Moldova has no direct access to the sea. Despite this, it has become a real maritime force in the region, with hundreds of ships registered under the Moldovan flag.
The flag of Moldova is attractive to foreign individuals and legal entities due to cheaper services and faster registration than in other open-flag states.
Nonetheless, for more than ten years, Moldova has been on the Black List of The Paris Memorandum of Understanding on Port State Control and several Moldova-flagged ships became the center of international scandals.
Due to the lack of a regulatory framework, the Naval Agency of Moldova has not conducted flag inspections so far, although it can boast a fleet of about 300 ships.
In early August, about 2,700 tons of improperly stored ammonium nitrate, an extremely explosive substance, exploded in the port of Beirut, Lebanon. The blast brought into question Moldova’s maritime power and Moldovan-flagged ships, whose owners were lured by the cheap fees and fast registration process.
Seven years ago, the Moldovan-flagged ship Rhosus transported 2,700 tons of ammonium nitrate, which exploded in the port area of Beirut, Lebanon. In 2013, the ship with the explosive cargo had been berthed due to technical problems and got stuck in the Lebanese port.
Tons of Drugs on the Board of Moldovan-Flagged Ships
The incident in August is not singular. In October 2018, the Spanish National Police intercepted a Moldovan-flagged ship with about 1.4 tons of cocaine on board. Ten crew members were arrested for drug trafficking.
“Earlier, we discussed the procedure for registering ships under the Moldovan flag. I think we need to get back to this. We should know who gets this right. We may have such problems because the Ministry of Foreign Affairs is not involved, but it must be. There is already a lot of speculation,” commented former Prime Minister Filip, after a ship, registered under the Moldovan flag, was intercepted with 1.4 tons of cocaine on board.
Then, during a Government meeting, Pavel Filip, the then Prime Minister of Moldova, stated that such cases damage the image of the country and called for tougher ship registration procedures.
In June 2019, the Spanish police seized 10 tons of hashish aboard another vessel, sailing under Moldovan flag. The incident took place in Spain, and the crew members were detained.
Also in 2019, another ship under the Moldovan flag carried weapons, including anti-tank and anti-aircraft missiles, in a port in Libya despite the embargo imposed on this country by the U.N. Then, the Naval Agency stated that the ship no longer has the right to sail under Moldova’s flag.
In the fall of 2019, Moldova again came to the attention of the international press. This time, a ship ran aground near Odessa with several oil tanks on board that spilled into the sea, posing a real ecological danger. Igor Zaharia, the director of the Naval Agency of Moldova, stated then that the Moldovan flag was used illegally and that the vessel was forcibly removed from the State Register of Moldovan ships in 2018.
In 2012, Moldova was on the verge of an international diplomatic scandal when 12 Iranian ships were temporarily registered under the Moldovan flag. Learning about the Western sanctions against Iran, Moldova decided to cancel the registration of the 12 ships.
Moldovan-flagged ships get involved in international scandals despite the authorities’ statements, according to which both the ships and their owners are well assessed before reaching the flag of Moldova.
In 2011, after the Israeli military fleet opened warning shots in the direction of a Moldovan-flagged merchant ship, that tried to break the blockade of the Gaza Strip, Iurie Leancă, former Minister of Foreign Affairs and European Integration stated that there seems to be a small problem with Moldova’s ship registration process.
“There seems to be a little problem with the ships registered under Moldova’s flag. I talked to colleagues from the Ministry of Transport and Road Infrastructure, asking the Ministry to explain to the beneficiaries that they must respect certain rules when they get such authorizations.”
Despite these statements, the ships sailing under the Moldovan flag still got involved in international scandals. As the flag state, Moldova was obliged to take action and ensure that international rules were applied on board of ships sailing under Moldova’s flag.
Although the Government appointed the Naval Agency to monitor how legal entities and individuals comply with the normative regulations in the field of ship safety, the Agency did not establish a set of rules to carry out control of the flag state until 2020.
Moldova with No Efficient Inspection Mechanisms
In the absence of regulations on the procedure for carrying out the flag state control, verification of Moldovan ships compliance with the technical requirements of maritime operation was practically unfeasible. Consequently, without this mechanism, ships with deficiencies circulate under the Moldovan flag, some of which end up being detained, which is why our state is on the Black List of the Paris Memorandum.
This summer, the Government approved a Framework Regulation on compliance with the obligations of the flag State. Following the Regulation, the Naval Agency of Moldova will be able to undertake a series of actions aimed at ensuring the operation under national flag only of those ships that have been submitted to inspectors for examination or which provided evidence of proper maintenance of the ship. However, the approval of this Regulation by the Government does not imply its immediate entry into force; other regulations need to be approved, including identifying the inspectors who could carry out vessel verification.
“It is only the beginning. We have already taken some first steps. We have developed a mechanism and manual for conducting flag State control, which can be applied. I think that by the end of the year we’ll have everything ready,” says Igor Zaharia, the director of the Naval Agency.
In practice, the Naval Agency based its decision to register ships using the information provided by international databases. Now, the inspectors within the Agency will be able to check ships in ports and draw up an inspection report.
In the context of international scandals involving Moldovan-flagged ships, representatives of the Naval Agency deny that the right to navigate under the Moldovan flag can be obtained easily, as well as the fact that Moldova is a haven for smugglers and other ill-intended individuals, saying that these statements are erroneous and unfounded. They also state that, for the most part, illegal acts are committed by ship’s crew members, and the ship owner knows nothing about these illegalities.
“Such things happen not only under the Moldovan flag. Moldova is working with law enforcement agencies in this regard. In most cases that were made public, the ships were detained in international waters and we participated permanently and actively in detecting the ships and channeling these illicit activities,” comments Igor Zaharia, director of the Naval Agency.
Moldova, on the Black List of the Paris Memorandum
For more than ten years, Moldova has been on the Black List of the Paris Memorandum, an organization that sets the flag State index of performance to increase maritime safety. Every year, Moldova ranked last in the categories of high risk and medium to high risk.
According to the most recent report, Moldova ranks 67th out of the 70 flag States inspected, being classified as medium to high risk. Only Togo, Albania and the Comoros Islands record a worse result than Moldova.
According to official data, in the last three years, 381 inspections of ships under the Moldovan flag have been carried out, and in 363 cases deficiencies have been detected, which has led to the detention of 57 ships under the Moldovan flag. According to these data, out of the total number of inspections, ships were detained in 14.96 percent of cases, a reason for which Moldova was included in the Black List, while the detention rate of White List countries is 2.3 percent.
Igor Zaharia, director of the Naval Agency, claims that Moldova’s presence in this Black List does not lead to sanctions or tougher controls of ships sailing under the Moldovan flag; in fact, it is a statistical criterion that shows the performance of the flag.
“This Black List does not mean imposing sanctions or image damage. No coercion is applied to the state. This list is, in fact, a statistical criterion which, together with other criteria, such as, for example, the classification society, its performance, the type of vessel, age, last entry in the Paris Memorandum, last verification, etc., cumulatively, they establish they risk criteria indicating that the ship must be inspected,” states Igor Zaharia.
The director of the Naval Agency emphasizes that Moldova’s exit from this Black List is a priority, and the state would not have taken measures to carry out this action until 2015:
“Moldova entered the Black List for the first time in 2008. Until 2015, however, no action was taken to get out of this list. I mean, the state did nothing.”
Vessel Registration Procedure
Moldova’s presence in the Black List of the Paris Memorandum reveals deficiencies of ships sailing under the Moldovan flag. Igor Zaharia, however, claims that before registration, both ships and their owners are subject to a complex verification process.
“The vessel and its owner are thoroughly checked. When submitting the application for vessel registration, the Naval Agency verifies if the ship is under naval sanctions. Subsequently, we check if the owner is on the list of sanctions. The port entry history shall be verified if the ship entered areas closed to navigation or areas where there are international restrictions. We also check the illegal documents of the ship or the owner.
If the vessel is not included in the respective databases, the Agency sends the set of documents to colleagues from the Ministry of Foreign Affairs and European Integration,” says Igor Zaharia, specifying that, the Ministry may refuse to register the ship, with appropriate argumentation.
The Fees for Registering the Ships
One of the reasons why Moldova is attractive for ship registration is the low tariff compared to other open flag States. Thus, for example, the registration of a 500-ton ship costs only 6000 lei, and registering a 5,000-ton ship amounts to about 26000 lei. The director of the Naval Agency says the tariffs are low because they were developed in 2006, therefore, they should be reviewed.
“These tariffs have never been revised. When creating the Naval Agency, they set the task of elaborating tariffs, but they must be established based on a methodology approved by the Government. The methodology for the formation of registration fees differs from the classical methodology for the formation of tariffs for the provision of services. Currently, there is a group of representatives of the Ministry and the Naval Agency working on the creation of such a methodology, but it is a complicated process,” says Igor Zaharia.
The representatives of the Naval Agency specify that ship operation under the Moldovan flag does not require just one single payment for registration; it also involves costs for related services, such as confirmation of ship’s crew licenses, issuance of certificates, extracts, etc . In addition to all these, the ship owner has to pay the annual confirmation of the ship’s registration in the State Register of Ships of Moldova, a fee that, according to the Naval Agency, is generally only about 10 percent lower compared to the initial registration fee.
Moldova’s Income for Registering Foreign Ships
We asked Igor Zaharia what Moldova’s interest is in registering foreign ships, that resulted in including our country in the Black List of the Paris Memorandum, as well as involving Moldova’s name in international scandals. The director of the Naval Agency emphasizes that, first of all, Moldova gains financially.
“These are financial means, because money comes from abroad, from non-residents of Moldova. I do not understand why Moldova should refuse such an income,” mentions Igor Zaharia.
The representatives of the Naval Agency claim that since this procedure of ship registration started, the revenues provided to the state budget constituted approximately 5 million lei annually from non-residents of Moldova.
According to a decision on the approval of the Rules for the registration of maritime vessels in Moldova, Moldovan residents can represent the interests of foreign ship owners; they are empowered to act in the name and in the interests of the ship owner and respond to all claims in his name.
“Any company can be a representative of a ship owner. There are no selection criteria. These are strictly economic relations between the economic agent from Moldova and the one from abroad,” explains Igor Zaharia.
According to the Naval Agency, the following companies act as representatives of ship owners with a large percentage of the fleet registered in Moldova: Geoship SRL, GP Management SRL, Dagna SRL, Lawyers office Leonid Karagheaur, Marine Engineering SRL, Vlanta Inter SRL and Euro Marine Service SRL.
Manoli Charalambos, a Cypriot businessman and founder of Geoship SRL, is one of the ship owners’ representatives. He registered the ship Rhosus in the Naval Register of Moldova, the vessel that seven years ago transported 2,700 tons of ammonium nitrate that exploded in the port area of Beirut.
Veaceslav Macaidenco, who ran in 2011 and 2014 for the position of deputy on the PSRM lists, founded and managed since 2018 Marine Engineering SRL. Earlier, Anatolie Labuneț, deputy of the Socialist Party, was founder of the company.
Moldova’s exit to the Danube is a narrow strip of 430 meters. Currently, 308 ships sail under the flag of Moldova, of which 114 are maritime. In 2019-2020, the Naval Agency of Moldova registered 57 sea and river vessels, and another 32 sea vessels got refusals to register for various reasons.