Ameioud: Geopolitics

The Strait of Hormuz: One Chokepoint and No Easy Answers

2026-03-20T00:00:00Z

Something worth sitting with: the Strait of Hormuz is 33 kilometers wide at its narrowest point. About 20% of global oil supply moves through it. That's not a statistic you absorb once and move on from.

For anyone working in procurement or supply chain, the situation in the Middle East stopped being abstract a while ago. We've had suppliers in Asia hit by oil usage restrictions that fed directly into production delays. Not shipment delays. Production delays. The plant slows down because input costs spike and availability tightens, and then you're choosing between waiting it out or putting things on a plane. Airfreight gets the job done. It also costs roughly three to five times sea freight, and that math compounds quickly.

On the chemicals side, the honest answer is that nobody really knows what's coming. The situation shifts week to week. We've kept standing calls with suppliers just to get early warning on any price movement, not because prices have blown up yet, but because the lead time on alternatives is long enough that waiting to find out is a bad strategy.

Logistics costs are relatively contained right now, at least in Germany. Governments have kept certain energy costs buffered. That doesn't hold forever, and the moment it changes, shipping costs are going to feel it fast.

What's strange is the gap between the alarms being sounded and how normal everything still feels. Analysts have been clear about the exposure. Markets keep moving. Life keeps going. There's a scene in Interstellar where the crew lands on a planet and sees what looks like mountains in the distance. They're not mountains. They're waves. That's the image that keeps coming back when thinking about this. We're on the beach, watching something very large move toward us slowly enough that it doesn't feel urgent yet.

Even a resolution doesn't reset this quickly. If the conflict wound down tomorrow, you'd still be dealing with production capacity that was disrupted intermittently throughout the war. That takes time to rebuild. Oil supply that's been offline doesn't come back in a quarter. The feedback loops in energy production are long.

So the question isn't really what happens if things get worse. It's what recovery actually looks like, and whether anyone is planning for how long it takes.

That part of the conversation is happening less than it should.

Europe Is Spending on Defense. The Hard Part Comes After That.

2026-04-10T00:00:00Z

Something that tends to get lost in the coverage of European rearmament is the distance between a government budget commitment and an actual delivered piece of equipment, and how much of that distance is a procurement and industrial base problem rather than a political will problem.

Germany's 500 billion euro special fund, announced in early 2025 alongside a revision of the constitutional debt brake that had constrained defense spending for years, is real money. The number is large enough to be credible. The harder question is where it goes, because the supply chains that would need to absorb that spending have been running lean for thirty years on the assumption that the threat environment was stable and that just-in-time logic applied to military hardware as much as it applied to anything else.

It doesn't. The lead times on artillery shells, armored vehicles, and the raw materials that feed into them operate on timescales that anyone used to commercial procurement finds disorienting. Eighteen months for a complex mechanical component is not unusual. Two to three years for certain specialized electronics is not unusual. We deal with lead time extensions on high-precision components in civilian contexts and those are already hard to manage. Defense operates on timescales that make commercial supply chains look agile by comparison.

What makes this more complicated is that the bottleneck doesn't sit only at the finished product level. It reaches back into materials. Gunpowder production, which sounds like a problem solved in the nineteenth century, turns out to be geographically concentrated and capacity-constrained in ways that have surprised a lot of planners. The shortfall in 155mm shells that became visible after 2022 was in part a raw materials problem and in part a manufacturing capacity problem. Both are slow to fix. You can't solve a capacity problem with a budget announcement.

From a procurement standpoint, what this creates looks a lot like 2020 and 2021, except the time horizon is longer and the stakes are higher. When you try to place orders into a supply base running near capacity, lead times extend, prices move, and suppliers with the best production slots start choosing their customers. Being the customer who has been consistent, who has built relationships, and who shows up with clean specifications and payment terms that work is worth more in that environment than being the one with the largest budget when everyone is competing for the same components at the same time.

The industrial ramp required to turn European defense budgets into European defense capability is probably measured in years. Whether the procurement organizations being asked to execute it have the structure, the staffing, and the supplier relationships to move at the speed the political conversation implies is a question that gets far less attention than the size of the budget.

The money is there. The muscle to spend it well is the part that takes longer to build.

Germany's Industrial Decline: Is Europe's Largest Economy Becoming a Deindustrialization Case Study

2026-06-13T00:00:00Z

Germany built its post-war identity on three things: cars, chemicals, and engineering exports. For decades that combination worked. Cheap Russian gas kept industrial energy costs competitive, export-oriented growth made the trade surplus a national point of pride, and the manufacturing base that employed millions never really had to face a serious threat from below. Then several things happened at once, and none of them were recoverable quickly.

When I was writing my thesis at TU Darmstadt on European electricity markets and energy security, what became clear in the data was something that felt almost too obvious to say: German industry had built its competitive position partly on an energy arbitrage that depended on one supplier. That supplier was Russia. The gas pipeline was the assumption the whole model rested on. When it stopped flowing, the assumption went with it.

The cost differential that followed is not a small adjustment. German industrial electricity prices hit three to four times what American manufacturers were paying. The US, at the same time, was running the Inflation Reduction Act, directing hundreds of billions into domestic production subsidies. European industry was paying more to produce and competing against companies that were being paid to produce. That is a structural problem, not a cyclical one, and you cannot fix it with a rate cut.

The numbers that came out of the German economy in 2023 and 2024 reflected this. Two consecutive years of contraction. Not a mild slowdown, an actual shrinking. The auto sector, which employs around 800,000 people directly and several times that in the supply chain, was being squeezed from two directions: Chinese electric vehicles that cost less to build than German ones, and US tariffs that made the American market harder to access. BASF, the largest chemical company in Germany, announced it was permanently cutting capacity at its Ludwigshafen headquarters and investing in China instead. Volkswagen opened internal discussions about closing German factories for the first time in its history. These are not signals of a company adjusting at the margins.

What makes this harder to address than a standard recession is that people keep reaching for the wrong frame. It gets described as a confidence problem, or a reform problem, or an energy price issue that will normalize over time. None of those descriptions are completely wrong. But they miss the part that is actually structural: the conditions that made Germany competitive in manufacturing have changed, some of them permanently, and the industries at the center of the German economy are the ones most exposed to that shift.

The bureaucracy problem compounds everything else. It has been discussed for years without meaningful improvement. Permitting times for infrastructure projects in Germany are longer than in almost any comparable European country. The digital infrastructure, outside major cities, remains behind in ways that are hard to excuse for an economy of this size. A country that built the Autobahn cannot seem to reliably connect its offices to functional broadband, which says something about more than just infrastructure priorities.

None of this means Germany is finished. The Mittelstand, the layer of mid-sized industrial companies that form the backbone of the manufacturing sector, contains real engineering depth and real export relationships that do not disappear overnight. The workforce is skilled. The institutional knowledge is there.

But the window for a managed transition is not open indefinitely. Every year without a coherent energy investment strategy, without a serious answer to the digitalization gap, without a clear position on where German manufacturing fits in an economy where China competes at the bottom and the US subsidizes at the top, is a year where the structural gap gets harder to close from the inside.

The risk is not collapse. It is a slow hollowing out that takes long enough to happen that everyone adjusts to the new baseline before deciding whether they actually chose it.