Iran’s Petroyuan Tollbooth Inadvertently Put China In A Zugzwang

China is still extremely vulnerable to the US Navy’s blackmail 13 years after BRI was announced due to the US’ Hybrid Warfare masterfully subverting these alternative trade corridors, but it took Iran’s petroyuan tollbooth to prompt the US to push forward its preplanned power play.

Iran’s enforcement of sovereignty over the Strait of Hormuz through the tollbooth that it established risks being an epic mistake that could ultimately force its and China’s de facto surrender to the US. It was assessed at the start of the war that “The US Military Campaign Against Iran Is Part Of Trump’s Grand Strategy Against China”. The unstated goal is to obtain control over Iran’s energy industry just like it obtained control over Venezuela’s in order to leverage this for coercing China into a lopsided trade deal.

Iran calculated that closing the Strait of Hormuz would put pressure upon the US from its Gulf allies and the rest of the world alike to return to the status quo ante bellum in exchange for reopening it. Reportedly charging yuan for transit was meant to serve the dual purpose of further pressuring the US and encouraging China to extend more support to Iran. Instead, these moves only provoked Trump into ordering the US’ blockade of the Strait of Hormuz, which economically harms Iran and also China.

Former senior US sanctions strategist Miad Maleki calculated the economic costs to Iran in his X thread here, which also estimated that “Storage fills in 13 days, forcing well shut-ins that cause permanent reservoir damage.” Prior to the war, 13.4% of China’s oil imports by sea came from Iran but are now cut off by the blockade, while Venezuela – whose oil exports are now under US control – accounted for only 4%. Nearly one-fifth of China’s oil imports by sea are now therefore under some degree of US control.

Treasury Secretary Scott Bessent explicitly pointed out the blockade’s goals vis-à-vis China by declaring that “They can get oil (from the Gulf). Not Iranian oil.” On that topic, the Gulf Kingdoms (exempting Oman whose exports are from the Arabian Sea) account for 35% of China’s oil imports by sea, so actually more than half of such imports are now under some degree of US control due to the blockade. This share is poised to soon grow further and even expand to include China’s foreign trade too.

That’s due to the high likelihood of the US’ new “Major Defense Cooperation Partnership” with Indonesia and reportedly negotiated plans for military overflight rights across the archipelago empowering it to blockade the Strait of Malacca to Chinese ships. Two-thirds of China’s foreign trade and over 80% of its oil imports, so another 30% separate from Iran and the Gulf Kingdoms, transit through there. Indonesia might also take a page from Iran’s book with the US’ support to set up its own tollbooth.

For instance, transit through the Strait of Malacca could be coordinated with Malaysia and Singapore to be a higher rate for faster interoceanic passage than the lower rate for slower passage through the several straits entirely within Indonesia’s waters, with a premium being charged to China for both. China’s tacit recognition of Iranian sovereignty over Hormuz through the reported paying of its demanded toll sets the precedent for possibly setting up the same system in those straits too.

Iran’s tollbooth therefore inadvertently put China in a zugzwang a month before Trump’s trip. Doing nothing could lead to Iran’s collapse or the war’s resumption with the likely destruction of all regional energy infrastructure, neither of which is advantageous to China. Pressing Iran to agree to whatever deal the US offered before relatively better terms are withdrawn as a pressure tactic would save Iran but the US might never let it export oil to China again or these exports would then be under the US’ control.

If China tried to break the blockade, not only might its ships arrive too late to save Iran from collapse or prevent the war’s resumption, but the US could intercept them long before they arrive. Likewise, the US could rely on “plausibly deniable” air and/or underwater drone attacks against these ships attributable to “rebels” or “crime syndicates”. China isn’t expected to attempt this, however, since it has the world’s largest oil reserves and is unlikely to risk World War III over Iran when it won’t even risk it over Taiwan.

The Chinese leadership is known for its rationality so the aforementioned scenarios about breaking the blockade can be ruled out unless something very unexpected happens like a military power struggle that ultimately results in Xi complying with hardliners’ demands for Cuban Missile Crisis-like brinksmanship. That being the case, every other endgame scenario includes the US Navy controlling most of China’s oil imports by sea as well as foreign trade through its influence over the Straits of Hormuz and Malacca.

China might also soon be forced to pay tolls to transit through the Strait of Malacca and nearby Indonesian-exclusive straits following the precedent set by it reportedly paying Iran for transit through the Strait of Hormuz if Indonesia, Malaysia, and Singapore impose such a system at the US’ behest. They’re all very close to the US – Indonesia after its new military deal, Malaysia through last year’s military and trade deals, and Singapore is its traditional regional partner – so they’re unlikely to refuse.

Had China’s main Belt & Road Initiative (BRI) corridors across Eurasia been fully built and implemented at their expected scale, then China would have been less susceptible to the US Navy’s blackmail, but the US masterfully subverted them through Hybrid Warfare. The Eurasian Land Bridge across Russia became financially unviable due to the threat of arbitrarily imposed US secondary sanctions scaring away many Chinese companies. The EU’s complementary anti-Russian sanctions further reduced its attractiveness.

The China-Central Asia-West Asia Corridor that was supposed to link China and Iran across Central Asia never really took off either, mostly owing to the arbitrarily imposed US secondary sanctions against Iran doing the same with many Chinese companies as the ones against Russia did. As for the China-Pakistan Economic Corridor, which was supposed to be BRI’s flagship, endemic corruption and the ruling Pakistani elite’s (especially its military’s) preference for the US hamstrung this megaproject from the get-go.

The Bangladesh-China-India-Myanmar corridor was also hamstrung from the get-go due to India’s unwillingness to participate due to the China-Pakistan Economic Corridor transiting through the Pakistani-controlled part of Kashmir that India claims as its own. China and India also have unresolved border disputes, including in the region of Northeast India through which this corridor would transit, thus making it even more politically difficult for India to ever agree to this proposal.

The China-Myanmar Economic Corridor had promise, but then the latest phase of Myanmar’s Civil War broke out after the military restored its control over the country in early 2021 following a disputed election a few months prior, with the resultant conflict raging to this day. This naturally made that corridor unviable for trade at any large scale although its oil and gas pipelines are still being used. Even so, the US is trying to co-opt the junta again, which would place the corridor under its influence.

And finally, the ASEAN Silk Road centered on a high-speed railway from China to Singapore transits through Thailand, which has been the US’ mutual defense ally since 1954 and a “Major Non-NATO Ally” since 2003. It would therefore always be under US influence that could be leveraged through either the US-aligned armed forces or US-aligned political parties to disrupt transit in times of crisis. All of these factors led to BRI’s failure to preemptively neutralize the US Navy’s predictable blackmail of China.

The US also has another ace up its sleeve for securing total strategic victory over China if the resource-centric “New Détente” with Russia that’s presently being negotiated is finally agreed to. This would ipso facto deny China access to those resource deposits in which the US invests. While there’s no realistic scenario in which Russia weaponizes its energy exports to China, let alone at the US’ behest, some in China might still fear this possibility in the event of a Russian-US rapprochement after Putin leaves office.

Reflectng on the insight that was shared about BRI, it can therefore be concluded that China is still extremely vulnerable to the US Navy’s blackmail 13 years after BRI was announced, but it took Iran’s tollbooth to prompt the US to push forward its preplanned power play. Had Iran not enforced its sovereignty there through these means, not to mention charging yuan for the purpose of threatening the petrodollar, the US wouldn’t have imposed its blockade.

Likewise, the “Major Defense Cooperation Program” that it was negotiating with Indonesia might not have been announced at this particular time, or it wouldn’t at least have seemed so obviously aimed at empowering the US to blockade the Strait of Malacca to Chinese ships in the event of a crisis. Similarly, the possibility of Indonesia, Malaysia, and Singapore replicating Iran’s tollbooth in the Strait of Malacca and Indonesian-exclusive straits wouldn’t have seemed realistic, but now it might soon be in the cards.

China was thus already vulnerable to being put in a zugzwang even before Iran’s tollbooth, but it was this move that exposed its extreme vulnerability to the US Navy’s blackmail that Trump is now leveraging ahead of his trip next month in order to coerce China into a lopsided trade deal. Whether he gets what he wants then, sometime later, or not at all doesn’t detract from the fact that China’s strategic position is extremely weak right now and Trump 2.0 is systematically exploiting all of its weaknesses.

The mastermind who identified all them and formulated the most effective ways to take advantage of them, including through the US’ flexible adaptation to changing international circumstances such as the trade war, Venezuelan Crisis, and now the Third Gulf War, is Elbridge Colby. He’s the Under Secretary of War for Policy and the author of “The Strategy of Denial: American Defense in an Age of Great Power Conflict”. What’s more popularly known as the “Trump Doctrine” is essentially his “Strategy of Denial”.

The gist is that the US must do its utmost to prevent Chinese hegemony in Asia, in furtherance of which it’s indirectly controlling or cutting off Chinese resource imports (Venezuela and Iran) and seeking control over global chokepoints (Hormuz, Malacca, and the Panama Canal), with everything accelerating ahead of Trump’s trip to China from 14-15 May. Trump’s desired acquisition of Greenland, or at least hegemonic rights over the island, is also part of this strategy since it aims to deny China control over its rare earths.

The timeline for fully implementing the “Strategy of Denial”/“Trump Doctrine” was likely by the end of Trump’s term but was sped up by Iran’s tollbooth prompting the US to respond with its blockade in order to nip the nascent petroyuan threat in the bud. This in turn directly challenges China as explained, including due to how its new military deal with Indonesia is now perceived as enabling the US to blockade the Strait of Malacca to Chinese ships too, thus leading to China “losing face”.

The US likely intended to help China “save face” by only gradually denying it access to the resources and markets (via the US’ weaponization of trade deals) upon which its continued economic growth and thus its superpower trajectory depend. In that scenario, China could have still played it cool at home and abroad by presenting whatever concessions it might make to the US in their own lopsided trade deal as voluntary, not unilateral, and for the greater good, but that’s almost impossible for it to do now.

The reason why the US wanted to help China “save face” is to avoid the risk of hardliners coercing Xi into sparking a Cuban-like brinksmanship crisis with the expectation that the US would back down out of desperation to uphold their proud civilization-state’s image at home and abroad. The concept of “face” is so central to Chinese culture, especially at the political level, that this is a credible risk. Nevertheless, the odds objectively remain low, but this scenario can’t be ruled out anymore either.

In any case, China’s strategic predicament that left it extremely vulnerable to the US Navy’s blackmail predates Iran’s tollbooth since it stems from the US’ successful Hybrid War on BRI from 2013 till today, but it was the aforesaid move which accelerated the US’ plans and made them unambiguous. China is now truly in a zugzwang since any of the moves that it’s now inadvertently been forced by Iran to make are all bad. This raises serious concern about the future of the emerging multipolar world order.