Maritime security expert weighs U.S.-Iran deal's impact on global shipping

Amna Nawaz:

For more on what this deal would mean for global shipping and the Strait of Hormuz, I'm joined by Ian Ralby. He's a global maritime security expert, president of Auxilium Worldwide, and a senior fellow at the Center for Maritime Strategy.

Welcome back to the "News Hour," Ian.

Let's just start with what's happening right now. President Trump posted earlier today that ships are starting to move out of the Strait of Hormuz. Does that line up with what you're seeing and hearing?

Ian Ralby, President, Auxilium Worldwide:

I'm afraid not.

It has been a very, very slow trickle. We see about 15 to 20 ships move through a day, often very clandestinely. And that hasn't really changed. There's no discernible uptick at this time. And I think that's probably going to stay the case throughout this week.

Amna Nawaz:

Well, we just heard Liz report there we have not yet seen the text of this deal between Iran and the U.S. It's expected to be signed on Friday. President Trump is already saying that the deal will fully reopen the strait.

Is that reassurance enough for global shipping agencies and insurance companies to bank off?

Ian Ralby:

Well, we have heard a lot of very exuberant announcements over the last 3.5 months, most of which have proved not to have a huge amount of content to them.

So I think global shipping can't run on narratives. It has to run on reality. And, unfortunately, the reality is still quite uncertain. And, in fact, the discord between the U.S. and Iran over what is actually supposed to be in that agreement and what's going to happen vis-a-vis the strait remains very confusing.

The president has announced no tolls. Iran says, yes, no tolls, but there will be service fees, which sounds like a toll by another name. So it is very confusing. And until there's clarity, certainty and consistency over more than just a few hours, the shipping industry is likely to stay put, because we're not talking about some kind of political or wider narrative.

We're talking about people on ships carrying millions of dollars worth of goods. The catastrophic effect of losing them, both in terms of life and in the environment, is just too much to risk.

Amna Nawaz:

Say more about those potential tolls, because if the Iranian officials do try to impose some kind of fee or toll, would companies pay that? I mean, what are they telling you about that?

Ian Ralby:

Well, thus far, we have seen some companies willing to pay, because, to be honest, the payment of the toll for the short term seems like a better option than being stuck in the long term.

But there's a couple of problems. Number one, the Iranians keep saying that they're operating the Persian Gulf Strait Authority, a bureaucratic construct that they have put together to administer not just the toll or fee, as they're now calling it, but some kind of administrative passage requirement, where you either are allowed or not allowed to come through.

And that sort of discretion to discern which ships are and aren't allowed is not at all consistent with the concept of freedom of navigation which governs international straits.

And so this is not only challenging for discerning what to do in this situation, but it sets a potentially dangerous precedent for other parts of the world where we see maritime choke points starting to potentially think along these same terms if Iran is allowed to do this. International law is very clear, this is not legal, but international law is made by states.

And if states start to agree to this through their flag state responsibilities, as well as through not protesting it, unfortunately, it becomes legal. And so other places like the Strait of Singapore, Malacca, other critical choke points like the Suez Canal and Panama Canal all become subject to potential increased economic pressures, which would put pressure on everything, not just energy supplies, but all of our goods.

Amna Nawaz:

There's still so much uncertainty about what's in this deal and how it will unfold.

As we mentioned earlier, Iran's still demanding that Israeli forces leave Lebanon as part of that deal. How are the shipping sources you're talking to looking at that and how worried are they that this entire deal could fall apart?

Ian Ralby:

Very.

I mean, look, we actually really don't have a deal. What we have is an MOU. An MOU is a memorandum of understanding, which is inherently nonbinding. And it was agreed on Monday. It's supposed to be signed on Friday. That alone provides a window for all kinds of confusion and potential recrimination, as well as backing away from it.

Even if it's signed as it stands today, there's a 60-day window, from what we can understand, to negotiate the details. Now, this conflict has been going on for 3.5 months. Sixty days is a very short period of time, given how difficult it's been to get a nonbinding, pretty basic framework MOU.

So to think that all the nuclear details, the maritime details, are going to be worked out in 60 days without any current visibility as to who the expert technical negotiators will be remains very, very uncertain. And so I think there's a confidence issue that is building up in the global maritime community, because the president has made lots of bold statements.

Iran's made lots of bold statements. And, unfortunately, the reality hasn't changed very much since the first week of this war for most of the ships. They're still in danger. They're not moving anywhere. And it's very difficult to discern how to move forward.

And even if the shipping industry feels better, there's still a couple of issues. The concern around mines is real. And that will require an overt, above-the-water, very clear, open countermining effort in order to ensure that the strait is clear. And that will take between three weeks and 60 days.

And so that puts a timeline constant with the actual negotiations before this week, until they're fully confident that the strait would be safe in order to even think of a mass exodus. But, as you say, the uncertainty is really problematic.

And, unfortunately, shipping needs a great deal of certainty in order to be able to be calmer. The other side of it is the insurance sector. And that is unlikely to change any time soon.

Amna Nawaz:

So, in the minute or so I have left, I feel like I have to ask you this every time we talk as the timelines and the news events shift.

But if there's a deal signed on Friday, and if it then enters the 60-day negotiation period, what are you and others in the industry preparing for in terms of a timeline of when those global trade routes could get back to some kind of normal?

Ian Ralby:

Well, if all the variables are taken off the table and everything goes smoothly, which nothing thus far has, we're still looking at, as I said, three to six weeks -- three weeks to 60 days in order to do the countermining operation to make sure the strait is physically safe.

If no attacks occur during that time, and if ships start moving out, we will start seeing an uptick in economic activity. But, even having said that, it will take several weeks for Qatar to get back up to 80 percent of its capacity on gas and five years to get back to 100 percent.

So we're looking at a long-term time frame before we see the resumption of the full amount of maritime trade that was occurring before this war started on the 28th of February.

Amna Nawaz:

All right, that is Ian Ralby, president of Auxilium Worldwide.

Ian, thank you so much. Good to speak with you.

Ian Ralby:

Always a pleasure.