Asian economies are among the biggest customers of energy shipped through the Strait of Hormuz, the narrow waterway connecting the Persian Gulf with the Arabian Sea, making any prolonged disruption particularly consequential for the region.
Trump has said that Asian economies, which are heavily reliant on energy shipped through Hormuz, should shoulder more of the burden of keeping the waterway open rather than relying predominantly on U.S. protection.
“We don’t use the strait. We don’t need it. Europe needs it. Korea, Japan, China, [and] a lot of other people,” he said earlier this year.
Balakrishnan, however, cautioned against viewing the issue simply through the lens of who buys the oil, stressing the importance of maintaining freedom of navigation through international waterways. He made the remarks to CNBC on Wednesday at Milken Institute’s Asia Summit in Singapore.
For Singapore, that principle is “non-negotiable,” Balakrishnan said, citing the United Nations Convention on the Law of the Sea and the rights of transit passage and freedom of navigation. “This, for us, is an existential question, and it’s a matter of principle, matter of international law,” Balakrishnan said.
Iran’s attempts to assert greater control over traffic through Hormuz also go beyond the revenues it could generate from tolls and fees, he said.
From Tehran’s perspective, the ability to charge vessels could effectively establish its right to determine which ships are allowed through, giving Iran what Balakrishnan described as a potential “veto right” over Hormuz.
That power could provide Tehran with “greater leverage right now than even a potential nuclear weapon from an Iranian point of view,” he said.
Balakrishnan said he does not expect the U.S. or Gulf states to tolerate a situation in which Iran had such a veto over the waterway, suggesting tensions could persist even if oil continues flowing.
“I think there will be a lot of pushing and shoving the next few months,” he said, adding that he did not see “a quick diplomatic off-ramp” to the conflict.
In April, Balakrishnan had warned that a U.S.-China conflict in the Pacific could make the disruption seen in the Strait of Hormuz look like a “dry run,” underscoring the vulnerability of global trade to critical maritime chokepoints.
Balakrishnan has maintained that Singapore would “refuse to choose” between Washington and Beijing, instead acting according to its own long-term national interests, while stressing that the city-state would uphold freedom of navigation through the Strait of Malacca and would not participate in efforts to close, interdict or impose tolls on the waterway.
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