By closing the Strait of Hormuz, Iran has given a kind of practice test to the Trump administration. To pass this, or in other words to maintain the ability to deter against a possible Chinese attack or blockade on Taiwan, the US will have to decisively reopen the strait. Closing the Strait of Hormuz and the Taiwan Strait, both narrow sea routes, could send the economy back to mid-20th century levels. Over the past month and a half, Iran has turned the Strait of Hormuz into a floating shooting gallery. The movement of ships has reduced, tankers are moving out of fear and Iranian speedboats and drones are behaving like pirates. The stagnation has gripped the global economy as much of the world’s oil and LPG passes through this route. This is not just a crisis in the Middle East, but a rehearsal for conflict in Asia. This is giving China a strategic plan against Taiwan. The Taiwan Strait is like the Strait of Hormuz, but for semiconductors. Taiwanese company TSMC makes more than 90% of the world’s most advanced chips. These chips are called the ‘brain’ of AI data centers, fighter planes and smartphones. In view of the national security risks of dependence on foreign chips, the US had passed the ‘Chips and Science Act’ of 2022, so that manufacturers could be attracted to set up factories in the country. But despite plans for new fabrication units in places including Texas, Ohio and New York, the US is still largely dependent on imports of chips. In such a situation, if China attacks or blockades Taiwan, the technological ‘nervous system’ of the 21st century may come to a standstill. Global losses could reach $10 trillion. This will not be just a recession, but a ‘cardiac arrest’ of the supply chain. Xi Jinping doesn’t want to be known in Chinese history as just the guy who made better car batteries than Elon Musk. Xi wants to achieve what Mao Zedong had promised – a China without any conditions and without any rebel islands that would challenge the Communist leadership. If Xi feels that America will hesitate in taking action or compromise after the attack on Taiwan, then his power of resistance will be lost. If even the world’s most powerful navy cannot safely escort tankers against a weak regional power, why would Xi believe that the US would risk its aircraft carriers, submarines and the lives of thousands of soldiers to break the Chinese blockade of Taiwan? Game theorists call this ‘credible commitment’. That is, your opponent must have confidence that you will act as per your word. If this does not happen then the whole game gets spoiled. It is true that once credibility is lost, it is not easy to get it back. Now the solution to this problem is painful, but obvious. America will have to reopen the Strait of Hormuz in a decisive manner. This action included escort in the strait, emplacement of mine-sweepers, attacks on launch sites, and capture of Iranian tollbooth islands. Once the route is safe, America should send its big ships there, so that the world can see that the route is open for trade. From a long-term perspective, America will have to accelerate shipbuilding, stockpile weapons, and expand pipelines in Saudi Arabia and UAE. In 2020, Greece, Egypt, the Palestinian National Authority and Israel, along with other countries, founded the East Mediterranean Gas Forum to tap new gas reserves. Unfortunately, the Biden administration withdrew US support for the proposed pipeline from Israel to Europe. Whereas, this is the same project which can reduce the dependence on Hormuz. The choice before the US is clear: either use its own power to open Hormuz, or watch Xi prepare to attack Taiwan. The good thing is that America has the world’s most lethal navy and such economic power that it can defeat any adversary. If China attacks or blockades Taiwan, the technological ‘nervous system’ of the 21st century may come to a standstill. Global losses could reach $10 trillion. This will not be a recession, this will be ‘cardiac arrest’ of the supply chain. (@ProjectSyndicate)
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Todd G. Busholz’s Column: If Hormuz is not opened, will Taiwan be the next front?
