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Murky world of international shipping
CNN Online
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 reregister 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.
Registration decisions are mostly driven by commercial reasons.
"One way to reduce costs is to choose a flag like Mongolia,” Roe said. "It's got no coast, no ports, no real direct relevance to shipping, but it offers a flag that's cheap and low standards, therefore it is good for shipowners."
According to the United Nations Conference on Trade and Development, 265 vessels with a total cargo capacity of 664 million tons are sailing under the Mongolian flag.
It works the other way too. Greece, a shipping superpower that owns the largest fleet in the world, is sailing most of its ships under a foreign flag, because shipowners want to avoid Greece's high tax rates.
But the flag decision can have a huge impact on crews. Stena Impero, the Swedish-owned tanker that was seized in Iran last week, was almost certainly targeted because if was flying the British flag.
Iran captured the vessel as a tit-for-tat after its own tanker was detained in Gibraltar because it was carrying Iranian oil to Syria in breach of ELI sanctions.
The crew aboard Stena Impero comes from India, the Philippines, Russia and Latvia. It's a fairly typical makeup: India, Russia and the Philippines are among the top five countries with the highest numbers of seafarers.
International Transport Workers' Federation (1TWF) has been
campaigning against flags of convenience for decades, saying the practice puts crews at risk of exploitation.
When a ship registers with a country, it assumes its nationality and becomes governed by that state's laws. In return, the country is theoretically responsible for the vessel and its crew regardless of their nationalities.
But David Heindel, the chair of the seafarers section at ITWF, said seafarers sometimes find it difficult to get help from their vessel's flag state if they are not its citizens. That is especially true when the flag belongs to a developing country with little diplomatic power and no real labor protections.
At the same time, Heindel said, the diplomatic missions of the seafarers' own countries may not be able to help either. It may be their citizens who are involved, but they have no power over the vessels.