Can landlocked countries develop a blue economy?

A United Nations report revealed that poor maritime connectivity prevents smaller and weaker economies from reaching world markets. However, for those few landlocked countries that have developed a maritime industry, the risk seems to have been worth it, as Eva Grey reports

Seaborne trade

is often seen as the backbone of economic growth and development, and the challenges faced by landlocked developing countries (LLDCs) are proof of this. 

Over the years, multiple studies have shown that the pace of development in areas remote from the coast slows down as the distance from the sea increases. Today LLDCs are, as a group, among the poorest in the world.

A new report compiled by the United Nations Conference on Trade and Development (UNCTAD) reminded policy-makers that low shipping connectivity makes weaker economies more vulnerable, and the world is experiencing “a growing rift between the best and worst connected countries”.

There are currently 48 countries (including four partially recognised states) that are completely surrounded by at least one other country. For those most affected, their lack of sea access means they have to contend with fewer, less frequent, less reliable and more costly transport connections. 

However, the United Nations Convention of the Law of the Sea (UNCLOS) of 1982 recognises the right of “every state, whether coastal or land-locked to sail ships flying its flag on the high seas”.

As such, a number of landlocked countries around the world have chosen not to pass on the economic opportunities that a maritime industry can offer. Whether by training seafarers for navigation on the high seas, manufacturing shipping parts, shipbreaking, or the less reputable practice of lending flags of convenience, LLDCs are developing their own blue economies.

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Bolivia’s fight for coastal access

Bolivia lost its territorial access to the sea in the early 1900s, after post-war border divisions between itself and Chile left it a landlocked country. 

Although past negotiations looked into the possibility of providing Bolivia with a “corridor to the sea”, this was never achieved and today, all containers arriving via the Pacific Ocean need to pass through Chilean ports, a difficult and volatile process that often sees Bolivian lorries having to wait in long queues at the mercy of Chilean bureaucracy or internal labour issues. 

All containers arriving via the Pacific Ocean need to pass through Chilean ports

That’s why in 2013, Bolivia filed a lawsuit against its neighbour with the International Court of Justice in The Hague in order to reclaim access to the sea. 

Speaking in September last year, Chilean Foreign Minister Heraldo Muñoz refuted any possibility of dialogue yet again, saying that “there is no obligation to negotiate sovereign access”. 

The case hearings are still ongoing; in the meantime, Bolivia continues to celebrate its traditional Day of the Sea on 23 March each year, and still hosts a navy force.

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Luxembourg’s success story

Speaking in front of the European Commission on Maritime Day in 2016, Luxembourg’s minister for the environment, maritime affairs and fisheries, Karmenu Vella, made an impassioned case for giving landlocked states the opportunity to develop and grow their own blue economies. 

“To many, speaking about the maritime economy in landlocked countries might seem counterintuitive, like placing fire extinguishers on a ship,” he said. “But all of us here know better. We know that blue growth is not just for coastal states. And we have the examples to prove it.”

Luxembourg for one is “punching far above its weight”, as Vella put it. 
Since the creation of its national shipping register in 1990, the number of ships registered in Luxembourg has increased from nearly 150 to around 240 in 2015. 

The number of ships registered in Luxembourg has increased from nearly 150 to around 240 in 2015

Gross tonnage has also tripled from one to three million tons over the same period. This means that today, Luxembourg taps into the European blue economy valued at approximately €500bn. 

Its maritime administration (Commissariat aux affaires maritimes) became the country’s first governmental agency to earn an ISO 9001 quality certification and in 2011, Luxembourg became the fifth EU country to ratify the International Labour Organization’s Maritime Labour Convention.

The country’s tax regime and legislation have also been developed in such a way that allowed the industry to flourish. 

“Numerous synergies involving the financial, insurance and logistics sectors have since then emerged,” writes Robert Biwer, the government commissioner for maritime affairs. “These have led to the creation of the Luxembourg Maritime Cluster, and today a developing maritime sector fits in with the Luxembourg Government’s economy development policy.”

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Austria’s blossoming involvement

Austria has also reached out to surrounding coasts, although more modestly. 

The country has two main gateways operated by shipping carrier ZIM, one to the north and one via the Adriatic. According to the carrier’s website, both gateways are linked from various terminals inside Austria, with block trains operating to the each of the cargo gateways. 

The Port of Hamburg has also been running its own representative office in Austria since 1951

The carrier operates about 80 vessels, with a 344,460 TEU capacity, and its ships stop at 180 ports around the world. 

The Port of Hamburg has also been running its own representative office in Austria since 1951, working to establish good contacts with shippers, forwarders, shipping agencies and operators, as well as trade associations and institutions in the maritime sector.

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Exporting Ethiopia’s seafarer skills

Despite being separated from the Red Sea by a stretch of land less than 200km long, Ethiopia has only recently established direct coastal access, thanks to a Chinese-built 750km-long railway linking Addis Ababa to the port city of Djibouti.

However, Ethiopia’s blue growth has taken a different path until now. A number of agencies and institutes have been training up young Ethiopian seafarers to export their skills on ships all around the world. 

For example, global manning and crewing support agency EMA Marine has been aiming to attract and train the best talent in the country since its foundation in 2011. 

EMTI trains more than 500 officers annually, and is now looking to increase that number to 1,000

“As a country with over 100 million people and exceptional educational standards, Ethiopia is well positioned to meet the manpower needs of the maritime industry,” the company’s website reads. “The maritime field that was at first unknown to most people, since Ethiopia is landlocked, has now become popular.”

Similarly, the Ethiopian Maritime Training Institute (EMTI) also provides professional maritime training for Ethiopian engineering graduates. Working in partnership with Bahir Dar University, EMTI trains more than 500 officers annually, and is now looking to increase that number to 1,000. 

The ultimate goal is to use the boosting economic powers of the maritime industry to “create a large middle class replacing those below the poverty line,” the Ethiopian Maritime Affairs Authority states. Maritime policies are also integrated in the country’s five year national transport plans.

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Mongolia: a muddled approach to maritime growth

As the largest landlocked country in the world, Mongolia has developed a maritime industry whose legitimacy is often disputed by international bodies. 

The Mongolian Ship Registry was first established under then Prime Minister Nambaryn Enkhbayar in February 2003, as “one of the many projects the country has undertaken to improve the investment and economy of the country,” according to its mission statement

Although the registry, officially based in and operating from Singaporean offices, is fully authorised to issue the necessary certificates and documents for ships, multiple investigations have cast doubts on its legality, raisings suspicions that it is in fact giving out flags of convenience. 

Shippers might opt for a Mongolian registration thanks to a range of benefits, such as low taxes

According to the International Ship Registries, shippers might opt for a Mongolian registration thanks to a range of benefits, such as low taxes or no additional costs, no restrictions on crew nationality, and no restrictions on the ownership of any vessel.

A UN report from 2013 found that over the course of the decade, Mongolian merchant fleet grew to reach a total dry weight tonnage capacity of 643,000 tons, the vast majority as bulk carriers or general cargo ships.

Inspections of these vessels under the Tokyo Memorandum of Understanding (MoU), which holds regular port state controls in the Asia-Pacific region, have raised numerous alarms and Mongolian ships have often been blacklisted. For example, in 2016, out of 108 inspections, 96 of the ships were found to have “deficiencies”, resulting in 16 detentions. Mongolia is also present on the list of under-performing ships.

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