Rallying around the “flag of convenience”: Merchant fleet flags and sanctions effectiveness

Abstract

This study argues that the features of the merchant fleet of a sanctioned state are an important determinant of sanctions success. More specifically, I focus on the influence that registration of vessels under a “flag of Convenience” has on a target’s ability to redirect its trade. I argue that when much of the target’s merchant fleet is registered under foreign flags, it is easier for it to employ practices that potentially alleviate third parties’ fears of detection and punishment by the sender, and thus increase its ability to find more potential third-party trading partners. I thus hypothesize that the negative association between a target’s economic integration and sanctions success increases when much of the target’s fleet is foreign-flagged. Conversely, access to a substantial fleet that is registered under the target’s national flag increases the target’s ability to use shipping companies to re-route lost trade with the sender to specific third-party markets. I, therefore, contend that an extensive domestically flagged and owned fleet reduces the target’s vulnerability to disruption of its trade with the sender. I test these arguments using data on targets’ fleet features and sanctions success. Statistical tests spanning 1980–2005 strongly support my expectations.