Flags of inconvenience: noose tightens around Iranian shipping; Ship's flag can help its owner keep costs down. But for the crew, it can be a nightmare

Flags of inconvenience: noose tightens around Iranian shipping
Jonathan Saul, Parisa Hafezi, Marianna Parraga JULY 26, 2019 The ship carrying 2 million barrels of Iranian crude was seized by British Royal Marines off Gibraltar, raising tensions in the Gulf where Iran detained a UK-flagged ship in retaliation.

Grace 1 remains impounded, not because of its flag but because it was suspected of taking oil to Syria in breach of EU sanctions, an allegation that Iran denies.

Yet Panama’s move on May 29 to strike it from its register mid-voyage was part of a global squeeze on Iranian shipping.

Nations that register vessels under so-called “flags of convenience” allowing them to sail legally have de-listed dozens of tankers owned by Iran in recent months, tightening the economic noose around it.

In the biggest cull, Panama, the world’s most important flag state, removed 59 tankers linked to Iran and Syria earlier this year, a decision welcomed by the United States which wants to cut off Tehran’s vital oil exports.

Panama and some other key flag states are looking more closely at the thousands of ships on their registers to ensure they comply with U.S. sanctions that were re-imposed against Iran last year and tightened further since.

A Reuters analysis of shipping registry data shows that Panama has de-listed around 55 Iranian tankers since January, Togo has de-listed at least three and Sierra Leone one.

That represents the majority of its operational fleet of tankers, the lifeblood of the oil-dominated economy, although Iran may have re-registered some ships under new flag states.

When a vessel loses its flag, it typically loses insurance cover if it does not immediately find an alternative, and may be barred from calling at ports. Flags of convenience also provide a layer of cover for a vessel’s ultimate owner.

International registries charge fees to ship owners to use their flags and offer tax incentives to attract business.

LONDON/DUBAI/PANAMA CITY (Reuters) - Somewhere on its journey from the waters off Iran, around Africa’s southern tip and into the Mediterranean, the Grace 1 oil tanker lost the flag under which it sailed and ceased to be registered to Panama. Iran later claimed it as its own.

The ship carrying 2 million barrels of Iranian crude was seized by British Royal Marines off Gibraltar, raising tensions in the Gulf where Iran detained a UK-flagged ship in retaliation.

Grace 1 remains impounded, not because of its flag but because it was suspected of taking oil to Syria in breach of EU sanctions, an allegation that Iran denies.

Yet Panama’s move on May 29 to strike it from its register mid-voyage was part of a global squeeze on Iranian shipping.

Nations that register vessels under so-called “flags of convenience” allowing them to sail legally have de-listed dozens of tankers owned by Iran in recent months, tightening the economic noose around it.

In the biggest cull, Panama, the world’s most important flag state, removed 59 tankers linked to Iran and Syria earlier this year, a decision welcomed by the United States which wants to cut off Tehran’s vital oil exports.

Panama and some other key flag states are looking more closely at the thousands of ships on their registers to ensure they comply with U.S. sanctions that were re-imposed against Iran last year and tightened further since.

A Reuters analysis of shipping registry data shows that Panama has de-listed around 55 Iranian tankers since January, Togo has de-listed at least three and Sierra Leone one.

That represents the majority of its operational fleet of tankers, the lifeblood of the oil-dominated economy, although Iran may have re-registered some ships under new flag states.

When a vessel loses its flag, it typically loses insurance cover if it does not immediately find an alternative, and may be barred from calling at ports. Flags of convenience also provide a layer of cover for a vessel’s ultimate owner.

International registries charge fees to ship owners to use their flags and offer tax incentives to attract business.

Ship's flag can help its owner keep costs down. But for the crew, it can be a nightmare
Ivana Kottasová July 28, 2019

(CNN)A British-flagged ship owned by a Swedish company was seized by Iran last week. Caught in the middle are 23 seamen who have nothing to do with any of the three countries.

The current crisis in the Strait of Hormuz has put a spotlight on the murky world of international shipping, where shipowners can register and re-register their vessels within minutes, turning their crews into pawns in a game of diplomatic chess.

"If you've got a credit card, and you've got 15 minutes, you can re-register your ship under any flag you want," said Michael Roe, a professor of maritime and logistics policy at the University of Plymouth.

Under marine laws, every merchant ship has to be registered with one country. While the UN Convention on the High Seas says a vessel should have "a genuine" link with its flag state, current rules allow ships to sail under almost any flag regardless of their ownership, as long as they pay the registration fee. This is known in the shipping industry as a "flag of convenience."

That roughly 40% of the global fleet is registered in Panama, Liberia and the Marshall Islands -- three countries that together own just 169 ships -- shows how common the practice is.

"Without being too insulting, these are totally irrelevant countries when it comes to shipping, except they've got cheap flags with low standards of regulation," Roe said.

more....https://edition.cnn.com/2019/07/28/middleeast/seized-tanker-crew-shippin...