Tolls at the strait of Hormuz?

The Trump Administration is busy leaking its proposals for opening the strait of Hormuz and trashing Tehran for collecting tolls. Iran is busy creating a Persian Gulf Strait Authority to collect the tolls.

The legalities

I am not a lawyer. But even I know the legal issues are more complicated than US Ambassador to the UN Waltz suggests. The 1982 Law of the Sea Convention confirmed the right of “transit passage” through international straits without interference and without charges, except for specific rendered services. The US has neither signed nor ratified the 1982 Convention but claims its provisions for transit passage are customary international law. Therefore applicable to all.

Iran had signed but not ratified the 1982 Convention. In doing so it objected explicitly to the provision for transit passage. Iran claims it is not customary international law and applies only to those who did not object to it. Instead, Tehran claims to apply the provisions for “innocent passage” contained in the 1958 Geneva Convention on the Law of the Sea. That allows constraints on belligerent states.

Iran could also have claimed to be providing services by guiding ships through the strait, which it has mined. That however would make tolls a protection racket. And it would require that Iran accept the 1982 Convention.

Historical precedent for charging fees exists but is dated. Denmark levied “sound dues” for entry and exit of the Baltic Sea from 1429 to 1857. The Portuguese did likewise for the strait of Hormuz in the 16th century. Trump undermined the US position opposing such tolls when he speculated in public that the US might charge fees for passage through the strait after the war, perhaps even cooperating with Iran in doing so. 

The harmful precedent

The strait of Hormuz is only one of ten or so international straits and channels through which large volumes of international trade pass. It is reasonable to worry about the precedent tolls at Hormuz will set. Iran’s Houthi friends would no doubt like to impose a similar regime on the Bab al-Mandeb, which links the Red Sea to the Gulf of Aden. They could toll virtually all the traffic transiting the Suez Canal in both directions.

The Suez and Panama Canals are not international straits but man-made structures. They are run by local authorities that collect tolls. Both are subject to international treaties that are supposed to keep them open during both war and peace.

The Bosporus and Dardanelles that connect the Mediterranean and Black Seas are international straits that Turkey administers in accordance with an international treaty. It charges fees for navigational services. Indonesia has considered but ruled out fees at the strait of Malacca. Singapore does not charge fees at the Singapore strait.

Lots of international straits dot the globe:

If tolling spreads from the strait of Hormuz, the results could be expensive and disruptive to international trade. And cause lots of diplomatic and perhaps even military disputes.

What is to be done?

Continued blockage of the strait of Hormuz will enable Iran to impose tolls and attract traffic. If you owned a ship or cargo that has spent the last few weeks captive in the Gulf, which would you rather:

• Stay holed up in the Gulf?
• Run the risk of an Iranian attack?
• Pay 1% of the cargo’s value for some Iranian help in getting through?

This is not rocket science. If the Americans want to prevent tolling, they need to settle with Tehran soon. That will hurt but is better than the alternative, which is a long war.