December 05, 2021
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The Liberia Maritime Program – an Abridged History Featured

By Gola Traub

Telling a long, serpentine but successful story in an abridged form tends to prove challenging, intimidating, if not plainly impossible. This piece, however, attempts to do just that – narrate Liberia’s maritime story in a truncated form – a brief history that covers the evolution of the Liberia Open Registry from 1948 to 2011. (2012 up to 2019 – and the “best way forward” will be tackled in the next edition of the Marine Monitor.)

To tell the story of the Liberian Registry is to tell the stories of the Panamanian and the Marshallese registries, for these three small developing countries that have become major maritime states have an extraordinary oceanic history to recount – a narrative that is conjoined and dreadfully difficult to decouple.

The wealth of literature on the open registry mode of maritime transport can be traced back to the sinking of RMS Titanic in 1912. For many years, that horrible accident made safety at sea and the general welfare of seamen the front and center of political and economic discussions in Europe and the United States.

It is generally believed that the fervent fear brought on by the death of so many people (1,500 passengers and crewmembers) and the fierce and hot debates that followed in the American Congress, gave rise to the birth of the American Seamen’s Act of 1915.

This detailed Act is recognized globally as the Magna Carta of seamen’s rights and welfare, for it was crafted to seek and promote the working and living conditions of mariners. 

Before the Titanic mishap, sailors were viewed as among the most disadvantaged and exploited lot in America’s labor market. The Seamen’s Act gleaned some unintended consequences, however. Almost at once, it created additional labor overhead costs for shipowners. In other words, American mariners had become too expensive overnight.

Moreover, the passing of this Act coincided with the American government’s decision to dispose of the so-called Liberty Ships - thousands of government-owned ships that were built to support America’s efforts during the global wars.

Accordingly, almost instantly, American shipowners had a twin problem. They had to deal with all the negative impacts of surplus ships (i.e., too many ships chasing fewer and fewer merchandise) while struggling with very high labor costs. This was a double whammy indeed.

Something had to give. Nevertheless, it was not until in the 1920s when some countries decided to create open registries that American shipowners got some relief. The first state to create such a registry was Panama, followed shortly afterward by Honduras and later Liberia.

Teddy Roosevelt and the Panamanian Registry 

Not very long ago, there was no such thing as the Republic of Panama. Panama was once a province of Colombia. In 1902, during what is known as the One Thousand Days War in Colombia, President Theodore Roosevelt, an ardent believer in sea power, threw America’s financial and military muscles behind a rebel group that wanted to secede from Colombia. It is probably safe to argue that the Panamanian Independence Movement was formed at the behest of the US. 

A year later, with the open and fervent support of the US government, the province of Panama broke away and issued a declaration of independence from Colombia. The US was the first country to recognize the nascent republic - and almost at once, it sent troops to prevent the Colombian Armed forces from reestablishing control.

America became very obliging with financial aid to Panama’s development, as it wanted to build the all-important Panama Canal.

That year, 1903, the United States and Panama signed the Hay-Bunau-Varilla Treaty, which established the Panama Canal Zone and the subsequent construction of the world-famous maritime chokepoint. The treaty allowed the Americans to control the Canal Zone and it gave them the right to have military bases in Panama - arrangements that would come to haunt them.

Along with this diplomatic recognition came the former’s passive support for the latter’s maritime program. The transfer of vessels to the young nation’s registry started with two American cruise vessels, with the Belen Quezada being the first to do so in 1919.

 This was during the prohibition period, a time in the United States in the early 1920s when there was a ban on the production, importation, transportation, and sales of alcoholic beverages.

More voyages of this nature followed as shipowners sought to avoid higher labor costs and regulations geared at improving the welfare and general working conditions of American seafarers.

However, the Panamanian registry grew rather slowly and only gathered pace in late 1924 after the sale of the Liberty Ships. Even after that, ship rates were subdued for a long period because of the oversupply of ships.

 Total Ships and Tonnage under Panamanian Registry, 1924-1939

Graph Maritime                                           Source: Rodney Carlisle, Sovereignty for Sale, 1981

 Political Crises and Anti-Americanism Upend Panama’s Growth

As the fleet grew, Panama had an excellent position in the money market as it competed for loans. Hence, the country’s fleet increased tremendously between 1945 and 1948. Political crises, however, put an end to that. 

Just about this time, in December 1947, to be exact, Panamanian politics entered a period of erratic change and began to show serious signs of political instability and growing anti-Americanism.

Panama City, the nation’s capital, experienced vehement student protests. The students clashed with the National Guard and stirred up anger over a proposal to extend for thirty years American control of the bases. The protests took on a savagely ferocious anti-American tone.

In 1948, the presidential election created further turmoil and instability in the country. Within a week the following year (November 1949), Panama had three presidents.

Partly because of the rancorous political situation and the fierce anti-American threats that came with it, and partly because the canal treaty had become a source of conflict between the two countries, American shipping companies and shipowners began looking around for an alternative to the Panamanian registry. 

Essentially, these uncertainties coupled with what were considered as high consular fees gave rise to a need to find an alternative to Panama’s shipping registry, bringing about a realignment of tonnage allocation and the shifting of “business goodwill” from Panama’s offshore registry to Liberia’s.

In short, that is why Panama lost its first-place position to Liberia.

Before discussing Liberia more broadly, it is worth noting here that at one time or another, other small states, Honduras, Somalia and Cyprus, for example, emulated Liberia and Panama, with little success.

For this reason, in highlighting the origin of the Liberian maritime flag, this article limits itself to Liberia, Panama and the Marshall Islands, the three most successful open registries.

Total Ships and Tonnage under Panamanian Registry, 1924-39

LiMA g1                            Source: Rodney Carlisle, Sovereignty for Sale, 1981

A Bright Star Emerges

Given that the founders of the Panamanian registry had little historical awareness of how to run an efficient open registry, the country’s original procedures and systems (from 1919 to 1949) developed largely without conscious planning.

In 1948, under the Tubman Administration, a group of American executives and political leaders, headed by Edward R. Stettinius Jr, former US Secretary of State set out to improve on Panama’s unplanned, unsystematic, self-evolved system – and created a maritime transportation business that was tailor-made to meet the needs of modern United States shipping necessities. This was after he secured a flexible concession for the development of the Liberian economy.

Indeed, this new ocean business set up by these men was purposely structured to be a registry that was far more efficient, effective and responsive than the undesignedly structured Panamanian one.

LiMA g2                                   Source : DeSombre E., Flagging Standards, 2006

The rise of Panama and Liberia, two small developing countries as major maritime states has been extraordinary. Right from the start, these two countries had several specific attractions for US shipowners not found in other countries, attractions that made it tempting and easy for Americans to do business with them. For example, typically, many Americans held that Panama had a special relationship with the US, for while Panama was officially sovereign, it had been created by Washington’s intervention, just as they thought Liberia had a very special relationship with the US, given its founding history.

Very early on, with cardinal offices in the United States, both countries enacted liberal maritime laws and offered incentives aimed mainly at attracting American companies.

Nearly all ships in their registries were American. Using these nascent offshore registries enabled American shipowners to use relatively cheap foreign labor.

Controlling the transportation of resources from far-flung parts of the world to mainly Europe and the US itself gave the Americans primacy in the bulk sector in the 1950s and the 1960s, as local and international consumption of these resources increased tremendously.

In like manner, American-owned vessels sailing under the Liberian and Panamanian flags transported massive amounts of American products globally, especially to Western Europe, where they were needed to rebuild the continent.

Panama and Liberia go head-to-head

The open registry business is an intensely competitive business, as the below graphs indicate.

LiMA g3

                         Source: Source: Rodney Carlisle, Sovereignty for Sale, 1981

LiMA g4

                                                 Source : DeSombre E., Flagging Standards, 2006

By 1955, Liberia surpassed Panama in tonnage, in 1956, in the number of ships registered.

Indeed, by 1956, eight years after the start of the Liberian registry, the volume of tonnage under its flag had skyrocketed; thus, overtaking Panama as the number one open registry. As the above graph indicates, Liberia started with only two ships or 772 gross tons, while Panama had 515 ships or 2,716,468 gross tons by then.

By 1958, Liberia had 975 ships or 10,078,778 gross tons, whereas Panama had 602 vessels or 4,357,800 gross tons. As intimated earlier, this was mainly due to political instability and anti-Americanism in Panama during the late 1940s up to this time.)

 In 1948, Liberia and Panama had a little over 3 percent of the world’s fleet. By the late 1950s, the combined gross tons of Liberia and Panama had surpassed many traditional maritime states. Seemingly, this realization stunned the old major powers, which had enjoyed a dominant position in merchant shipping until then. Hence, they and their maritime trade unions intensified their opposition to the open registry business model on several fronts.

Merchant Flag Registries, Panama and Liberia, 1948-58

Panama

 

Liberia

Year

Number of Ships

Gross Tons

 

Number of Ships

Gross Tons

1948

515

2,716,468

 

2*

772

1949

535

3,016,227

 

5

47,314

1950

573

3,361,339

 

22

245,457

1951

607

3,609,395

 

69

595,198

1952

606

3,740,451

 

105

897,898

1953

593

3,906,901

 

158

1,434,085

1954

595

4,091,013

 

245

2,381,066

1955

555

3,922,529

 

436

3,996,904

1956

556

3,925,751

 

582

5,589,378

1957

580

4,129,029

 

743

7,466,490

1958

602

4,357,800

 

975

10,078,778

*These two ships were registered not under the maritime code, but by special arrangement in 1947.

                                      Source: Rodney Carlisle, Sovereignty for Sale,1981

Untitled 4

                                                Source: Rodney Carlisle, Sovereignty for Sale, 1981

In a certain sense,  1949 is a watershed year in the history of Liberia’s maritime history, for it was in this year that the country had a total gross ton of well over 47,000; thus, becoming a “fully-fledged” competitor for vessel registry. Although the history of the Liberian emblem actually goes back a year earlier when it flagged its first ship, the American-owned Farrel Line. The Liberian Ship Registry flagged its first tanker, World Peace, on March 11, 1949. She was also American-owned.

The Fiercest Competition in the History of Open registries

With each registry, striving to outperform the other, it is impossible to overstate the positive impact of the fierce competition within the open registry sector of the shipping industry. This has been the case since many shipowners left the Panamanian registry for the Liberian registry.  Then, many shipping firms viewed Liberia as a better option. At the end of 1959, Liberia had become the world’s largest shipping registry.

 The reverse happened when Liberia experienced its own civil strife between 1983 and 2003. Then, there was a mass exodus from its registry to more stable ones like those of Panama and the Marshall Islands.

Notwithstanding, inter-open registry rivalry was at its fiercest when the US-based company called the International Trust Company (ITC), established after the death of Secretary of States Edward Stettinius in 1950 to serve as a management agent of the Liberian registry began operating the Marshall Islands registry simultaneously at the beginning of the 1990s.

This rivalry between Liberia and the Pacific Ocean atoll that was an American protectorate until it became independent in 1979 was to prove the point that open registries are not homogeneous.

In fact, open registries can be seen as commercial concerns in stark competition with one another, a gruesome competition that is predisposed to improving standards, especially standards within the better-established ones. This intense rivalry makes it harder for European states to undercut the open registry mode.

As demonstrated below, before the International Trust Company started administering both registries in 1992, the Marshall Islands had no commercial shipping business.

At the end of the same year, it had obtained 1,675,899 GT, with most of the vessels reflagging from Liberia and the US. This was to mark the steady rise of the Marshall Islands’ ship registry and the relative decline of the Liberian fleet.

 Liberia and Marshall Islands Tonnage growth, 1989-99

67

                                                   Source : DeSombre E., Flagging Standards, 2006          

In the wake of a lengthy hard-fought litigation, the Government of Liberia (GOL) formally dropped ITC and engaged a new company in 1999 called the Liberian International Ship and Corporate Register (LISCR), another US-based Corporation.

By 2007, the new second registry had become demonstratively successful, sidelining both Panamanian and Liberian registries as the leading foreign registry for US shipping companies. All indications suggest that all three rivals are being well- managed. All tend to score well on all port state control and IMO performance indicators. Oftentimes, they get better “grades” – and make the “White List”, unlike some of the so-called traditional maritime states.

Ostensibly, this very stiff competition among open registries serves as a shot in the arm for the open registry business model.

68                                     Source : DeSombre E., Flagging Standards, 2006

 Early opposition From Traditional States

These two offshore registries (the Panamanian and Liberian) created largely by American executives with the tacit blessing of the American government and inexorably dependent on American influence were growing exponentially. This reality did not settle well with other traditional maritime countries.

These days, open registries are accused of the exploitation of seamen, the distorting of freight charges, aiding and abating over-fishing traders, lax regulatory regimes, and the compromising of safety standards - allegations that are vehemently rejected by well-run open registries like the Marshall Islands, Liberia and Panama, given their respective port-state records (white lists) and their respective low aggregated detention rates. Their excellence is accentuated by the percentage of key international conventions ratified by them.

Percentage of Conventions ratified by the largest Open Registries

State

Total Environment out of 24

 Environmental %

Total Labor out of 47

 Labor %

Total safety out of 19

  Safety%

Panama

13

54.17

24

51.06

8

42.11

Liberia

17

70.83

14

29.79

11

57.89

M. Islands

16

66.67

6

12.77

10

52.63

                                                               Source: IMO, 2013; DeSombre E., 2006

Unlike today, during the period between the mid-1920s and the early 1960s, as Panama and Liberia became formidable competitors of traditional shipping states,  the question was whether Liberia, Panama and Honduras, the often called “Panlihon” states, had any right to grant their flags to ships whose owners were not their nationals.

At the Law of the Sea Conference in Geneva in 1958, it was proposed that there must exist a “Genuine Link” between a flag state and all ships that fly its flag. This propaganda failed.

Indeed, at the very beginning of the open registry business in the mid-1920s, the traditional maritime powers of Europe sought to have the practice banned. They, along with their trade unions, particularly the International Transport Workers Federation (ITF), pursued the architects of the system, Liberia and Panama, in courtrooms and in international conference centers in a bid to prove that the open registry business model was a hoax, well-aimed at stealing American and European sea workers' jobs.

 In the same spirit, US maritime unions blocked ports up and down the country and called on their government to clog loopholes that gave shipping companies the opportunity to circumvent US labor regulations and wages.

American unions were hell-bent on illustrating to the public and the courts that not only was the open registry model bad for American sea workers' jobs, but also awful for America's economic, military, cultural and marine hegemony.

In the end, Panama and Liberia won every court battle, and by 1963, they, along with all their business partners had surmounted all legal challenges, even the ones that went to the American Supreme Court and the US Congress, thereby giving legal precedents to the open registry shipping business.

Matters came to a head in 1959 at the first meeting of IMCO (the Inter-governmental Maritime Consultative Organization), the forerunner of the International Maritime Organization (IMO), when the organization blocked Liberia and Panama from becoming members of the Safety Committee.

Liberia and Panama begged to differ and pleaded with the ICJ (International Court of Justice) to adjudicate (ICJ Reports 1960, p. 150).  Dr. Rochefort L. Weeks, who was accompanied by Counsellor Edward Moore, nimbly presented Liberia’s case. The ICJ ruled in favor of Panama and Liberia by a 9-5 vote and asked IMCO to rescind its earlier decision.

This decision rendered on June 8, 1960, gave an additional legal basis for the international acceptance and functioning of open registries, another reason, one can posit, that makes it harder to outlaw or sideline this maritime transportation mode. Nevertheless, the movement to phase out the so-called flags of convenience was not defeated. It was simply deferred, a deferral that would end less than a decade later.

Oil Spills Dampen Liberia’s Extraordinary Growth

Since the creation of the Panamanian registry in the 1920s and that of the Liberian registry in the 1940s, the open registry business has had exceptional growth rates. For example, open registry shipping had one percent of shipping tonnage in 1939, five percent in 1950, and thirty-two percent in 1980, the bulk of which was registered in Liberia and Panama.

It is important to realize that this phenomenal growth has been equaled only by the number of serious accidents that can be blamed on open registry vessels, mishaps that led to a chain of international maritime regulations. For several decades, especially during the 1970s and up through the 1990s, open registry oil spills like those of the Torrey Canyon and the Amoco Cadiz left a legacy of global regulations in their wake.

Although ships registered under traditional registries had accidents during this era, the accidents ascribed to open registries were more spectacular as they were many. The below table shows major oil spills attributed to key selected flag-states at the end of the 1970s and the beginning of the 1980s.

Major Oil Spills of Selected Registers, 1977- 1980

Country

№ of spills

Liberia

159

USA

117

UK

74

Greece

48

Japan

35

Panama

32

Norway

28

Total of world-flags

712

Source: Metaxas, 1985

This period of marine accidents coincided with the world energy crises and the world economic recession at the time.

Undoubtedly, the oil spills of the 1970s and 1980s rekindled the struggle against the open registry-shipping model, but perhaps paradoxically, regulations meant to curb the excesses of the system actually helped the major open registry countries to improve their standards.

The table below shows Liberian Flagged Tanker/Freighter Accidents from 1967 to 1996.

 Major Oil Spills under the Liberian Flag

Date

Name of accident

Place of accident

Ship/Class of ship wt.

03/18/67

Torry Canyon

Coast of Landsend, UK

Tanker. 118,285

11/30/71

Stranding of Juliana

 Port of Niigata

Tanker. 11,684

12/15/76

MV Argo Merchant

Massachusetts, USA

Tanker. 18,743

03/16/78

Amoco Cadiz

Brittany ,France

Tanker. 228,513

01/26/90

Maritime Gardenia

Kyoto, Japan

Freighter. 2,027

09/20/92

Nagasaki Spirit

The Straits of Malacca

Tanker 95,987

01/05/93

Stranding of  Braer

Shetland Island England

Tanker. 89,730 dwt

02/15/96

Sea Empress

Milford Haven, Wales

Tanker. 133,855

                                                       Source: IMO Data Base

In mid-1977, during the commissionership of Mr. Gerald F.B. Cooper, a number of East European countries (of the former Soviet Bloc) and their labor unions under the aegis of the ITF and the United Conference for Trade and Development (UNCTAD) in a slightly different form sought to have the so-called “flags of convenience” business model banished.

Unfortunately, for the Liberian Registry, this renewed effort to phase out the so-called  flags of convenience coincided with a major oil spill by a Liberian registered oil tanker, the MV Argo Merchant.

Given the savage international press coverage of the incident, the then Minister of Finance, James T. Philips, designated Commissioner Gerald F.B. Cooper and Deputy Commissioner Joseph P. Keller to spearhead a team that would pushback and quell the negative press coverage and improve the safety of the registry. (Then, the Bureau of Maritime was a sub division of the ministry.)

Working from both Geneva and Washington, the team succeeded in dampening and frustrating the efforts of the ITF and UNCTAD and their East European allies. Commissioner Cooper and his colleagues even succeeded in having the 1986 Conference adopt the nomenclature “Open Registries”, which was hitherto “flags of convenience”.

 Liberia had this sudden change of fortune after a well-managed press conference held in New York by Commissioner Cooper and Deputy Commissioner Keller. The press conference came a fortnight after the MV Merchant went aground off the Nantucket Islands, Massachusetts, U.S.A. on December 15, 1976.

Commissioner Cooper & Team at New York News Conference

Cooper

                               Courtesy of Commissioner Joseph P. Keller

Before the MV Argo Merchant accident, the Liberian Ship Owner’s Council (LSC), established in 1974 to ensure the highest practical standards of quality, safety, and environmental protection in maritime shipping joined the International Shipping Federation (ISF) at an International Labor Organization (ILO) Conference, which was also attended by the ITF. At that 1976 meeting, named the “Merchant Shipping (Minimum Standards) Convention”, the LSC successfully pushed the notion of countries inspecting and sharing information about foreign vessels that berth at their ports.

This push by the LSC took on an added significance after Liberia weathered the storm generated by MV Argo Merchant oil spill, hereby enhancing the status and relevance of the Liberian Ship Owner’s Council itself

As a direct outcome of the LSC’s efforts, in 1982, a number of states setup the Paris Memorandum of Understanding (MoU), the well-known and respected Port State Control (PSC) system, a mechanism that would inevitably spread worldwide. All of this newly found dynamism made the Liberian register the touchstone – the recognized yardstick for measuring flagging standards in all Open Registers and inevitably all shipping registries (both traditional and open registries).0

The signatories to the agreement undertook to support an effective port inspection regime based on IMO conventions and protocols. The signatories also assumed the power to board, inspect, and if deemed necessary, detain foreign ships mooring at their ports that were found to be conflicting with international shipping laws until the reasons for such detentions were resolved.

Selected Shipping Regulations Induced by Accidents

Accident

Flag State

Year

Convention/Regulation

Titanic

UK

1912

SOLAS

Torrey Canyon

Liberia

1969

MARPOL

Amoco

Liberia

1978

Paris MoU

Exxon Valdez

Liberia

1989

US Oil Pollution Act

Prestige

Bahamas

2002

Double Hulls

                                                        Source: IMO Databases

As stated in an earlier subsection, Liberia was at one period the basket case of the worst problems in the shipping industry, mainly because of the incidence of marine accidents.

These days, the country’s vessels are amongst the best largely due to the mechanism of the PSC system and the management team that oversees the Liberian shipping business. This state of affairs is reflected in its excellent port-state detention rates in recent years, an achievement that some old maritime states find hard to accomplish. Indisputably, Liberia’s records are no worse than traditional registers and are often better.

Conclusion

The extraordinary history of the Liberian Ship Registry began its ocean commerce in 1948 during the Presidency of William V.S. Tubman and under the aegis of former Secretary of State Edward Stettinius.

In the final analysis, stiff global competition, attempts by some “traditional” maritime states and their maritime unions to have it banished, international economic crises, massive maritime accidents, and rancorous civil conflicts have taken their toll, but the program has persisted and has become the pride of the Liberian people and government.

Gola Traub is an educator with BA in Human Geography from the University of Liberia, an MA in Education from Boston University, an MA in International Maritime Policy from Greenwich University (London), and an MA in International Relations from the University of Westminster (London). Email: This email address is being protected from spambots. You need JavaScript enabled to view it., This email address is being protected from spambots. You need JavaScript enabled to view it., and This email address is being protected from spambots. You need JavaScript enabled to view it.

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