Its shipping registry has seen the Islamic Republic of Iran sign up 11 tankers, including seven large crude oil carries, which will now carry the Tuvalu flag.
This comes only days ahead of a European boycott of Iranian oil exports designed to pressure the country over its nuclear program.
But could this lead to Tuvalu getting into deeper international waters than it wants?
Professor Bill Hodge, professor of Law at New Zealand's Auckland University, tells Bruce Hill the Iranians are probably using a Tuvalu flag of convenience to try to get around the sanctions, and this could lead to unforseen consequences for Funafuti.
Presenter: Bruce Hill
Speaker: Professor Bill Hodge, Professor of Law at New Zealand's Auckland University
HODGE: I would think that they're avoiding having their own flag given the European sanctions and the European Union and NATO concerns putting pressure on Iran and this takes it out of the spotlight, at least in theory, of the international sanctions on Iran. So this is different from other shall we say convenience activity, money-raising convenience activities, whether it's printing stamps or coining coins and … and so on. This puts Tuvalu potentially in a flashpoint in the Persian Gulf if NATO, if the Europeans, if the American say we're going to stop this ship, and the captain says sorry, we're a Tuvaluan ship, and I can just see something rather serious arising out of this. We're not talking something humorous, like an East End musical in London, we're not talking about stamps and coins, we're talking about a flashpoint on one of the most dangerous parts of the world.
HILL: What could happen to Tuvalu if an incident like this actually occurs?
HODGE: Well one of the things that occurred to me right away, and this is now taking one step sideways, if something happens and oil is spilled it seems to me Tuvalu becomes a responsible nation, and the question is whether or not Tuvalu has the appropriate insurance machinery in place, it's getting increasingly difficult to re-insure for oil disasters because if something happens to one of these, if it's a tanker and it's owned by the Iranians, are the Iranians going to cover it? Is there an insurance company that's got to Tuvalu covered? Does the government acting of Tuvalu as its own insurer? So there are all sorts of things thinking of just accidents, leaving aside something intentional that would bring Tuvalu into the midst of a confrontation between Europeans, Americans and Iranians. It's not a place where it's very comfortable really for the Tuvaluans.
HILL: From the perspective of the Tuvalu government I suppose you would say it looks like more or less free money, run your own flag of convenience, get some money, it's not particular skin of their nose, why shouldn't they get a piece of the action?
HODGE: Well historically nations like Panama and Liberia have done that and the word convenience is so appropriate because what it means is, well I'd be interested to know to what extent will Tuvalu insist on adherence to international standards, international standards of worker protection, seamen's protection, international protection of the environment, what if there's a discharge, accidental discharge, a leakage, what if they hit a rock somewhere in the Persian Gulf or the Gulf of Mexico, wherever, there are standards that international organisations have been putting place. Is Tuvalu a signatory to all of those conventions, and if so are they answerable if there's a breach by the people running the ships? Because I assume that the captains and officers are not from Tuvalu, although many of the seamen may be because Tuvalu has been sending people to sea, it's been a good source of income for them. But that's I would say honest hard work, and this is I wouldn't say dishonest, but it's certainly like a banking money haven or closer to a place where drug runners send their money to be laundered. This isn't quite that level but it's pretty close.
HILL: Tuvalu's not the first Pacific country to run a flag of convenience operation. Some years ago I remember Tonga also got into a bit of trouble running a flag of convenience operation didn't they?
HODGE: I think Tonga got into big trouble, although that was a little bit worse because I think some of the ships that were flying the Tongan flag were shipping things that they ought not to have been, armaments instead of legitimate cargoes, and that was about as bad as it gets, if you're running guns as opposed to simply running petroleum more cheaply. So Tonga did get into the poo rather deeply and one would hope that Tuvalu, well with Iran who knows what's possible, but I wouldn't exclude that possibility either, that it's not just petroleum, it could be some form of arms, something coming from North Korea, something going down to the Syrians, anything is possible.