Denmark's 428-Year Toll

Iran’s demand for “international recognition of sovereignty over the Strait of Hormuz, including toll collection rights” sounds unprecedented. It is not. For 428 years, Denmark collected tolls on every non-Danish ship passing through the Øresund strait, funding up to two-thirds of its state revenue. Turkey has controlled the Bosphorus under international treaty since 1936 and still collects fees on every vessel that passes. The Suez and Panama canals generate billions annually for sovereign operators.

What Iran is attempting — converting military leverage over a natural chokepoint into a formalized, revenue-generating toll regime — has deep historical roots. Some of those precedents lasted centuries. Others collapsed. The differences between them reveal whether Iran’s gambit has any chance of succeeding.

The Sound Dues: 1429–1857

The Øresund is a narrow strait separating Denmark from what is now southern Sweden. At its narrowest point, near the town of Helsingør, it is roughly four kilometers wide. In the fifteenth century, Denmark controlled both shores. Every ship that wanted to pass between the North Sea and the Baltic — the primary trade route for Scandinavian timber, Russian furs, Polish grain, and the entire Hanseatic commercial network — had to sail within range of Danish cannons.

In 1429, King Eric of Pomerania began collecting tolls on every non-Danish vessel that transited the sound. The enforcement mechanism was simple and direct: Kronborg Castle, perched on the headland at Helsingør — the same fortress Shakespeare would later immortalize as Elsinore in Hamlet — housed batteries of heavy cannon that could reach any ship in the channel. Pay the toll, or do not pass.

The rate was set at 1 to 2 percent of declared cargo value — a figure that modern shipping executives would find eerily familiar, given that Iran’s war risk insurance surcharges landed in exactly the same range. Denmark developed an ingenious anti-fraud mechanism: the king reserved the right to purchase any cargo at its declared value. Undervalue your goods to reduce the toll, and the Danish crown would simply buy them at the price you stated. Smuggling was difficult when the buyer was the sovereign.

The revenue was enormous. During the sixteenth and seventeenth centuries, the Sound Dues generated up to two-thirds of Denmark’s total state income. The tolls financed the Danish military, the construction of royal palaces, and an era of Scandinavian power that would have been impossible for a small kingdom to sustain on domestic taxation alone. Denmark was not a great power because it was large or populous. It was a great power because it sat on a chokepoint.

The Sound Dues lasted until 1857, when the Copenhagen Convention bought Denmark out. The United States, which had refused to pay since 1855, joined European maritime powers in negotiating a one-time payment of 33.5 million rix-dollars — a vast sum — in exchange for Denmark permanently opening the strait to free passage. It took the collective pressure of the world’s major trading nations, and a significant financial inducement, to end what had been history’s longest-running toll regime.

The lesson for Hormuz: physical control of a chokepoint, backed by credible military force, can sustain a toll regime for centuries. It does not require international legitimacy. It requires only that the cost of paying is lower than the cost of fighting.

Turkey’s Montreux Model: 1936–Present

If the Sound Dues represent the brute-force model of strait control, the Montreux Convention represents the diplomatic one. Turkey controls both the Bosphorus and the Dardanelles — the only passage between the Black Sea and the Mediterranean. Unlike the Øresund, these straits are governed by an international treaty, the Montreux Convention of 1936, which grants Turkey sovereignty over the waterways while guaranteeing civilian transit rights.

In theory, the Montreux Convention ensures freedom of navigation for commercial vessels. In practice, Turkey collects substantial fees on every transit — categorized not as tolls, which would violate the treaty’s principles, but as “lighthouse, rescue, and medical service fees.” The distinction is purely semantic. The money flows to Ankara regardless of what it is called.

As of 2025, the fee rate stands at $5.83 per net ton, a figure that has increased 7.2 times from pre-2022 levels. Annual revenue from strait fees runs approximately $227 million. These are not trivial sums, but they are modest compared to what Turkey’s real leverage delivers.

The true power of the Montreux Convention lies not in commercial fees but in military transit restrictions. Warships must provide 8 to 15 days’ advance notice. Tonnage limits restrict the size and number of non-Black Sea naval vessels that can pass. In 2022, following Russia’s invasion of Ukraine, Turkey invoked Article 19 of the convention and closed the straits to warships of all belligerent nations. It was a dramatic demonstration that treaty-based control is not ceremonial. It is operational.

The lesson for Hormuz: a treaty framework that grants the controlling nation sovereignty while nominally protecting transit rights can endure for generations. Turkey has operated under Montreux for nearly a century. No nation has seriously challenged it. The framework works because it gives everyone something — Turkey gets sovereignty and fees, the world gets predictable access — while leaving the controlling nation with a veto it can invoke in extremis.

Suez and Panama: Sovereign Waterways

The Suez Canal and the Panama Canal represent a different category entirely. These are artificial waterways, dug through sovereign territory, operated by state authorities, and funded by user fees that no one disputes. They are the clearest precedent for what a strait toll looks like when it is fully legitimate.

Egypt nationalized the Suez Canal in 1956, triggering the Suez Crisis and a brief military intervention by Britain, France, and Israel. But nationalization stuck. Since then, the Suez Canal Authority has collected $153.4 billion in cumulative toll revenue, with a peak of $10.3 billion in 2023. At its height, the canal was the single most profitable piece of infrastructure on Earth.

But even sovereign control has limits. When the Houthi campaign in the Red Sea made the southern approaches to Suez dangerous starting in late 2023, container shipping rerouted around the Cape of Good Hope. Suez revenue crashed by 60 percent. Egypt learned what every toll collector eventually learns: the toll is only as valuable as the traffic that pays it. If the route becomes dangerous, ships find another way.

Panama tells a similar story of sovereignty. The canal was built by the United States, operated by Americans for decades, and transferred to Panamanian control through the Torrijos-Carter Treaties of 1977. Today it generates roughly $5 billion per year for Panama. No one questions Panama’s right to charge. The canal is in Panama. It was built within Panamanian territory. The legal basis is unassailable.

The key difference between Suez and Panama on one hand and Hormuz on the other is that canals are artificial constructions within undisputed sovereign territory. A natural strait shared between nations — or through which international law guarantees transit passage — occupies fundamentally different legal ground.

Malacca: What UNCLOS Prohibits

The Strait of Malacca is the closest geographic analogy to Hormuz: a natural waterway, bordered by multiple nations (Malaysia, Indonesia, and Singapore), carrying an enormous share of global trade. Roughly one-third of all seaborne commerce passes through Malacca. The temptation to toll it has been present for decades.

It has never been acted upon. Under the United Nations Convention on the Law of the Sea, states bordering international straits cannot suspend transit passage or impose tolls that would have the effect of impeding it. Malaysia and Indonesia have proposed voluntary contributions from user nations — as little as one cent per ton — to fund navigational safety and environmental protection in the strait. Even that modest proposal gained little international traction.

This is the legal reality that confronts Iran’s toll ambitions. UNCLOS, which Iran has signed but not ratified, explicitly prohibits tolls on international strait transit. The Malacca precedent shows that even willing, cooperative bordering states with legitimate maintenance costs cannot extract meaningful fees from strait traffic. The international legal order simply does not permit it.

Or at least, it has not permitted it until a nation decided to stop asking permission. That framing should not obscure the legal reality: under the prevailing interpretation of international law, what Iran is doing at Hormuz is illegal. The question is whether legality matters when the country with the geography has the missiles to enforce its position.

Bab el-Mandeb: Disruption Without Governance

At the southern entrance to the Red Sea, the Bab el-Mandeb strait offers the most recent — and most cautionary — precedent for what happens when a non-state actor attempts to control a chokepoint through force alone.

Beginning in late 2023, the Houthi movement in Yemen launched a sustained campaign against commercial shipping in and around the Bab el-Mandeb. The results were devastating to traffic: container shipping through the strait dropped by 90 percent. A total of 178 vessels were attacked. Four were sunk. The world’s largest shipping companies rerouted entire fleets around the Cape of Good Hope, adding weeks and millions of dollars to every voyage.

The Houthis demonstrated that a relatively small force with anti-ship missiles, drones, and sea mines can effectively close a major international waterway. What they did not demonstrate is how to profit from it. Revenue collected from the Houthi campaign: zero. Disruption is easy. Converting disruption into governance — into a sustainable, revenue-generating framework — is the hard part.

The Bab el-Mandeb crisis has now merged with the broader Iran war, creating a dual-chokepoint scenario that the global shipping industry has never faced. Ships rerouting around the Cape of Good Hope to avoid the Houthis at Bab el-Mandeb now find the alternative Persian Gulf route blocked at Hormuz. There is no easy detour when both doors are shut.

What Iran Is Attempting

Place these precedents on a spectrum. At one end: Houthi-style disruption, militarily effective but economically barren, generating headlines but no revenue. At the other end: the Danish Sound Dues and Turkey’s Montreux regime, durable frameworks that converted geographic control into centuries of income.

Iran is trying to leap from one end of that spectrum to the other.

The March 25 demand for “international recognition of sovereignty, including toll collection rights” was the opening bid. The April 7 toll legislation, passed by Iran’s parliament, formalized the framework domestically. These are not ad hoc measures. They are a deliberate attempt to establish the legal and institutional infrastructure for a permanent toll regime — to move from Houthi-style disruption to Denmark-style governance in a matter of weeks.

President Trump’s off-hand comment about a “joint venture” in the strait — widely interpreted as a willingness to negotiate over Hormuz transit rights — accidentally validated Iran’s framing. By engaging with the premise that the strait is something to be negotiated over, rather than a waterway protected by international law, the United States gave Tehran’s position more legitimacy than any UN resolution could.

The central question is whether military leverage can be converted into a durable legal framework. History suggests it can — but only under specific conditions. Denmark held the Øresund for four centuries because it controlled both shores and because the cost of military confrontation exceeded the cost of paying the toll. Turkey’s Montreux regime endures because it was established by treaty and gives all parties a reason to maintain it. Both models required either unchallenged physical dominance or multilateral agreement.

Iran has the first ingredient — physical dominance over the strait, at least in the short term. What it lacks is the second. No multilateral agreement is forthcoming. UNCLOS explicitly forbids what Iran is proposing. The United States, even in a negotiating mood, is unlikely to sign a treaty that recognizes Iran’s right to toll international shipping.

But the Montreux lesson cuts both ways. That treaty was signed because Turkey had already demonstrated, in the First World War and the Turkish War of Independence, that it would and could close the straits by force. The treaty did not create Turkey’s control. It ratified it. Iran may be betting on the same sequence: establish control as a fait accompli, and wait for the world to ratify it.

Whether that bet pays off depends on what Iran is actually proposing. In Part 4, we examine Tehran’s published 10-point plan for a Hormuz toll regime — the most detailed framework any nation has ever put forward for taxing an international strait.