Shadow fleet
In a report in 2013, the International Maritime organization acknowledged that such practices generated considerable risks to commercial shipping, safety, and environmental security: ship-to-ship transfers in the high seas were high risk activities that undermined the international regime with respect to maritime safety, environmental protection and liability and compensation needed to be urgently addressedGenerally speaking, vessel identity tampering refers to the process of masking 'shadow' vessels real identities in order to trade sanctioned goods, and make detection more difficult.
Open registries, being predominantly small states with limited resources, lack the financial incentives to invest in effective regulatory practices, and by taking advantage of jurisdictional control they have through the process of flagging and registering, they prioritize revenue generation over rigorous compliance measures.
[13][20] The possibility of capitalizing on the minimal application and administrative fees, as well as nominal tonnage taxes offered by open registries, renders such practice highly economical for sanctioned states.
Through the use of more and more sophisticated sanction busting practices in the maritime domain, the Democratic People's Republic of Korea has attempted to maintain imports of basic commodities, raw materials, aid, and luxury goods, but also to finance its regime through the export of iron ore, coal or textiles.
[11]: 39 The Agreed Framework signed under the Clinton administration led to a short-lived relaxation in sanctions as the Democratic People's Republic of Korea (DPRK) committed to divest from its nuclear program.
The sanction regime has been criticized as "patchwork", "sewn on opportunistically when North Korea provocations create political will" yet drastically challenged by lack of interest or capacity to use the full power of the law.
[38]: 159–160 Some included specific recommendations concerning enforcement in the maritime domain: The sanction regime against North Korea is unique in its broadness and the fact that it is led by the United Nations Security Council.
Despite the discovery of Scud missiles aboard a vessel bound for Yemen, legal ambiguity led to the ship's release by the US and Spanish authorities, highlighting the challenges and limitations of maritime sanction enforcement.
[54][55] Yet, scholars such as Kraska underscore that despite current issues, "the legal process is the best tool available, albeit an imperfect one, to counter North Korea’s maritime proliferation of nuclear weapons and technology".
The technologies under scrutiny include ball bearings, electrical transformers, high priority dual use items like integrated circuits, and radio frequency transceiver modules.
[88][83] Hong Kong, for instance, has held an important transshipment port, and doubled its exports of semiconductors to Russia in 2022, reaching figures of around 400$ million, and making it the second supplier of such components, after mainland China.
[95] Hong Kong is especially useful since it is hard for export control officials to conduct preshipment screening or post shipment checks, and that is because it has a huge volume or transshipment occurring through it, making it one of the busiest shipping hubs in the world.
[87] Another reason is that developing countries such as India, Indonesia, Brazil, Turkey, or Nigeria seek to maintain flexibility and avoid brawls and entanglements between major powers like China, Russia, and the US.
The new measures tasks "respective maritime authorities to request relevant proof of insurance from suspected shadow vessels as they pass through the English Channel, the Danish Straits of the Great Belt, the Sound between Denmark and Sweden, and the Gulf of Finland".
[115] The Danish Ministry of Foreign Affairs has said that this new measure is a result of Denmark gathering this coalition earlier in 2024 to look at the possibilities within international law to counter the challenges related to the shadow fleet.
In 2017, the Chinese tech giant ZTE was contracted to develop new identification smart cards as part of a $70 million government initiative aimed at enhancing national security by monitoring and controlling citizen behavior.
The UN Security Council Resolution 1929 from 2010 clamps down remarkably on Iran in the maritime as sphere[124][125] and tightened earlier rounds of sanctions from 2006 in so far as it for example allowed inspections of vessels suspected to carry cargo related to prohibited activities also on the high seas and not only in the territorial waters of member states.
[128][129] The incidents have many of the characteristics typically associated with sea-based sanctions evasion: an old tanker, owned by shell companies, with changing names and flagged by states with poor rule enforcement capacities, that sailed with no effective insurance.
[130] : 154 On the level of container-based cargo, Iran has in the meanwhile made use of the practice of expropriating colors and unique serial numbers (called the BIC code) of shipping containers of non-Iranian companies.
[131] While "an easy and less expensive method for Iran was to use its own tankers or rented vessels to transport petroleum to foreign destinations“, ship-to-ship transfers often require facilitation through actors from abroad.
[127] : 202 There is a selection of such known cases:[130]: 154 In one "Iran has used, and may continue to use, the port of Labuan in East Malaysia to avoid international sanctions by using middle-of-the-night ship-to-ship oil transfers to floating storage ships.
It stands out that Iran often evades sanctions in cooperation with countries that have likewise strained relations with the West, smaller ones that seek bare revenue or with states that putatively aspire to maneuver the world towards a more multipolar order.
[130][139] Still, Iran's ability to participate in world markets has been limited, because it may have received payments in Lira, Renminbi or Rupees, but not in US Dollars, the primary currency of international trade, to which Iranians continually have had no access due to financial sanctions.
[130][72][127] Dubai generally, as a commercial hub, offshore financial center, port city and because of its geographical proximity, has traditionally represented a welcomed opportunity to make use of in sanction evasion processes for Iran.
[139][127] Another notable person in this context is Babak Zanjani, who "in order to help the Iranian government export more cargoes of its sanctioned oil […] had basically taken advantage of a network of more than 60 businesses registered in the UAE, Turkey, and Malaysia.
[126]: 151 The Iranian Revolutionary Guard Corps (IRGC) for example set up the “Mehdi Group“ in India that handled vessels and financials, paving “the way for Iran’s informal oil business with other nations, including China“.
These include: Analyses have determined that in 2022 there have been at least eight groundings, collisions, or near misses that involved tankers carrying sanctioned crude or oil products, which represents the same number as the three previous years combined.
These vessels, due to their secrecy and poor maintenance, present ongoing risks not only to the environment but also to maritime safety[151] Sanctions have a profound impact on the economies of the affected countries, often exacerbating existing hardships.
Sanctions against Venezuela have significantly affected the population's well-being, reducing caloric intake, increasing disease and mortality rates, and forcing thousands of citizens to flee the country.
The reliance on shadow fleet vessels for oil trade, while necessary for sustaining economic interests under sanctions, further complicates these issues by diverting resources away from essential public services and infrastructure.
