The Strait of Hormuz Showdown

0:05This morning, the United States imposed a blockade on Iran's ports, including those in the Persian Gulf. Our colleague Vera Bergengruen has been following the developments. We saw the president threaten this massive blockade. He said the U.S. military will now basically be stopping ships and chasing them down. According to a senior official, more than 15 U.S. warships are positioned near the Strait of Hormuz, including an aircraft carrier, an amphibious assault ship, and multiple destroyers. Their goal? To prevent ships from leaving major Iranian ports. Iran's Revolutionary Guard Navy said that any approach by military vessels toward the strait would be treated as a violation of the ceasefire, according to a state-linked media outlet.

0:52What does this mean for the ceasefire? that, you know, started last week, will it hold? That's a great question. As of now, it is holding. But again, I mean, what the president is threatening here is that in the course of instituting this blockade, there may also be some limited strikes, as some officials told us yesterday. So if there's Iranian assets on either side of the shore, you know, targeting them, then they might take them out. In that case, the ceasefire would definitely be considered to be broken. We're in a weird position where technically both sides could accuse each other credibly of violating the ceasefire, but they don't seem eager to resume the fighting.

1:31What does this moment tell us about the next phase of the war, potentially? I think what it tells us is that this has become very centered on the global economy, on the strait. When you remember how the war started, where Trump basically said Iranians take to the streets, he made it sound like it was about regime change, and now we're in this extended back and forth about this critical waterway. All of these countries around the world are having to really deal with economic consequences. I think what that tells us is that we're now in this potentially prolonged, protracted conflict that isn't just military, it's economic.

2:07And it's something that in our reporting, everyone around Trump basically warned him might happen. I just don't think they thought that would still be there. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Monday, April 13th.

2:30Coming up on the show, the showdown at the Strait of Hormuz.

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4:19Last week was a potential turning point for the war in Iran. After dramatic threats from Trump, the U.S. and Iran agreed to a two-week ceasefire, with the goal of negotiating long-term peace. On Saturday, both sides met for talks. Vice President J.D. Vance led U.S. negotiators to a meeting in Pakistan with high-level officials from Iran.

4:42What were each country's goals kind of going in? So we've seen both sides talk past each other for the last couple of weeks when they've attempted to do some kind of peace negotiation. The U.S. has very maximalist demands. They are going in and they're saying, we want you to not pursue nuclear weapons. We want you to reopen the Strait of Hormuz in unrestricted terms. We want you to curb all of your behavior in the region. So the U.S. is coming in with really major demands. Iran wants sanctions to be lifted and, you know, they just basically want an end to the hostilities. But they're both coming there and neither side appears to think they have lost.

5:23And so the United States seems to think they have the upper hand on Iran. Iran seems to think that they have very critical leverage over the United States because of the control of this waterway. So they're both there kind of not willing to be, you know, out leveraged, I guess. Right. I mean, both sides last week had essentially declared victory. Right.

5:43Another really important thing to set the scene, I think, is that President Trump repeatedly said, we don't really need a deal. Oh, I don't know. I don't care if they come back or not. And going in, he's telling reporters, I don't care. They can make a deal. They can't. We've already won. If they don't come back, I'm fine. Their military is gone. Their missiles are largely depleted. The manufacturing capability for missiles and drones is largely defeated. And he himself was actually in Miami watching, you know, a UFC fight with Secretary of State Marco Rubio. The 45th and now 47th president of the United States of America, Donald J.

6:24Trump. And there's this bizarre split screen where everyone's waiting for the vice president after 20 hours of negotiations in Pakistan. And we have Marco Rubio and Trump, you know, watching two guys beat each other up in Miami. In Pakistan, Vance and his team sat in a room with Iranian officials. The meeting was the highest level talks between the two countries since the Islamic Revolution in 1979. After 21 hours of discussions, Vance spoke to the press. Well, good morning, everybody. And let me say a couple of notes of appreciation, first of all. And he said that in the end, negotiations had failed.

7:02We have not reached an agreement. And I think that's bad news for Iran much more than it's bad news for the United States of America. So we go back to the United States having not come to an agreement. We've made very clear what our red lines are, what things we're willing to accommodate them on, and what things we're not willing to accommodate them on. And ultimately, he walked out after 21 hours and he said, you know, we weren't able to reach an agreement. There's no deal. And so ultimately, the vice president said that the negotiations broke down specifically because Iran would not commit to not pursuing nuclear weapons.

7:35And, you know, kind of curbing their nuclear ambitions. But as far as we can tell, it was about more than that. What did Iran say? Iran said that the United States was not approaching this in good faith. They said that the United States was coming in, again, with like a fantasy wish list of the demands of a victor, of somebody who's won a war and is forcing concessions on another country. And in their view, they still have control of the Strait of Hormuz. They're still in control. So, you know, Iran wasn't approaching this as someone who has lost the war and who has to concede. They didn't see that as somebody really approaching this in a serious and good faith way.

8:12I mean, you've been reporting on this for a while now, Vera. When you heard that negotiations were happening, did it seem even going in that there was any room for either side really to negotiate over anything? Again, I mean, when the president himself is saying, we've already won, I don't really care what happens in these negotiations. I think that was a very unusual message to say in front of a negotiation. You know, when you think how long it took 10 plus years ago to settle a couple of points on the nuclear program, that took hundreds of people and many years. And now they were trying to do that and 10 other things at the same time without having done any of the pre-meetings with lower level people getting on the same page.

8:54You know, these negotiations are incredibly complicated. And this is how the Trump administration in his second term has approached all of these. We saw this in Gaza and Ukraine. They tend to try to invert the whole process. And they really like what we kind of called, you know, deal now, details later. They want to just declare, you know, there's been some kind of agreement and then all of the details have to be worked out after there's been some kind of agreement. That's definitely not how the Iranians do these things. And that's not how most negotiations work.

9:26After U.S. and Iranian efforts to reach a deal failed, President Trump responded on social media. On Sunday, he announced that the U.S. Navy would begin blockading ships entering and leaving the Strait of Hormuz. Trump also said the U.S. would intercept every vessel that had paid a toll to Iran. And he added, quote,

9:51There wasn't more detail than that. We didn't know what would happen to those tankers, what would happen to those ships, who's going to be doing this. He said that other countries had signed up to help the U.S. with this blockade, which seems very unlikely. And we still don't know which countries those are. So I think when we first saw that, you know, I guess our main question was, does the U.S. have the capability to even do that and who's going to be doing it with them? How a U.S. blockade could play out is next.

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11:54For the past six weeks, ships trapped in the Persian Gulf have been unable to move their cargo, and that includes the millions of barrels of oil that normally flows through the strait. Iran has allowed a few ships to cross, including its own oil tankers and ships that have paid them a toll. So what is the bet that Trump and the U.S. are making with this blockade? Because long term, the U.S. wants the strait open, right? What they are hoping is that they are going to impose so much economic pain by not allowing these ships through that they are going to choke off the little bit of remaining revenue that is coming into what's left of Iran's economy.

12:33And that without the tolls, without the ships, without being able to sell oil, that they are going to impose so much economic damage on Iran that they are basically going to blink first. Of course, the flip side of that is that it's also going to cause big pain to the global economy. So now it just becomes a matter of who can withstand the most pain. And from speaking to officials and analysts, I mean, it's kind of a toss-up. Right, because I thought the whole point was that the U.S. wanted to open or reopen the Strait of Hormuz to let ships and oil flow through. What this blockade would do is essentially really, like, lock it down so that not even Iran can get anything.

13:12Right. It's basically kind of, you know, the way the president has described this, it's a necessary short-term pain that everyone is going to have to suffer in order to, you know, really severely weaken Iran and bring them back to the negotiating table or at least force them to give up more concessions. And he's been very clear on that. One of the most striking things to me about how the president has conducted this war is that he's often quite blunt about the costs. And he kind of says that he's, you know, everyone should be willing to bear them. So how does a blockade like this work logistically?

13:44Like, what does it mean when he says, like, the U.S. Navy is going to impose a blockade on this strait? So, so far, very few ships were going through. So from speaking to analysts and military experts, they say that, you know, the handful of ships that have been going through, it's quite easy given that it's a very narrow waterway for the United States that has the assets in the region to basically position themselves to intercept those ships. And we've seen them really use these capabilities last year, you know, more extensively. We saw them do this in Venezuela. They've got, you know, lots of assets in the region that allow them to, you know, go after these ships, potentially board them.

14:23But they haven't really told us what they plan to do with them after. So there's still a lot of questions about that. But it isn't, you know, as massive as it might sound, given that traffic through the strait had already slowed to a trickle. Officials told Vera that while the U.S. has the resources to enact a full blockade, the hope is that their presence will act as a deterrent So from speaking with officials and analysts, what they say is that the United States doesn't even have to try and catch all of these ships No one's really going to risk it All it takes is one or two, and the rest of them are going to have this quote-unquote hurt mentality and aren't even going to try How has Iran reacted to this blockade?

15:04I think for Iran, it's almost been validation to an extent that they still have so much control over this critical global oil joint point that, you know, the United States would even bother wasting all these resources to do this. And, you know, again, they still retain the ability to retaliate against Gulf states. They still have everything that they had a week ago. So for them, we've seen, you know, they've been really adept at kind of trolling the United States to an extent, kind of flaunting the fact that they still retain control and that that is why this is happening. I guess what I'm curious, what sort of capabilities both sides have really to have a prolonged kind of standoff in the strait, right?

15:45Like what capability does Iran have right now to fight a U.S. blockade? You mentioned some of the things that they could do off the coastline, but what about their naval assets? Do they have any? So the formal Navy has been pretty severely decimated by the U.S. strikes. But again, it was more of a often kind of a formal symbolic Navy. Then you've got the IRGC, the paramilitary force, operating these small, nimble speedboats that really kind of caused the most harassment and potential damage. And according to analysts we've spoken to, they still retain about 60 percent of those. So, you know, it's difficult to describe this as capabilities because it's so asymmetric.

16:25We're discussing like major, major U.S. assets, like big ships, big military assets. And then we're discussing cheap drones, small speedboats, and small capabilities that are destructive enough to deter everyone trying to go through. Everything we've been talking about sets up a standoff between who can really tolerate more economic pain, Whether it's Tehran, which at this point has suffered, you know, weeks of war and probably feels in terms of the regime, it doesn't have much to lose. Their number one goal is just to survive. And then you've got the global economy, which even though President Trump keeps insisting that U.S.

17:06is less dependent than Europe, for example, on the strait, which is true, it is still part of an interconnected global economy. And that's something that Trump hasn't been willing to really acknowledge during much of this conflict. He keeps basically saying that the United States is doing this for the rest of the world, but they could just, you know, give up, go home and leave the problem to everybody else. As of Monday afternoon, no U.S. allies had agreed to assist in the blockade. We're kind of already in a global energy crisis as a result of this war. What kind of impact could this blockade have on things?

17:45Practically everybody we've spoken to says it's only going to make it worse. This is not, there's no good case scenario here. Even with what has happened so far, if every single best case scenario were to happen from here on out, it's going to take a while for the global economy to recover. A lot depends on how this blockade works out, whether both sides actually come back to the negotiating table, whether the fighting resumes. But anything that adds more time to this conflict is just going to extend how long it's going to take to recover.

18:28That's all for today, Monday, April 13th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Shelby Holiday and Georgi Konchev.

18:41Thanks for listening. See you tomorrow.

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