Original Title: It All Comes Down to Who Controls the Straight of Hormuz: The "Final Battle"

Original Author: Ray Dalio

Translated and Compiled by: Peggy, BlockBeats

Editor's Note: In most wars, disagreement and uncertainty are often the norm. But in this conflict surrounding Iran, the criteria for victory or defeat are unusually clear: who controls the Strait of Hormuz.

This is not just an energy transit route; it is the "valve" for global capital flows and the geopolitical power structure. Once the right of passage is weaponized, its impact will quickly spill over into oil prices, inflation, financial markets, and even the entire international order.

Author Ray Dalio's judgment in this article is quite direct: if Iran retains control over Hormuz (even just as a bargaining chip), this war will be seen as a failure for the United States in terms of outcome. And the significance of such a failure extends far beyond the gains and losses of a single military operation.

Starting from historical comparisons, the author points out that similar junctures often correspond to turning points in power structures. Building on this, he places this conflict within the larger framework of the "big historical cycle," arguing that the current Middle East situation is merely one part of the co-evolution of debt, politics, and the geopolitical landscape.

When the outcome of a war can be measured by whether a strait remains open, its significance is no longer confined to the Middle East but points to the next phase of the entire world order.

Below is the original text:

Comparing what is happening now with similar situations in history, and then calibrating my thinking with the judgments of better-informed and more seasoned decision-makers and experts, has always helped me make better decisions.

I find that there is often great divergence and surprise regarding future directions. However, regarding this conflict, there is one judgment that is almost uncontroversial: the key lies in one point—who controls the Strait of Hormuz.

The consensus I hear from government officials, geopolitical experts, and observers from different regions around the world is: if Iran continues to control passage through the Strait of Hormuz, or even merely retains the ability to use it as a bargaining chip, then:

The US will lose, Iran will win.

The United States will be seen as having lost this war, and Iran will be seen as the winner. The reason is simple. If Iran can use the Strait of Hormuz as a "weapon," it means the US lacks the capability to resolve this issue.

This strait is one of the world's most critical energy channels, and its right of passage should be guaranteed at all costs. Because if blocked by Iran, the damage would extend not only to the US but also to its Gulf allies, oil-dependent nations, the global economy, and the entire international order.

In terms of outcome, the victory or defeat in this war can almost be measured by one indicator: whether safe passage through Hormuz can be guaranteed. If Trump and the US cannot "win" this war, they will not only be seen as losers but also as having created an untenable situation.

As for why they can't win, it's actually unimportant. Is it domestic anti-war sentiment affecting midterm elections? Is American society unwilling to bear the costs of war? Is it insufficient military capability? Or an inability to rally allies to jointly keep the shipping lane open?

None of that matters. There is only one result: the US loses.

Historically, the significance of such a failure can be very serious. Losing control of Hormuz for the US might be akin to what the 1956 Suez Canal Crisis was for Britain (where Britain was forced to concede on the canal issue, leading to a shift in global power), or to 17th-century Spain (which lost its advantage due to fiscal overextension and naval decline), or 18th-century Holland (whose decline was marked by its trade and financial center status being replaced by Britain)—all iconic moments of imperial decline.

History repeatedly follows a similar script: a seemingly weaker nation challenges a dominant power over a key trade route; the dominant power issues threats, the world watches the outcome; and then, positions and capital are redistributed based on victory or defeat.

This decisive "key battle" often rapidly reshapes history because people and money instinctively flow to the winner. This shift is directly reflected in markets—bonds, currencies, gold—and in deeper geopolitical power structures.

Based on numerous historical cases, I have distilled a simple but important principle: when a dominant country with reserve currency status becomes fiscally overextended and simultaneously shows signs of military and financial fatigue, be wary that allies and creditors may begin to lose confidence, debt may be sold off, the currency may weaken, and even its reserve currency status may be shaken.

If the US and Trump cannot control the flow of shipping through Hormuz, this risk will rise significantly.

In the past, it was taken for granted that the US could militarily and financially overwhelm its opponents. But Vietnam, Afghanistan, Iraq, and potentially this conflict—their cumulative effect is eroding that belief and shaking the post-war international order led by the US.

Conversely, the same holds true: when a dominant country demonstrates clear military and financial strength, confidence is reinforced. For example, Ronald Reagan, shortly after taking office, quickly secured the release of hostages from Iran and provided escort for oil tankers during the Iran-Iraq War, actions that reinforced US deterrence.

If Trump can deliver on his promise to ensure Hormuz remains open and suppress the Iranian threat, it will significantly boost confidence in US strength.

Conversely, if the Strait of Hormuz falls into Iranian hands and is used as a tool of threat, the world becomes its "hostage." This not only means the global energy lifeline is "held hostage" but also signifies that the US "started a war but failed to win it" in this conflict. Trump's credibility would be directly impacted, especially given his previous tough rhetoric.

The private views of many foreign policymakers are quite direct: "He talks a good game, but when push comes to shove, can he win?" Some observers are even viewing this conflict as an "ultimate showdown," like watching a gladiator arena or a championship final.

Trump is calling on other countries to join a maritime escort operation, and his ability to actually organize allies is itself a test of capability. The reality is that relying solely on the US and Israel, it is difficult to ensure the safety of the shipping lane without diminishing Iranian control, which would likely require a truly large-scale conflict.

Iran's attitude stands in stark contrast to America's. For them, this is a war of belief and survival. They are willing to bear greater costs, even sacrifice lives. American society is more concerned about oil prices; American politics is more concerned about elections.

In war, who can "endure more pain" is often more important than who can "inflict more pain."

Iran's strategy is likely to drag the war out, prolonging and intensifying the pain until the US loses patience and withdraws. If this happens, US allies will quickly realize: America will not always stand behind them.

"Negotiated Settlement" is Only a Superficial Option

While there is discussion of ending the war through an agreement, everyone understands: an agreement cannot truly solve the problem. Almost everyone knows that conflicts of this nature cannot be truly resolved by agreements. What truly determines victory or defeat is the upcoming "key battle."

Whether the result is Iran continuing to control Hormuz or its control being taken away, the conflict will enter its most intense phase. This decisive "final battle" is likely to be very large in scale.

The Iranian military has stated: "Any regional energy facility related to or cooperating with the US will be utterly destroyed." This is precisely the kind of action they might take. If the Trump administration successfully rallies other countries to send naval escorts, and the shipping lane has not yet been mined, then this might be a path to resolution. But both sides know the truly decisive battle still lies ahead. If the US cannot reopen the strait, the consequences will be extremely severe; conversely, if Trump wins this battle and neutralizes the Iranian threat, it will greatly enhance his prestige and demonstrate US strength.

The "Final Battle" Will Have Global Impact

The direct and indirect effects of this "final battle" will ripple across the globe. It will affect trade flows, capital flows, and the geopolitical landscape concerning China, Russia, North Korea, Cuba, Ukraine, Europe, India, Japan, and others. More importantly, this conflict is not an isolated event but part of a larger "historical cycle." This cycle is simultaneously driven by financial, political, and technological forces. The Middle East situation is just one slice of it.

For example, a country's ability to win a war depends on the number and intensity of its wars, its domestic political situation, and its relationships with countries sharing similar interests (like Iran, Russia, China, North Korea). No country has the capacity to fight multiple wars simultaneously, and in a highly interconnected world, wars, like pandemics, spread in unpredictable ways.

Simultaneously, domestically, especially in democratic nations with significant wealth and value divides, fierce debates always arise around "whether to go to war, and who bears the cost (in funds or lives)." These complex chain reactions, while difficult to predict, usually do not end well.

Finally, I want to emphasize that I am not speaking from a political stance, but as someone who must make judgments about the future. By studying the history of the rise and fall of empires and the changing of reserve currencies over the past 500 years, I have summarized five major forces driving changes in the world order:

1) The Long-Term Debt Cycle

2) The Cycle of Rise and Decline in Political Orders

3) The Cycle of International Geopolitical Orders

4) Technological Advancement

5) Acts of Nature

The current Middle East situation is just one segment within this "big cycle." While it's impossible to predict all details precisely, the operating state of these forces can be observed and measured.

History doesn't necessarily repeat, but it often rhymes. What truly matters is: you need to judge whether this "big cycle" is happening, what stage we are in, and how you should act within this context.