I think Armenia is a flag of convenience. As I understand it, under international shipping law, a ship has to be registered in a country and must fly that country's flag. However, if a shipping owner wishes to avoid the business taxes, employment laws, safety regulations etc of their own country, there's nothing to stop them from registering the ship in a country that has nothing to do with their business (or indeed which doesn't even have a coastline) but which has cheaper or laxer regulations. A ship registered in such a way, and thus flying that country's flag, is said to be operating under a flag of convenience (an FOC for short).
Some countries seem to specialize in making themselves FOC countries, and some have historically been popular with shipping businesses wishing to operate outside the laws of the countries they trade between. (Panama, for instance, was a popular place for rum runners to register their ships during US prohibition in the 1920s and early 30s). I'd guess that at the time when The Crab was written, Armenia was a popular FOC country, and a likely choice for the Karaboudjan's owner (presumeably Bin Salaad).
Edit: I see that Ranko posted just as I was typing the above. Sorry for the duplication about flags of convenience. Re Ranko's thought about Haddock, I'd guess that the Karaboudjan's owners deliberately employed a legitimate non-criminal captain (rather than simply giving the captaincy to Alan) to make the ship seem legitimate to any authorities and able to trade in a seemingly honest way. But they made sure, of course, that this honest captain was also an easily-controlled drunk. |