For over 30 years following the Cold War, economic coercion mainly served as a unipolar tool. U.S. control, capitalizing on the dollar's dominance over international financial systems and the country's key position in trade and technology networks, had an unrivaled capacity to enforce sanctions. These actions were not just punishment; they were strategic measures aimed at changing the behavior of states and large parts of the global economy. 

Today, this system is undergoing a profound transformation. This is a transition characterized by the decline of monopoly power, making economic warfare no longer the sole domain of a single actor.

The evolving situation in the Strait of Hormuz exemplifies a new form of economic retaliation. Instead of closing the waterway outright, Tehran seems to be creating a system of conditional access. While shipping is not completely blocked, transit increasingly relies on political alignment or implicit approval. Essentially, the Strait stays open, but it no longer functions as a neutral route.

This distinction is vital. A formal closure would prompt an immediate and strong international response. In contrast, a system of selective control creates uncertainty, increases transaction costs and shifts risks onto market participants—such as shipowners, insurers and commodity traders—without fully blocking maritime traffic.

Early signs indicate that this system is already becoming operational. Reports of ships moving nearer to Iranian waters, along with the development of informal "approved" transit routes, suggest a gradual formalization of this approach. For financial and insurance sectors, the consequences are substantial. Western insurers, limited by sanctions, cannot easily cover voyages that involve Iran, which increases risk premiums and tightens market liquidity.

Iran is not just threatening disruption; it is reshaping the rules for accessing a vital global bottleneck.

The shift has several implications for the global economy.

First, the power of sanctions as a coercive tool is waning. As targeted countries establish alternative trade routes, boost local production and strengthen economic relations with non-aligned nations, the lasting effectiveness of sanctions lessens. One example is Russia shifting its trade focus to Asian markets post-2022; another is the rise in China's domestic innovation driven by restrictions on technology.

Second, the cost of economic warfare is increasing for all parties. In a multipolar world, actions prompt counteractions. Measures previously seen as low-risk now pose the threat of substantial domestic economic disruption. This situation fosters caution but also heightens the risk of miscalculation.

Third, the line between economic and military conflict is blurring. When economic measures become less effective or risk unintended escalation, states might consider other pressure methods. At the same time, economic strategies can also bolster military goals by affecting logistics, energy supplies and industrial output.

In Europe, these trends are causing challenging trade-offs. Efforts to reshape energy supply chains away from Russia conflict with recent instability in the Middle East. Consequently, policymakers must navigate a limited range of choices, weighing geopolitical goals against economic stability. This tension is evident in short-term sanction adjustments and renewed efforts to engage with alternative suppliers.

The U.S. faces the challenge of strategic adaptation. To sustain influence in a system where economic coercion isn't one-sided, it needs a more sophisticated approach—one that combines partnerships, industrial policies and supply chain resilience.

Ultimately, the shift from unipolar to multipolar economic conflict signifies a fundamental change in how international relations are structured. Power is now more spread out, yet is also more fiercely contested. While economic interdependence was once considered as a stabilizing factor, it is now increasingly viewed as a vulnerability, transforming it into a new arena for competition.

The emerging system isn't necessarily less connected; however, it is more conditional, politically influenced and susceptible to disruptions.

In this new environment, the fundamental question shifts from who can exert economic pressure to how states handle the repercussions of a world where everyone has that capability. 

The author is former prime minister of Kyrgyzstan, a distinguished professor at the Belt and Road School Beijing Normal University and author of the book Central Asia's Economic Rebirth in the Shadow of the New Great Game (2023)

Copyedited by G.P. Wilson

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