On April 22, Indonesia’s finance minister went off-topic during a symposium and raised the possibility of tolling the Strait of Malacca in light of the current Hormuz crisis, drawing swift rejections from the foreign ministers of Singapore, Malaysia and even Indonesia.
All appealed to norms like the “freedom of navigation” or the “right of transit passage,” which are rooted in the outdated language of the United Nations Convention on the Law of the Sea.
Unfortunately, UNCLOS’ articles are predicated on romantic and misguided ideas about what shipping lanes actually are. Many of these norms trace their origins to a time when maritime shipping was dominated by Dutch fluyts, not post-Panamax container ships.
Yet these norms are treated as absolutist dogma, frozen in time, like how American Second Amendment advocates believe that James Madison would have wanted them to own an M16 assault rifle.
The truth is that coastal waters near global chokepoints are not pristine, “natural” commons, where all captains and sailors possess the God-given right to transit freely. The Strait of Malacca in the 21st century is a continuously used “highway” for Very Large Crude Carriers, which are about as long as a city block and have 20-meter drafts.
These highways are sustained by constant monitoring, dredging and radio operations. Yet, Article 26 prohibits coastal states from charging tolls to vessels in transit, rendering their labor and financial investment invisible and providing the shipping industry with a massive free-rider subsidy.
In this way, UNCLOS is the guarantor of global capital’s imperative to deliver goods more quickly and cheaply by building bigger and bigger ships. The deadweight tonnage of merchant ships in the Age of Sail topped out at around 1,500. Post-Panamax container ships, for comparison, top out at around 240,000. Malaccamax VLCCs hit 300,000.
To put it mildly, modern ships interact differently with coastal waters than Spanish galleons did, yet UNCLOS treats the infrastructure built to accommodate them as a free gift of nature. This is a bit like saying that an airport runway is a natural feature because a goose can also land on it.
Aside from UNCLOS, the guarantor of global capital is the US Navy, which has proven itself an imperfect policeman of the existing maritime order. With the Strait of Hormuz under an American blockade and Iran proposing a toll system for safe passage, it makes sense that other coastal states are considering whether or not they are well served by the status quo.
For decades, China has been disturbed by the fact that the vast majority of its energy imports and European-bound exports must squeeze through the Strait of Malacca, centering around a once-considered-unlikely scenario in which the US might leverage its naval supremacy to blockade the strait and starve China’s industrial economy of the fuel it needs to run.
In that context, an Indonesian finance minister raising the possibility of charging tolls might seem like the first step down that path. But nothing could be further from the truth.
A legally recognized toll to transit the Strait of Malacca would transform the region’s greatest vulnerability into a straightforward commercial transaction. Asia’s largely state-owned shipping and energy companies can easily absorb the cost of tolls. What they desperately need is market predictability that the US can no longer be relied upon to provide.
Reforming UNCLOS to allow countries like Indonesia to charge tolls is the best way to create a stable, capitalized maritime order in our increasingly multipolar world. The revenue generated by tolls could then be reinvested in maintaining and expanding shipping channels and in constructing ships, creating a virtuous cycle of industrial development that benefits the citizens of coastal states.
This shift would also accomplish a secondary objective of pricing out American hegemony. For 46 years, the US has justified its forward-deployed posture in the Indo-Pacific by “securing” the maritime commons for trade.
If coastal states had the money to independently fund engineering, manufacturing and policing, there would be no need for a US naval security umbrella.
Serious discussion about setting tolls in the Strait of Malacca deserves to take place, without being dismissed out of hand as a political or economic taboo. A toll is not a tariff, despite what some may think – it is a cost recovery mechanism.
Today, the Malaccan states of Southeast Asia have a historic opportunity to reform a legal sleight of hand that renders their labor and investment invisible with a pragmatic policy that acknowledges the simple fact that there is no such thing as “free” shipping.
Logan McMillen writes foreign policy analysis through the lens of critical political economy and geography, focusing on Latin America. His work has recently appeared in The New Republic, Responsible Statecraft, the North American Congress on Latin America, and Foreign Policy in Focus.