Panama Registry Set to Remove 128 Ships as US Sanctions Tighten

The Panama Maritime Authority (PMA) has announced a significant move to revoke the registration of 128 vessels linked to sanctioned countries, a decision that underscores the tightening of US sanctions and the global push for stricter compliance with international regulations. This action, driven by Executive Decree No. 512 issued by Panama’s President Jose Raul Molino on October 18, 2024, aims to immediately revoke the registration and navigation licenses of vessels appearing on international sanctions lists, including those issued by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), the United Nations Security Council, the European Union, and the United Kingdom.

The PMA’s decision is part of a broader effort to enhance compliance with international sanctions and to protect Panama’s national interests. The new legal mechanism allows for the swift cancellation of vessel registrations, a process that previously took months due to bureaucratic hurdles. This streamlined approach ensures that vessels listed on sanctions lists will have their registrations and navigation licenses revoked promptly, along with any other navigation documents issued by the PMA.



The impact of this decision on the global shipping industry is expected to be substantial. The removal of 128 ships from the Panama Registry, which accounts for 15% of the global merchant fleet tonnage, will create a shortage in shipping capacity. This shortage is likely to lead to supply chain disruptions, increased transit times, and higher freight rates. Compliant shipping companies will face operational challenges as they seek alternative vessels to transport goods, potentially increasing their costs and reducing profitability.

The geopolitical implications of Panama’s decision are also significant. The revocation of vessel registrations could strain Panama’s relationships with sanctioned countries such as Russia, Iran, and Venezuela, which have been accused of using Panama-flagged vessels to evade sanctions. These countries might respond with retaliatory actions, including imposing their own sanctions on Panama or taking other punitive measures. Conversely, Panama’s decision could strengthen its ties with the United States and other countries that have imposed the sanctions, potentially leading to increased trade, investment, and diplomatic support.

However, there are potential risks and unintended consequences. The deregistration of a significant number of vessels could lead to a loss of revenue for Panama and a decrease in its influence in the global shipping industry. The PMA has emphasized its commitment to protecting national interests and maintaining the integrity of the global shipping industry, but the long-term economic impact of this decision remains to be seen.

In conclusion, Panama’s decision to revoke the registration of 128 vessels linked to sanctioned countries is a significant move that reflects the tightening of US sanctions and the global push for stricter compliance with international regulations. While this decision will have substantial impacts on the global shipping industry and Panama’s geopolitical relationships, it also underscores the country’s commitment to maintaining the integrity of its ship registry and protecting its national interests. The long-term effects of this decision will depend on how Panama navigates the complex geopolitical landscape and adapts to the changing dynamics of the global shipping industry.