Oil tankers used to sail down the middle of the
Strait of Hormuz but since Feb 28, any seeking to cross the 21-mile-wide waterway have had to
take a detour. In what has become known as the “Tehran Tollbooth”, vessels must now head closer to the Iranian coastline, nosing themselves between the islands of Qeshm and Larak.
Ship owners then go through a complex – and expensive – process of negotiation. First, according to Bloomberg, they are required to inform intermediary companies linked to the
Islamic Revolutionary Guards Corps (IRGC) of the ship’s cargo, destination and ultimate owner.
Iran then charges a “toll” of at least $1 per barrel, with the rate rising according to the perceived friendliness of the national operator. Fees must be paid in Chinese yuan, or a cryptocurrency. The average rate for a single oil tanker is $2m (£1.5m). If everything is approved, IRGC boats will finally provide an escort into and out of the “tollbooth”.
In a statement after Trump's ceasefire message, Iranian foreign minister Seyed Aragchi said that Iran would halt its "defensive operations" and allow safe passage through the Hormuz "via coordination with Iran's armed forces" (meaning?).
That plan includes the US withdrawing its military forces from the region (meaning what? The Carrier Groups? Or from bases established in neighbouring countries for decades?), lifting economic sanctions on Iran, paying compensation for war damages and allowing Iran to maintain control over Hormuz.
Some analysts believe it could make as much as $500bn (£377bn) in five years.
This system – informal and illegal for now – represents
Iran’s biggest win from the war with the United States. It is now the target of the two-week ceasefire announced by Donald Trump. The US President has stated that the pause in fighting is strictly “subject to” the “COMPLETE, IMMEDIATE, and SAFE OPENING” of the Strait of Hormuz.
However,
Iran’s statement said that any crossing had to be carried out “in conjunction” with the Iranian military – something very different to free passage –
and an Iranian official told AP that the deal allowed Tehran to still charge fees.
Both Trump and Iran are going to claim victory (Trump has been claiming victory since the beginning of March but this is still going on). We’ll have to see how flexible both (or either) side(s) are going to be in the next two weeks,
The next two weeks will see which system holds.
At moments, Donald Trump has appeared to be attracted by the idea of operating the toll booth himself, rather than opening up free passage.
“What about us charging toll?” he said this week. “I’d rather do that than let them have them. Why shouldn’t we? We’re the winner. We won.”
While the US president had previously
threatened to destroy Iran’s “entire civilisation” if it does not surrender and
open the strait, that deadline was averted by the last-minute ceasefire agreement. Gulf nations are concerned that Mr Trump will prompt a final, furious round of regional bombardments and then walk away with the strait – at least temporarily – under Tehran’s control.
Some countries might be forced to pay the export toll at first, one Gulf diplomatic source told The Telegraph. Abu Dhabi, Qatar and Bahrain lack alternative pipelines, and supplies of liquid natural gas can only be delivered by ship.
Nations like India might send their own tankers through the strait to collect oil and gas, bearing the “tollbooth” cost themselves. But over time, the Gulf nations will not tolerate a system that funnels vast wealth towards a hostile regime that has already blown up chunks of their critical infrastructure, the diplomatic source said.
Hugo Dixon, a columnist for Reuters, estimated that Tehran could earn $500bn over the next five years, creaming off profits for as long as it takes to
construct new pipelines.
Even a fraction of that sum would slingshot the Shia nation to regional dominance.
Iran's military has been significantly degraded. Although its Islamic fundamentalist regime is still in power, many of its top leaders have been killed in bombing strikes
It would allow the IRGC to rebuild, many times over, its obliterated military. “I don’t think this war can end if Iran is still running the ‘tollbooth’,” said Ellen R. Wald, a non-resident senior fellow at the Atlantic Council’s Global Energy Centre, based in Washington DC. With negotiations set for Islamabad on Friday, the US will be pushing to dismantle this system.
Saudi Arabia approaches the petrodollar remains an important harbinger of the financial future to come.
www.atlanticcouncil.org
She said that “Saudi Arabia and the United Arab Emirates and other Gulf countries cannot stand for it” and would eventually “have to build an army and fight”.
en.wikipedia.org
In the near term,
Iran’s enemies could use their own missiles to target the regime’s shadow fleet tankers, which are now transporting double the amount of oil they were before the war – and for almost double the profit.
Charging tankers to use Strait of Hormuz would enrich Iran and affect maritime trade around the world
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Recently, Mr Trump suggested that the United States had no need to reopen the strait, given bountiful domestic energy supplies. Oil-starved Europe should do the job itself, US super-majors, including Chevron, are heavily involved in the Gulf oil business, often running partnerships, and a permanent Iranian “tollbooth” would seriously undermine the international principle of the freedom of the seas, said Ms Wald.
Under the United Nations Convention on the Law of the Sea, no country can interfere with
the “innocent passage” of ships through
maritime choke points or straits. Tolls can only be charged at man-made canals, such as the Suez or Panama.
Last month, in a letter to the International Maritime Organisation, Iran argued that its
“tollbooth” was justified by self-defence. It had to inspect foreign, possibly hostile ships and the fee covered such costs, the regime told the watchdog.
Turkey charges a small fee to escort ships through the Dardanelles, but “that’s because it’s a very perilous waterway and Turkey provides coastguard services,” said Ms Wald. Iran’s legal claim was absurd, by contrast, resting simply on extortion.
(Would Trumps claim to the Strait of Hormuz and America charging tolls “because they clearly won” also be extortion?)
“The United States entered World War One in part to secure freedom of the seas,” Ms Wald added. “Leaving the tollbooth in place now would be like saying, ‘We don’t care about that any more – Britain, you can charge people to enter the English Channel’.” In a worst-case scenario, the law of the sea breaks down and Russia or China take greater control over the choke points in their back yards,
or Canada with its northern passage?
Inside Iran,
the IRGC would use oil funds to supercharge its ongoing takeover of the entire state, said Dr Andreas Krieg, a senior lecturer at the School of Security Studies at King’s College London.
While the overall level of traffic through the strait would fall – sanctions bar Western firms from engaging in any business with the IRGC –
the tollbooth windfall “would help to build a military dictatorship”.
The IRGC would emerge as a “more radical, more empowered, more financially robust system that can go and build networks east with Russia and China”. The prospect is catastrophic enough for so many nations that it is more likely to collapse than be allowed to take root, said Basil Germond, a professor of international security at Lancaster University.
“Historically, attempts to condition or close strategic straits – including Hormuz in the 1980s ‘tanker war’ – tend to prompt escalation … involving the use of force,” he said. Whether it is seizing Kharg Island, further US bombardments or Gulf counterstrikes, “it is more likely that the quagmire will resolve with further use of kinetic force, rather than the implementation of a stable, widely accepted and enforceable tollbooth”.
Much about
the agreement was unclear as the sides presented vastly different visions of the terms.
TEHRAN, Iran (AP) — Iran, the United States and Israel agreed to
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