SUMMARY
Iran cannot legally charge tolls in the Strait of Hormuz under UNCLOS, yet geography and power create something real: a system of selective closure where access is priced through risk, insurance, and control. In a world of war damage and rising reconstruction costs, the idea of Hormuz as a de facto toll booth moves from theory to operations.
1. The Idea – From Destruction To Revenue
Israel and the United States are going hell for leather destroying the basic built environment of Iran, but they are not paying attention to Iran’s demand for reparations. Rather than demanding compensation, Iran could monetise control over the flow of ships through the Strait of Hormuz. Rather than relying on legal claims that would take years to argue through courts and diplomacy, the logic shifts to something much more practical and immediate: control the flow, and the revenue follows. What cannot exist formally as a toll booth can function informally as a revenue machine.
So I have checked out this idea. First, some background.
2. The System – Global Choke Points And Real Toll Booths
There are a number of maritime choke points globally where the movement of goods and energy is constrained. These bottlenecks can be natural straits, artificial canals, or even extended to pipelines.
In reality, the number of true toll booths is very small.
- Suez Canal
- Panama Canal
These are engineered corridors, not natural straits. They charge roughly a million dollars per large vessel, and each generates in the order of five to ten billion dollars US annually.
By contrast, the great natural choke points such as Hormuz, Bab el Mandeb or Malacca, do not formally charge tolls. Under international law, they have to be kept open.
But that is only the legal surface.
Glossary
- Choke Point – narrow passage critical to global trade flows
- Transit Fee – payment for passage through controlled infrastructure
3. Estimates of the Costs of Reparations
As to costs, you have to distinguish between damage, loss, and reconstruction.
- Damage is what is physically destroyed
- Loss is the GDP that disappears while systems are down
- Reconstruction is the cost of updating and putting it all back together again
The modern benchmark is Ukraine, where reconstruction and recovery estimates are now in the region of $500–700 billion depending on methodology and a full rebuild may take that to a 1 trillion required investment. Given that the Donbass is an industrial heartland similar to the Ruhr Delta, payback could come in as little as 3 to 5 years ( my guess work, d y o r).
Iran is possibly smaller in economic terms, it depends on how far through the program to return Iran to the Stone Age taco Trump goes, but the sequencing is similar. If escalation continues, destruction could move through layers:
- Bridges and transport arteries
- Military-industrial facilities
- Electricity generation and grid
- Ports, refineries, and export capacity
- Housing, hospitals, education
Once you start moving down that stack, costs accelerate non-linearly.
A reasonable working range today might sit somewhere between $600 billion and $1.5 trillion (some studies have been started already eg UNDP, but these are my figures), moving to the upper end if critical civilian infrastructure is systematically degraded.
4. Hormuz As A Toll Booth, Strategy
If the Strait of Hormuz carries roughly 20 percent of global oil flows, then even a modest “toll equivalent” could generate large sums.
- Hypothetical revenue: $20–30 billion annually
- Payback period: 10 to 20 years for major reconstruction
From a purely mechanical perspective, it makes a satisfactory financing instrument.
Furthermore, letting the geopolitical imagination kick in,
- Sanctions relief could be added or offset against “safe passage guarantees”
- Regional actors could monetise restraint rather than escalation (for example, Israel could support the defense of Iran by ceasing to mow the lawn)
Being realistic, this is how systems evolve under pressure, by lifting constraints.
5. The Execution Premium – How To Actually Charge?
Operationally, how could such a fee be levied? How to set up the toll booth.
Execution converts the strategy into an operational toll booth with measurable performance. The trouble is, you cannot simply erect a toll gate in open water.
Instead, the system rests on:
- Insurance premiums rise
- Routes become “unsafe” for some
- Escorts are required
- Access becomes conditional, selective
So this is not a legal toll, it is an economic filter.
Glossary
- Execution Premium – refers to the real-world difficulty of aligning reality to a strategic idea and rolling it out operationally
- War Risk Premium – additional insurance cost for operating in conflict zones
6. The Legal Constraint – And The Loophole
Thing is that - peace to UNCLOS, the United Nations Convention on the Law of the Sea governing maritime rights - the Strait of Hormuz is so narrow that, at its tightest point, every vessel passes through the territorial waters of both Iran and Oman.
Yet, the waterway is legally classified as an international strait, which activates the doctrine of transit passage.
This means:
- Ships must be allowed continuous and uninterrupted passage
- The right cannot be suspended, even in tension
So formally, there can be no toll booth. But informally, something else emerges.
Because while the law guarantees passage, geography places control in the hands of those sitting on the water.
Further work
Türkiye has formal, treaty-based control over the Dardanelles and Bosphorus, under the Montreux Convention, allowing it to regulate naval access and even restrict passage in wartime. That control is codified in law.
By contrast, the Strait of Hormuz operates under UNCLOS, where access is being controlled informally through risk and power.
The interesting question is whether such informal leverage could, over time, be formalised into a treaty framework, in the manner of Montreux, turning de facto control into de jure authority.
7. The Reality is Selective Closure
What we have in practice is selective closure - open to some, closed to others, effected not by decree, but by risk. IE, insurance, threat perception, and naval posture do the work that the law of the sea forbids.
So the system evolves from legal openness to practical selectivity. And this, in effect, is the toll booth.
8. The Bottom Line – Power, Not Paper
The conclusion is uncomfortable to Western maritime interests but clear.
- The law says Hormuz must remain open
- The map says access can be controlled
- The market makers, on behalf of Iran and Oman, will decide who actually passes
So reparations in this framework are not demanded or negotiated, they are extracted over time through control of flows.
Which brings us back back to the core point. Controversially, we are heading to a New Order, one where the United Nations must be reformed or replaced and where in this case, real toll booths are not built, they are imposed.
