1970s: Oman’s ‘Flag of Convenience’ Wanted to Rival Panama’s
Hello there, Noam here. Today I have an interesting shipping story I came across in historical records that were shared with me by the Middle East Reporter (MER) newsletter— which used to be published in Beirut. I hope you will enjoy it as much as I did because I could not find the information online. And as always, feel free to share any feedback you may have.
There was a time, before the end of the Cold War, when Japanese and West German shipping firms expressed interest in an unusual “flag of convenience”: The Omani flag.
In November 1974, the Sultanate of Oman announced that it was planning to provide the shipping industry with a new “flag of convenience, rivalling those of Liberia and Panama,” according to a report by Reuters at that time. In the shipping industry, a “flag of convenience” (FOC) ship refers to a vessel that sails under the flag of a country other than the country of ownership. This is also called an “open registry”.
Oman wanted to provide a ship registry for foreign-owned and local ships. To introduce the Omani flag, a law was produced and which was supposed to offer the maritime community with an “Arab alternative” to flags of registry such as Liberia, Panama, Cyprus, and Singapore, according to the Reuters report. The law was reportedly hammered in consultation with leading classification societies, financial institutions, and ship owners.
Although Oman did not have a significant merchant fleet of its own back in the 1970s, it was, and still is, notable for a seafaring tradition that dates back to the 3rd millennium BC.
Citing an officially released statement, the Reuters report said that for the purpose of facilitating the registration of vessels under the Omani flag, the main offices of the maritime administration were to be set up in New York. And to further attract the shipping community, the law “provided for fleet financing and mortgages on ships, and for a filing system allowing omission from official records of details of financial transactions related to Omani-registered ships.”
Based on an AFP report published in January 1975, the first flag of convenience was raised by Panama in 1924, which at the time had 14 vessels that later increased to around 1,600 in 1975. The AFP report notes that US businessmen played a role in the creation of this shipping practice to “obtain tax breaks on their transactions and profits.” Some shipping circles consider the “flag of convenience” a derogatory term.
Several open ship registries with a particularly weak record of enforcing international regulations, attract ship owners who are trying to avoid taxes, and seeking minimal rules and inspections and the freedom to hire cheap labor. For more on this, you can read an investigation, here, which I published on THE CHOKEPOINT in July.
While I was searching for documents that could explain why Oman decided to join the world of open ship registry, I found a report by the World Maritime University (WMU) which noted that between 1950 and late 1970, several countries were competing for ship registrations as registry in the US and other places became “increasingly uneconomical.” Many countries wanted to reap the economic benefits of becoming flag states, however only a few were able to attract substantial registrations, according to the WMU. The flags of registry that were competing at that time included the Liberian, Panamanian, Honduran, Lebanese, Cypriot, Somalian, and Omani.
Liberia reportedly had the largest fleet in the world in 1975, amounting to over 55 million tons. This was “as much as the tonnage of the United States, the Soviet Union and Britain combined,” according to the AFP report. The US merchant fleet was only around 14 million tons.
Although Oman wanted to rival the Panamanian and Liberian ship registries, I did not find any records showing that it was able to compete with these two top flag states. In 2021, Panama was the largest flag state in the world, according to Lloyd’s List.