Colin Henderson | Bankwatch.ca
Historical research and analysis – Claude.ai (analysis posted separately)
The Structural Thesis
The liberal rules-based order masks but does not correct the natural hegemonic propensity of powerful states. Institutional frameworks — democratic checks, multilateral structures, constitutional constraints — act as the brake on that propensity. Remove the institutional framework through autocratic or highly concentrated leadership, and the hegemonic drive expresses itself without the liberal mask.
This is not a policy choice. It is a structural shift. And standard risk frameworks are not built to model it.
Hormuz is the current operational instance of that thesis in action.
The Liberal Order Was the Brake, Not the Cure
The post-WW2 architecture was a genuine normative achievement. Rules over power politics, collective security, economic interdependence, multilateralism, individual human rights over absolute state sovereignty — these were real commitments, not purely cynical construction. The 1948 Universal Declaration and the Nuremberg trials established principles that were structurally new.
But the architecture was built on top of hegemonic power, not instead of it. The liberal commitments were the legitimising language for an order the United States was powerful enough to enforce on its own terms. Wilson’s self-determination principle was applied to Europe; it was not applied consistently to colonial territories where Western interests remained intact. NATO was simultaneously a democratic alliance and a US-led security structure. The Marshall Plan rebuilt Western Europe on terms that reinforced parliamentary governance — and US strategic reach.
The institutional framework managed the tension between liberal values and hegemonic interest. It did not resolve it. The liberal order was the mask, and the mask worked as long as the institutional constraints held.
The historical proof is Suez, 1956. Britain and France, acting as residual imperial powers, attempted to bypass the emerging multilateral order to reclaim the canal by force. The United States — itself acting hegemonically, but within the institutional logic of the post-war architecture — forced them back inside the constraints. The brake held. The lesson was that even hegemonic actors could be disciplined by the framework they had collectively built.
That disciplining mechanism is what is now degrading.
Institutional Degradation: The Brake Fails
The degradation is not ideological — it is structural. Highly concentrated or autocratic leadership removes the institutional checks that previously constrained hegemonic expression. What changes is not the underlying propensity; what changes is the mechanism that managed it.
The US under Trump is the clearest current case. The executive has effectively concentrated foreign policy to a degree that sidelines the institutional architecture — Congress, the State Department’s career structure, treaty commitments, multilateral consultation. What remains is transactional power politics communicated through daily social media volatility. Rubio is nominally the fixer, but the role is impossible when the principal changes direction faster than any diplomatic institution can operate.
The consequence is not simply policy incoherence. It is the removal of the liberal mask from the hegemonic drive. US support for Israeli objectives in Iran — IRGC degradation, nuclear site strikes, Khamenei elimination — aligns with Israeli strategic interest, not with any narrowly defined US interest under the rules-based framework it formally upholds. The Joe Kent resignation (March 17, 2026) made this explicit: AIPAC commitments, enforced through concentrated political leverage, are directing US foreign policy in this theatre away from American national interest. Operation Epic Fury (February 28, 2026) was the operational expression.
This is what the Mearsheimer-Walt frame (M-W) identifies as lobby capture — the systematic distortion of US foreign policy through the exercise of concentrated institutional influence. It operates because the normal checking mechanisms have been sufficiently weakened to allow it.
The same structural logic applies on the Iranian side. The IRGC has been consolidating power throughout the conflict, progressively displacing the civilian and diplomatic institutional layer. Ahmad Vahidi represents the real negotiating axis; the political leadership is increasingly a legitimising facade. The result is a military command structure operating with reduced institutional constraint — a different form of the same degradation, with the same consequence: the hegemonic and expansionist drive expresses itself more directly.
Hormuz: Two Degraded Frameworks, One Chokepoint
Iran has 4,000 years of institutional experience — empire, colonialism, radical Islam — that has produced a deep capacity for patience and an acute read of negotiating leverage. That institutional memory is being bypassed, not replaced, by IRGC consolidation. The result is that Iran’s most experienced institutional actors are no longer reliably in the decision loop.
Meanwhile, the US negotiating posture is unreadable — not strategically ambiguous, but genuinely incoherent — because the institutional structures that would normally produce a legible position have been sidelined. Iran cannot decode Washington’s actual bottom line. An Iran that cannot read the enemy defaults to delay, consolidation, and the frozen conflict scenario.
The frozen conflict is increasingly the base case. And a frozen conflict with active IRGC presence in the Gulf is not a stable environment for global energy markets. Approximately 20% of global oil supply and significant LNG volume transits Hormuz. IRGC capacity to interdict, mine, or close the strait is not theoretical. The question is whether two simultaneously degraded institutional frameworks — one on each side of the conflict — produce an inadvertent escalation that neither political leadership could have authorised but neither can now prevent.
China’s strategic interest adds a further variable largely absent from Western risk models: energy security through Iranian supply, BRI positioning, and BeiDou infrastructure as an alternative to US-controlled navigation systems. Chinese institutional patience — itself a form of long-cycle strategic thinking — will ultimately shape the resolution. That timeline is not Washington’s timeline.
The Risk Management Implication
The core point for banks and business: risks cannot be mitigated without proper risk definition based on factual structure.
The failure mode in current risk frameworks is the embedding of liberal-order assumptions that no longer hold. Scenario models built on the premise that escalation has rational institutional off-ramps, that hegemonic actors will ultimately defer to multilateral frameworks, and that US foreign policy reflects stable national interest calculations — these models are now structurally mis-specified. They are modelling the mask, not the mechanism.
The factual structure requires a different set of inputs:
- Institutional degradation as a primary variable. Wherever autocratic or highly concentrated leadership has displaced institutional constraint — US, Iran, and increasingly elsewhere — the hegemonic drive will express itself more directly and less predictably. This is the governing dynamic, not a contextual factor.
- Lobby capture as a distortion mechanism. US foreign policy in this theatre does not reflect US national interest as conventionally modelled. Risk frameworks that assume it does are mis-calibrated at the foundation.
- Dual degradation amplifies non-linearity. When both sides of a confrontation have weakened institutional brakes, the probability of inadvertent escalation — action not authorised by either political leadership — increases non-linearly. Standard scenario modelling does not capture this.
- Counter-hegemonic actors on a different timeline. Chinese strategic positioning around Hormuz and Iranian energy supply is patient, structural, and largely invisible to Western risk models focused on the US-Israel-Iran triangle.
A risk framework that does not incorporate these structural realities is not conservative — it is misleading. Energy price volatility, supply chain disruption, and Hormuz closure scenarios need to be modelled against the actual political structure: one in which the institutional brakes that previously made liberal-order assumptions defensible have been materially weakened.
Realist risk management requires realist structural analysis as its foundation. The liberal order told us what powerful states aspired to. Structural analysis tells us what they actually do when the constraints are removed. Hormuz is the current classroom.
Related: Mearsheimer-Walt Frame — Transnational Political Capture of US Foreign Policy | IRGC Wartime Power Consolidation | European Strategic Autonomy as Downstream Consequence
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