on August 12, 2026, 11:30 pm, in reply to "Hudson The Dollar’s Last Line of Defence"
What makes Paragraph 5 so important is the conflict between two opposing objectives. On the one hand is Iran’s administration of transit through the Strait of Hormuz with the aim of obtaining reparations for the property destroyed by the unprovoked U.S. and Israeli bombings (and indeed for its confiscated savings and the damage caused by the 46 years of trade and financial sanctions against it). On the other hand is the broader U.S. global objective of control of the oil trade and dollarization, subordinating both Iranian and Arab OPEC interests to this objective which is at the root of its Oil War.
In view of the legalistic problems and inevitable delays in trying to collect reparations from the United States and Israel, Iran intended to use its control of the Strait to re-impose transit fees after the MoU’s 60-day transition period. Iran has estimated that its tolls would yield $40 billion a year. The charges would be an expense for its neighboring OPEC countries to pay out of their export income, perhaps by raising their oil prices, in which case the cost would be borne by oil-importing countries, in effect for not having acted to stop America’s attacks on Iran and blockage of its trade.
At issue on the broadest international level is whether the United States will control OPEC’s oil trade and dollarize it for its own financial benefit (and specifically for its military spending), or whether Iran (and Russia and other countries) will be free to control and sell their oil and keep their sales revenue in currencies and financial markets of their own choice to promote their own national development.
For Iran, there will be Persian Gulf oil exports either for all or for none, open oil trade for everyone or no trade at all. Control of the Strait gives it this power.
Trump’s plan to cover the costs of his war by America imposing its own tolls
The MoU’s first U.S.-ceasefire violation occurred on June 25 after Trump claimed that Iran had no right to interfere with ships it had not authorized to sail close to Oman. Iran launched a drone strike against a ship that had followed that route. The United States attacked Iran, and both sides traded fire for two days.
Reviewing U.S. “provocations designed to challenge Iran’s authority,” Larry Johnson explains that: “On July 6-7, Iran struck at least three commercial vessels in/near the Strait of Hormuz who tried to circumvent the PGSA [Persian Gulf Strait Authority] protocols.” The United States responded by launching “attacks on Iranian positions along the Strait of Hormuz. Iran responded by launching attacks on US targets in Kuwait and Bahrain,” which had participated in the attack.
Iran’s stated aim of obtaining $40 billion annually from tolls on the Strait of Hormuz provided Trump with the opportunity he had been waiting for to make Arab OPEC countries bear the cost of his war with Iran. In a July 13 Truth Social post he announced a renewed blockade against Iran and said all other vessels passing through the Strait of Hormuz must pay the United States a 20% toll on the value of their cargos. The United States, not Iran, was to be the recipient of shipping tolls, while Iran itself was to be blockaded to prevent its own exportation of oil through the Strait from Kharg Island and other depots:
The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran. We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran’s ships or customers from entering or leaving. All other countries will have fair and open use of the Strait.
The U.S.A. will be, from this point forward, known as “THE GUARDIAN OF THE HORMUZ STRAIT,” but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World. The process and formation will begin immediately.
Iran’s Foreign Minister Abbas Araghchi announced that Trump was “absolutely right” to reject the idea that UNCLOS forbid any such charges. Insisting on Iran’s right to levy such tolls on ships using the Strait, he was glad to grant that “Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service.” He pointed out that “Iran has always been the GUARDIAN of the Strait and will remain so FOREVER. 20% is of course too much. We will be fair,” charging nowhere near the rate of about $15 per barrel that Trump wanted.
In a television interview later in the day, Trump defended his claim for tolls:
We’re going to keep the strait and we’ll probably run it. We’ll become the guardian of the straight. Maybe we’ll call it the guardian angel of the strait and we should be reimbursed for that. … we’re going to be reimbursed because the other nations are very wealthy, they’re on our side, and we can’t be expected to do that for nothing, unlike we had for many years.
… we guarded the strait for 50 years, more, and we never got paid for it. … we guarded it for nothing and now we’re going to guard it and we’re going to get paid for guarding it, a lot of money. But we just want to be reimbursed for doing all of this, for putting our people in danger.
Secretary of State Rubio warned Trump not to pursue his claim for tolls, pointing out that this endorsed the right in principle for Iran and other states to impose tolls on their own neighboring international waters. Trump retracted his statement the next day:
I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States. Those Investments will be MASSIVE …
Trump thus found a logic to realize his long-term dream of obtaining a share of OPEC oil-export revenue. Instead of charging a 20% fee for transport through the Strait of Hormuz, he would impose a “voluntary” workaround by extracting a similar magnitude of payment from Saudi Arabia, Kuwait, the UAE and other local monarchies for protecting them from Iranian drones and missiles. This protection shakedown did not leave a legal opening that Iran could use to charge its own tolls. In an Oval Office press conference he elaborated on the workaround:
… it was never fair to me that we would be guarding the strait we basically don’t take anything – we don’t need the oil at all. It wasn’t important for us, but it was important for allies. … I was called by different people, different countries, kings and emirs and all of the people that we all know and we all love … and they said, we’d love to do it a different way. We’d love to invest in the United States with billions and billions of dollars … we would like to invest tremendously in the United States as opposed to charging a fee.
And I like that, actually, because I don’t think anybody should be able to charge a fee for strait or for any other strait relationship in … other sections of the world. … But we were doing it as a reimbursement. The Gulf states are going to invest a tremendous amount of money into the United States, and that was very satisfactory to me. I think it’s actually much better.
… And this way there’s no fee. I don’t like the concept of a fee, but at the same time, it’s not fair that we’re protecting this strait for the entire world, for China and everyone. I don’t mind protecting it for China, I don’t mind protecting it for anybody, but it’s unfair that we’re not somehow compensated. And we’ve been doing this for many years. It’s bothered me for – 25 years ago it bothered me. During my first term, I was doing things like, you have to invest in the United States. … by doing it that way, there’s no fee. They’re investing and they’re getting a return on their money, and it’s good, but they’re going to be making massive investments into the United States, and I like that much better.
Trump’s plan was for the U.S. military to defeat Iran and force a reopening of the Strait in exchange for a promise by the Arab monarchies to invest or spend hundreds of billions of dollars of their export proceeds in the United States. His deal-making maneuvering confirmed that he never had intended to let Iran put in place procedures to administer trade through the Strait of Hormuz that would have formed the basis for Iran to extract tolls or charge any other fees on which Trump had set his sights – and that he never intended to help arrange with Arab OPEC countries to return any of the $100 billion in Iranian savings that had been confiscated. The fighting resumed on July 18, and as it heated up on July 24, Trump announced in a 5 AM Truth Social post that “until further notice, from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls.” And of course there would be no $300 billion investment in rebuilding the economy of an Iran not under U.S. control.
Trump’s dream had been to repeat in Iran the victory that he claims to have achieved in Venezuela. He would install a client regime that would pay compensation to the United States for the cost of its military weaponry and related efforts involved in the U.S. attack. Iran was left to conclude that the MoU had all been a charade, enabling Trump to gain time to reorganize his military plans and tighten his alliances with the Sunni rulers. On July 19 it formally suspended the MoU as a result of the U.S. violations of its terms.
The choice confronting OPEC countries: to ally with the United States or Iran
Iran’s alternative to U.S. hegemony goes far beyond driving America’s military bases out of the region. These bases already have been destroyed, and their role has been moved to the Indian Ocean and Italy. The remaining relationship that Iran finds it necessary to end is the reliance of Arab oil producers on U.S. financial markets and business partnerships. This economic symbiosis has tied them to the United States and its policy dictates dating back to the 1974 “petrodollar” agreements to recycle their oil-export revenues to U.S. bond and stock markets and to purchase U.S. arms.
This recycling already has slowed down in recent years as OPEC countries embarked on enormous capital investment to create luxury real estate and related projects at home. The Emirates created a world airline and made themselves a major international flight-capital center and even a sports center for international events. And the AI revolution’s demand for electricity to power its data centers has led Bahrain and other Persian Gulf countries to host such AI centers for Amazon, Google, Meta, Microsoft and other U.S. information technology companies that have moved their operations to where energy is more readily available than the United States.
Trump has sought to intensify these mutual investment linkages by locking Persian Gulf monarchies into support for his war against Iran by offering leading U.S. technology in computer chips for the Emirates and nuclear reactors and uranium refinement for Saudi Arabia. In exchange for the Emirates promising to invest $1.4 trillion in the United States, he removed “limits on large U.S. companies including Microsoft and OpenAI that have planned data centers in the country. … The greater chip access could be worth billions of dollars” for “coveted artificial-intelligence chips after aiding America in recent months by carrying out dozens of airstrikes against Iran.” Understanding that countries’ hearts and political ties tend to follow where their money is, Iran’s IRGC (Islamic Revolutionary Guards Corps) announced that: “We will raze to the ground the most valuable assets of American companies in all countries that host US bases.”
Trump’s bargaining to secure a tighter alliance with Saudi Arabia escalated on July 22 when the U.S. Department of Energy approved joint U.S. investment with it to build its own nuclear reactor and refine its own uranium – precisely what Trump had insisted that Iran could not do, claiming that any enrichment is inherently military. He tried to assuage Israeli protests the next day by insisting that Saudi Arabia would have to join the Abraham Accords recognizing Israel. But official Saudi policy insists that no such accord can be signed without a Palestinian state being created. That of course is no longer feasible, given the genocide and property destruction that has occurred in occupied Palestine.
Saudi officials protested that no such condition was included in the contract signed between the Ministries of Energy of both countries. Trump’s proclivity for resetting contracts reminded the world of what has made the United States the world’s “exceptional nation.” It is immune from the world’s rules of conduct regarding official agreements.
Iran’s response in the face of Trump’s attempt to lock its Sunni neighbors into an alliance for mutual military support is to break their linkages with the U.S. economy and its associated foreign policy. The long-term Iranian argument is that the fortunes of these countries can grow most rapidly and securely by supporting Iran’s principle of open trade in oil and the sovereign right to invest the proceeds wherever they wish.
The Oil War is existential for the United States as well as for Iran
Trump’s Oil War is as existential for U.S. hegemony as it is for Iran’s survival against Trump’s threats to destroy it and impose a client regime along similar lines to what he claims to have achieved in his victory over Venezuela. For the United States the Oil War against Iran – and Russia and Venezuela – was not a war of choice. It was a desperate move to maintain its world oil monopoly as a chokepoint, hoping that this could enable it to remain a global rentier economy obtaining from abroad the affluence that it no longer is producing at home.
Toward this end the United States treats countries as enemies if they assert their sovereignty and refrain from joining its sanctions against countries whose policies conflict with U.S. dominance and weaponization of the world’s oil trade and dollarization of its monetary relations. Sovereignty for other countries is viewed as a threat to America’s own national economic security, its debt-leveraged stock- and bond-market wealth and the financial tribute that enables it to impose coercive military and political power.
The aggressive U.S. actions against Russia, China and Iran for asserting their own sovereignty has driven these countries together and accelerated their common efforts to create an alternative basis for their trade and monetary relations. Their efforts are catalyzing a global fracture that has been long in the making, but which only today has the critical mass that countries have needed to achieve independence from U.S. control.
The economic protection that China, Russia and Iran are offering to the rest of the world is based on an alternative payments system to avoid dependency on the U.S. dollar, which has been turned into a chokepoint posing the risk of asset seizure such as Russia and Iran have suffered. International savings and monetary systems need different financial system and operating philosophy than those of the austerity programs of the IMF and privatization policies of the World Bank that U.S. diplomacy created in 1945 under its own control and serving its dominant creditor and export power at that time. The potential for creating a New International Economic Order (to use the phrase popular in the 1970s) with its call for a multipolar body of international law and organizations not subject to U.S. veto, obstruction and control is what makes today’s U.S. Oil War against Iran, Russia and Venezuela civilizational in scope.
The creation of an alternative system enabling mutual gains from trade and financial relations and replacing the current U.S. win-lose extractive tributary system would be an existential challenge to U.S. affluence. That is why U.S. diplomacy is fighting against any such alternative system, and why, for the rest of the world, the U.S. policy imposed on Venezuela at the start of 2026 threatens to be imposed on Iran, Russia and other countries if they do not join together to support the principle of their national economic sovereignty for all and organize political and military protection to prevent the U.S. weaponization of world relations.
The world already is faced with having to suffer the deepest depression since the 1930s as a result of America’s Oil War interrupting the global trade in oil, fertilizer and related commodities. That collateral damage is the price that is to be paid for not having already acted against the regime of U.S.-sponsored trade and financial sanctions aimed at harming countries that do not join its increasingly predatory foreign relations.
The current international rules and global administration have been hijacked by America’s narrow and nationalistic meddling and violation of the sovereignty of other nations. Seeing that there are no international vehicles with the present power to impose reparations on the United States and its allies, Iran’s imposition of tolls on Persian Gulf oil trade is its only foreseeable way of recovering damages – not directly from the United States or its allied attackers but from the world’s oil consumers.
One of the great challenges is to create an enforcement power against lawbreakers of UN rules. Only such means of enforcement can ensure genuine national sovereignty and rules for open international trade and investment. Protection of national sovereignty was considered to be a guiding principle of civilization and its law of nations from the Westphalian peace of 1648 through the United Nations Charter. That principle is being blocked by America’s insistence on being permitted to act as “the exceptional nation” not bound by the rules of international law. Its demand for veto power and its covert bureaucratic maneuvering in any international organization that it joins has blocked the effective functioning of the United Nations and other global institutions. A systemic restructuring of these institutions, including a reconstituted international court of justice, is thus needed to end subservience to what has become a threat to the principles of civilization.
The leading requirements of a reformed international order would include rules to protect seaborne trade from U.S. attempts to create choke points, and inter-governmental rules to achieve what Keynes sought to ensure in his 1944 proposals as an alternative to the IMF backed by U.S. planners. What is needed are rules and arrangements to prevent debt dependency and impoverishment by imposing anti-government and anti-labor privatization and monetary austerity such as are currently imposed by the IMF and related U.S. foreign policy. The initial stage of such arrangements no doubt will be based on a combination of gold and foreign-currency swaps, with a new kind of international bank creating its own electronic balance-sheet claims and obligations among creditor and debtor countries.
The next report will review how the consequences of today’s U.S. Oil War and the world depression that it has made inevitable are likely to be as broad in scale as the ending of European monarchies after World War I and of British and other European overt colonialism after World War II without freeing economies from financial debt and trade dependency encouraged by the U.S. supported world order at that time.
Addendum
On July 31, 2026 the Moon of Alabama website published the following news selections documenting just how extreme U.S. moves to monopolize control of the Strait of Hormuz and also to impose financial sanctions intended to confiscate and injure Iran will be. These plans stand as a warning to other countries having the temerity to exercise their own sovereignty independent of U.S. policy:
“A Qatari tanker passing taking the Iranian channel through the Strait of Hormuz was a quite hopeful development for energy markets. The first Qatari LNG shipment in three weeks has successfully passed through the Strait of Hormuz along an Iranian-designated route with Tehran’s authorization, Fars news agency reported.
“Three weeks ago, following a US violation of a memorandum of understanding, Tehran mandated that all maritime traffic through the Strait require Iranian approval.
Fars said that the Qatari tanker presented clear identification data and adhered to the Iranian-designated route, allowing it to sail smoothly through the waterway. … The U.S. though, despite being an ‘ally’ of Qatar and Pakistan, did not like the precedence … The U.S. has blocked a Qatari LNG tanker from continuing to Pakistan simply because it used the Iran-designated safe corridor, and not the US-backed one. In consequence the Strait is again closed.”
Another citation describes how, “In response to repeated inquiries, we would like to reiterate that due to continued aggressive actions of U.S. forces in the region, passage through the #Strait_of_Hormuz is not feasible.
Once stability is restored, all requests will be reviewed and permits issued progressively.
– “The IRGC announces it targeted a convoy of tankers being escorted by the U.S. Navy through the Strait of Hormuz. Two of the violating tankers were struck, and four others turned around immediately. The convoy attempted to use the illegal route near Omani waters this morning. The IRGC says Iran continues to exercise full authority over the Strait of Hormuz, and that no vessel may pass without permission from the Persian Gulf Strait Authority.”
Iranintl published a statement, “US searching worldwide for Iran-linked assets.”
“Scott Bessent said Friday that the United States was searching worldwide for assets linked to Iran’s government, adding that recovered funds would go to Iranians and Americans harmed by Tehran. ‘It has been a privilege to be a part of, as we’ve gone from Epic Fury to economic fury, to constrict, on your orders, the Iranian regime’s financial tentacles all around the world,’ Bessent said during the televised Cabinet meeting at Camp David.”
“On your orders, we are searching for their assets all around the world."
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