US has left Malaccan states no choice but to charge tolls

For decades, the rules-based international order provided an often-functional “guarantee” that the world’s most critical maritime chokepoints would remain open, navigable and shielded from the friction of great power competition.

That era is now over. In the span of a single year, aggressive US maneuvering has muddied international consensus on freedom of navigation, replacing the universal protections of the UN Convention on the Law of the Sea with the selective protections afforded to sovereigns that have curried favor with the US State Department.

By treating trade routes like the Panama Canal and the Strait of Hormuz as imperial assets to be monetized or choked off without warning, America has given the nations bordering the Strait of Malacca a lot to think about. Stripped of the framework of a stable maritime order, Malaysia, Singapore and Indonesia will likely be forced to implement de facto tolls on shipping.

For decades, the Torrijos-Carter treaties maintained a clear framework where Panama operated an artificial waterway and charged a universal toll. Yet, spooked by the growing footprint of Chinese-linked port operators, the US engineered a pressure campaign that bypassed the spirit of this law entirely.

By bullying its way into the Canal Zone to oust competing logistics firms and demanding preferential, frictionless transit for American vessels, the State Department made it clear to the international community that local sovereignty and established toll regimes are subservient to the immediate needs of US capital and military logistics.

When Trump started his illegal war on Iran, Tehran leveraged its geographic advantage to collect a US$2 million-per-ship toll, payable in rials, yuan or stablecoins, to navigate the Strait of Hormuz. Under the UNCLOS, charging a toll for transit passage through a natural strait is plainly illegal.

Yet, in the ten-point peace plan that the Trump administration provisionally agreed to on April 7, Iran will retain the right to continue charging this toll (with Oman’s help), with revenues earmarked for reconstruction efforts.

Given the devastation the US and Israel have wrought on Iran’s military, productive capacity and infrastructure, it would be difficult from a moral and legal perspective to contradict their right to do this. At the same time, we are now in a position where the UN Security Council could be forced to ratify a peace deal that contradicts the UN’s own laws.

If this happens, freedom of navigation will be exposed as the hollow, selective framework it always was, enforced only when it serves the interests of Western capital, or – in this case – to paper over America’s military blunders.

If you’re a lawmaker sitting in Singapore or Kuala Lumpur right now, the collapse of this consensus poses an immediate political opportunity. For decades, the states bordering the Strait of Malacca have been locked into a raw deal.

They serve as both custodians of one of the most critical maritime chokepoints for global capital and buffer states in the great-power competition between the US and China. Yet these sovereigns bear nearly the entire financial burden of keeping the trade route operational, a status quo that could quickly become domestically unpopular in an inflationary environment.

The engineering involved in maintaining the Strait of Malacca is staggering. It is a shallow, hyper-congested waterway, prone to shifting sandbanks and heavy silting. Keeping it navigable requires capital-intensive dredging and wreck removal operations, which cannot be defrayed by tolls or charges for “specific services” under UNCLOS.

On top of the physical maintenance, these states must fund complex networks of electronic navigational aids, maintain localized environmental protection regimes to guard against oil spills and deploy naval and coast guard patrols to suppress a historically persistent, now shrinking, piracy threat.

Historically, these sovereigns absorbed the costs as the unspoken price of admission to the US-backed global order. Subsidizing the friction-free movement of international capital was tolerated because that same system “promised” broad stability, freedom of navigation, and access to global markets.

But Trump’s warmongering has turned this bargain on its head. Why should the Malaccan states continue to drain their own coffers to subsidize global supply chains when the American hegemon is weaponizing that system for its own advantage and driving up global oil prices?

Malaysia isn’t going to set up a naval blockade across the Strait of Malacca and demand cash upon arrival. Declaring a unilateral toll in direct violation of UNCLOS would practically invite the deployment of a US carrier strike group to restore “freedom of navigation” on behalf of Western capital.

But the Malaccan states don’t need to use military provocations to achieve the same defensive result in a multipolar world that remains symbolically protected by international law.

More likely, they would weaponize regulations to create a de facto toll regime, squeezing the shipping industry through unavoidable service mandates and forcing the expansion of existing international environmental frameworks.

The first domino to fall would be pilotage. Under UNCLOS, coastal states may charge for specific “services rendered.” Currently, navigating the shifting shallows of Malacca relies heavily on the expertise of individual ship captains.

Expect Kuala Lumpur and Jakarta to cite increasing congestion and safety concerns to mandate that commercial vessels over a certain tonnage, or those carrying hazardous cargo, must exclusively employ local pilotage and tug escort services.

By setting mandatory fees for these required services, the bordering states could extract a massive, steady stream of revenue from passing ships without ever technically charging for the underlying “right of transit.”

Every domino after that would be a different form of environmental enforcement. The bordering states could drastically tighten localized emissions caps, mandate strict under-keel clearance rules to prevent groundings, and enforce rigid traffic-routing schemes to avoid yet-to-be proposed “particularly sensitive sea areas.”

They would then unleash their respective coast guards to police these standards, harvesting entirely legal fines. After a year or so of that, the Malaccan states could then offer the shipping industry a new bargain. You can “voluntarily” donate more to the existing cost recovery fund, or you can continue to face regulatory harassment and billions in local fines.

In a multipolar world, the US can’t have it both ways. If the Malaccan states implemented such a regime, they would have simply adapted to the new order that America itself inaugurated. I suspect that the most impactful, long-term outcome of the war in Iran will be how the US itself shattered the illusion of the “free seas”– in both ideological and financial terms.

Now, everyone across the world, from logistics firms to national retailers to local consumers, will finally have to pay the price.

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.