Blaize Giangiulio

This paper models the disruption of a maritime chokepoint as a strategic choice rather than an exogenous shock. In an (N+1)-country Armington economy, a disruptor that raises trade costs between other countries improves its own terms of trade even absent any geopolitical motive, and the gain scales quadratically in the size of the disrupted corridor, rationalizing why disruptors target arteries rather than individual routes. I apply the model to the 2023–24 Red Sea crisis using a continuous, geography-determined measure of each country pair's exposure to closure of the Bab el-Mandeb, built by rerouting 39 million city-pair freight paths over a global road and maritime network. PPML gravity estimates show that trade fell on exposed dyads, with the response concentrated among Western-aligned pairs; exact hat algebra delivers the general-equilibrium welfare incidence, with losses increasing in exposure and Iran's own gain negligible. Inverting the disruptor's first-order condition shows that each dollar Iran gains at the margin costs Western economies roughly $200 to $1,200, and that self-interest alone rationalizes the campaign only if it cost Iran less than $42 million per year, well below independent estimates of Iranian support to the Houthis: a positive weight on harming adversaries is required to explain the observed disruption.