Testing times ahead as Iran aims for control of Strait of Hormuz

BRUSSELS – The renewed military clashes between the United States and Iran remain modest in scale.

The United States claims to have struck six land-based Iranian missile launchers and coastal radar stations on June 26, after an Iranian drone hit a Singapore-flagged container ship leaving the Strait of Hormuz a day earlier.

And in the early hours of June 27, the Iranians claimed to have retaliated by allegedly firing at US military installations in the Gulf.

Clearly, both sides in the conflict are keen not to return to open warfare. Still, while the latest military clashes leave the US-Iran ceasefire agreement intact on paper, it is unravelling in practice over a fundamental question: Who controls the shipping channel?

In theory, the Strait of Hormuz, the waterway through which about a fifth of the world’s oil and natural gas passes, is open again to international traffic.

The memorandum of understanding (MOU), which the US and Iran signed on June 20, specifies that “the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels, with no charge.”

So, Iran has formally given up its insistence that it can decide who sails through the strait, and that each oil tanker should pay fees of up to US$2 million (S$2.6 million) for safe passage.

However, this arrangement applies only to the 60-day period of the current MOU, and the permanent status of the strait will be left to future negotiations.

Under the agreement, Iran undertook to discuss with Oman, which controls the other coastline of the strait, “the future administration and maritime services in the Strait of Hormuz”, as well as consult with the other Arab monarchies of the Gulf, all of which rely on the strait for their oil exports.

But Iran’s final objective is not in doubt: It aims to exercise effective control over the strait, something it never had before the US and Israel launched their attack in February.

As Mohammed Bagher Ghalibaf, Iran’s chief negotiator, said on June 23: “Everyone should know that the administration of the Strait of Hormuz will never go back to the way it was before the war.”

The Iranians are adamant on this for three key reasons.

Control over the strait will give them a formidable strategic buffer against future attacks, as the US and Israel know that any strike against Iran would immediately disrupt global oil markets.

Furthermore, once Iran’s control over Hormuz is acknowledged, the Iranians will acquire an unassailable top position in the Gulf: most oil-exporting nations in the region will have to defer to the rulers in Tehran.

And then, there is the question of revenues: the Iranians anticipate that they could earn up to US$40 billion a year in fees. The figure is almost certainly an exaggeration. Still, for a state subjected to decades of Western-led sanctions and repeated bombing, any revenue stream of this kind is tempting.

The problem for the Iranians is that international law treats the Hormuz strait as an international waterway that should be open to free and unhindered navigation, a status it has always enjoyed.

So, Iran’s only hope of changing this status is either to force countries to accept its demand that the waterway be controlled by Tehran or to gain international agreement to change the strait’s status.

In their quest, the Iranians are making two legal arguments, both of which lack merit.

The first is that Iran is not a party to the United Nations Convention on the Law of the Sea, which came into force in 1994, and is therefore not bound by its provisions. This is correct but irrelevant, as the status of waterways like Hormuz is ultimately governed by customary international law, which has evolved over centuries and outweighs the claims of individual countries.

The second Iranian argument is that Turkey charges a fee for ships passing through the Dardanelles and that Denmark may also occasionally charge a fee for piloting ships through the shallow waters of the Danish Straits connecting the Baltic Sea to the North Sea.

Again, correct. But, yet again, irrelevant for the Gulf. The Dardanelles and the Danish Straits are both entirely within the territories of Turkey and Denmark, respectively, so they have a very different status from that of Hormuz. Besides, the fee is entirely voluntary in Denmark and trivial in Turkey, which recently raised it to US$6.70 (S$8.70).

Iran is careful not to violate the current MOU with the US by reimposing transit fees for now. But the Iranians are insisting that all ships crossing the strait must sail the routes approved by Tehran, which are all very close to Iran’s shoreline.

The objective here is to ensure that all ships acknowledge Iran’s control and that all shipping will remain at the tender mercies of Iranian missile batteries positioned along the coastline.

The ships Iran attacked on June 25 did not use the routes it dictated and instead sailed near the Omani coastline. Iran’s Persian Gulf Strait Authority – a new government agency established to enforce Iranian control over shipping in the strait – claimed that any transit outside its own designated routes “will not be covered by the guarantee of safe passage”.

The US had to respond, if only in order to reject the Iranian demand of sovereignty over the international seaway.

US Secretary of State Marco Rubio has just ended a tour of the Gulf, in an effort to reassure the local Arab monarchies that Washington will not cave in to Iranian demands to control the strait.

“The reality is that no country has the right to charge for the use of international waterways, and that will never be an acceptable condition of any deal,” he said on June 25, while on a visit to Bahrain.

Behind the scenes, there are discussions between the US and European nations about the creation of a multinational protection force to police Hormuz.

But the Arab states of the Gulf remain apprehensive about what the US may ultimately be willing to accept as part of a more permanent peace deal with Iran. And the Iranians are in no mood to compromise.

Either way, the current ceasefire seems to be just a prelude to further dangerous tussles.