Economy - The Sixteenth Council

Hormuz Control Conflict: When System Warfare Replaces Deterrence

Hormuz has shifted from deterrence to system warfare, where control of perception, risk, and flow now outweighs kinetic dominance. The U.S. is enforcing maritime order, while Iran exploits asymmetric disruption to raise systemic cost. Neither can fully control the corridor—only degrade or shape it. The result is a fragile equilibrium defined by volatility, insurance pressure, and alliance strain, where the decisive question is no longer military victory, but who sets the conditions under which global trade continues.

Impact of the 2026 Iran Conflict on Global Oil Markets

The 2026 Iran conflict has triggered severe volatility in global oil markets, driven largely by the closure of the Strait of Hormuz, a key artery for nearly 20% of global oil supply. Prices have surged above $100 per barrel, disrupting trade, transportation, and economic stability worldwide. Import-dependent regions, particularly in Asia and Europe, face acute shortages, while emergency reserves and energy transitions offer only partial relief amid ongoing geopolitical uncertainty.

Iran–U.S. Conflict Escalates: Strategic Costs, Regional Shockwaves, and Global Implications

Strategic Overview The conflict between Iran, the United States, and Israel has moved rapidly from a limited strike operation to a widening regional war. The initial U.S.–Israeli assault on 28 February targeted military and strategic infrastructure inside Iran and killed…

The Iran Strike: Regional Conflagration and Global Strategic Implications

The U.S.–Israel strikes on Iran represent now a decisive shift in regional security dynamics. By targeting strategic military infrastructure, the attacks have elevated the Gulf from a zone of tension to an active theatre of risk. Iran’s capacity for asymmetric retaliation through maritime disruption and proxy escalation remains intact. Energy markets, trade corridors, and alliance structures now face renewed volatility, while major powers recalibrate shifting positions in anticipation of a prolonged period of instability and competitive deterrence ahead globally today.

Hedging or Heading Away? The Quiet Drift of US Allies Toward China

US allies are quietly recalibrating their relationships with China, exploring economic and technological partnerships while maintaining security commitments to Washington. This hedging reflects pragmatic flexibility rather than outright abandonment, but signals a growing multipolar reality. Europe and Asia are diversifying trade, infrastructure, and tech ties with Beijing, testing limits of US influence. The trend highlights a critical choice for Washington: adapt to conditional loyalty and shared influence, or risk incremental erosion of its global primacy as allies hedge for security and opportunity

Negotiations and Tariff Threat of Ongoing US-Europe Territory Dispute

The US-Europe dispute over Greenland reflects a new era of geopolitically driven trade policy. President Trump’s threats of escalating tariffs aim to force European acquiescence, prompting discussions on Europe’s anti-coercion measures. NATO deployments to Greenland, debates over US missile defence, and concerns from Russia and China underscore the stakes. Failure to reach agreement risks severe economic disruption for Europe, particularly Germany, while US-EU trade faces uncertainty. The crisis signals that tariffs are increasingly a tool of strategic coercion rather than revenue generation.

Electoral Uncertainty in Latin America

Latin America is entering a period of heightened electoral uncertainty as a dense cycle of elections from late 2025 to 2026 reshapes the region’s political trajectory. Voter fatigue, economic pressures, and dissatisfaction with inequality are fuelling a potential shift away from left-leaning governments toward more centrist or market-oriented leadership. While this transition may unlock reform and investment opportunities, it also heightens risks of policy volatility, social unrest, and intensified geopolitical competition between global powers.

Global Order Under Strain: The Major Foreign-Policy Shocks of 2025

2025 exposed a global order under strain, defined less by decisive realignments than by accumulating shocks. U.S.–China economic confrontation became visibly symmetric, conflict mediation in Ukraine and the Middle East lost credibility, and regional actors assumed security roles once held by global powers. Trade routes, supply chains, and deterrence norms all proved fragile. The year underscored a central reality: major powers retain ambition, but their ability to enforce outcomes is increasingly constrained, producing a more volatile and contested international system.

Economies to Watch in 2026

The global economy entering 2026 is no longer governed primarily by growth cycles, but by strategic stress. Fiscal exhaustion in advanced economies, geopolitical fragmentation, energy realism, and uneven technological diffusion are reshaping economic outcomes. The most consequential economies in 2026 will not be those expanding fastest, but those sitting at critical inflection points—capable of transmitting shock, absorbing volatility, or redefining alignment. Economics has become an instrument of power, constraint, and contest.

Economic Policy Variation in Latin America

Latin America’s economic landscape is shifting as countries balance slow growth with rising geopolitical pressures. Diversified trade—especially deeper ties with China—and selective nearshoring are reshaping regional dynamics. While open-market economies like Chile and Colombia expand global access, protectionist players such as Brazil and Argentina prioritise shielding domestic industries. Despite strong potential, the region faces fiscal strain, low productivity, and infrastructure deficits. Long-term growth hinges on structural reforms and fiscal consolidation to strengthen resilience in a volatile global market.

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