But, as the world is learning, restrictions on travel in any one of these cause enormous damage to the interconnected global economy. Iran’s closure of the Strait of Hormuz after it was attacked by Israel and the United States (US) has caused crisis-like situations in countries across the world. In India, the immediate effect has been to raise concerns about the price and availability of cooking gas; but, over time, other effects will begin to be felt. Fertiliser supplies might dwindle because of the scarcity of ammonia and urea, for example.
The complexity of supply chains in today’s world means that almost all sectors depend upon the freedom of navigation in distant oceans. If the Strait of Hormuz does not open fully, polyester manufacturers in India will suffer, as currently almost 100 per cent of ethylene glycol is Hormuz-linked. The industry suggests that in the first weeks of the crisis, fibre prices went up 30 per cent or more; and those of dyes and ancillary inputs 15-30 per cent. The steel industry points out that almost four-fifths of India’s limestone flux imports are from the port of Mina Saqr in the emirate of Ras-al-Khaimah, just southwest of Hormuz. Sulphuric acid, crucial for producing exotic chemicals — and thus for processing critical minerals, among other things — is also dependent upon these shipping lanes.
In other words, if you close the Strait of Hormuz, you can hold the world to ransom. This is exactly what Iran is trying to do — and to an extent succeeding. It is clearly not even exerting itself fully yet; through its Houthi clients in Yemen, it could also restrict trade entering and exiting the Red Sea.
It is reasonable to ask exactly why the US did not predict this eventuality. Partly, presumably, it is the general incompetence and overconfidence that has been a hallmark of the current administration.
But in part it is perhaps because, in today’s world, we are simply unaccustomed to the idea that such crucial waterways would be closed. Open and free navigation has been the norm for decades, and has allowed the creation of the global, connected trading economy, which supports living standards and prosperity everywhere.
But, in historical terms, this is a unique privilege that has been afforded us over these past decades. Before our current era, control of these crucial waterways was fought over, because the money that today supports consumer welfare used to finance the luxuries of those who owned castles overlooking the straits. The Portuguese empire in the east was built around seizing such locations in the early 16th century: Malacca, Aden, and Hormuz. For the century or so that they ruled Hormuz, their client kingdom there was described as being extraordinarily opulent, paying for this lavishness through the tolls they charged ships. In Malacca, the Portuguese took over an existing toll system operated by the local sultans, which charged transit taxes of 5-8 per cent — relatively low for the time. Merchants would not complain as long as this was transparently enforced and the local authorities did a good job keeping the waterways cleared of pirates. Of course, some might say these authorities and empires themselves were little more than better-dressed buccaneers.
When Iran and the US claim that, as resident naval powers, they have the right to impose tolls on ships that pass through the areas that they control, they are merely monetising chokepoints the way that countries have throughout history. That it appals us today as a violation of shared norms is a reflection of the unique achievements of the past century, and should cause us to consider how fragile any prosperity is that is girded by such principles.
When former Japanese Prime Minister Shinzo Abe defined his country’s desire to see a “free and open Indo-Pacific”, it was because he recognised this fragility, and how Chinese aggression — particularly any closure of the Taiwan Strait, or the many other constricted waterways that mark the First Island Chain — would affect lives and livelihoods in his country. When people worry that Beijing will restrict freedom of navigation, it is not a minor, esoteric issue to be discussed at legal tribunals.
Negotiating with Iran or the US to pay tolls is thus perhaps in any one country’s interests during the crisis, but it is short-term thinking. Singapore, which profits from trade through the Strait of Malacca without being able to control it militarily, has already made this point. Its economic survival depends upon Malaysia and Indonesia recognising the principle of transit passage as laid down in the law of the sea; it cannot permit that to be diluted, and has said it will not negotiate with Iran.
The vast increases in living standards and sharp drops in poverty over the past 80 years of human history have not emerged out of nowhere. They are a consequence of norms such as the freedom of navigation, which allows us to invest in our own prosperity without having to negotiate with every petty state or send flotillas out to protect our merchants. But such norms have to be defended and upheld. They are built upon the foundations of a predictable global order.
If the post-War order does in fact break down, as some hope it does, to be replaced with some sort of global competitive anarchy — whether or not that new order is dignified by the sententious term “multipolarity” — then we have to recognise that the principles that supported trade and development in past decades may not survive.
 "Strait of Hormuz")