/ 26 January 2018

Tanzania’s flags of inconvenience

'According to international law
'According to international law

The Andromeda has seen better days — the cracked deck and inoperable lifeboats attest to that.

The cargo ship is one of thousands of rusty, nondescript vessels that are the backbone of the global economy, transporting goods from one part of the world to another. It has been a working ship since 1979, when it began life in the merchant fleet of the Soviet Union, flying the communist hammer and sickle above its bridge.

Now the Andromeda flies a different flag. In February last year, it was registered as a vessel of Zanzibar, the semi-autonomous island off the coast of Tanzania.

It is surprisingly easy for ships to become Zanzibari. Until earlier this week, the island’s maritime registry was infamous for offering “flags of convenience” (FOC). For a few hundred dollars a year, and usually without ever having seen the vessel, and without asking its owners too many questions, the registry will allow ships to sail under the Zanzibari or Tanzanian flag.

For ship owners, this is a great deal, allowing them to avoid the tough regulation and scrutiny that comes with being registered in places like Europe or the United States. And for Zanzibar and Tanzania — and the many other countries that offer similar services — the arrangement brings in a steady stream of foreign currency.

It’s a win-win situation — until something goes wrong. On January 8, the Andromeda was off the coast of Crete when she was boarded by the Greek coast guard. Their routine inspection uncovered a far-from-routine cargo: 29 shipping containers stuffed with 410 tonnes of ammonium nitrate, along with the detonators necessary to turn the chemical into a powerful explosive.

The ship’s eight crew members were arrested. Greek authorities believe that they were transporting the explosives to Libya, which is in the middle of a civil war.

The Andromeda is not the only Tanzanian vessel to have run into trouble recently. Most notably, in the Caribbean, off the coast of the Dominican Republic, the Zanzibar-registered oil tanker Kaluba was intercepted with 1 570kg of pure cocaine in its hold. North Korean and Iranian ships have also used the Zanzibari flag to get around economic sanctions.

In the wake of these incidents, Tanzanian President John Magufuli this week announced a dramatic change of policy — with immediate effect, Tanzania has suspended the registration of foreign-owned ships. In addition, he ordered security forces to investigate all 470 foreign-owned ships that fly the Tanzanian flag.

“When they were registered, they signed declaration forms that the marine vessels would never be involved in illicit drug trade, ship weapons or be used for human trafficking.

‘‘So, the fact that they have been seized for these very reasons, it means that the owners violated the laws,” Vice-President Samia Suhumu Hassan said.

Timothy Walker, a maritime security expert at the Institute for Security Studies, said: “When it comes to Tanzania, this has been a long time coming. Their flag has been exploited by foreigners trying to get round sanctions and trading restrictions.”

It’s not just Tanzania

Thirty-five countries offer flags of convenience, according to the International Transport Workers’ Federation (ITF), which leads the campaign against flags of convinience. Absurdly, three of these countries are landlocked: Bolivia, Moldova and Mongolia.

Panama is the most popular flag of convenience, with more than 8 000 registered vessels, and it is estimated to earn more than half-a-billion dollars from its shipping registry.

Liberia has the second-largest registry with 3 185 ships, representing more than 11% of the world’s total shipping. “The ITF believes there should be a genuine link between the real owner of a vessel and the flag the vessel flies,” the federation said in a statement. “Flag of convenience registries make it more difficult for unions, industry stakeholders and the public to hold ship owners to account. In many cases, the registries themselves are not even run from the country of the flag.”

The ITF said flags of convenience allow ship owners to take advantage of their crew.

“Seafarers who are employed on FOC ships are often denied their basic human and trade union rights since FOC registers do not enforce minimum social standards. This is what makes the flag so attractive to shipowners.

“The home countries of the crew can do little to protect them because the rules that apply on board are often those of the country of registration. As a result, most FOC seafarers are not members of a trade union. For those who are, the union is often powerless to influence what happens on board.”

Shipping countries, naturally, are reluctant to tackle the issue, knowing that their running costs would increase substantially if they had to register in their home countries.

And, with the notable exception of Tanzania, countries that offer flags of convenience are not interested in changing such a profitable system.

Compounding the problem is that representation on international shipping bodies like the International Maritime Organisation is determined by the number of ships represented by each country: the likes of Panama and Liberia, therefore, have a greater say in decision-making than real shipping powerhouses like China and the US.

“Shipping is a very powerful industry and there is a reluctance to change how it is set up,” said Walker.

What is a flag of convenience?

According to international law, all ships must sail under a national flag. Some countries allow ships to use their flag even if they have no physical connection to it. These are called flags of convenience.

Why do ships use such flags?

Flags of convenience allow ship owners to avoid onerous and expensive regulation that might be applied by their home country.

A ship registered in the United States, for example, must adhere to strict labour laws and environmental protections. These don’t necessarily apply in other jurisdictions, such as Liberia or Panama, allowing owners to cut costs dramatically.

In addition, smugglers often exploit the lack of accountability offered by flags of convenience.

What’s in it for countries?

To register, ships must pay an annual fee. Although not much — usually a few hundred or thousand dollars — these fees are an important source of foreign currency for the governments involved.
— Simon Allison