Today’s tumult in the Strait of Hormuz may be a dress rehearsal for tomorrow’s war in the Pacific, according to Singapore Foreign Minister Vivian Balakrishnan.
The city-state considers both the United States and China as partners. U.S. entities make up the largest share of its largest foreign investments, with American multinational enterprises directly pouring $467.6 billion into the country in 2024. Not only that, the U.S. trade surplus with Singapore reached $3.6 billion last year, per U.S. Trade Representative data, a 91.5% increase from 2024’s $1.7 billion. At the same time, Singapore also reached its largest trade partnership with China, exporting $58.8 billion worth of goods there in 2023.
While the U.S. looks to extend a tenuous ceasefire as the war in Iran continues, China is maintaining a low profile, publicly as a peacekeeper. Despite this happening on the world stage, Balakrishnan said he doesn’t feel like Singapore has to pick between the two countries. However, should tensions between the U.S. and China escalate in a future conflict, Singapore may be placed in a challenging position to navigate its best interests while maintaining diplomacy with its two partners.
“Are we exquisitely positioned to take advantage of developments in both America and China? We are,” he said. “The main danger is: That relationship fractures if they go to war in the Pacific. What you’re witnessing now in the Strait of Hormuz is just a dry run.”
Singapore’s stake in the Iran war
The ongoing conflict in the Gulf may be jostling the U.S. and China’s positions as global superpowers. Shipping traffic at the Strait of Hormuz, through which 20% of the world’s oil usually passes, has yet to return to its normal flow. As the U.S. blockade seeks to stymie Iran’s oil revenue, it is also leaving oil prices elevated and threatening high gas prices and inflation in the U.S.
Meanwhile, China has quietly benefitted from the U.S.’s exertions in the war. While its export market is slowing due to rising energy prices, China’s steep investment in renewables may see increased demand as other countries look to diversify energy sources. Ongoing sanctions and tariffs have also encouraged China’s allies, such as Iran and Russia, to de-dollarize and move away from trading oil with the petrodollar, a fixture of global trade that allowed the U.S. to keep a tight grasp on worldwide reliance on the dollar. Instead, industry experts say ships have been able to pass through the Strait of Hormuz using the Chinese yuan, further weakening dollar dominance.
While tensions slowly mount between these two counties, Balakrishnan indicated that if forced to choose one power over another, Singapore would prioritize its own needs without taking a side.
“We will refuse to choose,” Balakrishnan said. “The way we conduct our affairs is we assess what is in Singapore’s long term national interest, and if I have to say no to Washington or Beijing or anyone else, we don’t flinch from that.”
“But they will also know that when we say no, it’s not at the behest of the other party, we are acting in our own long term national interest,” he added. “We will be useful, but we will not be made use of.”
Singapore’s precarious plans for the Strait of Malacca
The Strait of Hormuz chaos may already be foreshadowing challenges Singapore may face in the Pacific. Tehran has proposed charging tolls to ships passing through the Strait of Hormuz as a means of generating revenue amid ongoing economic strain.
Should tolls be implemented—which would violate the UN Convention on the Law of the Sea, according to legal experts—it could set a precedent for tolls to also be deployed at the Strait of Malacca, a 500-mile waterway passing by Singapore which sees ships carrying about 30% of the world’s traded goods.
Balakrishnan said the states surrounding the Strait of Malacca (Singapore, Malaysia, and Indonesia) have a “cooperative mechanism” to not collect tolls, as it would go against their best interest as trade-dependent countries.
Even if geopolitical tensions were to boil over and extend to the Pacific, the minister said not only would he advocate against tolls, he would also avoid different treatment of the U.S. and China.
“The right of transit passage is guaranteed for everyone,” Balakrishnan said. “We will not participate in any attempts to close or interdict or to impose tolls in our neighborhood.”
As Singapore tries to maintain diplomatic ties with both China and the U.S., it may be cooling relations closer to home. Other Southeast Asian nations are taking alternative approaches to trade passage access. Indonesian Finance Minister Purbaya Yudhi Sadewa has said the country is weighing levies on vessels traveling through the strait as a way to monetize the busy chokepoint. Thailand’s government is fast-tracking plans for a landbridge that would connect between the Indian and Pacific oceans and bypass the Strait of Malacca.
Nurul Izzah Anwar, daughter of the Malaysian prime minister and deputy president of the People’s Justice Party, has criticized Balakrishnan’s earlier decision to not negotiate with Iran to access the Strait of Hormuz, once again citing his belief that international law dictates trade route passage as a right, not a privilege. Anwar suggested Balakrishnan’s decision was not universally favorable for all countries in the region. Malaysia was among a select few countries granted toll-free passage through the Strait of Hormuz by Iran.
“Malaysia will not be lectured on the merits of engagement,” she said in a statement earlier this month.
The post The Strait of Hormuz chaos is just a ‘dry run’ for if war breaks out between the U.S. and China, Singapore foreign minister says appeared first on Fortune.
