HORMUZ: THE MOMENT AMERICA MAY BE LOSING THE WORLD IT BUILT

There is a dangerous illusion at the heart of American foreign policy today:

that military superiority automatically translates into strategic control.

It does not.

The United States can deploy aircraft carriers. It can impose sanctions. It can destroy infrastructure. It can threaten governments, companies and financial institutions. It can weaponize access to the dollar-based financial system.

But none of these capabilities guarantees political obedience.

And the crisis surrounding the Strait of Hormuz may be exposing precisely that weakness.

Washington may be capable of reopening Hormuz.

It may be capable of imposing enormous costs on Iran.

It may even achieve a tactical military victory.

But there is a much bigger question:

What happens if the rest of the world responds by accelerating the construction of a system that is less dependent on American power?

That is the strategic danger Washington should be discussing.

Instead, it appears increasingly obsessed with demonstrating that it can still impose its will.

That is not the same thing as winning.

HORMUZ IS NOT JUST A STRAIT

Hormuz is one of the most strategically important waterways on Earth.

Before the conflict, roughly 20% of the world’s oil supply moved through the Strait.

That makes Hormuz much more than a Middle Eastern security problem.

It is an energy problem.

A trade problem.

An inflation problem.

A transportation problem.

A financial problem.

And ultimately, a global power problem.

Any disruption affects far more than Iran and the United States.

China needs energy.

India needs energy.

Europe needs energy.

The Gulf states need stable export routes.

Global manufacturing needs predictable logistics.

Financial markets need predictable inflation expectations.

The world economy needs confidence that energy can move.

That is why turning Hormuz into a permanent geopolitical battlefield is so dangerous.

And it is also why the American strategy deserves far more criticism than it currently receives.

AMERICA’S BIGGEST MISTAKE: CONFUSING POWER WITH CONTROL

The United States remains the world’s most powerful military power.

There is no serious argument against that.

But military superiority and strategic control are not the same thing.

Washington can force an opening.

It cannot necessarily dictate what happens afterward.

This distinction is crucial.

A military can destroy an enemy’s capabilities.

It cannot destroy geography.

It cannot eliminate economic incentives.

It cannot eliminate the strategic importance of energy.

And it cannot prevent other countries from adapting.

That is the fundamental problem with permanent coercion.

Every time Washington demonstrates that a particular dependency can be weaponized, other countries receive an incentive to reduce that dependency.

If the dollar can be weaponized, diversify financial exposure.

If sanctions can be imposed, develop alternative payment mechanisms.

If supply chains can be disrupted, build alternative supply chains.

If access to the American market can become a political weapon, diversify export markets.

If energy routes can become geopolitical vulnerabilities, build alternatives.

This is not ideology.

It is basic strategic logic.

The more aggressively Washington weaponizes interdependence, the stronger the incentive becomes to reduce interdependence with Washington.

That is the paradox.

THE REAL STRATEGIC PROBLEM IS NOT IRAN

This is where the conventional analysis gets it wrong.

Iran is a serious regional power.

Iran can impose enormous costs.

Iran can threaten energy infrastructure.

Iran can disrupt shipping.

Iran can create instability throughout the Middle East.

But Iran is not the real strategic threat to American global dominance.

The deeper challenge is much broader:

the emergence of a world increasingly capable of operating without American permission.

China.

India.

Russia.

Saudi Arabia.

The Gulf states.

Turkey.

And much of the Global South.

These countries are not a unified anti-American bloc.

They do not need to be.

That is the point.

They do not have to become America’s enemies.

They only need to become less dependent on America.

That is enough to change the balance of power.

SANCTIONS ARE POWERFUL — AND THAT IS EXACTLY THE PROBLEM

American sanctions remain one of Washington’s most powerful geopolitical weapons.

But the success of sanctions creates a dangerous side effect.

Every country watching Washington freeze assets, restrict transactions or punish third parties eventually asks the same question:

What happens if we are next?

That question changes behavior.

Not overnight.

Not dramatically.

But gradually.

Countries diversify reserves.

They develop alternative payment systems.

They establish new trading relationships.

They negotiate bilateral settlements.

They invest in domestic strategic industries.

They diversify energy suppliers.

They build alternative logistics routes.

None of these developments individually threatens the United States.

Together, they can.

The erosion of power does not necessarily begin with a spectacular collapse.

It can begin with thousands of rational decisions made by countries that simply want more strategic insurance.

TRUMP’S MAXIMUM-PRESSURE STRATEGY

The Trump administration has pushed the logic of economic coercion even further.

Washington’s willingness to use tariffs, sanctions and secondary economic pressure reflects a very clear philosophy:

if America controls enough critical nodes of the global economy, it can force other countries to behave accordingly.

There is logic behind that strategy.

But there is also a dangerous weakness.

It assumes that America’s economic centrality is permanent.

It is not.

No country’s dominance is permanent.

And history suggests that dominant powers become vulnerable when they begin to assume that everyone else will remain dependent forever.

That is precisely the mistake Washington should avoid.

THE HORMUZ PARADOX

The irony is extraordinary.

Washington wants Hormuz open.

Iran wants leverage.

Regional powers want stability.

Global markets want predictable energy flows.

And diplomats are once again being pushed toward negotiation.

This creates an uncomfortable question:

If military escalation ultimately brings everyone back to diplomacy, what exactly was achieved by escalation in the first place?

Military power can create negotiating leverage.

Absolutely.

But leverage is not the same as resolution.

And if the final settlement still requires negotiation, diplomacy and compromise, then the military campaign may have achieved less strategically than its advocates claim.

YOU CANNOT BOMB GEOGRAPHY

This may be the most important lesson of the entire crisis.

Wars can destroy weapons.

Wars can destroy infrastructure.

Wars can eliminate military capabilities.

But wars cannot eliminate geography.

Iran will still sit next to the Strait of Hormuz.

The Gulf will still be one of the world’s most important energy regions.

Asia will still consume enormous quantities of energy.

China and India will still need secure supplies.

And Hormuz will still matter.

You cannot bomb geography.

You can only change the political environment surrounding it.

That is why the idea that military force can permanently “solve” the Hormuz problem is fundamentally flawed.

THE MARKET MAY BE TELLING US SOMETHING WASHINGTON DOESN’T WANT TO HEAR

Markets have a strange habit of ignoring political rhetoric when the underlying economics point in another direction.

Oil prices have recently been reacting not only to military developments but also to expectations surrounding diplomacy and the possibility of increasing flows through Hormuz.

That matters.

Because markets are not necessarily pricing “war” as a permanent condition.

They are pricing probabilities.

A geopolitical crisis can be extremely violent and still fail to produce permanently higher energy prices if traders believe that supply disruptions will eventually be resolved.

For investors, this distinction is critical.

Geopolitical risk is not the same thing as a permanent economic outcome.

Markets can absorb extraordinary political violence if they believe the underlying economic system will eventually normalize.

That is precisely why policymakers should be careful about assuming that military escalation automatically produces economic leverage.

EUROPE SHOULD BE EXTREMELY WORRIED

Europe’s problem is not simply military.

It is economic.

Europe remains deeply exposed to the consequences of geopolitical instability.

Higher energy prices.

Higher transportation costs.

Higher inflation.

Higher financing costs.

Lower industrial margins.

Reduced competitiveness.

Lower investment.

And yet European policymakers still frequently behave as if geopolitics happens somewhere else.

It does not.

A crisis thousands of kilometers away can reach European companies within days.

Energy markets transmit geopolitical shocks.

Financial markets transmit them even faster.

The result can be devastating for an already fragile industrial base.

Europe therefore has an enormous interest in preventing the Middle East from becoming a permanent battlefield.

Unfortunately, Europe often has very little strategic autonomy when the United States decides to escalate.

That is a problem.

CHINA MAY BE THE BIGGEST BENEFICIARY

This is perhaps the most uncomfortable conclusion.

China does not necessarily need to defeat the United States.

It needs time.

Time to diversify energy supplies.

Time to develop infrastructure.

Time to expand trade relationships.

Time to strengthen economic ties with the Gulf.

Time to develop alternative financial channels.

Time to expand its technological and industrial capabilities.

Time to convince other countries that Beijing can provide economic relationships without demanding political alignment.

If Washington continues to use economic and military power aggressively, China does not need to win every confrontation.

It can simply allow the United States to make dependency increasingly unattractive.

That is a much more sophisticated strategy than direct confrontation.

AMERICA’S SELF-DEFEATING POWER

This is the central contradiction.

America wants to preserve an international system built around American power.

But excessive use of that power can encourage other countries to construct alternatives.

That is the paradox of hegemony.

Power can destroy the conditions that make power effective.

If everyone depends on you, you have enormous leverage.

If everyone fears becoming dependent on you, everyone starts diversifying.

And diversification is the beginning of strategic independence.

That process takes years.

Sometimes decades.

But once it begins, reversing it can be extraordinarily difficult.

THIS IS NOT ANTI-AMERICAN

There will inevitably be people who describe this argument as anti-American.

That is intellectually lazy.

Criticizing American strategy is not the same as opposing America.

Quite the opposite.

The United States is too important for its strategy to be treated as unquestionable.

America remains a technological giant.

A financial superpower.

A military superpower.

A major energy producer.

Home to the world’s deepest capital markets.

And the issuer of the world’s dominant reserve currency.

Precisely because American power is so extraordinary, Washington should be extremely careful about how it uses it.

The issue is not whether America is powerful.

The issue is whether it is using that power intelligently.

THE QUESTION WASHINGTON SHOULD FEAR

Ten years from now, historians may interpret the Hormuz crisis in two completely different ways.

The first interpretation will be:

America demonstrated once again that it remains the indispensable power of the Middle East.

But there is another possibility.

Historians may instead conclude:

Hormuz was the moment when the world accelerated its effort to become less dependent on America.

That second possibility should terrify Washington.

Because great powers rarely lose influence in one dramatic moment.

They lose it gradually.

A country does not suddenly stop being powerful.

Other countries simply become less willing to depend on its power.

That is how strategic influence erodes.

Not with a bang.

With diversification.

THE REAL BATTLE IS NOT IN HORMUZ

The real battle is not about missiles.

It is not about aircraft carriers.

It is not even primarily about Iran.

The real battle is about dependency.

Who depends on whom?

Who controls energy?

Who controls finance?

Who controls technology?

Who controls critical infrastructure?

Who controls trade routes?

Who can impose sanctions?

Who can enforce them?

And, most importantly:

Who can say “no” to Washington without destroying its own economy?

That is the real measure of geopolitical power in the twenty-first century.

CONCLUSION: AMERICA CAN WIN THE BATTLE AND LOSE THE SYSTEM

Washington may succeed in reopening Hormuz.

It may force Iran back to negotiations.

It may impose devastating economic costs.

It may demonstrate overwhelming military superiority.

But none of that guarantees strategic victory.

If the result is that China, India, Russia, the Gulf states and the Global South accelerate their efforts to reduce dependence on American financial, energy and technological systems, then Washington may have achieved something extraordinary:

a tactical victory that accelerates its own strategic decline.

That is the danger.

America does not lose power because China suddenly becomes stronger.

America loses leverage when the rest of the world decides it no longer needs as much of it.

And that process may already be underway.

The irony is brutal.

The United States may be using its power so aggressively that it is teaching the rest of the world how to live without it.

That would not be the triumph of American power.

It would be its greatest strategic failure.

Roberto Balbino — CEO, Fintech SCB
Independent Analyst of finance, economics, geopolitics and global markets.