Global Policy Forum

By James Brooke

Down an avenue named after Genghis Khan, up to the third floor of a Soviet-era government ministry and down a creaking wooden hallway, its carpet frayed and faded with the dust and the sun of the steppes, one office door has a freshly minted sign: Maritime Administration. In a one-room office, with whirring computers, a fax machine at the ready and model ships for décor, two civil servants oversee the Mongolia Ship Registry, an international service that offers quite competitive fees and no restrictions on the ownership of any ship.

Mongolia, the world's largest landlocked country, with its capital almost 1,000 miles from an ocean beach, is the latest entry in the business of flags of convenience. With Mongolia's red, yellow and blue colors now flying on 260 ships at sea, this unlikely venture is part business, part comedy and part international intrigue. "We earned the treasury about $200,000 last year," Bazarragchaa Altan-Od, head of the Maritime Administration, said, slightly tense for his first interview with the world press. "We have 20 to 30 new registrations every month. The number is increasing."

With new international shipping security rules going into effect on July 1, some shippers may see the newest flag of convenience as one that does not yet set off alarm bells. The new rules require that ships and ports adopt verifiable, uniform security plans. Intended to prevent hijackings of large vessels for terrorist attacks, the rules are promoted by the International Maritime Organization, a United Nations body with no enforcement powers. The United States Coast Guard has said it will check compliance by boarding selected major ships approaching American ports.

Mongolian flags are not expected to become a common sight at American docks. But it was an unexpected twist of fate that brought Mongolia, a nation of nomadic herders, to the high seas.

In the 1980's, a Mongolian university student known only as Ganbaatar won a scholarship to study fish farming in the Soviet Union. But the state functionary filling out his application put down the course code as 1012, instead of 1013. As he later told Robert Stern, producer of a documentary on the Mongolian Navy, that bureaucratic error detoured him from fish farming to deep-sea fishing. Upon graduation, he was sent to work with the seven-man Mongolian Navy, which patrolled the nation's largest lake, Hovsgol. The lone ship, a tug boat, had been hauled in parts across the steppes, assembled on a beach and launched in 1938. After the collapse of Communism here in 1990, Ganbaatar wrote Mongolia's new maritime law, which took effect in 1999.

The registry opened for business in February, 2003. Perhaps to play down any negative connotations of being landlocked, the glossy color brochure of the Mongolia Ship Registry shows Mongolia surrounded on three sides by a light blue blob that, on closer inspection, turns out to be China. One clue to the international intrigue behind the registry may be in plans to reopen the North Korean Embassy here this fall.

Sovereign Ventures, a Singapore-based classification company handles the Mongolia Ship Registry, and Chong Koy Sen handles the business. "We are going quite well," Mr. Chong said in a phone interview, before asking that questions be sent by e-mail. Two e-mail messages were not answered. According to Lloyd's List, the maritime trade publication, Capt. Chong is a major shareholder in Korasia Shipping and Trading, Sovereign Ventures and the Cambodia Shipping Corporation. Founded in 1986, Korasia operates ships for North Korea and, through Sovereign Ventures, explores for oil and gas in North Korea.

The Cambodia Shipping Corporation registered foreign vessels - many of them North Korean - for Cambodia, until 2002, when the French Navy seized the Winner, a Cambodia flag cargo ship, for cocaine smuggling. The seizure, the latest in a series of mishaps for Cambodian flag vessels, prompted the Cambodian government to cancel its contract with Cambodia Shipping.

Mongolia's maritime niche may be North Korea, which has revived relations in recent months with the ruling Mongolian People's Revolutionary Party, the former Communist party here. (On June 27, after a parliamentary election campaign that included corruption accusations against the government, the opposition Motherland Democratic Coalition unexpectedly won 36 of 76 seats. A final outcome is not expected until early July.) North Korea flag vessels increasingly are watched around the world. Under the Proliferation Security Initiative, the United States and a dozen nations started to monitor North Korean vessels in 2003 for illicit cargos, like drugs, missiles or nuclear weapon fuel.

In 2003, Japan, traditionally an important trading partner of North Korea, adopted a policy of stringent safety and customs checks of North Korean flag vessels visiting Japanese ports. As a result of this enforcement, the number of port calls by North Korean flag vessels to Japan in 2003 plummeted by 29 percent, hitting 1,007. At the same time, port calls by Mongolian flag vessels jumped in Japan. In April and May, there were 115 port calls by Mongolian flag vessels, almost five times the 24 registered in April and May of 2003.

Here at the one-room office of the Maritime Administration, the cheerful tropical fish and coral calendars were not enough to break the tension caused by a question about flagging ships from North Korea. "Within international agreements, some countries have friendly relationships with Mongolia," Mr. Altan-Od said. He declined to specify where most registered vessels were from, but did note that "we have one to two American ships." With or without North Korean vessels, critics say Mongolia is registering anything that floats and can pay the fee.

Mongolia "is indicative of the larger, growing trend of the weakening of the nation state on the high seas," William Langewiesche, author of "The Outlaw Sea: A World of Freedom, Chaos, and Crime," a new book, said in a phone interview. Over the last 25 years, he said, the use of flags of convenience has grown from a small portion of the roughly 40,000 large vessels at sea "to account for a large percentage of shipping worldwide, over half."

Last Nov. 21, 13 Russian sailors were rescued from the Fest, a Mongolian-flag ship loaded with logs that was sinking in the Sea of Japan. In 20-foot high waves, the ship's main engine had failed. "That ship was 40 years old, it was too old and should not have been registered," said Damba Baigalmaa, deputy director of Mongolia's Maritime Administration, noting Mongolia's policy of not registering ships over 30 years old.

Also in November, Irish police boarded the MV Unique, a Mongolian-flag vessel that had been moving around the high seas of Europe for one month without apparent destination or cargo. Although an international police task force suspected that the ship was involved in moving illegal immigrants into Britain, Irish detectives did not find evidence of wrongdoing. On Dec. 9, the Indonesian Navy seized the Mongolian-flagged MV Bravery Falcon for not having any documentation to prove that its load of 17,000 cubic meters of tropical hardwood had been legally logged. "Unfortunately, there were a few Mongolian-flag ships that sank," the prime minister of Mongolia, Nambaryn Enkhbayar, said when asked about the incidents. "We have to improve, so this becomes a good company for us," he said, referring to the ship registry.

The Mongolian Sea-Lovers Association, a civic group that gathers mainly to discuss maritime policy, dreams of the day when Mongolia will have its own merchant marine, tying up at a Mongolian-owned duty-free zone at Tianjin, China, about 500 miles by rail from Mongolia's southeast border. Critics say that safety is the victim of an international shipping system that leaves enforcement of international rules to the countries that register vessels and to the ports where they drop anchor.

Countries "can become 'flag nations' for ships, usually by employing an agent who 'certifies' that the ships carrying a Mongolia flag, for example, meet all the international rules," said Jim Carrier, author of "The Ship and the Storm," an account of the sinking of the Fantome in Hurricane Mitch, in 1998 off Honduras. Thirty-one sailors drowned with the Fantome, a yacht flagged by Equatorial Guinea. "Shipping companies simply send a check to a country, and, in return, get the paperwork to allow a ship with a Mongolian flag to go into any port in the world," Mr. Carrier, a trans-Atlantic sailor, said in a phone interview. "Usually these ships avoid the tougher countries, however, and roam the world uninspected, leaking, polluting, sinking time bombs for the sailors aboard."

Mr. Langewiesche, whose "Outlaw Sea" came out in the spring, cautioned, "It is important not to draw a mechanical linkage between dangerous ships and this flag." "Given the range of flags available, those interested in Mongolia are not interested in maintaining ships, in sailing well," he said. "But to say that Mongolians should not have ships flying their flag is also unfair."