Billion Dollar Bounty: Open the Strait

From Confusion to Clarity with Clayton Wood

June 20, 2026

I. We Have Been Here Before

With the signing of the Treaty of Paris in 1783, the United States hoped it would enter a new era of global free trade. Without the protection of the powerful British Royal Navy, American merchants quickly found themselves defenseless against Barbary pirates. The Mediterranean was vital to American prosperity. Presidents George Washington and John Adams chose to pay tributes to the Barbary pirates, but the bribes failed to ensure full protection and were subject to the shifting moods of the rulers of Tripoli, Tunis, Morocco, and Algiers. With ransom amounts escalating, newly elected President Thomas Jefferson sent America’s reestablished Navy to confront the Barbary powers.

Congress authorized the president to subdue, seize, and make prize of all vessels, goods, and effects belonging to the rulers threatening American commerce, and to cause to be done all such other acts of precaution or hostility as the state of war would justify. The line “to the shores of Tripoli” in the Marine Corps Hymn is not poetry. It is a record of what happens when America stops paying ransom and starts paying warriors.

The founders had a tool for exactly this situation. It is called a letter of marque and reprisal. It is written into Article I, Section 8 of the Constitution. It authorizes Congress to license private armed vessels to operate against enemies of American commerce under the authority of the United States government. Jefferson used it. Congress authorized it during the War of 1812. It has never been repealed. It has simply never been picked up by a generation of lawmakers too cautious to reach for it.

The Strait of Hormuz is closed. It is time to reach.

II. Incentives Determine Outcomes

I believe deeply that incentives are the most underrated force in human affairs. More than ideology, more than speeches, the structure of incentives shapes what people actually do.

The current incentive structure around the Strait of Hormuz is a disaster, and it is a disaster by design. Lloyd’s of London collects war risk premiums when the strait is dangerous. They collect nothing special when it is safe. The U.S. Navy deploys carrier strike groups to manage the threat environment, not eliminate it. Diplomats earn their relevance from ongoing negotiations with the people creating the crisis. Iran extracts leverage from the pain it inflicts. Vladimir Putin collects a windfall without firing a shot.

Every single one of these actors benefits more from a simmering threat than from a solved one. The incentive structure points everyone toward managed misery and away from resolution.

The goal is not a managed strait. The goal is an open strait, permanently, with the idea of closing it occurring only to suicidal men who are genuinely eager to die.

You achieve that goal by building an incentive structure that pays people generously for opening the strait, keeps paying them as long as it stays open, stops paying them if it closes, and makes the threat to close it so immediately and personally dangerous to anyone who attempts it that the attempt itself becomes a form of self-execution. That is not a metaphor. That is a contract structure. And it is what a letter of marque makes possible.

III. Who Wins When the Strait Closes

Before the solution, consider the alignment of interests Congress should be staring at right now.

Russia is by far the biggest winner. The closure of the Strait of Hormuz has flipped the global oil market from surplus to deficit. Russian oil has gone from global pariah to being extremely sought after, with the discount on Urals crude versus the global Brent benchmark almost disappearing. If this is allowed to persist, Russia will reap another 2022-style windfall, the kind that in one year made up for all of Russia’s official foreign exchange reserves frozen by the West. Russia’s oil and gas tax revenue increased by 32.4% year on year in May to $9.3 billion, thanks to the global oil price rally fueled by the Middle East war.

Every day the strait stays closed, Vladimir Putin collects a dividend he did nothing to earn except sharing intelligence and encouragement with the IRGC. The men threatening shipping in the Strait of Hormuz are functionally writing Putin a check.

Saudi Arabia’s oil revenues grew by 4.3% during the closure, as it activated pipeline alternatives that other Gulf states do not have. Riyadh is not engineering this crisis. It did refuse use of its bases when Trump could have ended it with Enduring Freedom. MBS is not suffering from the closure, at least not yet, because it has the East-West pipeline to Yanbu that most of its neighbors lack.

The devastated parties are the ones who cannot reroute. Iraq and Kuwait saw oil export revenue decreases of around 75%. About 93% of Qatar’s and 96% of the UAE’s LNG exports transit through the strait, representing 19% of global LNG trade. India, South Korea, Japan, and most of developing Asia are absorbing an energy shock with no bypass available. Transpacific container rates to the U.S. West Coast are up 40% since before the war. Asia to North Europe rates are up 20%. Brent crude has exceeded $90 per barrel and tanker freight rates have spiked to $800,000 per day at peak disruption.

The people who benefit from a closed strait are Russia, Lloyd’s of London, and Iran. The people who suffer are American consumers, our Asian allies, the Gulf states we are defending, and the developing world. Once you see that alignment clearly, the case for a radically different approach becomes obvious.

IV. Why Lloyd’s of London Is the Wrong Model

Every major shipping company in the world pays Lloyd’s of London extraordinary sums to insure their vessels against maritime threats. Lloyd’s prices risk. It does not eliminate risk. And here is the part nobody says out loud: Lloyd’s has no institutional interest in eliminating risk. A world where the Strait of Hormuz simmers indefinitely is a world where Lloyd’s collects maximum premiums forever. The insurance model is structurally incentivized to manage threats, not end them. Lloyd’s has been profiting from managed maritime misery for generations, from their towers in the City of London, insulated from every consequence of the wars they price.

Consider Maersk, which owns one of the largest commercial fleets on earth. It could put five .50 caliber rifles on every major vessel it operates tomorrow, staff them with trained shooters on every watch, and make boarding attempts extraordinarily costly. It will not, because the moment Maersk arms its ships it accepts a legal identity as a combatant. The Geneva Conventions and the law of the sea were built around the distinction between civilian and military actors. Civilian shipping companies operate under a framework that requires them to appear defenseless in order to remain legally protected. That distinction has become a gift to every IRGC fast boat crew and every Houthi drone operator on earth. They have learned that the ships will not shoot back.

A licensed PMC operating under a letter of marque dissolves that problem entirely. The PMC is not a civilian. It is a commissioned combatant operating under lawful authority. The waterways it patrols are defended by men who have decided that anyone threatening transit dies, and who have the legal standing, the equipment, and the financial incentive to ensure exactly that.

V. The Target Is Not Somalia

The comparison to Somali piracy is useful up to a point and then becomes misleading, and intellectual honesty requires drawing the distinction clearly.

Somali pirates were young men, often high on khat, in open skiffs carrying AK-47s and rocket-propelled grenades. They were economically motivated opportunists operating from a failed state with no navy, no air cover, no mines, no missile systems, and no institutional backing. Arming merchant vessels with private security teams worked against them because the threat they posed was roughly equivalent to what a reasonably equipped private security team could handle. Even then it took a decade and billions in insurance losses before the model was implemented seriously enough to matter.

The IRGC Navy is a different order of problem entirely, and the PMC model has to be scaled accordingly.

Iran’s maritime deterrence doctrine is built around what analysts call a mosquito fleet: more than 1,500 small attack craft under 10 tons, designed to convert numerical density into kinetic saturation rather than platform survivability. These vessels reach speeds between 50 and 110 knots and exploit acceleration and maneuverability to compress engagement timelines, forcing advanced radar and fire-control systems to divide targeting resources under swarm pressure.

The IRGC controls three major islands positioned directly along the shipping corridors, with underground bunkers, swarm boats, and anti-ship missiles networked together. Their swarm tactic deploys 10 to 20 fast attack boats against a single cargo ship from 360 degrees, targeting the bridge to blind the vessel and the engine room to leave it dead in the water.

This is not a khat-addled pirate in a dinghy. This is a structured naval doctrine built around swarming, speed, and saturation. It requires a response built around the same principles, executed by men with better weapons, better intelligence, and a stronger financial incentive to win. And then there are the mines, which require a separate answer entirely.

VI. A Hard Question: What About the Mines?

Anyone making the privateer case who skips past the mines is not being straight with you. I will not skip past them.

The IRGC has spent decades developing a mine warfare capability specifically designed to make the strait impassable at low cost. Mines do not require a crew. They do not require fuel. They do not need to be commanded. They sit on the bottom or tethered below the surface and wait. A fast interceptor doing 70 knots cannot outrun a mine it cannot see. Armed privateers solve the swarm boat problem. They do not inherently solve the mine problem at all.

This is the asymmetry Iran has always known it held. The fast boats get the headlines. The mines are the weapon that actually closes the strait to commercial traffic, because insurance underwriters will not send a $200 million tanker through a waterway where the mine threat has not been cleared, regardless of how many armed interceptors are on patrol.

The answer exists and the technology is already fielded. It is just not a fast attack boat with a bounty hunter at the wheel. The U.S. Navy declared its mine countermeasures mission package at initial operational capability in 2023. It is an integrated suite of unmanned maritime systems and sensors that counteracts mines in littoral environments while increasing the host vessel’s standoff distance from the threat area, conducting the full spectrum of detect-to-engage operations, hunting, neutralizing, and sweeping against mine threats using sensors and weapons deployed from unmanned surface vehicles. The French Navy’s SLAM-F program has delivered an unmanned surface drone equipped with a high-resolution towed sonar capable of missions lasting up to 40 hours, designed specifically for mine detection and neutralization.

Drone boats running ahead of the shipping lane, operated by contracted technical teams paid per cleared corridor mile and per confirmed mine neutralized, are the first layer of the privateer system.

The second layer is fast armed interceptors hunting the swarm boats that attempt to interfere with the clearance operation or attack vessels transiting the cleared corridor. Both layers incentivized by results. Both layers keeping American uniformed personnel out of the primary kill zone. One technician with a laptop. One contract that pays him when the corridor is open.

VII. What the Right Men Actually Do

NATO has not solved this. They have refused and have demonstrated repeatedly how worthless they are in many ways as allies to the U.S.

The U.S. Navy is running Aegis-equipped destroyers designed to fight conventional navies against fiberglass boats and tethered mines. The UAE cannot project the kind of lethal sustained force needed. Diplomats are negotiating with the people who closed the strait while the clock runs and the economic damage compounds.

Iran has deployed hundreds of missile-equipped fast boats at 16 strategic points around Larak Island. Their bases are known. Their patrol routes are mapped. Their vessels operate on the surface in a strait only about 21 nautical miles wide at its narrowest point. Every one of them is visible to American satellite and aerial surveillance within seconds of departure.

Purpose-built interceptor vessels doing 60 to 80 knots, carrying 30mm autocannon and fed by American targeting data from overhead assets already in theater, engage IRGC boats from outside the range at which those boats can effectively return fire. The 30mm GAU-8 fires 3,900 rounds per minute and can shred small boats in seconds. The IRGC boats are fast. They are not armored. A burst of 30mm fire ends them.

Smart PMCs would not wait for IRGC boats to emerge from their island bases. They would send armed drone boats in after them. A semi-autonomous drone boat carrying a shaped charge warhead, launched from 20 miles offshore, requires no sailor in the kill zone. It requires a technician with a laptop and a contract that pays him when the cave is empty and the strait is open. Bunkers concentrate assets. Concentrated assets in a known location are easier to target when the targeting does not require a manned platform inside the threat envelope.

The men willing to crew the interceptors and operate the drone systems are not difficult to find. Special operations veterans, private maritime security contractors, former naval officers from a dozen allied nations: the professional class that does this work is large, experienced, and currently watching the strait close from the sidelines while diplomats argue about Article 13 of a memorandum that Hezbollah violated the same week it was signed.

VIII. Who Should Pay, and Why

Let’s talk about what the current model actually costs and who is actually paying it.

The United States currently operates two carrier strike groups in the region at approximately $6.5 million per day each per strike group, putting the combined daily bill at roughly $13 million, a figure that has been running for months and by mid-March had already exceeded half a billion dollars before accounting for additional surface ships, submarines, and air assets supporting the operation.

But that number requires an honest asterisk. A large portion of those costs exist whether the Abraham Lincoln is patrolling off Oman or conducting exercises in the Pacific. The sailors get paid either way. The reactors keep running either way. The ships get maintained either way. The marginal cost of the deployment is real. The capital cost of the fleet is a sunk expenditure regardless of where it sits. The honest framing is not that America is spending $13 million a day to keep the strait open. It is that America is spending $13 million a day on ships that cannot be anywhere else while they are there, committing its most powerful naval assets to a threat environment those assets were not optimally designed to handle, against fiberglass swarm boats and tethered mines, while the nations who benefit most from the open corridor pay nothing toward the effort.

The United States is not being reimbursed. Not by the UAE, whose LNG revenues depend entirely on the strait being open. Not by Qatar. Not by Japan, South Korea, or India. Not by Europe. America is subsidizing the energy security of the entire Indo-Pacific trading system and the Gulf monarchies simultaneously, with ships that were already paid for, and collecting nothing for the service.

Lloyd’s of London is collecting something. Putin is collecting something. Iran is collecting leverage. The United States is collecting the bill.

The privateer model corrects this at every level simultaneously. The United States provides the legal architecture: the letter of marque authorization from Congress, the targeting data, the ISR overhead, and the international diplomatic cover that makes the operation legitimate under the law of nations. American satellites and reconnaissance assets feed the targeting picture to contracted teams in real time. That is the American contribution, and it is largely infrastructure that exists and operates whether deployed to this mission or not.

The funding comes from the nations that need the strait open most desperately. About 96% of the UAE’s LNG exports transit through the strait. Qatar faces the same cliff. These are wealthy governments watching billions evaporate every month while Lloyd’s and Vladimir Putin collect the proceeds of their misery.

The conversation with Abu Dhabi is straightforward: an open strait is worth how much to you per month? The answer is a number with a lot of zeros. A billion dollars to eliminate the IRGC naval threat and $50 million per month retainer to keep the strait open and secured is a rounding error against the LNG revenues that resume the moment the corridor is cleared. It is also a fraction of what the UAE currently pays in war risk premiums to Lloyd’s for the privilege of not quite getting its ships blown up.

Instead of that money flowing to towers in the City of London, it flows to the men maintaining their weapons, their drone boats, and their willingness to end any threat to the shipping lanes that are also their livelihood. The privateer force is self-sustaining because it is paid to keep open the thing that pays them to keep it open. That alignment of incentives is what Lloyd’s will never have and what a letter of marque makes structurally possible.

The UAE gets an open strait. Qatar gets its LNG exports back. India and South Korea get energy security. Russia stops collecting its windfall. Iran loses its leverage. The United States gets its carrier groups back for the missions they were actually designed for. And the men who risk their lives to make it happen get paid by the people who benefit most directly from their work.

IX. Call Erik Prince. Write the Letter.

Put $50 million on his leadership and a billion dollar bounty pool for his teams. The man built a private army from scratch and ran logistics in some of the most hostile environments on earth. He lives in a place deeply impacted by this war and the closure. He knows how to organize lethal operations with private capital and minimal bureaucratic friction. You may disagree with everything else about him. He would have the IRGC mosquito fleet degraded within weeks, the mine clearance corridors opened within the same window, and the combined threat eliminated within months.

The Republican Congress is supposed to believe in American power, economic common sense, and the constitutional tools the founders gave them. Letters of marque are not a fringe idea. They are in the document. Washington and Adams tried paying tribute to the pirates threatening American commerce. The ransoms kept escalating. Jefferson stopped paying and started fighting. The lesson was learned two centuries ago and apparently needs to be learned again.

Stop paying Lloyd’s. Stop enriching Putin. Stop letting Iran collect leverage from a waterway it has no legitimate authority to close.

The founders wrote the letter of marque into the Constitution because they understood that the most efficient solution to a threat on the water is a motivated man in a capable boat who gets paid when the threat is dead and keeps getting paid as long as it stays that way.

Congress should write the letter. The UAE should fund it. The men will find the boats. The drones will clear the path.

Watch and pray.

Clayton Wood

From Confusion to Clarity