Iran Shippers Face Difficult Sanctions

Officials from landlocked Mongolia said they would cancel the flag registrations of five Iranian cargo ships, providing a window into the cat-and-mouse game played by international authorities that are trying to curb Tehran weapons programs and by Iranian companies trying to work around them.

The move on Thursday came days after officials in another inland nation, Moldova, told The Wall Street Journal it had deregistered 12 Iranian vessels in July and no longer has any Iranian vessels on its registry, to come into compliance with international sanction restrictions.

Government officials said and international shipping databases show state-controlled Islamic Republic of Iran Shipping Lines, or Irisl, repeatedly shifted flag registrations of a number of vessels in recent months to different small inland nations.

The moves are an expected consequence of United Nations and U.S. sanctions, a company executive said last week.

“When you push someone from a room, he should find a door,” said Ali Ezzati, Irisl’s manager for strategic planning and international affairs, on the sidelines of a shipping conference in Xiamen, China. “If he can’t find a door then he should try to find a small hole.”

Mr. Ezzati declined to answer subsequent questions about the registries of Irisl’s ships. Contacted by email, Irisl declined to comment.

Mr. Ezzati said shifting the flag registrations had complicated, but hadn’t stopped, the company’s ability to operate.

The U.N. has alleged Irisl helped Iran’s military program, and placed sanctions on the company. The U.S. also has sanctioned Irisl, alleging it provided logistical services to an Iranian military department that oversees the country’s ballistic-missile program, and thus helped Iran’s nuclear program.

Irisl denies any connection to Iran’s elite Revolutionary Guard Corps, and Iranian officials say the nation’s nuclear program is aimed at peaceful uses.

The complications are considerable, too, for any country that registers the ships, as they would risk being exposed to the sanctions, particularly a ban fromaccessing the U.S. financial system.

Ships might fly a flag provided by different countries as proof they are safe and legal—and in compliance with the host country’s shipping standards. Many register with what are known as flags of convenience outside their home country at the request of banks, because it guarantees neutrality in case of a legal disputes, as well as for tax or labor-related reasons.

The sanctions give Iranian shipping companies additional reason to register their ships elsewhere. Erich Ferrari, a Washington, D.C.-based sanctions lawyer at Ferrari & Associates, said shipping under and Iranian flag would make any trade with other nations “easier to detect.”

The Islamic Republic has struggled to find ships to import cereals and other basic goods. A dozen foreign-flagged ships carrying food and other non-oil goods had to stop entering Iranian ports earlier this year because of fears that paying local ports operators and banks would breach sanctions. The sanctions are tied to money transactions with bank and trade services.

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Article by Benoît Faucon, courtesy of The Wall Street Journal.

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