Main Edition
US
FR
March 26, 2021 - 3:55pm
But it’s not just one canal we need worry about. For instance at the other end of Red Sea, there’s a second choke point: the Bab Al-Mandab strait. It’s about 20 miles wide, so there’s more wiggle room than a canal. On the other hand, it’s got Yemen on one side and the Horn of Africa on the other — both of which have got wars raging. Moreover, Djibouti, on the African side, is currently an arena for the superpower rivalry between China and America (both countries have military bases there). By the way, Bab Al-Mandab means ‘Gate of Tears’ or ‘Gate of Grief’
If you manage to get out of the Red Sea, you can sail along the Arabian shore all the way round into the Gulf. Except that to reach the oil ports of Iraq, Kuwait and Saudi you have to go through a third choke point — the Strait of Hormuz. This is also about 20 miles wide at its narrowest point — and has the Arabian peninsula on one side and Iran on the other. What could possibly go wrong?
If the cold war between Saudi Arabia and Iran turned hot, then the latter could easily block the Strait — through which something like a quarter of the world’s oil and a third of its liquified natural gas currently passes. There are other ways of getting energy supplies out of the Middle East, but pipelines are even narrower than canals and thus eminently disruptable.
We imagine that technology is enabling us to overcome geography. And, in some respects, it is — we wouldn’t have millions of people working from home right now if that wasn’t true. On the other hand, it has facilitated an ultra-integrated, just-in-time globalised economy in which the around-the-clock accessibility of the shortest possible routes has become more important than ever.
It’s time for us to re-evaluate the benefits of geographical proximity — and, further to that, direct political control. After all, the Ever Given isn’t the only reminder we’ve had this week about the fragility of our supply lines.
Last month, Ursula von der Leyen compared Britain’s vaccine policy to a “speedboat” and the EU’s policy to a “tanker”. Well, that tanker has now run aground and is threatening to cut off our supplies from the Continent.
This week’s double lesson therefore is that, in a time of crisis, there is no one on the planet that we can absolutely rely upon but ourselves. For all the blessings of global free trade, it is never, ever, a given.
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
peterfranklin_
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeIt’s not a coincidence that the British Empire controlled Gibraltar, Malta, Suez, Aden, Singapore and Hong Kong. Or that the USA controlled the Panama Canal. Time to relearn the lessons of history?
… or that, of these, only The Rock remains under Western control … (with, incidentally, 100% covid vaccination coverage) .
Rule Britannia!
We are living at the apex of a very complex pyramid and things could very easily go very wrong. What if the national grid were to go down, for example?
You miss the entire point of what a pyramid is. Try pushing a pyramid over, you cannot, it is the most stable structure there is – you mean house of cards.
That is to assume the pyramid is pointy end up.
And Sanford is assuming that the base of the pyramid is sitting nice and comfy on the ground rather than balancing on the tip of another pyramid.
Saladin’s son had a go at demolishing the Pyramid of Menkaure, the smallest of the three great pyramids at Giza, in 1196.
He failed but there is still a massive scar on the North face to remind us of this act of Islamic barbarism.
Were I captaining a ship on the southeast side of the blockage, I would be heading south ASAP. The Cape of Good Hope route – though a week longer – looks much better.
Fiat Money! The USA Dollar being the Global Reserve Currency. If there is anyone so uneducated to not understand about ‘Reserve Currency’ and ‘Fiat Money’ you need to read up on it.
1) Fiat Money 101, Fiat Money is backed by nothing, it is paper and data only. It is a ‘promise’ to pay. All paper money today.
2) Gold backed currency, this was all the world, before 1971, the paper money backed by gold held in gov vaults. (But gold gave no interest or income and meant printing money impossible without devaluing the currency, unless you got more gold! But With $ Bonds as reserve you print more money (but not too much) and use it to buy more USA treasury bonds, see?)
3) ‘Good as Gold’ USA dollars were backed by gold in Ft Knox, so countries used them as reserve currency instead of gold as they were as good as gold, and they could hold USA Gov Bonds which paid interest, where metal gold did not. $ became the world’s ‘reserve currency’ instead of gold.
4) Fiat, 1971 Nixon did away with backing the USA $ in gold, and $ became ‘Fiat Currency’, or money by decree, and backed only by a promise.
5) The world kept using US $ Treasury Bonds anyway (which pay interest) as its reserve. It worked and there was nothing else as good.
6) Printing. USA can print all the money it wishes, and sell debt as Bonds to cover the new $. in 2 years $ 9 Trillion stimulus. The world buys the bonds, it costs USA nothing but the small interest when interest is low. Inflation then will reduce the debt, so the money is free. (No other nation can do this without devaluing their fiat money)
7) Inflation. Say bond pays 1.5% but inflation is 2% the USA is really not paying interest – but is getting .5% gain on the money it loans!
8) ‘Real Yield’ The difference between what treasury Bonds pay in interest, Minus the Inflation, this is what you gained/lost over the year. Interest 1.5%, inflation 2%, Real Yeild = Minus .5% This is normal and means all countries are paying USA .5% interest in fact (in this example), to use Dollars as their reserve, this makes USA able to live above its actual income.
9) Petro Dollars. all the global commodities, oil, copper, lumber, computer chips are bought in Dollars. Almost all foreign purchases in the world are paid for in USA $. Even China uses $ to buy its materials, and then sells its goods in $. This is how it works.
10) everyone plays along with this as it works, and NO other currency can be used instead, none are big and steady enough, so it keeps on keeping on. (thanks world, for subsidizing our lifestyle)
But it will keep on keeping on because it works, there is no other choice, and what are you going to do…. but what if…….
?
The dollar is the Ultimate Choke Point. It is the pipeline ALL Financial Transactions Must Pass Through!
If the $ gets stopped up (say one day no one shows up at the Bond Auctions because too much has been printed, then the USA has to buy all its own bonds by printing more $, which it then has to sell bonds to cover, and if no one shows to buy those…. just say)
Think all the world has fiat money, and all of it uses the $ as its reserve, which is a Fiat its self, do you not see how that can be the ultimate choke point? If the Fed sneezes the world catches a cold.
Try watching Powell and MMT, and how printing no longer causes inflation – it is pure unicorns laying gold eggs stuff.
… buy NFT art, Now !
France also has a base in Djibouti.
Blessings of global free trade? You mean, like deindustrialisation, dereliction, wage depression, loss of public assets, foreign property ownership, mass unemployment, austerity, drug markets, mental health crises, novel viruses and a drift to the far right?