Nowhere in the world is safe from the economic disruption
that will come from this that will, first of all, hit by
energy prices and is already hitting by energy prices, but
then will impact everything that energy goes into.
Because we don't know how long this is going to last for,
because we don't know what President Trump really wants out
of it. It is very very hard to see what
the bottom is. The society resilience in the
United States is really low. We're not a good country for
problems. And with a midterm election
coming up, the president's going to be in a lot of trouble, in my
opinion, so this has to work quickly.
Hello, and a very warm welcome to the forecast.
I'm Alex Thompson in Jerusalem. Now, as you may just have heard,
Donald Trump has imposed his blockade on the economically
vital Straits of Hormuz. Or has he?
We know that since the blockade came into place, several
vessels, including one Chinese and several flight to Iran have
passed through. So how is this blockade working?
Why has he done it and how long is it going to last for?
Well, we're lucky enough to be joined by the retired US Rear
Admiral Mark Montgomery and the contributing editor and Times
columnist Cindy Yu. Cindy and Mark, thanks very much
for being with us Mark, as we have the the luxury of your long
time expertise as a naval man. Just as I think when people
think of a naval blockade, they think of large grey vessels with
guns sitting outside somebody's harbour with somebody, I don't
know on a loud hailer saying you are hereby blockaded.
This isn't quite what it's all about, is it?
No, it isn't. And that's because what we're
blockading are vessels transiting from an Iranian port
to another port, either carrying, you know, oil, some
kind of fossil fuel, maybe fertilizers.
And therefore we can intercept them wherever we want.
In fact, I if I were the Commodore in charge, I would
probably back off a little bit from the Iranian ports
themselves and do the the the detentions and the seizures some
distance away. Eventually that ship has to go
to the port that it's intended to go to, and you can you can
grab it almost anywhere along the way.
So the military in there by the political, economic objective,
just to be absolutely crystal clear, is not obviously to block
off trade from the straight, it's actually to open it to
everybody bar Iranian vessels. What it is, is, is Iran said you
cannot transit through here if you're from certain countries or
if you're from other countries and haven't paid a toll or if
you're Iranian. So, you know, what they did was
they illegally, you know, in contravention of maritime law,
prevented what's called transit passage to an international
waterway. And in doing that, you know, the
United States said, well, look, we have two things we can do.
We can either force our way open, you know, go back to a
kinetic conflict, knock back your forces, do a pay, you know,
what would probably end up being a a challenging convoy
operation, which we may do anyway eventually, or we can
say, you know, a pox on both your houses.
It we're going to prevent you. Those ships that are illegally
trans, you know, that are paying a toll, which is in
contravention of international law.
We can block them, you know, detain them and ship, ship them
off to a third party port to determine what to do with them.
Right. Thanks, Mark.
Well, now, Cindy, I'm sure you've heard what Mark's just
laid out. It sounds, to put it gently, a
little bit complex. An awful lot of things could go
very badly wrong, it would seem. With that, what do you what do
you make of it? Yeah, it could go wrong.
And especially when Trump seems to be wanting to bring other
countries into it because let's be clear, some of the ships
leaving Iranian ports are going to Iran's friends in the world.
That's including China, but also India and Pakistan.
So you're bringing more countries into this conflict by
basically hijacking what little oil can get out of Iran at the
moment with the hope that Iran will be the ultimate victim of
this. And it is estimated that Iran
might lose $13 billion a month in lost imports and exports
through a blockade like this. But at the same time, you're
hurting other countries that so far have stayed neutral.
And in particular, China is the big one here.
You know, what do you do? As we are seeing today, and this
is a situation still evolving, what do you do when a ship
leaves an Iranian port, supposedly heading for a Chinese
refinery and actually now seems to be stopped on the other side
of the Strait of Hormuz, Whereas Mark says they, the Navy, the US
Navy may be be doing some kind of action there to stop them
from moving on. You know, what Does that really
happen? How will that work in the future
with more and more vessels to stop like this?
Will China really accept it? And you have to also bear in
mind that actually the US and China are meant to be seeing
each other next month for this kind of trade war discussion,
which now will also will seem so 2025, doesn't it?
So, you know, there's, there's just a lot of kind of escalation
potential here that I, I don't know, nobody really knows how it
will play out. Just prior to us putting in this
blockade and you know the what, what Iran had established was a
very illegal mechanism that said only the ships we prefer can go
through. In other words, Saudi ships
weren't going to go through. Probably a lot of UAE ships
weren't going to go through unless they were going to China,
a lot of Qatar, Kuwaiti, Bahraini, in other words, the
Iranian, the Arab states that Iran held accountable for the
war. So it wasn't like the world was
getting 90% of the oil coming out of there before we did this.
What we're doing is shutting off that final 10%.
Yes. And Donald Trump has said, Mark,
has he not that he indicated that he'd obviously like other
countries, not least NATO to kind of come along and help as
it were, that didn't prove very effective in the early stages of
the of the shooting war with Iran by air, Did it?
Any sign that that's going to play any better in this aspect
of the war? No.
And Donald Trump's only an important lesson here.
If you mistreat your allies and partners for 14 months and then
give him a call saying, hey, could you come down to the
street fight I'm in, they're probably not going to join you.
And I don't blame the Europeans in the in NATO for being
particularly disappointed in Trump over Greenland.
I mean, there's a litany of issues over Greenland and other
things. So, and, and it's one thing to
not notify him. I wouldn't have trusted, I
wouldn't have told the 32 countries of NATO I was about to
do hit, you know, hit on Iran. I mean, what are the chances
Hungary wouldn't have spilled the beans on that under Orban,
right? I, I, I get why he didn't tell
NATO, but he should have immediately consulted with them
afterwards, told everyone he was doing and asked for assistance.
Like, like minesweepers. I'll be honest, there's not a
lot of there there in the European Navy's for like air
defense ships, escort, you know, the kind of ships that would
enforce this kind of blockade because 30 years of not spending
on defense, your navy's the big loser.
And the Royal Navy is a dumpster fire now.
The French Navy's not in much better shape.
The German Navy's a bunch of new ships that aren't really
weaponized yet. The Italian Navy's in no good
shape. I'm sorry.
Those navies are no longer pertinent players in a game
10,000 miles away in the Straits of Hormuz.
So we didn't miss that, but we did miss the minesweepers.
And the president should be criticized for his failure to
talk with the Europeans and the immediate aftermath of the start
of the strikes. And Cindy, that's quite a charge
sheet Mark just laid out there. The European Navy's a dumpster
fire in his view through neglect down the years economically
10,000 miles away from where they should be.
But in any case, why go and help Donald Trump when he sat around
insulting you anyway for months on months?
Yeah, well, quite. And I'm starting to think that
actually the breakdown in the the US and the European
relationship will take much more than Trump leaving the White
House to fix at this rate, because it's starting to feel
structural now, actually, so many European countries,
countries are thinking about alternatives, even if they don't
have much capacity or, or money to make those alternatives
happen. That even the thought of getting
strategic autonomy from America is, I think, damaging for for
the US in, in, in the kind of empire of consent, if you would
like to put it that way, that it had built with its allies across
the world. You've got the Spanish Prime
Minister this week in China talking about how much China
needs to take a greater role in the world because America can't
be trusted. You know, that's the kind of
stuff it's going to take much longer than Trump leaving the
White House to fix. And I'll defer to Mark on the
abilities of these navies. But of course, you know, the
other thing to consider is actually that the Strait of
Hormuz gives Iran an asymmetrical and oversized
ability to disrupt the world as everybody knew, You know, war
games, war gaming, this kind of situation for years have always
said that Iran could just close off the Strait of Hormuz.
Legal or not, That is something that they could just report, do
do very easily and disproportionately that disrupt
the rest of the world. And so, yes, of course, the
European navies should perhaps be better funded.
But at the same time, this is basically the first car that
Iran would have gone to at a strike situation, and it was not
one that it seems like the US prepared for.
Let's something just drill down into this in detail a little bit
for the next few minutes. And and Cindy, perhaps if you
could give us your a political answer to this question and then
Mark, I'll come to you for a military strategic one.
We understand as I said at the opening at the several vessels,
at least one apparently Chinese flag, several Iranian vessels
have already gone through the straits since this thing was
supposedly put in place. Well, politically, what do you
make of that, Cindy? Well, so as I as I, I think the
situation is developing such that any ships leaving uranium
ports haven't quite left the region.
So we don't know what is going on with ships like the Valpus,
which left an uranium port seemingly heading for China,
which hasn't basically moved since this morning.
That is Tuesday morning UK time. So we don't know if the US Navy
is is the result is the reason for that ship stopping.
Another ship, Rich Starry, which is the Chinese ownership left
the UAE port actually and traversed the Strait of Hormuz
and seems to be on its way to China.
So that does seem to have a lied outside of of the American
blockade. I mean, part of this is the
confusion of what the blockade really means because Trump has
said it's it's any any ship that goes via the Strait of Hormuz.
But then CENTCOM says that it's any ship that leaves the Iranian
ports. And, you know, I assume that the
latter is right, considering what we've seen today already.
But nobody really knows. And what a what a ridiculous way
to run the world, basically. Well, yes, it's certainly it
would seem that way. The Chinese certainly think so,
Cindy. They've already condemned this
in what for Beijing is unusually strong language, haven't they?
Yeah, and they've said that they strongly condemn any disruptions
to the world economy, any unilateral moves on to this.
And they've said a lot, you know, throughout all of this.
They condemn the Ayatollah's assassination as well.
They condemned building up of military presence in the region
by America before then as well. The Chinese haven't done
anything too material so far. What is interesting and
something to watch is the US intelligence reportedly showing
that China may be offering Iran these kind of shoulder
maneuvered anti air missile systems that would have an
impact on, for example, low air American action over Iran if
it's when, if and when the ceasefire breaks.
So if that has happened, you know, as I say, we are already
in certain territory. I think it would be very stupid
of China to get more involved in this.
But if Trump continues to force the issue and actually China
can't get its oil from from the Strait, I think it will have to
start thinking about a different way of doing things.
Right Mark, a note of of a semi despair almost exasperation from
Cindy just there. This is no way to run a world
quote UN quote. Is this any way to run a
military blockade in your view? A naval blockade.
I mean, if, if, if Sidney's exasperated, try being Admiral
Brad Cooper, the CENTCOM commander with this commander in
chief. So first I do need to say the
Royal Navy is, is, you know, has tons of good people in it.
I just think that they haven't paid their money and and
watching the defense minister recently not know the number of
ships is kind of a mildly when the numbers as low as it is,
it's kind of an embarrassing thing.
The Spanish need to be really careful.
I mean, they, of all the European countries, they're
treading into the most danger with Trump.
And most of us who think Trump is a little nuts on Europe, I
actually kind of think he's got Spain about right.
So they they should be very careful.
They are setting themselves up for a very long term frigid
relationship with the United States, which won't do them any
favours. But let me, but let me flip that
mark. Let me flip that the other way.
An awful lot of people, an awful lot of people in Europe think
the Spanish are the people who've got it exactly right with
Trump and they're standing up and calling a truth the truth
about him. So the Spanish were stuck at
1.3% on defense spending for 20 years and they were trying to
justify their low numbers by saying we're not gonna respond
to this blackmail from Trump. I mean, let's be clear, they
didn't. Exactly.
They are not a contributor. They've never been a
contributor. They don't see a threat from
Russia. They think China can help in the
since 1949, China's never helped out in anything internationally
except supporting North Korea in an invasion of South Korea.
So I think I'm going to be a little careful here in how the
Spanish handled themselves international relations.
They will be of all the countries.
I can IA lot of this can be forgiven.
The Spanish have really gone pretty far.
And look, Trump needs to be held accountable as well.
You know, he is, he is definitely more than 50% of the
problem back to Brad Cooper, his problem here is that he has, he
has inconsistent guidance for the president.
I, I can't tell yet whether if a ship leaves a non is Iranian
port but pays a toll, I think they then are blockaded.
So that might be the condition with the second Chinese ship
losing the UAE. But you know, if we don't really
know the rules, I'm not sure how you can hold the ship captives
responsible for not knowing the rules.
I will say these Chinese. Well, exactly, exactly what
you're you're a Rear Admiral. You're a Rear Admiral.
Look at this with your years of expertise and you're forced to
use dangerous verbs like I think you know, not I know that's
that's terrifying. I agree.
How's that for another verb? But the but you know, I'll I'll
tell you, I think there's a problem here.
You know, I think the president's making this hard.
Having said that, no one needs to The one thing if our Brad
Coopers, I wouldn't do anything urgently to get from Iran to
China's, you know, 14 to 21 days.
You have lots of time to figure out what you are and are not
going to do with that ship. My suspicion is the Chinese
ships are going to get a pass from Trump because of, as Cindy
referred to the the meeting May 14th and 15th between the summit
between XI and and Trump. And that's going to put the lie
to this blockade. I will say though, the non
Chinese bound stuff, which is principally India, I think
that's where a lot of the rest of this sanctioned oil, this
shadow fleet oil is going that I think we're going to seize and
India is going to have a problem very quickly.
Right. So, Cindy, let's bring this up
to the dear old subject of money.
It's kind of what it's all about as well as the military aspect.
The longer this goes on, I mean, Mark making a very clear case
that he thinks the Chinese could get a free pass outlook for
India, not nearly so good. Two huge economies.
The longer this goes on, with all the complexities that we've
been laying out here this afternoon, what does it do for
the global economy? Yeah.
And Alex, it's more than just about money, because money, of
course, is just a shorthand or rather a correlation of what
we're otherwise talking about, which is material living
standards. You know, we're talking about
jobs, we're talking about people's health, we're talking
about, you know, how entire countries fare for the rest of
the year and actually for the next few years, depending on how
this conflict, how long this conflict drags on.
So we've already seen in Europe, for example, a 60% rise in gas
prices. But actually it's it's Asia that
is most impacted by Strait of Hormuz energy blockade because
countries like Japan, for example, get over 90% of its
imported oil via the Strait of Hormuz.
The Arab nations, of course, being in the middle in the of
the storm. The UN estimates that they might
lose $200 billion in revenues as a result of this war.
So nowhere in the world is safe from the economic disruption
that will come from this. That will first of all hit by
energy prices and already hitting by energy prices, but
then will impact everything that energy goes into.
Things like fertilizers, which will impact the food industry,
things like transportation, things like manufacturing.
You know, some countries are already starting to ration their
power. Some countries are already
starting to tell the people to start working from home.
You know, we because we don't know how long this is going to
last for because we don't know what President Trump really
wants out of it. It is very, very hard to see
what the bottom is here, Alex. And I try to be very, very kind
of impartial here, but it is it is an exasperating situation.
And I think, you know, Donald Trump, for all his faults, has
been good on foreign policy for a long time.
And actually people have underrated him for that.
But this kind of latest war is just so uncharacteristic of the
kind of isolationism and the American first attitude that has
actually been quite good for America or just sorry, quite
good for America Solo, not for the Americans global alliances
right so far. But but it does it does just
seem bizarre that he get himself into this war and now he has no
way out and the rest of the world is paying a bill.
And just a brief point on Mark's point about Spain.
Yes, I can see why the Americans are annoyed with Spain, but just
look at it from the perspective of Europe or any of these other
areas and countries that I've mentioned. 90% of the FOD lies
with America and then everyone else has been taken along for a
ride here. You've got, you know, leaders of
countries from South Korea can comparing Israel to the actions
of Japan during World War 2. You've got countries like Spain,
but also you've got Italy. You know, Georgie Maloney is
hardly a left wing actor in Europe and she has been
criticizing Trump as well. So it's, it's there is, yeah.
I mean, it's hard to know how to conclude this point, but
basically the economic shock is very, very great.
We can have the Pope to that list.
We probably have the Pope to that list.
Yes, the Pope. That's a after, after Cindy's
global overview there. Let's bring it back to the
United States, shall we? Domestically longer though, all
this goes on in and around Hormuz, the more the price of,
of gas, petrol goes up in the US.
That's not good for the poll ratings of the president.
Small matter of the midterms trundling along towards us in
November. And he knows that, doesn't he?
Yeah, he does. We're going to have less impact
than the European and Asian States and Arab states that
Sydney went through. And I agree with her assessment.
And I put fertilizer as a, as a really top issue in, in food
production in, in a lot of places at at the top of the
list. But while we will have less gas
price challenges, they'll be some the the society resilience.
the United States is really low. We're not a good country for,
you know, for problems. And and with a midterm election
coming up, the president's going to be in a lot of trouble, in my
opinion. So, yeah, he has a lot of this
has to work quickly. This idea of cutting off the,
you know, 13 billion, you know, a month from the from the
Iranians. It's going to have an immediate
impact. If it doesn't, he's going to
have to pick some other tools to get them back to the negotiating
table. And I would caveat one thing.
I don't like much of his foreign policy and I'd throw his Russia
Ukraine policy on, you know, on the fire of not not executed
well, even from a make America great again stance.
So, you know, I think this is a long series of failures in my
mind by by Trump and and I'm very disappointed with him.
I'm just when I comment on the blockade.
I do think it's legal. I do think it's executable and I
do prefer it, you know, to trying to wedge open the
straight for convoy operations. I think that would lead to
casualties of US sailor casualties unnecessarily.
So right now, trying this blockade strikes me as the right
thing to do initially. Mark, why is the US blockade
legal but not legal? Because the US is responding,
What's happened is what the US is doing is seizing ships that
are participating in an illegal operation.
The illegal operation is they are being exempted from toll or
in the case when they're paying tolls, paying tolls while Iran
blocks the, you know, the transit passage through an
international waterway. You, you can't, you know, our
response to this can't be, well, you got away with it.
You know, it's got to be no, we're going to hold you
accountable. And that's what, that's what you
do. I, I'm, I don't think what he's
doing here, you know, not that he cares, but I, I don't think
what he's doing here is, you know, is illegal.
I think what he's doing here is a response to an Iranian action
to block. And it is Iran that blocked the
Straits of Hormuz. Isn't the Iranian blockade a
response to the war that he started, which is arguably
illegal as well? Yeah, well.
That's a separate argument about the war being illegal or
illegal. How you know his assessment of
whether there was a threat to United United States is what you
have to go through that. But no, blocking an
international Strait is not an allowable response.
What this is all about is also resilience.
Now, many would feel, and it's more a feeling than an
intellectual argument, the Iranians culturally, socially,
politically have resilience to the ends of the Earth compared
to the United States. the United States has an airman or two
missing and there's a state of almost national panic.
You compare that to what's actually being inflicted and
what the Iranian nation is going through.
And that's a factor here. As we've mentioned time and
mentioned, you said this has got to happen quickly, Mark, that
resilience, Sydney, is a big factor, isn't it?
Yeah. And I, I wouldn't want to
pretend to be an Iran expert here, Alex, but I think the, the
operative part seems to me is maybe the fact that when you are
the one under attack, that resilience comes much more
easily because it seems much more obvious that is an
existential risk to you. And this is the, this is what's
happening in Iran. And this is what happens at a
lot of the countries that not just America, but other nations
target over time. You know, I, I'm ethnically
Chinese. China, as you know, plays a lot
on this kind of memory of, of existential risk.
And it's not because the country is strong or because the people
are more smart or anything. I don't really think it's any of
that. I think it's just because when
you are the one forced to rally around your flag and when it is
an existential risk for your own country or your or your regime,
whatever you want to identify with, then it becomes much
easier to feel that that battle to the death.
I mean, I don't think America, Americans can feel that kind of
same sense of desperation. Just remember they murdered
32,000 protesters in about 40 hours.
I mean, this is not a popular regime, but you know, if the,
you know, when we started bombing like this, we don't
give, we didn't give do any of the preparation so that the
activists or so that, so that the people who are opposed to
the regime were armed and ready to go.
We did none of the proper preparation.
But the regime is resilient. And when you can kill 32,000 of
your people and get away with it, you're a pretty resilient
regime. So that's, that's an ugly
resilience. That's part of your, that's part
of this description. And I think people are
forgetting that a lot. I the United, you know, they're
blaming the United States for all this.
I mean, what was, what's Europe's response to the 32,000
people condolence cards, you know, a criticism of a country
trying to remove the regime. I'm sorry.
This is, you know, there's a lot of amnesia in Europe over the
Iranian regime and what they say about Israel, what they say
where they're going to get a bomb and what they do to their
people who protest. This is an evil group of, of
guys who have who have ruled this country mercilessly for 47
years. I'm not 100% sure I'd have any
empathy for them in in this case.
Now just going forward on the economic part of China, China's
in our in our minds, of course, because of the Chinese vessel
which has seemed to have gone through the straits thus far.
OK. Longer term, how does this play
for the Chinese economy, Cindy? I think it depends on how long
it goes on for. For now, you know, China is not
over at the front of the line as as one of the biggest victims of
this action, even though as as a figure often trotted out China
as a massive customer of Iranian oil. 80% of shipped Iranian oil
goes to China. You flip that stat on the other
on its head, the other way around.
And actually Iranian oil accounts for about 10% of
China's energy oil imports and about only 7% of China's total
energy consumption because actually China's so energy
independent. So going back to your point
about resilience, Alex, you know, 85% of China's energy that
it uses comes domestically basically.
So it's been preparing for a long time for external
disruptions precisely like this one.
So I think, you know, countries like Japan, for example, are
much more exposed. But that's a short term thing.
You know, in the long run, if there is a global recession, a
country like China whose economy is basically being kept afloat
by exports, needs customers, and that is not going to be good for
the Chinese economy either, which is probably only growing
at about 3 to 5% at the moment. Some people say even less than
that. So none of this is good for
China in the economic sense. Diplomatically though, depending
on how Trump plays the card, I think China has a lot of brownie
points, as it were, that it can win from the rest of the world
if it plays its own cards. Well, in the sense, because
right now, who looks like the most disruptive, the most
threatening actor to the rest of the world is not China, it's the
US. Cindy, Mark, thanks very much
for your valuable time. We've covered a huge amount of
ground in the last half hour or so.
Very grateful to you both. Thank you so much.
Thank you.