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The Fiesta, a passenger cruise ship, burned and sank at a port in Greece in mid-October. The 33-year-old ship, formerly the Vera Cruz I, had been inspected less than a year before by the U.S. Coast Guard in Tampa, Fla., and found to comply with current standards for passenger-vessel safety.

Despite being inspected and approved by the Coast Guard, older passenger ships such as the Fiesta pose a fire hazard because of loopholes in international safety standards for seagoing vessels, government and private safety experts said.

The biggest problem is that the oldest operating ships, those least likely to be fireproof by current standards, are subject to the most lax regulations because of grandfathering.

”You`ve got too much . . . stuff that is going to burn on these ships,” said D.A. Calicchio, a retired Coast Guard captain and a private marine surveyor who had inspected the Vera Cruz I for some potential buyers.

What makes this case especially ironic is that the Coast Guard tried to be particularly diligent in making sure the ship conformed to fire-safety requirements. The agency turned up 113 safety code infractions in its initial survey in October 1990. It also sharply criticized a foreign inspection agency that had inspected the ship two weeks earlier and had certified its safety.

After the infractions identified by the Coast Guard were corrected, the agency ruled the ship was in compliance with international safety construction codes and rules, according to a memorandum dated Nov. 9, 1990.

Nevertheless, the ship caught fire and burned out of control less than a year later at a shipyard near Piraeus, Greece, according to shipping reports from Lloyd`s of London. Nobody was killed, but the fire apparently could not be stopped because of the amount of combustible material used in construction. ”The combustible materials on that ship, by international convention, are not controlled,” said Capt. Thomas E. Thompson, chief of the marine technical and hazardous materials division of the Coast Guard in Washington.

That`s the case with many passenger ships operating in U.S. trades today. More than 100 such vessels are serving U.S. ports, according to the Coast Guard. More than half of these ships are more than 20 years old, making them subject to construction codes and safety regulations created as long ago as 1954.

Those regulations are outlined in the Safety of Life at Sea conventions negotiated by the world`s seafaring nations and administered by the International Maritime Organization. The rules allow ship interiors and bulkheads to be built with combustible materials as long as various types of sprinkler or alarm systems are installed. Not all ships are required to have sprinkler systems.

Time has rendered many of those construction standards obsolete and revealed many of the old sprinkler and alarm systems to be ineffective.

International safety conventions have been amended to improve safety standards and reduce the amount of combustible material in passenger ships. Vessels built before the new standards, however, are exempt.

When the newer standards were put into place, it was believed that the older ships soon would be retired, said Coast Guard and maritime officials familiar with the history of the international safety conventions. However, as the costs of shipbuilding rose, passenger cruise ships were kept in service longer.

The Fiesta`s experience isn`t isolated. The Scandinavian Star, for example, caught fire as it sailed from Oslo to Frederikshavn on April 7, 1990, with 500 people on board; 158 people died.

The International Maritime Organization, which establishes international safety standards, has several proposals for improving the safety of older ships in the passenger fleet, according to Coast Guard and maritime officials. The leading proposal would phase out older ship construction standards by 2010 and require new, modern sprinkler systems on all ships by 1994.

Some countries, however, object to the proposal because of the estimated cost of $10 million per ship to install modern sprinkler systems on old vessels.

The Coast Guard has tried to be anticipatory in its safety inspection program and has intensified inspections of foreign passenger ships, Thompson said. In many cases the Coast Guard has discovered safety problems with the ships after they have been inspected and approved by ”classification societies,” agencies used by foreign governments and shipowners to inspect ships for insurance and certification purposes, Thompson said.

Not all ships older than 20 are equipped according to the obsolete standards, the Coast Guard captain added. Many have been upgraded or built to higher standards.

The potential for disaster has drawn the attention of Congress. The House Merchant Marine and Fisheries Committee has asked the General Accounting Office, the congressional investigation unit, to examine safety standards and the Coast Guard inspection program for passenger vessel safety.