LONDON, England (GEMINI NEWS) — “It means ‘fear’ – the Flag of Convenience means fear for the seafarer,” says John Sansone, director for the Flags of Convenience Campaign at the International Transportation Federation (ITF) in Washington.

“We’ve been fighting Flags of Convenience for 50 years. There’s been no change — except that the industry has become more deplorable,” he deadpans.

Now the ITF may have a major ally in its fight against the industry. The United States has done an amazing volte-face on its long-time support for Flags of Convenience and is considering legislation to make it harder for such ships to dock at American ports. The reason: counter-terrorism.

Flags of Convenience, or FOCs, have long been a way of doing business on the high seas — opposed tooth and nail by international transport unions. The FOCs allow individuals and shipping companies to register their ships in countries other than their own — making them subject to the laws of that country, usually a place with lax safety regulations, measly minimum wage controls, and of course, big tax breaks.

In addition, registering ships in places like Cambodia, Liberia or Panama allows shipping companies to keep the ships’ owners concealed. This dangerous combination has resulted in decrepit ships, suspect business deals, and millions in unpaid wages.

“There’s too much under-the-table business – too much underhandedness going on in the industry,” Sansone told Gemini News Service.

The ITF has been the loudest voice in calling for the FOC countries to open up their books and become more accountable. As the leading advocate for seafarers working on FOC ships, they have managed to retrieve over $25 million in unpaid wages over the years.

“They need to take away the corporate veil that hides the industry,” Sansone says.

But that step, he admits, will probably never happen. FOCs have a storied history in developing the shipping industry in the 20th century. Panama was the first to announce an ‘open registry’, the term for a country’s FOC operation. By taking lower taxes and allowing cut-rate wages, Panama took a large slice of the British, American and Chinese shipping business.

Through the years, Panama has always been at the top of the list when it comes to FOC shipping. Panamanian registered ships are also consistently among the worst maintained, and most likely to be lost at sea – a product of the scant safety regulations.

Not everyone believes Flags of Convenience deserve such a shady reputation. Konstantinos Chryssoulis, managing director of Flags of Convenience, SA – an open registry service operating out of Cyprus, says the business has cleaned up its act.

“We are responsible to the public, to ship owners and to seafarers,” Chryssoulis said. “In the past there were abuses, and we have to accept that, but that’s all changed now.”

According to the ITF, 46 per cent of all shipping losses in 1997 came from ships registered among eight FOC countries – a safety record that earned FOC ships the nickname ‘floating coffins’. But Chryssoulis maintains FOC registration business can operate effectively and safely.

“We no longer accept ships that are old, or have poor safety records. But at the same time, a ship that is old and well maintained is better than a new ship that is not,” he says.

The latest push for opening up the secret world of FOCs has come from America – but not because of concerns over shipping losses or safety standards.

“The worry is that it is so easy to come up with a scenario to allow terrorists to operate a fleet of ships, and you could never find out who actually owns them,” Sansone says. “It is a good possibility that the next terrorist attack could come by ship.”

Aware of that threat, America went to the United Nations’ International Maritime Organisation (IMO) in April saying they wanted to see a more transparent FOC business. It is an about-face for America, which was largely responsible for jump starting the FOC industry in the first place. By creating an open registry in Liberia for American oil tankers in the 1940s, America set off other countries offering their flags for use by foreign ship-owners.

In the 1950s the Americans lobbied for IMO voting powers to be allocated by registered shipping tonnage – which means FOC countries like Liberia and Panama have a lot of power. It also means it is unlikely many of the most powerful voices in the IMO will support proposals that would threaten their shipping income.

But American lawmakers are so concerned about the possibility of hunted terror suspect Osama bin Laden controlling untraceable ships they may ignore the IMO process altogether, experts say. In January, a group of American senators submitted a bill, as a counter-terrorism measure, to the House of Representatives outlining security procedures that would make it nearly impossible for FOC-registered ships to dock in American ports without a laborious investigation.

For those genuinely concerned about the future of the shipping industry, there needs to be consensus on how to best solve the crisis that FOC registration has caused.

“The best thing that could possibly happen would be that the IMO would come out and say ‘we’re all going back to the national flag’,” argues Sansone. “Or, open registries have to be regulated by an organisation with teeth.”

But Chryssoulis says the FOC business is viable and improving on its own, without new laws and interference from governments. “The business climate has become such that all people are more responsible now,” he claims. “It is a competitive business, you know.”

For the Americans, however, promises of “responsibility” and improving the safety records will do nothing to shed the spooked feeling of 9/11. For the ITF’s John Sansone, it is all the more reason to continue the campaign against FOCs.

“It’s sad that the greatest contribution [to fighting FOCs], unfortunately, could come from the events of September 11,” he says.

About the Author: CHRISTOPHER LANE is a Canadian journalist working with Gemini News Service in London on an Internship from the University of Regina, Saskatchewan.