Larry Johnson: Merciless Kindness – Britain’s Economic War on America and the Long Shadow Over the Iran Sanctions

by Larry Johnson(opens in new tab) [9-13-2026] Larry C. Johnson(bio)(opens in new tab).

A chokepoint is not a wall. It is a tollbooth — expensive, annoying, survivable — and the traffic always finds another way around. That is the single lesson I would press on anyone in Washington who believes the dollar can be made into a cage for Iran, and it is a lesson the last great naval hegemon paid for in starved cities and a needless war. Britain held the sea lanes in 1812; the United States holds the dollar-clearing system in 2026. Both powers convinced themselves that command of the arteries of commerce could bend a rival without fighting him. Both discovered that a blockade, whether of ships or of payments, leaks — because networks reroute, and a determined adversary treats the chokepoint as a toll to be paid rather than a barrier that stops him.

I want to walk through why I think the parallel is exact rather than poetic, because when you lay the two systems side by side they line up almost part for part, and so — so far — do their results.

Networks reroute: the pattern that governs both cases

Start with the behavior that decides everything, because it is the same in both centuries. Coercion by commerce generates its own antibodies.

Under the Orders in Council and the wartime blockade, American and neutral trade did not stop. It went underground — sailing under false flags, buying the very British licenses the system sold, and slipping through the gaps in the cordon. Under the Office of Foreign Assets Control, the identical pattern repeats with new tools: a fleet of more than 350 aging tankers moving Iranian crude with their transponders dark, ship-to-ship transfers off Malaysia and in the Sea of Oman, a web of front companies that reconstitutes within weeks of each designation, and a discount deep enough — Iranian barrels have lately traded well below Brent — to keep Chinese refiners buying no matter how many vessels are blacklisted. The result is the fact that ought to trouble the architects of “maximum pressure” most: Iran is now exporting more oil than at almost any point since 2018, sanctions and all.

Power exercised through a chokepoint measures itself in throughput, not in walls, and throughput can be rerouted. The sea could be evaded by anyone with a fast hull and a false manifest. The dollar can be evaded by anyone willing to build a parallel rail and eat a discount. In both cases the hegemon mistakes the chokepoint for control, and in both cases the adversary gets to work on the bypass. Hold that pattern in mind; everything else follows from it.

Britain’s system: the license and the blockade

The Orders in Council of 1807 were London’s answer to Napoleon’s Continental System. Bonaparte’s Berlin and Milan decrees ordered the continent closed to British goods; Britain retaliated by declaring that neutral ships bound for French-controlled Europe had first to call at a British port, submit to inspection, and buy a license before they could proceed — on pain of seizure. It was a global permission slip for maritime trade, administered from London, and it caught the young American republic squarely in the middle. As the great neutral carrier of the age, the United States found its merchantmen liable to condemnation by Britain if they sailed without a license and by France if they sailed with one.

Layered on top was impressment — the Royal Navy stopping American ships on the high seas and hauling off sailors it declared to be British subjects — and, once war came in 1812, a naval blockade that tightened year by year. The blockade was the sharpest tool. Britain initially spared New England, both to reward the Federalist merchants who opposed the war and because New England was quietly provisioning British forces in Canada and Iberia. By 1814 the exemption was gone and the entire American coast was sealed. American exports collapsed; customs duties, then the federal government’s main source of revenue, cratered with them, and Washington was pushed to the edge of insolvency. Coercion by commerce, not by conquest.

Washington’s system: the designation and the dollar

Replace the Royal Navy with OFAC and the picture is startlingly familiar. The United States cannot physically stop every tanker, but it does not need to. It controls the plumbing through which oil is paid for — the dollar-clearing system, the correspondent-banking network, the marine-insurance market — and it uses access to that plumbing as its blockade.

The mechanics translate directly, and this is where I think the comparison earns its keep:

• The OFAC license is the modern Order in Council — a permission slip, granted or withheld from Washington, that decides who may lawfully move a cargo.
• The SDN list is the modern condemnation in prize court — a designation that renders a vessel or a trader untouchable without a shot fired.
• Secondary sanctions are the modern doctrine of neutral forfeiture — the rule that a third party trading with the enemy forfeits its own standing, the same principle that made American ships lawful prizes in 1808. Today it falls on Chinese refiners, Hong Kong shell companies, and intermediaries in the UAE, India, and Turkey.
• The Western grip on marine insurance — run largely through the London-centered protection-and-indemnity clubs — is the lineal descendant of Britain’s old command of Lloyd’s. Deny a tanker its coverage and you can strand it as surely as a frigate once did.

The stated goal is maximal. Washington has declared it means to drive Iran’s oil exports to zero — the twenty-first-century equivalent of sealing the coast. And as I write, the campaign runs alongside an actual shooting war and a Strait of Hormuz that is only partly open, which makes the 1812 analogy tighter still: this is not sanctions in the abstract but sanctions plus blockade, coercion by commerce backed by the threat of force.

The boomerang

Here is the part I would make Washington study most closely, because it is the part the British learned the hard way.

The Orders in Council did not break Napoleon. What they broke was Birmingham. As the neutral trade that fed British industry dried up, a trade depression spread across the manufacturing towns. In Birmingham, master manufacturers cut wages to a fraction of their former level; in Manchester, by one contemporary account given in Parliament, a quarter of the population was on parish relief. Merchants and manufacturers across Birmingham, Liverpool, and Manchester mounted one of the largest petitioning campaigns Britain had yet seen, demanding repeal. In the Commons, Henry Brougham gave the argument its enduring phrase: the people had come to beg the House to spare them the “merciless kindness” of a policy that was supposed to protect them and was instead starving them. On 23 June 1812 the government relented and repealed the Orders as they applied to America.

The timing is the cruelest lesson in the whole affair. James Madison, not yet knowing London had backed down, had signed the declaration of war five days earlier, on 18 June. The central economic grievance was resolved for practical purposes before the fighting even began; the news simply could not cross the Atlantic in time. Britain abandoned its own economic weapon — not because America forced it to, but because its own industrialists could no longer bear the cost.

The modern boomerang is quieter but unmistakable. Every turn of the sanctions screw against Iranian and Russian oil tightens the global supply of it, and the price is paid at every pump in the West. Brent crude sits above $100 a barrel as I write — up roughly 17 percent in a month and more than half over the year — driven by the same Gulf war the sanctions are meant to win. The campaign to deny Tehran its revenue is simultaneously a campaign to raise the cost of energy for the sanctioning coalition’s own voters. Birmingham’s petitioners would have recognized the arithmetic exactly.

And there is a second-order cost the British never had to reckon with, because in 1812 there was no alternative to sterling and the sea. Every time Washington weaponizes the dollar, it teaches the rest of the world to build a system that routes around the dollar. The shadow fleet, the ship-to-ship transfers, the rial-ruble settlement, the Iran-Russia-China trilateral, the BRICS payment rails — these are not accidents. They are the predictable engineering response to a chokepoint, and each one makes the next chokepoint less effective. Britain’s blockade could only be evaded by faster ships, and the ships rotted after the war. The dollar blockade is being evaded by a new financial plumbing that, once built, does not disappear when the sanctions lift.

Where the analogy breaks

Honesty requires marking the limits, and there are three that matter.

First, Britain abandoned its weapon under domestic pressure that Washington does not yet face. The costs of the Orders in Council fell on concentrated, politically organized British manufacturers who could march on Parliament. The costs of the Iran sanctions are diffuse and largely exported — a few cents on a gallon of gasoline, spread across a whole electorate, with no Brougham to give it a voice. That makes the modern policy far more durable than the British one, for better and for worse.

Second, the dollar is a stickier chokepoint than the sea. A fast ship could always run a blockade in a single night; unwinding dependence on the world’s reserve currency and its clearing system takes years, and the alternatives remain clunky, illiquid, and expensive. The workarounds are real, but they are not yet cheap, and Washington’s leverage is correspondingly deeper than London’s ever was.

Third, the targets differ. America in 1812 was collateral damage in a war aimed at Napoleon; Iran in 2026 is the direct object of the campaign. That makes the modern policy more coherent in its aim — and also removes the easy off-ramp Britain enjoyed, which was simply to stop annoying a neutral it had never meant to fight.

None of that changes the core lesson, and the core lesson is the one Britain paid for in Birmingham wages and a needless war: economic coercion routed through a chokepoint imposes real costs on the coercer, breeds the very networks designed to defeat it, and rarely bends a determined adversary before it exhausts the patience of the people footing the bill at home. Washington is betting that the dollar is a wall. My reading of history is that it is a tollbooth — and the traffic is already finding another way around.