Russia and other sanctioned nations are using lax flag rules in countries like Panama, Liberia, and the Marshall Islands to evade scrutiny. Elisabeth Braw reports in Foreign Policy:
The world’s top three ship-owning countries are China, Greece, and Japan. But the top three countries under which ships sail include none of these—nor fourth-ranked United States or fifth-ranked Germany. The flag league is instead led by Panama, Liberia, and the Marshall Islands. They are flag-of-convenience states, economically weak countries that allow vessels to register in their ship registry for a much lower fee than developed countries. The lower fee comes with less service—and less scrutiny—than traditional maritime states offer. Although the former has made flag-of-convenience states popular with countless vessels over the past decades, the latter is now making them extremely attractive to vessels seeking to get around Western sanctions against Russia. Such vessels have begun switching to flag-of-convenience states—or even taken to sailing under their flag without telling them.
And these overburdened maritime nations do little to remove the squatters. Rickety tankers that should be headed for the junkyard are instead roaming the world’s oceans, bringing oil from Russia and its fellow sanctioned nations, Venezuela and Iran, to China and other customers. And it’ll take a major crisis to force the problem to the surface.
“Shipping companies that are trying to get around sanctions are targeting really small registries that are privately managed,” Lloyd’s List Intelligence maritime analyst Michelle Wiese Bockmann told Foreign Policy. “Then they either falsely claim that their ships are flagged there because the country will do nothing about it, or they legitimately flag the vessels there and get the country to issue false company IMO numbers,” referring to the International Maritime Organization (IMO). Every shipping company has an identification number with the IMO. But if a shipping company or vessel doesn’t want to be recognized, then they can trick a flag state’s registry into using fake IMO numbers—and since flag-of-convenience states’ shipping registries are often poorly resourced, privately managed, or both, officials rarely spend serious time investigating IMO numbers. And shipping companies operating under a false IMO number can be traced only with extreme difficulty.
Shifting registries to avoid sanctions has been going on for a decade or so, ever since Iran’s state-owned oil company discovered that it could get around restrictions on its oil by having its shipping companies register their vessels with twin registries maintained by Tanzania and Zanzibar. (Zanzibar is now part of Tanzania, but the registries date back to the days when it was an independent state.)
Parking the Iranian tankers in the Tanzania-Zanzibar registry wasn’t exactly legitimate, since ships are not supposed to change flags simply to get around sanctions, but as Bockmann points out, “It was done with the knowledge of the privately owned company that manages the Tanzania-Zanzibar registry.” In fact, by registering its vessels in Tanzania-Zanzibar, Iran managed to continue exporting oil. Although traditional maritime states, such as Britain and Greece, comply with sanctions on goods that travel by sea, flag-of-convenience states are often laissez-faire regarding both vessels and cargo. And the world doesn’t have a maritime authority that can track every single vessel, especially if it changes its flag registration.
Now Russia has adopted Iran’s strategy. Today flag-hopping “is on steroids,” Bockmann said. “Iran started it. Venezuela copied it. And it turned out to be a perfect template for Russia.” Flag-of-convenience states—including Tanzania, Samoa, Nauru, Belize, the Cook Islands, Gabon, Palau, Kiribati, St. Kitts and Nevis, Sierra Leone, Cameroon, Guyana, Comoros, São Tomé and Príncipe, and Micronesia—all host such new arrivals.
Mysterious tankers sailing under the flags of unwitting or inattentive flag-of-convenience states are transporting enormous quantities of sanctioned crude: every day, an estimated 2 million barrels from Iran, Venezuela, and Russia. Most of the tankers are bound for China, which means that China single-handedly is undermining some of the West’s most potent sanctions against Russia. On the way, tankers often make port calls in other countries for refueling or other logistical purposes. “Shipping companies’ tactics have evolved along with United States foreign policy,” Bockmann said. “Ship-owners make billions of dollars shipping this oil and are willing to take the risk.” So far, the United States hasn’t held China to account—and Beijing would argue that it’s under no obligation to obey U.S. sanctions against Russia, Iran, Venezuela, or any other country. And neither the IMO nor any other authority seems eager to tidy up. An IMO legal committee is investigating—but its report is not expected until next year.
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