The U.S. and Israel war on Iran will come down to “who controls the Strait of Hormuz,” says Ray Dalio, the retired founder and CEO of Bridgewater Associates.
“If Donald Trump and the U.S. don’t win this war — with victory being easily measured by whether they can ensure safe passage through the Strait of Hormuz—they will be perceived to have caused a disastrous situation they could not fix,” he wrote on Principled Perspectives, his Substack newsletter.
Dalio, who has long written on geopolitical issues, he says he’s “not political; I am just a practical person who has to bet on what will happen and has studied history to draw lessons that help me do that well.”
The situation in the Strait of Hormuz, where 20 percent of the world’s oil transits, has become a vexing problem for the U.S., which so far has been unable to get its Western European allies to help it in trying to force the passageway open.
Iran has reportedly struck numerous vessels in the Strait, including one U.S. oil tanker, since the U.S. and Israel attacked it on Feb. 28. However, it has recently allowed some ships through, including Indian and Chinese vessels, according to the Wall Street Journal.
Dalio compared the potential U.S. loss of control over the Strait of Hormuz with what happened with Great Britain during the Suez Canal Crisis, which was one of the key moments in the decline of that empire when Egypt took control of the canal.
“The pattern of events that leads to the breakdown of empires is almost always the same,” he said. There are “innumerable cases in which a perceived lesser power challenges the leading world power over the control of a critical trade route,” like the Suez Canal situation, Dalio said. “In these cases, the dominant power (Britain) threatens the lesser power (Egypt) to open the route, and everyone watches and shifts their approaches to these countries and where their money goes based on what happens.”
“If Iran is left with control over who can pass through the Strait of Hormuz, or is even left with the power to negotiate,” he wrote, “The United States will be judged to have lost the war, and Iran will be judged to have won.”
Dalio cited several reasons why the U.S. might be unable to take control of Hormuz, such as “anti-war politics” that threaten the upcoming mid-term elections, the “American electorate’s lack of willingness to suffer the losses of lives and money required to win this war,” or “because the U.S. doesn’t have the military power to get and maintain control or because [Trump] cannot bring together other countries in a consortium to keep this strait open — it doesn’t matter. President Trump and the U.S. will have lost.”
Dalio pointed out that despite the military and financial might of the U.S., “the cumulative effect of the military, financial, and geopolitical consequences of the wars in Vietnam, Afghanistan, Iraq, and perhaps this war with Iran, are not good for the United States and the sustainability of the post-1945, American-led world order.”
He also said that “it will be very difficult for the United States and Israel alone to ensure the safe passage of ships without prying Hormuz loose from Iranian control, and it will likely require a great battle to do so.”
Dalio cautioned that “the outcome is existential for the Iranian leaders and the largest and most powerful segment of Iran’s population.” Americans, on the other hand, he said, are simply “worrying about high gas prices and America’s leaders are worrying about midterm elections.”
