Choke Points, Stranglehold, and Self-Asphyxiation

The week ended on September 26, 2025, interesting news items to look at this week are:

1. Choke Points, Stranglehold, and Self-Asphyxiation: Since WWII, control of energy production and energy transit choke points has been the most important US Foreign Policy. Hence, the US Energy Information Agency (EIA) has meticulously tracked where and how oil and gas are produced and moved. (Fig. 1).

With the default of the Bretton Woods Agreement and the creation of the Petrol Dollar to maintain the Dollar Hegemony, US has doubled down to ensure she stays as the apex predator. Non-submissive regimes are changed (Iraq, Libya, Venezuela and Iran), war is waged (NATO proxy war with Russia) without cost considerations so that America could feel safe that she remains as numero uno. Eighty years has come and gone since WWII and finally the punch bowl party for America has come to and end and even the White House realized her days are numbered. The following are some of the more recent event markers.

(i) Saudi Arabia/Pakistan Strategic Mutual Defence Agreement: From the Brookings Institute - Even those accustomed to dramatic developments in the Middle East and South Asia were caught off guard by the announcement last week by Saudi Arabia and Pakistan of a new “Strategic Mutual Defense Agreement.” The pact, formalized with considerable pageantry in Riyadh on September 17 during Prime Minister Shehbaz Sharif’s visit, went far beyond the platitudes that typically characterize cooperative security announcements. It included a sweeping commitment to mutual defense, and although the text was not released, some officials on both sides—including Pakistan’s own minister of defense—intimated that the deal involved the provision of extended nuclear deterrence. (Fig. 2).

The link to the Brookings’ analysis is given here https://www.brookings.edu/articles/the-signal-and-substance-of-the-new-saudi-pakistan-defense-pact/ . I just want to highlight, as China has given her full backing to Pakistan and recently agreed to arm Iran with Air Defense Systems, the Saudi Arabia/Pakistan Pact will have a domino effect on power play in the region because by association China in effect is backstopping Pakistan in the deal and is seen as the stabilizing force.

(ii)  Poland reopens its border ports with Belarus: At the behest of UK, Poland applied a stranglehold on the China-Europe railway through her border checkpoint with Belarus. On September 12, the Polish government suddenly announced that it would " indefinitely close" all border crossings with Belarus thus poses a serious threat to the China Europe Rail Link. (Fig. 3)

The China Europe railway links 128 Chinese cities with 26 European Countries and 229 European cities is the most important overland trade route between China and Europe. Since its inception the rail link carried $450 billion worth of merchandise between the two regions. The rail cut short 40% of time it takes for container ships (from 40 days through Cape of Good Hope to 25 days) and cost is 5 times lower than air freight. Poland and her UK backers thought this stranglehold would force China to withdraw her trade with Russia. The choke hold only lasted for 12 days because China had plans B,C & D already lined up to guard against such possibilities. On the afternoon of September 22, a giant container ship called "Istanbul Bridge" completed the loading operation at the port of Zhoushan in Ningbo, and its destination was Europe. But it is not a traditional route, but a new, game-changing channel - Central Europe "Arctic Express". (Fig. 4).

The Arctic Sea Corridor has been in planning for quite sometimes and all the details worked out at the September 2025 Shanghai Cooperation Summit between Russia and China in Tianjin. The Arctic Sea Route further shorten the time for a container to reach Europe than by rail by almost one third. This re-routing together with other rail diversions would put 50,000 Polish jobs at risk and loss of economic value annually of $50 billion to Poland. (Poland 2024 GDP is $914.7 billion). Face with a possible permanent redundancy by the Chinese move, Poland immediately backed down and reopens her border.  Just how many attempts by incompetent politicians to sanction and embargo the Global South before they realized weaponizing trade is a double edged sword and very dangerous to weld. Whilst on the subject of the Arctic Route and the Arctic Region, the attached map shows why the obsession of Trump to make Canada its 51^st State and a takeover of Greenland. (Fig. 5).

With an anticipated growth in merchant fleet through the Arctic, so lies an increased risk of undetected submarine penetration to the Atlantic nations.

(iii) US Confrontation with Venezuela: The Trump administration has declared the start of a military campaign against Venezuelan drug cartels, claiming cocaine smuggling by the “narco-terrorists” poses an imminent threat to the United States. On September 2, Trump announced that U.S. forces struck what he claimed was a Tren de Aragua boat trafficking cocaine to the United States, killing eleven people. To every political and military analyst, the US attack was under a false pretext because (a) a 12 meters long boat with a 200 -horsepower outboard motors cannot travel 3,000 Km from Venezuela to US. (b) Venezuela was never classified as a major narcotics producing country. (c) The boat and passengers posed no threat to the US Naval Vessel. This is political provocation and murder under broad daylight and another example of American Exceptionalism with impunity.  (Fig. 6)

Venezuela has the world’s largest proven oil reserve (303 billion barrels) and has suffered relentless attacks from US spanning decades.

(iv) US War Secretary summons military leaders to Virginia mystery meeting: We conclude this week with news of US summoning all top military generals world wide to a sudden meeting in Virginia without an agenda to the invitees. (Fig. 7).

Whilst US Media downplay the unusual meeting as an opportunity to rally the troops (Fig. 8).

 Independent military analysts argued that such a meeting would most likely be a prelude to military budget cuts, closure of outlying military stations and summary dismissals of generals. Last week we reported on a strategic change of direction of Pentagon to pivot to Homeland security and downplay the “China Threats” as there is no money for Washington to build the Golden Dome Defense, renew its aging Naval Fleet and to meet the aerospace military techno challenge of China. Trump’s reluctance and inability to continue as the Global Police is already plain for all to see. With DOGE a failure, a recalcitrant Federal Reserve and a Western duration Bond rout, the axe has finally come to Pentagon. We will know by next week if the knives will be out.

2. Gold is for War and Bitcoin is for Flight: Gold and “Digital Gold (Bitcoin) has begun to diverge. Understand the different user of these two instruments and one may even prosper at times of adversity. The week financial market performance as follows (Fig. 9):

Silver (+7.19%), Oil (+3.49%) , Copper (+2.84%), Gold (+2.09%), Shenzhen Composite Index (+0.87%), DXY (+0.55%), Ruble (+0.15%), S&P 500 (-0.24%), Rmb (-0.25%), Euro (-0.42%), GBP (-0.51%), JPY (-1.05%) and Bitcoin (-5.08%). 

This week saw a weakening of the US Credit market as the subprime auto loan originator Tricolor dressed up as AAA failed in eerie similarity to the fiasco in 2008. JPMorgan Chase and Barclays were also potentially exposed. (Fig. 10).

The entire US Treasury Curve shifted upwards despite the Administration’s desire to have another 150 basis point rate cut before year end. (Fig. 11)

After this week, the frequency of this Blog will be reduced from weekly to fortnightly because I felt I am getting too old to keep pace with everything happening so fast and so unexpectedly. My friends, you should take at easy as well.

Psalms 128:1  Blessed is every one who fears the LORD, Who walks in His ways. 2  When you eat the labor of your hands, You shall be happy, and it shall be well with you. 3  Your wife shall be like a fruitful vine In the very heart of your house, Your children like olive plants All around your table. 4  Behold, thus shall the man be blessed Who fears the LORD. 5  The LORD bless you out of Zion, And may you see the good of Jerusalem All the days of your life. 6  Yes, may you see your children's children. Peace be upon Israel!