DEATH SHIP SCANDALS The following article was published in "The Guardian", newspaper of the Communist Party of Australia in its issue of Wednesday, March 17th, 1999. Contact address: 65 Campbell Street, Surry Hills. Sydney. 2010 Australia. Phone: (612) 9212 6855 Fax: (612) 9281 5795. Email: <[EMAIL PROTECTED]> Webpage: http://www.peg.apc.org/~guardian Subscription rates on request. ****************************** by Rowan Cahill* The much praised glories of free trade and globalisation are alive and well on the oceans of the world. Flag of Convenience (FOC) shipping is a portent of the deregulated, open market, global future. Ships plying the world's trade routes have to be registered with a national authority (a flag state); standards and responsibility are meant to be involved. However, Flags of Convenience involve the opportunistic registration of ships with national governments that do not impose or effectively administer agreed international standards regarding seaworthiness, safety and health, officer and crew competencies, and employment conditions. For the governments concerned FOC shipping is an easy way to make money. Registration comes at a price in return for turning a blind eye to maritime responsibility, decency and common sense. The classic FOC host has little to do legitimately with the sea and seafaring. For owners of FOC ships, often hidden in corporate mazes and having little to otherwise do with the registering authority, the device is a way of increasing profit margins or turning quick profits. With modern off-shore investment and accounting techniques it is possible some FOC owners do not even realise they are in fact shipowners. The FOC scam enables owners or their representatives to avoid human responsibility generally, and trade unionism, taxes, maintenance costs, and capital reinvestment programmes specifically. In the worst cases FOC vessels are structurally weak "rust buckets". Vermin ridden and unsanitary, they are brutally run with untrained crews working as virtual slave labour. Overall, FOC shipping accounts for more than half of the ships lost world wide, and is responsible for the majority of major collisions. In the FOC world it is no big drama when a vessel sinks, or otherwise comes to grief through fire, collision, or grounding. Replacements are cheaply available on international second hand markets, and from ship breakers; paint, canvas, timber and cosmetic welding can hide a multitude of sins. Cargoes are covered by insurance. As for crews, usually desperate and frightened non-unionised Third World workers, if they are injured or drowned they can be replaced from the huge pool of similar workers struggling to make a pittance. The FOC phenomenon had its origins prior to World War II when American shipowners moved off-shore to Panama and Honduras to escape maritime trade unionism and negotiated agreements. By 1939 just over one per cent of the world's gross registered tonnage of shipping was under FOCs. After the war the process escalated. More countries offered FOC registration. By 1990 there were 16 main players, with Liberia and Panama the most important, and notably enjoying a special relationship with America. Other FOC hosts include the Antilles, Bermuda, the Cayman Islands, Gibraltar, Honduras, Malta, Vanuatu. Liberia, for example, went from having two small ships in 1948 to having the world's largest fleet by 1980. This incredible growth was due primarily to complete freedom from taxation on profits; to American oil interests; and to the corporate involvement of the United Services Life Insurance Company (USLICO) based in Arlington, Virginia, and before that the Washington International Bank, the former's parent company, swallowed by its offspring in 1986. Aside from maritime interests, USLICO had global holdings in banking, insurance, real estate, and data processing. Some nations, like Greece, jumped on the bandwagon and acted in a FOC-like way. Maritime controls regarding seaworthiness and standards were weakened. Taxation was eased, and preferential credit schemes introduced. As a result Greek shipowners remained in Greece and prospered, while foreign shipowners seeking FOC type advantages went off- shore to Greece. The result was Greece became one of the world's largest shipowning nations, with 10 per cent of total world tonnage under its flag by 1980. This was also the world's most unsafe commercial fleet. Others were cynically creative. France, for example, while maintaining the integrity of its national shipping register, opened a laxer option in 1986 in its Antarctic territory Kerguelen. Boasting a research station of 100 people, a hostile climate, minimal port facilities, and a general inaccessibility to shipping, this island had 39 ships on its register by 1990. FOC control of the world's shipping tonnage now stands at over 50 per cent. In terms of actual ships this is about a fifth of the world fleet, but most of the big bulk carriers and oil tankers operate under FOCs. As the FOC phenomenon mushroomed, there were consequences. Nations that abided by traditional maritime conventions were disadvantaged by FOC competition. Because it was cheaper, corporations increasingly chose the FOC option to move imports and exports. Capital that could have bolstered and developed national fleets made its way off-shore from traditional maritime nations; America became the biggest FOC stakeholder. Coupled with the impact of post-war technological change in the maritime industry, the result was that legitimate national commercial fleets declined; ship building, maintenance and repair facilities tended to scale or wind down, as did the infrastructures supporting all of these, including specialised education and training programmes. The process was exacerbated from the 1960s onwards as economic rationalist philosophies took hold and idealised visions of the open market place were extolled. The high cost of modern maritime technology further contributed, the FOC option allowing expensive ships to be used well past their use-by dates. By the turn of this century the average age of the world's commercial fleet will be 20 years old. Arguably this will be okay if ships have been carefully maintained; but in these days of "bean counting" economics, corners are being cut. Besides, the safe commercial life span of a modern ship subjected to a wide range of ports, cargoes, stresses and strains, is around 15 years. Humans can circumvent and ignore maritime understandings and safeguards that have evolved to the benefit of seafarers and shipping since the late 19th century. However the power and unpredictability of nature remains. The issue of seaworthiness aside, in the world of FOCs nature gets a helping hand from negligence, untrained crews, and officers and skippers with fraudulent credentials. Statistics suggest that 18 per cent of personnel shipping out in the world today are untrained. World wide between 1988 and 1991, 47 FOC registered bulk carriers sank. The major cause was structural failure. Three hundred and eighty-one lives were lost, along with 2.6 million tonnes of cargo. Seven of these vessels went down off the West Australian coast after loading iron ore. FOC ships are also notorious polluters. They discharge chemical and oil wastes, and contaminated water, straight into harbours when in port; their hulls can host exotic maritime parasites. Oil and chemical tankers are accidents waiting to happen. In July 1991 the huge bow section of the Greek registered tanker "Kirki" simply fell off 55 miles off the West Australian coast. En route from the Arabian Gulf to Australia, "Kirki" carried 82,660 tonnes of crude oil. As tankers use passages through the Great Barrier Reef, this area is constantly at risk, and there have been recent close calls. Pressure from FOC shipping, in conjunction with Federal Government failure to help the Australian shipping industry with much needed fiscal reforms over the years, have contributed to the decline of Australian shipping. To some extent Australia is protected from the full FOC menace. Coastal trade is regulated by the practice of cabotage which restricts trade to Australian ships, crews, and conditions. Thirty-two countries have similar legislation. However, the shipping reform agenda of the Howard Government favours deregulation, and the opening of all Australian trade to foreign shipping, manning agents, and crews. Amendments to the Navigation Act (1912), now before Parliament, are a step in this direction. They have been described by Maritime Union of Australia (MUA) National Secretary John Coombs as "yet another ploy to replace MUA workers with non union workers, perhaps, in this case, even with Third World guest workers". * Rowan Cahill is a labour historian and co-author of "The Seamen's Union of Australia 1872-1972: A History" and long-term left-wing activist. 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