Transcription
So, today I want to talk about something that happened at the United Nations on April 7th that I think most people completely misunderstood. And I mean completely, because when China and Russia vetoed the UN Security Council resolution on the Strait of Hormuz, the Western media said, "Okay, China and Russia sided with Iran. China and Russia are bad guys. China and Russia are shielding a regime that is threatening the global economy."
But, that is the wrong way to look at this. That is completely the wrong frame. Because here is my question, and I want you to sit with this question for a moment before I answer it. If China vetoed this resolution, and China is the world's largest buyer of Iranian oil, and China gets a huge portion of its energy through the Strait of Hormuz, then why would China veto a resolution that would reopen the Strait? Why would the biggest victim of the Hormuz blockade be the one blocking the solution?
Think about that. Because once you understand the answer to that question, you understand not just the veto, you understand the entire war, you understand who is really winning, and you understand why China's veto was not a mistake. It was the single smartest strategic move of this entire conflict.
Okay, so let me break this down carefully. Let's start from the beginning. On April 7th, 2026, the United Nations Security Council voted on a resolution that was originally proposed by Bahrain. The resolution would have authorized countries to use, and I'm quoting directly, "all necessary means to ensure freedom of transit through the Strait of Hormuz." Eleven countries voted yes. China and Russia vetoed it. Pakistan and Colombia abstained.
Now, I want to walk you through what actually happened in that room, because the details are very important. The original resolution was very aggressive. It would have given any country the legal cover to use military force to reopen the Strait. Russia, China, and France all said, "No, this is too extreme. We cannot authorize the use of force." So, they revised it. They took out all references to offensive military action. And still China and Russia vetoed it. Then they revised it again. They took out any reference to Security Council authorization entirely. And still China and Russia vetoed it. So, they kept weakening the resolution. They kept making it softer. They kept taking out the aggressive language. And China and Russia still said no every single time.
Now, the American ambassador said China and Russia sided with a regime that seeks to intimidate the Gulf into submission. The UK ambassador said China and Russia chose to shield their ally, Iran. That is the Western narrative. China and Russia are protecting Iran. But, I want you to really think about this. Is that what happened, or is something much more sophisticated going on?
Okay, so here is my framework for understanding this. And this goes back to something I have discussed many times on this channel, which is the idea that in geopolitics, you should never look at what a country says. You should always look at what a country does. And more importantly, you should always ask, "What does this action actually benefit?"
So, let's apply this framework to China. China imports approximately 10 to 11 million barrels of oil per day. A significant portion of that comes from the Gulf region and passes through the Strait of Hormuz. So, in theory, China should want the Strait open. In theory, China is being hurt by the closure of the Strait, right? Well, here is the thing. Yes, China is being hurt in the short term, but China is not making decisions based on the short term. China is making decisions based on the long term. And in the long term, this veto is one of the most strategically brilliant things China has done in a generation.
Let me explain why. And I want to walk through this step-by-step, because each step builds on the last.
Step one, understand what the resolution would actually have done. The resolution, even in its watered-down final form, would have given the United States and its allies the legal legitimacy to use military force in or around the Strait of Hormuz. It would have been the United Nations saying, "Yes, America, you have the right to be here. You have the right to control this waterway." And here is what that means for China. If America successfully reopens the Strait of Hormuz by force, and Iran is defeated or forced to back down, then America has demonstrated something extremely important. It has demonstrated that it can still control the world's most critical energy choke point. It has shown that the American empire, even in decline, still has the muscle to decide who gets energy and who doesn't. And that means China goes back to being dependent on American goodwill for its energy supply. China goes back to a world where America can moment threaten to cut off Chinese oil supply by controlling the Strait. This is called the Malacca dilemma in Chinese strategic thinking. China's fear that America can strangle its economy by controlling the sea lanes. Hormuz is the same problem. It is a choke point that America, if it controls it, can use against China. So, step one is simple. If America wins this resolution and uses it to reopen the Strait by force, America wins strategically, and China loses, which means China has every reason to block the resolution.
Step two, understand what happens if the Strait stays closed. Now, here is where it gets really interesting, because the closure of the Strait is hurting China, yes, but it is also accelerating something that China has been working toward for decades, which is the de-dollarization of global trade, the weakening of the petrodollar system, and the rise of alternative trade routes that China controls. Let me explain the petrodollar system first, because it is the key to understanding everything. Since 1973, all oil in the world has been traded in US dollars. This was a deal between America and Saudi Arabia. The Saudis sell oil only in dollars. America protects the Saudi regime, because everyone in the world needs oil, everyone in the world needs dollars. This creates permanent global demand for the US dollar. It is what allows America to print money, run enormous deficits, and finance its military empire. Without the petrodollar, America cannot afford to be America.
Now, what happens when the Strait of Hormuz is closed? Gulf states cannot export oil. Petrodollars stop flowing. The Gulf states stop recycling dollars back into American stock markets and American AI data centers. The entire financial architecture of American power starts to crack. And China is watching this happen, and China is thinking, "This is actually good for us." Because every week that the petrodollar system is under stress, the world is being pushed to find alternatives. And the alternatives that exist, the yuan-based oil trade, the Belt and Road payment systems, the Russian-Iranian-Chinese energy corridors, these all benefit China. So, the closure of the Strait in the medium term is accelerating the very thing China wants most, which is the end of dollar dominance in global trade.
Step three, understand China's alternative energy strategy. Now, you might say, "Okay, but China is running out of oil because of the blockade. How is this actually good for China?" And this is where you have to understand something important about how China thinks about supply chains. China has been preparing for exactly this kind of energy disruption for years. Let me give you some specific examples. China has been building strategic petroleum reserves. It has been diversifying its energy suppliers. It has been building the China-Pakistan economic corridor, which gives it access to ports in the Arabian Sea that bypass the Strait of Hormuz. It has been developing the North-South transport corridor with Russia and Iran, which gives it an overland energy route. And most importantly, China has been rapidly building domestic renewable energy capacity, solar, wind, nuclear, specifically to reduce its dependence on Gulf oil. So, while the blockade is causing short-term pain for China, China's actually better positioned to absorb that pain than almost any other major economy, because China has been preparing for this scenario. The Americans have not. The Europeans have not. The Japanese and South Koreans, who are also extremely dependent on Gulf oil, have not. China took the short-term pain, but it is the country best equipped to absorb it. And every week the crisis continues, the alternatives that China has built become more important. And the American-controlled maritime system becomes less relevant.
Step four, understand the legal and moral dimension. Now, I want to talk about something that most analysts completely ignore, and that is the legal and moral dimension of this veto. China's ambassador, Fu Cong, said at the Security Council, and I am paraphrasing, that the resolution failed to address the root causes of the conflict. Russia's ambassador said the resolution blamed Iran, while completely ignoring what America and Israel did to start this war in the first place. And here is the thing, they are not wrong. Think about what actually happened. America and Israel launched military strikes on Iran, a sovereign nation. They bombed Iranian nuclear facilities. They killed Iranian leaders. And then, after starting this war, America went to the UN and said, "Iran is threatening the Strait. Please give us permission to use force against Iran." Think about the logic of that. You start a war, then you go to the international community and say, "Please authorize us to use force against the country we attacked, because they are fighting back." This is exactly the kind of move that the rest of the world, the global South, Asia, Africa, Latin America, has been watching for decades, and the world is tired of it. When China vetoed this resolution, it was not just protecting Iran, it was saying something to every country in the world that has ever been on the receiving end of American power. We will not give America a legal stamp of approval for this. And the reaction globally was very different from the Western media narrative. Much of the world saw the veto not as China shielding Iran, but as China enforcing basic principles of international law. You don't get to attack a country and then get UN authorization to punish that country for defending itself. This is a narrative win for China of enormous proportions, because it positions China as the defender of the international rules-based order, the very thing America claims to defend. And it positions America as the country that breaks the rules and then asked for legal cover after.
Step five, understand what this tells us about the new world order, okay? Now, I want to zoom out because I want to put this veto in the context of something much bigger, which is the question of what kind of world we are moving into. I have argued on this channel many times that the world is moving from a unipolar system where America is the dominant power and sets the rules to a multipolar system where multiple great powers all have meaningful influence and no single country can impose its will on the others. The veto on April 7th was a very clear signal of where we are in that transition. Because what China and Russia essentially said is this, "The United Nations Security Council is not America's rubber stamp. We have a veto. We will use it." And there are things that America wants to do, things America believes it has the right to do, that we will simply block.
Now, think about what this means strategically. For 30 years since the end of the Cold War, America has operated with a degree of freedom that no other power in history has had. If America decided to invade a country, it could. If America decided to sanction a country, it could. If America decided to use the UN to authorize its actions, it usually could because Russia was weak and China was not yet powerful enough to consistently push back. That era is over, and the Hormuz veto is one of the clearest signals that it is over. Because now you have a situation where America goes to the UN to get authorization for something it considers a basic, obvious, humanitarian necessity, keeping a major waterway open, and it cannot get it. Not because of procedural tricks, but because two of the world's most powerful countries looked at what America was doing and said, "No. We are not going to help you with this." This is a massive, structural shift in how the world works, and most people are not paying attention to it because they are focused on the military dimension of this war. But the political and institutional dimension is just as important because the United Nations Security Council is the last remaining institution of global governance. And China just showed the world that it will use its power in that institution to block American unilateralism.
Okay, now let me tie all of this together because I want to give you the complete picture of why this veto was the smartest move of the entire war. Let's do a thought experiment. Let's say you are the venture capitalist, okay? You have enormous resources, and you are watching this war, and you are asking yourself, "Who is actually winning?" Most people look at the military dimension. They look at how many bombs were dropped, how many missiles were fired, which side destroyed more assets, and they try to figure out who is winning from that. But that is the wrong way to look at it because as I have argued many times, war is fought across four dimensions, military, economic, political, and narrative. And if you look at all four dimensions, what you see is that China's veto was a move that advanced China's position in all four dimensions simultaneously.
Militarily, China did not fire a single bullet. It did not spend a single dollar on weapons, but it blocked America from getting international legal cover for its military operations. That weakens America's military position politically without China taking any military risk.
Economically, the veto kept the pressure on the petrodollar system. It kept oil prices high enough to hurt the American financial system and accelerate de-dollarization. And it did this while China's alternative energy infrastructure, its reserves, its overland routes, its renewable capacity helps it absorb the pain better than its rivals.
Politically, the veto positioned China as a defender of international law and national sovereignty. In a world where most countries are not part of the Western alliance, this is an enormously powerful message. The global south, which has suffered from decades of American military intervention, largely sees China as being on the right side here.
And in the narrative dimension, China is now telling a story about itself that is very appealing to most of the world. We are not the aggressor. We are not the ones bombing sovereign nations. We are the ones defending the principle that you cannot attack a country and then ask the UN to authorize punishing that country for fighting back.
So, in all four dimensions, the veto was a win for China, and it cost China almost nothing. That is what smart strategy looks like.
Now, let me address one more thing because I can already hear the counterargument. And it goes like this, "But China is hurting from the oil shortage. China cannot afford this strategy indefinitely. Eventually, China will have to negotiate a reopening of the strait." And to that, I say, "Yes, you are right. China cannot sustain an indefinite oil shortage. Nobody can." But here is what matters, who runs out of time first? America is running out of interceptor missiles. America is running out of political will at home. Only 40% of Americans support this war. America is running out of financial patience. Every week of high oil prices puts more pressure on the American stock market, the American economy, the American political system. And America is running out of allies who are willing to take the economic pain with it. Iran is running out of nothing. Iran's economy is actually benefiting from the lifting of sanctions that this war has inadvertently caused. Iran is generating more revenue from oil sales than it has in years. Iran has been preparing for this war for 25 years. It is not running out of will or capacity. And China? China has its reserves. China has its alternative routes. China has its domestic energy production. China can hold out longer than America can sustain the political and economic cost of this war.
So, when you ask who benefits from the passage of time, the answer is not America. The answer is China and Iran. And China's veto was designed precisely to extend time, to keep the pressure on, to let the economic and political costs accumulate on the American side. This is not Iran's war. This is not China's war. This is a war being fought in significant part over the question of who controls the global economic order, and China is fighting it in the smartest way possible without firing a single weapon, without losing a single soldier, just by saying two letters at the United Nations, "No." That is the power of a veto. That is the power of a great power that understands strategy. And that is why April 7th, 2026 may be looked back on as one of the most important days in the history of American decline.
Okay, so that is my analysis for today. This is not prophecy. This is structural history combined with game theory. I want you to think about this carefully. Question it. Push back on it. The goal is never to tell you what to think. The goal is to give you a framework so you can think for yourself.