by Adam Sharp, Daily Reckoning:
Back in December, I wrote a newsletter about lessons from the war in Ukraine.
The conclusion was:
“This is the age of asymmetric warfare. Pinpoint long-range weapons systems have eliminated the advantage of large troop concentrations and capital ships like aircraft carriers.
For a long time, only superpowers like America and Russia had access to these types of systems. Now they have proliferated throughout the world. The implications have yet to be fully realized.”
This lesson is coming into sharper focus due to the war with Iran. So far, the U.S. has kept its Navy ships far from the country. Yes, they are still launching strikes from the 1 carrier in the area, but from a safe distance. This limits aircraft time over target.
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The threat of anti-ship missiles and sea and air drones has kept U.S. Navy ships mostly out of the Persian Gulf. We also saw this during America’s brief skirmish with Yemen’s Houthis. With the threat of anti-ship missiles, they were mostly able to scare off even mighty U.S. aircraft carriers.
Now Iran is using the threat of sea drones and anti-ship missiles to keep the Strait of Hormuz closed.
Iran is allowing some ships through, but none owned by the U.S., Israel, or certain other countries.
Tankers that are allowed to pass are apparently paying a toll of around $2 million. But they’re not paying in dollars. The toll is being paid in Chinese yuan. Fortune:
The secretary-general of a bloc of Gulf Arab countries said that Iran is charging fees for ships to safely transit the Strait of Hormuz. Industry experts say some ships are paying in Chinese yuan to pass through the Strait of Hormuz, where 20% of all traded oil and natural gas is transported in peacetime.
For Iran, using Chinese currency is preferable because it cannot be seized by America or NATO countries. And it’s a small blow against U.S. dollar hegemony.
This is not a small thing. For the first time in a long time, a foreign enemy is denying us and our allies resources. And forcing other parties to switch from U.S. dollars to Chinese yuan.
We are accustomed to being the one who sanctions.
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