Panama to Sign Shipping Accord

The U.S. Navy will be allowed to board Panamanian-registered commercial ships to search for weapons of mass destruction under a deal to be signed today by the two nations in Washington.

The agreement could help ease tensions sparked by U.S. claims that Panama was failing to ensure that ships flying its “flag of convenience” complied with tough new anti-terrorism measures. Thousands of Panamanian-flagged ships could be barred from U.S. and European ports if they failed to meet the new requirements by July 1.

The Central American nation’s economic lifeline would be threatened if Panamanian ships were barred from many foreign ports. Panama’s maritime industry brings in about $300 million a year. Its registry accounts for 26% of the global fleet and licenses more ships and seafarers than any other nation, thanks to low taxes and minimal labor regulations.

The shipping industry here has recently been roiled by new allegations of corruption, which ship owners say are keeping them from meeting the new security requirements.

Unlike other so-called flag states, Panama snubbed safety stalwarts such as Lloyd’s Register and the American Bureau of Shipping to award monopoly control of its security certification program to a little-known private company in Florida. The firm, Phoenix Vessel Services, has been charging at least three times the fees set elsewhere for compliance reviews.

The exclusive deal has exposed Panamanian-registered vessels to more scrutiny by the U.S. Coast Guard.

Ships on Panama’s registry already are designated priority targets for boarding because of the country’s record of lax enforcement. Panama is at the top of an international maritime blacklist because many ships on its registry have had excessive detentions by port authorities over safety or security concerns.

After the Sept. 11 attacks in the United States, the London-based International Maritime Organization adopted new security standards, requiring all vessels to work out plans to prevent terrorists, pirates, smugglers and stowaways from gaining access to ships or cargo.

By late April, only 60% of the 5,526 Panamanian-registered vessels subject to the new security constraints had been certified as in compliance, the daily newspaper La Prensa reported, citing maritime authority figures.

Maritime lawyers blame the slow pace of compliance on the government’s procedures, which require ship owners to hire one company to develop their security plans, another -- Phoenix -- to assess and approve them, and a third to get their certificates from the Panama Maritime Authority.

“It was quite a shock for the industry when Panama said ship owners had to use this one, single company,” said attorney Jazmina Rovi, a member of the Panama Maritime Law Assn.

“We are not arguing the capabilities of Phoenix,” Rovi said. “They have been very efficient.

“What made no commercial sense was to make this exclusive. It raised a lot of questions about what prompted that decision, and corruption went through a lot of people’s minds.”

Phoenix cut its fees by about 25% late last year in response to industry accusations of gouging, and the government in January named two other companies to conduct the security assessments.

Other maritime states placed compliance monitoring in the hands of internationally known groups such as Lloyd’s Register and the American Bureau of Shipping. ABS, a not-for-profit organization, has been authorized to conduct security plan reviews by more than 40 maritime countries, said spokesman Stewart Wade.

“The Panamanian government’s view is that security plans should be done by security experts and not marine safety officials, that it’s a new field for everyone,” said Eduardo de Alba, a maritime attorney.

He noted that “Panama’s position is not being replicated elsewhere” among other flag-of-convenience states such as Liberia, the Bahamas and the Marshall Islands.