I ship you not

How is it possible landlocked countries can be players in a high seas game?

Shipping; hardly a topic for furious discussion, right? Well, consider this: The Mongolia Maritime Administration has 271 ships on its books. Not too shabby for a landlocked country. Welcome to one of the world’s most bizarre – and contentious – games of international commerce.

By law, ships, like cars, have to be registered before they can hit the open road…or seas. This is especially the case if they intend to travel internationally. But here’s the strange bit: unlike cars, ships don’t need to be registered in the country that has anything to do with where it is built, who owns it, who finances it, or who sits behind the wheel.

Because of quirks inherited from maritime history and the seeming reluctance of shipping nations to shift the status quo, a merchant ship (i.e. one designed to carry passengers or cargo) can be registered anywhere in the world. This concept is called an ‘open registry’.

Here’s the catch: wherever a ship is registered it is subject to the laws of that country. This is called its ‘flag state’. The ship sails under that flag, and carries that country’s name on its stern (the blunt bit at the back).

It all sounds very global, and many countries have stepped up to offer registration services, for a nice fee of course. Many of these services can even be done online. This is where things get a little dodgy. Countries offering their flag include North Korea, Myanmar, Moldova and Bolivia (both also landlocked), Panama and Liberia. In fact, the last two countries boast the world’s largest registries of ships.

Now think what that means: theoretically, a ship financed by a British bank, owned by a Greek company, built in South Korea, carrying cargo made in China bound for the United States, and manned by a South African crew, can traverse the seas subject to the laws of North Korea.

This is all very convenient for ship owners who may want to take advantage of another country’s rather ‘creative’ approach to, say, taxation or workers’ rights. This is why the concept of open registry is sometimes referred to as ‘flags of convenience’, especially by organisations keeping an eye on a game that sounds suspiciously ripe for change.

[This article originally appeared in the publication Fox Bytes and on the mindofafox Growing Foxes app in the week of 30 April 2018. Growing Foxes is a school strategic intelligence programme designed by mindofafox. It is being piloted in a number of leading schools in the UK and South Africa. The app serves to support those students currently engaging with the programme. Click on the logo to find out more]

Image: Pixabay