Dalio: The Strait of Hormuz is the final straw that breaks the camel's back for America

(Source: Quan Yan She)

On March 16th, local time, Bridgewater founder Ray Dalio published a systematic analysis of the trajectory and historical significance of the US-Israel-Iran conflict. Dalio began by pointing out that although most wars are filled with disagreements and surprises, in this Iran war, “the answer is obvious, almost everyone agrees”: control of the Strait of Hormuz is the only measure of victory or defeat.

Dalio believes that the Strait of Hormuz is the world’s most important energy corridor. If Iran maintains the ability to threaten or blockade this route, it is equivalent to holding a weapon aimed at the global economy. In such a situation, regardless of the reasons the US fails to ensure free passage, there is only one outcome: President Trump and the United States lose.

Dalio writes that this failure will harm the US itself, its Gulf countries, oil-importing nations dependent on this route, and the entire global economic order.

01

“Cycle of Empire Rise and Fall”

Dalio embeds the current situation into his long-term research framework of the “Cycle of Empire Rise and Fall.”

He points out that over the past 500 years, the decline of empires almost follows the same pattern: a relatively weak power challenges the dominant great power’s control over a key trade route; the dominant power issues threats; the world holds its breath; then, human and capital resources rapidly flow to the victorious side. After this “final showdown,” history is rewritten.

The most direct analogy he cites is the Suez Canal crisis of 1956 for the British Empire, or the collapse of the Dutch Empire in the 18th century and the Spanish Empire in the 17th century. He believes that today, the Strait of Hormuz plays a similar role for the US.

From this, he concludes: “When the world’s leading power holds the global reserve currency but exposes its military and financial control decline due to excessive fiscal expansion, beware: creditor nations will lose confidence, the reserve currency status will waver, debt assets will be sold off, currencies will depreciate, especially relative to gold.”

02

Iran’s Strategy: No Quick Victory

Dalio has a clear understanding of Iran’s strategic intentions. He believes Iran does not expect to defeat the US in a direct confrontation; its strategy is to delay and escalate.

He writes that this strategy is based on an open judgment: the US public and leadership have very limited tolerance for casualties and prolonged wars. As long as the war is painful enough and lasts long enough, the US will voluntarily give up.

In Dalio’s view, this asymmetry is the most important structural difference in this war. He writes: “In war, the ability to endure pain is even more important than the ability to inflict pain. Iran is willing to die, while Americans worry about oil prices. US leaders are calculating for mid-term elections.”

The statements from Iran’s military leadership confirm this judgment. Dalio quotes their declaration: “All oil, economic, and energy facilities operated by oil companies in the region, whether partially owned or cooperating with the US, will be immediately destroyed and turned to ashes.”

Dalio specifically highlights the pressure created by Trump’s previous statements. He lists several of Trump’s public remarks, including: “If anyone mines and fails to clear quickly, Iran will face unprecedented military strikes.” These statements set very high expectations. Dalio notes that he often hears senior policymakers from other countries privately say: “He speaks very well, but when it comes to real action, can he win?”

03

This Is Not Just About the Middle East

Dalio finally broadens his perspective. He believes that the outcome of this war will send signals to all major powers through trade flows, capital flows, and geopolitics.

His judgment is based on a broader analytical framework. He sees the current situation as a node in a “long cycle” driven by five major forces: the long-term debt cycle, political order and disorder cycles, international geopolitical cycles, technological progress, and natural forces.

In his view, everything happening in the Middle East is not an isolated event but a manifestation of a centuries-old historical process. The dispute over the Strait of Hormuz is just the clearest cross-section of this larger story at this moment.