Blockades are Back, The UK Should Plan Accordingly
A guest post by an anonymous Geopolitical Analyst
The UK has a blockade problem. The Royal Navy utilized this tool of warfare better than any other in history. A handful of bases along the British Empire’s critical shipping lanes — Singapore, the Cape of Good Hope, Gibraltar, Alexandria, and Dover were called the “five keys that lock up the world.”
Today’s Royal Navy can no longer enforce an effective blockade. But, even more worrisome, we have no plan for when the UK is impacted by a blockade and other tools of hard power. The UK also has no plan for how protect its economy in an era when sea lanes are no longer free and open to maritime commerce, but instead are the focus point of new great power competition.
There are effectively two ongoing blockades in the Middle East (Strait of Hormuz by Iran and Gulf of Oman/Arabian Sea/Indian Ocean by the US). There is also another in the Caribbean (US blockade of Cuba). Venezuela was blockaded for months until the US seizure of former President Maduro in January. The US is now engaged in a pattern of using blockades to advance its hard power policy goals.
In contrast, the Royal Navy could barely send one ship to defend UK military bases in Cyprus. It certainly cannot assemble a fleet capable of a lasting blockade of a hostile power. Fixing this state of affairs is best left to defense experts and those that served when the Navy was more capable. But planning for how the UK economy should prepare for blockades, however, is basic economic security. As we move away from the US-led rules based international order and further into an era defined by hard power, such planning is more important than ever.
As the world shifts towards hard power, the UK under Labour is doubling down on the deindustrialization started in the 1980’s by the Conservative Party. Despite affiliation with trade unions and supposed concern for workers, Labour’s policy choices are having terrible consequences for industry. Economic challenges have been accelerated by the Net Zero fanaticism of Labour’s energy choices that put ideology over reality.
Deindustrialization means that more and more people and businesses are exposed to overseas supply chains. Production of many of the necessities of an industrial (or sadly post-industrial) society have increasingly been outsourced. Examples include transport, refined petroleum products, renewable energy technology, petrochemicals, semi-conductors, and even defense components. As the UK makes less on its own shores, ever-increasing swathes of the economy are exposed to risk of disruption from events overseas, like a blockade or tariffs.
The UK and middle powers like Canada and Australia are operating in a world where the United States and China (among others) have cast aside the old rules-based playbook. More and more, countries are using hard power to achieve their national goals. In this regard the UK, EU, and Canada and Australia (with three out of 4 currently led by left-leaning parties) are notable exceptions. The UK needs to develop its own strategy to protect its economic security as hard power projection becomes normalized.
The UK should reduce over-reliance on natural resources and manufactured goods from countries that could be subjected to a blockade by the US or another power, like China. This is yet another reason that the UK should look to fully develop its own natural resources (oil, gas, tin, lithium, etc.). The UK can also partner with its overseas dependencies and Commonwealth Countries to expand access to resources. The UK is not blessed with as diverse an array of natural resources as some countries, but its historic links to dozens of overseas territories, the Commonwealth, and former parts of the British Empire give it leverage and reach compared to Europe and Japan, for example.
Increased importation of Chinese electric vehicles and other green tech is as big of a risk, if not more, than importing Russian natural gas, then Qatari natural gas, and crude oil from the Gulf. Arguments made by Secretary of State for Net Zero and Energy Security Ed Miliband that Chinese-made renewables are the safest energy choice are dangerous to UK economic security. Chinese made technology bring well-known security risks and their government subsidies undercut UK and EU competitors, exacerbating deindustrialization. There is also the risk that in the future, the UK cannot access software updates, replacement parts, or conduct business with Chinese green tech manufacturers due to a potential US blockade or secondary sanctions. MI6 has warned of this risk for years, to no avail.
The chances that the US and China butt heads in the coming years is not a low probability. The fallout from such a conflict will have severe repercussions in the UK. Chinese goals for reunification of the mainland and Taiwan are the number one priority for President Xi Jinping. Strategically, the US has been making several moves to encircle China’s maritime export routes, as well as its seaborne natural resource import routes. The latest US move is to sanction Chinese “teapot” refineries importing Iranian crude oil, in an attempt to further limit their supply chains.
The US recently pushed the Panamanian government to remove Chinese (Hong Kong) port operator CK Hutchinson from two ports along the Panama Canal. This firm that the US deems too risky also manages three of the UK’s largest ports (Felixstowe, Harwich International Port, and London Thamesport). Removal of Chinese port operators from the Panama Canal Zone will help the US prevent Chinese use of the canal in the event of a crisis.
Defense partnerships were recently signed by the US with Indonesia and Malaysia. America has existing alliances with the Philippines, South Korea, Japan, and Australia. If the US were to successfully activate these alliances it could project considerable naval power into the Indo-Pacific. China’s natural resource imports could theoretically be blocked—an expanded version of China’s “Malacca dilemma.” Even more risky for the UK, the US could block Chinese goods exports to the UK and Europe. The UK should prepare in case the US unilaterally acts to deny access to a trading partner(s) to advance its own policy goals.
Whatever the merits of the UK refusing to join the US conflict with Iran, this choice has made the Trump administration feel that it stands alone. The prevailing view amongst many in Washington is that the US can no longer rely on key allies when it makes a request.
This feeling of rejection only increases the chance that the US attempts a blockade against China during a confrontation. A blockade could be additive to primary and secondary sanctions or a request to join an embargo. Note that the US legally treats Hong Kong in the same manner as mainland China in terms of sanctions. Washington will expect the UK and other allies to adopt a similar stance, creating huge potential headaches for UK finance and services sectors. To US decisionmakers, blockades agency and the power of disagreement from countries or blocs that want to continue trade. The pervasiveness of this mistrust from Trump’s team is real. The UK should engage in preparations to mitigate the potential damage.
At a minimum, the UK should amass stockpiles and reserves of certain key natural resources and industrial inputs like in the US and Japan (oil, gas, critical minerals, etc.). Key sectors of UK industry necessary for basic economic security (refining, petrochemicals, steel, etc.) should also be preserved and revived by removing regulatory burdens from Net Zero. UK companies can be encouraged to contract with domestic counterparts to create mutually reinforcing economic links. Tax laws can incentivize these types of business choices. This could include reducing VAT charged when “buying British.” Mandates for UK-produced procurement and use of taxpayer funds should also be actively debated in Parliament as a demand-side anchor of reindustrialization.
Despite its proud maritime tradition, the UK does not currently have the naval power to fight back against another country attempting to blockade or attack its overseas economic interests. The best example remains the Falkland Islands. That British Overseas Territory has substantial oil deposits named Sea Lion field. The current Labour Government has given its blessing to the Falklands to develop this field. Such a small and sparsely populated region with immense resources remains a tempting target. US tacit encouragement of Argentine revisionism, while eliciting strong negative responses from Whitehall, would be challenging to overcome with the UK’s limited hard power capabilities.
Finally, oil executives and military planners around the world have known about the risks of a blockade or disruption of commerce in the Strait of Hormuz since the 1970’s. During this time, both the Conservatives and Labour oversaw a marked increase in deindustrialization and a decrease in stockpiles and reserves. Pursuit of Net Zero has had a particularly harsh result for refining, petrochemicals, and steel, among others. The UK still needs those products. But now it must increasingly import them. The country loses the tax revenue and jobs from not producing at home. It instead imports the risk of other countries’ actions disrupting the flow of commerce and supply chains around the world.
The entire security and domestic energy architecture in the UK and most developed countries also depends upon the premise that the US protects global sea lanes as a common good. Little planning was done in the UK to prepare the economy for closure of the Strait of Hormuz. Even less planning has been done for the US choosing to regularly close sea lanes—a complete departure from underwriting the free flow of global maritime commerce.
As part of this shift, the blockade of Iran is further evidence the rules-based international order is dead. Canadian Prime Minister (and former Bank of England Governor) Mark Carney clearly articulated this diagnosis in his Davos speech earlier this year. “Great powers, have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.”
We are fully in a new era of hard power. Although Carney’s diagnosis has gained broad acceptance, his strategy of increasing economic dependence on China and building a block of “Middle Powers” via the world’s existing failed institutions is exactly the wrong approach. A new UK government has an obligation to protect the public and economy from foreseeable shocks. It should accept the current geoeconomic reality and make the UK stronger and more resilient to be able to face it head on. The UK should not wistfully try to recreate the old order using failed institutions. A clear-eyed acceptance of reality even includes reassessing aspects of relationships with close allies, like the United States.
The current US blockade of Iran is but one example of how even an ally can use hard power to remove our ability to trade with countries upon which we have an economic dependence. The UK once used blockades to bring down other empires and expand its power base around the world. We cannot afford to let our economic security fall victim to the same strategy.