decide the outcome will often swiftly reshape history, as people and money instinctively flow toward the winner. This shift will be directly reflected in the markets, in bonds, currencies, gold, and deeper geopolitical power structures.
Based on a multitude of historical cases, I have outlined a simple but important principle: when a dominant country with reserve currency status excessively expands financially, while simultaneously showing fatigue militarily and financially, one must beware that allies and creditors may begin to lose confidence, debts may be sold off, currencies may weaken, and even the status of the reserve currency may be shaken.
If the U.S. and Trump cannot control the shipping movements through Hormuz, this risk will significantly rise.
In the past, it was assumed that the U.S. could militarily and financially overwhelm its opponents. But Vietnam, Afghanistan, Iraq, combined with this potential conflict, its cumulative effect is eroding this belief and shaking the post-war U.S.-led international order.
Conversely, the opposite is also true: when a dominant country exhibits clear military and financial strength, confidence is reinforced. For example, Ronald Reagan quickly facilitated the release of hostages after taking office and provided escorts for tankers during the Iran-Iraq War, all of which strengthened America's deterrent power.
If Trump can fulfill his promises, ensuring the Strait of Hormuz remains open and suppressing the Iranian threat, it will significantly enhance external confidence in U.S. power.
Conversely, if the Strait of Hormuz falls into Iranian hands and is used as a tool of threat, the globe will become its "hostage." This not only means that the lifeblood of global energy is "held hostage," but also that the U.S. "provoked the war but failed to win." Trump's credibility would take a direct hit, especially given his previous strong statements.
Many foreign policymakers' private views are actually very straightforward, "He talks a good game, but can he actually win at a critical moment?" Some observers even view this conflict as an "ultimate showdown," akin to watching a gladiator arena or finals.
Trump is calling for other countries to join the escort operation, and whether he can truly organize allies is itself a test of capability. The reality is that relying solely on the U.S. and Israel, it is difficult to ensure the safety of shipping lanes without undermining Iran’s control, which may require a real large-scale conflict.
Iran's attitude sharply contrasts with that of the U.S. For them, this war is about belief and survival. They are willing to bear greater costs, even sacrificing lives. Meanwhile, American society is more concerned with oil prices, and American politics is more concerned about elections.
In war, who can "bear pain" often matters more than who can "inflict pain."
Iran's strategy may very well be to drag the war out, prolonging and deepening the pain until the U.S. loses patience and withdraws. Once this happens, American allies will quickly realize: the U.S. will not always stand behind them.
"Negotiated Resolution" is Only a Surface Option
Although there are discussions about ending the war through an agreement, everyone is clear: agreements cannot truly resolve the issues. Almost everyone understands that such conflicts cannot truly end through agreements. What really decides victory or defeat is the upcoming "key battle."
Whether the result is Iran continuing to control Hormuz or its control being taken away, the conflict will enter its most intense phase. This "final battle" that determines victory and defeat is likely to be very large in scale.
The Iranian military has stated: "Any regional energy facilities related to or cooperating with the U.S. will be utterly destroyed." This is exactly the action they may take. If the Trump administration successfully coordinates other countries to send warships for escort, and the shipping lane has not been mined, then this might be a solution path. But both sides know that the key battle that truly decides victory or defeat is still ahead. If the U.S. cannot reopen the strait, the consequences will be extremely serious; conversely, if Trump wins this battle and eliminates the Iranian threat, it will greatly enhance his prestige and showcase American power.
"Final Battle" Will Impact the Globe
This "final battle" will have direct and indirect effects worldwide. It will affect trade flows, capital flows, as well as the geopolitical patterns related to China, Russia, North Korea, Cuba, Ukraine, Europe, India, Japan, and others. More importantly, this conflict is not an isolated incident, but a part of a larger "historical cycle." This cycle is driven by financial, political, and technological forces. The situation in the Middle East is just one facet of it.
For example, whether a country can win a war depends on the quantity and intensity of its wars, the domestic political situation, and the relationships with similarly interested countries (like Iran, Russia, China, North Korea). No country has the capacity to respond to multiple wars simultaneously, and in a highly interconnected world, wars, like pandemics, can spread in unpredictable ways.
At the same time, domestically, especially in democratic nations where there are significant differences in wealth and values, there are always fierce debates around "whether to go to war and who bears the cost (financial or in lives)." These complex chains of reactions, while hard to predict, typically do not yield ideal results.
Finally, I want to emphasize that I am not speaking from a political stance, but as someone who must make judgments about the future. Through studying the rise and decline of empires and the changes of reserve currencies over the past 500 years, I have summarized five major forces driving changes in the world order:
1) Long-term debt cycles
2) The rise and fall cycle of political orders
3) The cycle of international geopolitical orders
4) Technological advancements
5) Natural events
The current situation in the Middle East is only a segment of this "great cycle." Although it is impossible to predict all the details accurately, the operational state of these forces can be observed and measured.
History may not repeat itself, but it often marches to similar rhythms. What truly matters is: you need to judge whether this "great cycle" is happening, what stage we are in, and how you should act in this context.
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