Any agreement that allows Iran to impose tolls on ships passing through the Strait of Hormuz would “totally shatter” the principle of freedom of navigation that has underpinned global trade for decades, maritime experts have warned.
Hopes of a deal between the US and Iran have increased, but Tehran's demand that it charge a service fee in one of the world's most important shipping routes would undermine laws governing international waters. Such a move could also encourage other states to demand payment fro ships in vital waterways.
It is understood that Iran is seeking sanctions relief in exchange for agreeing to a toll-free passage in the strait, sources told The National, with the latest negotiations reportedly in the final stages.
But the looming threat of tolls "totally shatters the idea of freedom of navigation, which is the founding principle on which global trade has been held together since the Second World War", Tom Sharpe, a maritime security expert and former British Royal Navy officer, told The National.
“The international law of the sea and UNCLOS [the UN Convention on the Law of the Sea] are fragile concepts, but they are held together by the fact that people believe in them," he added.
Negotiators from the US, Iran and Oman are attempting to finalise an interim arrangement, but Tehran's demand for recognition of a greater role in managing traffic in the strait has become one of the biggest obstacles. Under UNCLOS, ships have the right to “innocent passage” through territorial waters without paying transit fees.
Petras Katinas, research fellow at the Royal United Services Institute think tank, said Iran's proposal challenged the principle accepted by maritime powers around the world. “Technically what Iran wants is something that nobody wants,” he said. “Innocent passage means you don't need to pay.”
He warned that agreeing to any form of mandatory fee could create a dangerous precedent. “If Iran gets away with this and somehow they agree that ‘innocent passage’ is no longer innocent, it means they impose a toll," he added. "Any other part of the world can then do exactly the same.”
Similar demands could theoretically emerge in other waterways, including the Turkish Straits, Danish Straits, Bering Strait and routes in South-East Asia. “Precedent is a precedent,” Mr Katinas added.
Global transit tax
Mr Sharpe also warned that accepting Iranian charges would blur the distinction between internationally governed waterways and commercially operated routes, such as the Suez and Panama canals.
“If you start charging for an international strait, you start confusing an international strait with an internal waterway or a canal,” he said. “Then you've removed those guardrails and you end up with the kind of free-for-all that led to the creation of the rules in the first place. It’s a totally regressive step.”
Mr Sharpe said the wider issue was which group might follow Iran's example. “The obvious question is who starts charging next? How long before the Houthis start saying, ‘You can come through as long as you pay?’ It's a really dangerous precedent," he said.
He added that the crisis had exposed the limits of the understanding that the US would always guarantee maritime security. “The working assumption for the last decades was that America would enforce this," he said. "The problem is that the Iran war has shown that they're unable to do so. It’s not that they don't want to, it’s that they're unable to.”
The ability of merchant ships to navigate international waterways "safely, predictably and without unnecessary impediment is fundamental to resilient supply chains, economic stability and energy security", the world's leading shipping associations said in an open letter this week. Introducing compulsory charges through the strait for transit or service fees was "a toll in all but name", said the letter, which was sent to the UN's shipping agency.
"It would establish a precedent that could undermine the internationally recognised legal framework governing straits used for international navigation and transit passage."
Increasing risk
The Institute for the Study of War think tank said the emerging arrangement could give Iran a greater role in controlling traffic through the strait. Meanwhile, the US remains opposed to formally recognising Iranian control or legitimising compulsory charges.
Any agreement is likely to be temporary, rather than a permanent treaty. But shipping companies, insurers and naval planners are expected to treat the strait as a fundamentally changed risk environment, with higher insurance costs and greater reliance on naval escorts.
Mr Katinas said the regional conflict had demonstrated how little force was needed to disrupt global shipping. “You don't need to stop all ships. You just need to attack a few ships and the risk premium and insurance increase and nobody wants to pass without insurance if something happens.”
