Bloomberg News

Iran Tanker Flagging Threatens Tanzania-U.S. Ties, Lawmaker Says

July 03, 2012

Tanzania must reverse the decision allowing Iranian oil tankers to register in the country or face a breakdown in its ties with the U.S., a member of Congress wrote in a letter to the East African nation’s president.

NITC, an oil-tanker company owned by Iranian pension funds, renamed at least 10 of its vessels and switched them to a Tanzanian flag, according to the Equasis shipping database maintained by the European Commission. The move will assist Iran in evading U.S. and European sanctions, Representative Howard Berman wrote in a June 29 letter to President Jakaya Kikwete, a copy of which was posted on the congressman’s website.

“The decision to accept the re-flagging of NITC vessels casts a shadow over Tanzania’s international reputation,” wrote Berman of California, the top Democrat on the House Committee on Foreign Affairs. “If Tanzania were to allow Iranian vessels to remain under Tanzanian registry, we in the Congress would have no choice but to consider whether to continue the range of bilateral U.S. programs with Tanzania.”

Iran is subject to U.S., European Union and United Nations sanctions over its nuclear program, which the U.S. and EU say is designed to produce atomic weapons and the government in Tehran says is for civilian purposes. The nation is the second-biggest producer in OPEC after Saudia Arabia, and a full EU ban on its oil shipments began July 1. The only tankers signaling Kharg Island, Iran’s biggest oil-export terminal, as their destination yesterday belonged to NITC, ship-tracking data compiled by Bloomberg show.

Insuring Cargoes

EU sanctions ban transporting or insuring Iranian oil, and the concentration of the maritime insurance industry in London means the curbs apply to almost all tankers. The Iranian fleet can handle 1.1 million barrels a day, compared with current sales of 2.3 million barrels, investment bank Dahlman Rose & Co. estimates. Daily exports will probably drop by 1 million barrels to about 1.5 million barrels this year, according to the Paris- based International Energy Agency.

Ownership of the reflagged vessels was switched from NITC to new companies operating from the same address in Tehran and NITC remains the operator, the Equasis shipping database shows. They were previously registered in Malta or Cyprus.

Zanzibar’s Minister for Communications and Infrastructure Hamad Masoud Hamad told the country’s parliament June 29 that a Bloomberg News story on June 25 reporting the reflagging was inaccurate because the tankers aren’t Iranian. His comments were reported in Tanzania’s state-run Daily News. The minister’s list of 11 reflagged tankers that were previously registered in Malta or Cyprus match 10 of those on the Equasis database.

Civic United

Three calls to the minister’s mobile phone yesterday and today weren’t answered. Salva Rweyemamu, a spokesman for Tanzania’s president, didn’t answer three calls to his mobile phone yesterday and today or respond to an e-mail. Jussa Ismail Jussa, a spokesman for Hamad’s Civic United Front party, didn’t answer three calls to his mobile phone yesterday and today.

Zanzibar is an Indian Ocean archipelago in a political union with mainland Tanzania. The U.S. has proposed $571 million in foreign assistance to Tanzania for fiscal year 2013, Adam Sharon, a spokesman for Berman, said in an e-mail. That includes funding for foreign military financing, global health aid and international military education, Sharon said.

Registering the ships in Tanzania breaches President Barack Obama’s Executive Order 13608, signed on May 1, Berman said in his letter. That allows for sanctions to be imposed on any entity, including foreign governments, who assist Iran in evading U.S. sanctions, he said. Berman and Senator Bob Menendez, a New Jersey Democrat, have proposed legislation that would require the Treasury Department to target NITC.

‘International Scrutiny’

NITC is subject to Iran-related sanctions, John Sullivan, a spokesman for the Treasury, said in an e-mailed response to questions. “We are aggressively monitoring Iranian vessel issues and efforts by Iran to evade sanctions and international scrutiny,” Sullivan wrote.

“All the activities of our oil ministry are based on international norms and rumors that are spread should not have a negative impact,” Ramin Mehmanparast, a spokesman for the Iranian Foreign Ministry, said today in Tehran in response to questions about NITC vessels being reflagged.

A contact telephone number provided by the office of Hamid Behbahani, NITC’s chairman, wasn’t answered today and there was no opportunity to leave a message. Habib-ullah Seyedan, NITC’s commercial director, was unavailable for comment, a person answering the phone in his office said. Neither Behbahani nor Seyedan responded to e-mails seeking comment today.

Data compiled from public sources show that of the 39 Iranian tankers originally registered in Cyprus and Malta, 21 were recently renamed or reflagged, said Mark Dubowitz, executive director at the Foundation for Defense of Democracies in Washington and a sanctions specialist who has advised the Obama administration.

To contact the reporter on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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