Good Company

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Wednesday, March 01, 2006

Flag of convenience

The Republic of Georgia may have some concerns over being a "flag of convenience":
According to basic estimates, 35 percent of the world's merchant shipping vessels are registered under flags which are different from their country of origin. In these cases there is no genuine link between the vessel's owner and the flag that the vessel flies.

For a variety of reasons - including tax breaks, cheap registration fees and the freedom to employ cheap labor - ship owners often find it lucrative to fly a flag other than that of their own country.

This practice is known as flying a "Flag of Convenience" and, although legal, it is generally associated with unethical practices and murky financial practices. For example, fishing boat owners who use a flag of convenience can ignore their home countries' conservation agreements.

Certain countries have taken advantage of this situation by marketing themselves as tax havens for ship owners. The perennially war-torn West African nation of Liberia, for example, has operated a flag registration since 1948 and now boasts a merchant fleet that is more than three times the size than that of the United States.

Georgia is one of thirty-two nations which appear on the International Transport Workers' Federation list of "flag-of-convenience" states. Perhaps proving the dubious nature of this practice, two landlocked countries - Bolivia and Mongolia - are also on this list...

...Because of this more-or-less officially sanctioned process of selling Georgian flags to certain maritime vessels it has recently become clear that a number of these ships, or their owners, are of suspicious reputation. Consequently, there are currently ships that are sailing under the Georgian flag that operate beneath commonly accepted safety standards, and which may engage in smuggling or other illegal activities.

All of this negatively influences Georgia's international reputation. According to a United Nations Office on Drugs and Crime report the "availability of a flag-of-convenience shipping registry" is one of the characteristics necessary for creating an ideal environment for money laundering.

According to Deputy Chairman of Georgian State Border Guard Department David Gulua, 730 ships that were sailing under Georgian flag were stopped for spot inspections by the Georgian Coast Guard last year.

"Plenty of ships sailing under Georgian flags have been detained. If Georgia's flag-bestowing process is not reformed and made more stringent then it's quite possible that, sometime in the near future, a ship flying under the Georgian flag could be used to transport an atomic bomb," Gulua warned in an interview with the newspaper Rezonansi.
At least, unlike some other countries, Georgia seems to have people concerned with the issue.

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