America's merchant fleet: a 'dangerous weakness'
As the Reagan administration reviews United States maritime policy, close attention should be given to a glaring, but sometimes overlooked, weakness -- America's excessive dependence upon ships of foreign registry, particularly those flying flags of convenience, to supply it with imported oil.
Ship registry in Panama and Liberia is not a recent development. American-owned ships flew the Panamanian flag to evade prohibition laws in the 1920s and neutrality legislation in the 1930s. During World War II the War Shipping Administration even placed ships seized from enemy owners and from Axis-overrun nations of Europe under Panama's flag to evade the government's own health and safety standards. Since 1945, American owners have registered ships in Panama and then Liberia to evade US taxes and high American labor costs.
During the 1960s and 1970s, the sinking of the Torrey Canyon, the Argo Merchant, and the Amoco Cadiz, all Liberian-registered oil tankers, aroused world concern over supertanker safety. The outburst of public and media outrage at the resulting oil spills caused the US and the world maritime community to draw up a series of legal and institutional measures to enforce oil tanker safety, whatever the flag of registry.
Yet the current threat posed by the pattern of evasion of national law through convenience registry is much more fundamental. Today, less than 5 percent of the nation's imports arrive on American flag ships. There is practically no US merchant fleet in international trade. The owners of independent tanker and ore carrier fleets utilize foreign registry simply because it provides a less regulated and less expensive environment than US registry.
During both World War I and World War II, the US embarked upon a huge shipbuilding program to bring the American merchant marine up to war strength. As Alfred Thayer Mahan argued in the 1890s, the merchant marine -- both ships and men -- is an essential arm of defense. Without reliable, effectively controlled shipping, America's military and industrial power could not reach distant theaters of war. A strong merchant fleet in wartime insured strong military capability, the theory argued.
But today, the US has little effective control over ships owned by American-based corporations but registered under foreign flags. Ultimately, control is dependent upon the cooperation of shipowners and the possibly less reliable goodwill of the underdeveloped, but legally crucial, flag states. It is clear that certain smaller nations can constrain American freedom of action, as demonstrated by the 1973-74 OPEC limitation on oil sales to the US and the resulting energy crisis. Our dependence on foreign oil is further compounded by our unseen dependence on Liberia and Panama to carry that oil to the US.
The ship registries of both Liberia and Panama originally flourished precisely because each had a special, almost explicitly colonial relationship with the US. Yet that relationship, in both cases, has altered in recent years, and American policymakers can no longer view with complacency these two states as if their sovereignties were useful but artificial commodities readily purchased. Liberia exercises some leadership in Africa - a role it can best play if it stands fast when in disagreement with American policy positions. Panama's long-term bitterness toward the US over the canal issue may have subsided under the new treaties; yet Panama, if it is to retain its self-respect, will also need to forcefully show continued independence.
If both of these republics were to prohibit their ships from supplying an ally of the US, we might be nearly powerless to send oil, food, or arms to that nation. More dangerously, if both Liberia and Panama were to boycott the US, our own imports, particularly oil, could fall dangerously. It is not enough to say that the sheer reluctance of a small, third-world country to enrage the US and its preponderant military power will keep that country ''in line,'' as events in recent years in Iran, Libya, Nicaragua, and elsewhere amply demonstrate. In a crisis, American corporate owners could not effectively direct flag-of-convenience ship captains to violate the orders of the flag states, for the ships could be readily declared ''stateless,'' legally subject to seizure by any nation.
Americans rarely have viewed merchant shipping as crucial during peacetime. Yet, if this vulnerability is not soon perceived, we may one day face a crisis of ships-as-hostages which would make the Iranian hostage seizure appear mild by contrast.
There are simple legislative solutions to the dangerous weakness of American shipping. So far, oil company and other proprietary line shipowners have successfully fought any system which would require a minimum quota of US imports to enter the nation under the US flag. Ironically, the oil companies convinced Congress that such a requirement would force a rise in the price of fuel. In fact, the rise of a fraction of a cent per gallon would not be felt in the general fluctuation of petroleum costs. Yet the ultimate vulnerability of the nation to one more form of international blackmail may cost this nation dearly in the future.