Hormuz is just one of many chokepoints that are pushing countries to rethink economic strategy

The Strait of Hormuz is a chokepoint created by geology, but there are many other types as well—financial, technological and mineral, for example. The denial of advanced semiconductors to one country or of rare earth minerals to another are two examples of chokepoints that have been used in recent years by the US and China, respectively.

Chokepoints only matter in an interdependent world. However, their overuse is likely to push countries at the receiving end to reduce the same interdependence. So those in control of them must perform a delicate balancing act between weaponizing interdependence and maintaining it at the same time. It is a conceit to think that anyone at all knows where this delicate balance lies. The result is endemic uncertainty.

In his 2025 book Chokepoints: How Economic Warfare Is Changing the World, Edward Fishman has proposed a useful analytical framework to think about the problem. He writes about “an impossible trinity of economic interdependence, economic security and geopolitical competition.” The world can have only two of these three at any one point of time and never all three together. He then uses this framework to look at what happened in the world after 1945.

The Cold War era was marked by geopolitical competition between two blocs. Countries in each bloc secured economic stability by reducing interdependence with countries in the rival bloc. Then came the era of globalization after the collapse of the Soviet Union. The end of geopolitical competition allowed countries to expand interdependence even as they achieved economic security.

The world we are in has brought back geopolitical competition. Countries will have to choose between interdependence and economic security. It is a tough choice, given the realities of global supply chains as well as challenges such as climate change that need close international cooperation. “The Age of Economic Warfare will likely end when the chokepoints upon which it depends no longer squeeze so tight,” predicts Fishman, though he adds that this will only play out over a decade or so.

The uneven distribution of chokepoints means that only a few countries can use them for leverage over others. Some chokepoints emerge from network effects such as printing the global currency or controlling global technology standards. These are sticky. However, this does not mean that the rest have to only sit back to suffer in silence. Or become vassal states. They too have options that can provide them with some degree of freedom in a world of bullies.

Three options are worth mentioning here.

First, the most straightforward response is reducing reliance on any single chokepoint by diversifying trade routes, currency reserves, technology suppliers and diplomatic partnerships.

Second, smaller states individually have little leverage over more powerful countries, but they can work together in a coordinated way.

Third, some smaller states have managed exposure not by reducing connections, but by carefully managing their position across competing networks through strategic ambiguity or maintaining ties to rival hubs so that no single power can credibly threaten full exclusion.

In the case of India, the sheer size of its internal market and growth potential is a negotiating chip that is not available to smaller countries. The size of the market is not just in terms of goods, but also the information that Indian consumers give to global technology platforms, some of which is used to train algorithms. That is an advantage.

The brave new world of renewed geopolitical competition—and the weaponization of interdependence—will necessarily make countries pursue economic security. However, this shift will not be a costless affair.

This column has earlier noted that the quest for economic resilience in the face of global uncertainty in effect means that stocks will be prioritized over flows, and governments, companies and consumers will either directly or indirectly have to pay the costs of these risk buffers. (See ‘Resilience isn’t costless but even the private sector is in need of it’)

Fishman has written in his book that the world could be moving back to the Cold War era of geopolitical competition in which economic security grows in importance.

That was one reason why the newly independent Indian nation chose to focus on the production of key intermediate goods such as steel and capital goods such as machine tools as well as on building a network of research institutes.

Both Jawaharlal Nehru and Vallabhbhai Patel—despite their disagreements on economic policy—saw the need to build industrial depth in a dangerous world. After some initial success, that strategy eventually led to neither resilience nor economic efficiency.

The intent as well as hard lessons from that era are still relevant to our times.

The author is executive director at Artha India Research Advisors.