13 November 2003 – The arrival of a boat in north-eastern fishing ports is traditionally an occasion for celebration. When the Caloosahatchee docked at Hartlepool yesterday, however, it was greeted by jeering protesters calling for its prompt return to the US. Breaking up the 58-year-old tanker and 12 other former US naval vessels due to join it would provide much-needed jobs for the town and pose no threat to its citizens. But environmental campaigners have stirred up irrational fears that could lead to the dismantling of the ships under far more damaging circumstances.

The company at the centre of this controversy, Able UK, is experienced in dismantling oil rigs. It hoped that winning the $17m (£10m) contract to dismantle the 13 merchant vessels from the US naval reserve fleet would lead to more ship-breaking contracts from overseas. Success would bring work to a town with high unemployment and long experience in dirty, heavy work - to a shipyard near a nuclear power station, a chemical manufacturing plant and a sewage treatment works.

But environmental campaigners - led by Friends of the Earth - have attacked the contract as an ecological threat. The ships contain health hazards such as asbestos, lead, mercury, oil and polychlorinated biphenyl chemicals. They are so decrepit, the campaigners say, that they could break up while crossing the Atlantic. If they reached Hartlepool, dismantling them could poison the local environment.

To judge by the rhetoric of the environmentalists, the US flotilla poses an exceptional threat. Yet the ships have no more of the dangerous substances than others of a similar age that are broken up routinely and safely in shipyards around the world.

Despite this, the campaign has struck a chord in Hartlepool, with 90 per cent in a poll opposing the arrival of the ships - a verdict unanimously endorsed by the town council. The fuss has led the Environment Agency, the regulatory quango, to withdraw permission in the absence of certain documents. Meanwhile, court actions are under way to block the work indefinitely and to halt the departure of those still moored in the US.

Few emerge with credit from this story. The Environment Agency has proved inept in first issuing the necessary licence and then withdrawing it. The government has been slow to defend the contract, despite backing ship-breaking as an important and legitimate trade that the UK could excel in. Friends of the Earth has exaggerated the environmental threat in much the same way that Greenpeace did in its successful campaign to stop Shell sinking the Brent Spar oil platform in deep waters in 1995.

The tragedy of these events is that ship-owners with vessels to decommission will be more likely to send them to countries where there is little or no regulation to add to the cost or threaten embarrassment. If that is the outcome, the global environment will be the real loser.

We see the Englishmen first, a little red tug on a wide, rainswept horizon. A minute later a shape to port, merging and then disappearing into the pallid dawn set against the distant industrial landscape of steelworks, chemical plants, old docks and power stations. And then the "ghost ship" Caloosahatchee emerges solidly as a vast hulk of metal on a long steel hawser eight miles off the port of Hartlepool.

Bobbing along in the tiny MV Constant Friend, a fishing smack almost as antique as the Caloosahatchee, we approach gingerly the 58-year-old ship's rotting stern. It flies no flag, has no name painted on its side and carries no crew, lights or identification, apart from "Twin screws Keep clear" stencilled in large letters on the rusting starboard flank.

Dave, the Constant Friend's skipper, a Lincolnshire man who has taken to prawning off Hartlepool, is impressed. "They built ships in those days. The new ones are like baked bean tins compared to this. They should leave her out here so we can run tourist trips to the ghost fleet. All she needs is a lick of paint."

All the ICI paint and chemical factories on Teesside would hardly spruce up the Caloosahatchee. It is huge, ugly, dead in the water. At least 180 metres (200 yards) long and 25 metres (80ft) high, this 15,000-tonne carcass of a wartime US supply ship is a modern Mary Celeste. For 20 years it has been neglected, and to the untutored eye is just a mass of twisted metal, warped derricks and gangways, empty apart from several hundred tonnes of asbestos and dangerous chemicals.

The first of four of the redundant US navy reserve fleet - one more follows today and two next week - is technically in British waters illegally after the Hartlepool dock where it was bound was revealed to have no planning permission. Last week the government gave permission for it to come, then rescinded the offer following court challenges and finally said it could be stored here temporarily because it would be too dangerous to tow it back to the James river in Virginia, 4,000 miles away, in potentially heavy winter seas.

So here it is, listing slightly to starboard, motionless in the swell, waiting for the 11am tide and three local tugs to manoeuvre it into the Tees estuary and up the Seaton channel to the yard of Able UK, the company that won the contract to scrap it and its 12 fellow ships. If the Caloosahatchee received no attention whatsoever in 45 years of carting military hardware between the world's trouble spots, it is now a true celebrity, attracting worldwide television coverage, protests on both sides of the Atlantic and court cases by the cargoload.

"Look at it. What on earth are we doing taking this boat 4,000 miles across the Atlantic? Why has the government given permission for it to come here; it's a scandal," says one woman outside a Friends of the Earth meeting at the nearby Seaton Carew cricket club.

The protesters, mainly local women, have been barred from going anywhere near the ship, but are angry. "My fear is that now that the first four boats are coming we'll never get rid of them. They'll just sit here, like they did in the US, for years," says Margaret Sneddon from the local environmental justice group, Impact.

She and 30-40 others are concerned about the way the government has handled the fiasco, the support given to the venture by the town's MP, Peter Mandelson, and the image that the Caloosahatchee's arrival gives the world of Hartlepool as a "dustbin town", ready to take the world's waste.

"I'm also furious about being told I'm a hysterical member of the public being whipped up by environmentalists. I'm not. I'm a local woman and I'm worried about what is being dumped in my backyard," says Barbara Crosbie.

"We want the ships to be immediately checked, made safe and returned to the US as soon as is practical," said Tony Juniper, head of Friends of the Earth. "The government, the EU environment commissioner and wider international law all say that the ships are illegal. The first four alone contain more than 400 tonnes of PCBs [the highly toxic, long-lasting chemicals once widely used in industrial materials] and hundreds of tonnes of asbestos."

Out in the calm Tees, the mists have cleared and the Englishmen tug hands over to three smaller Middlesbrough ones who slowly nudge and pull the Caloosahatchee into the Seaton channel. It comes in stern-first, but not before a team of Able UK workers hangs a publicity banner on it, and claim it for the company at the centre of the storm. It takes a further hour for it to reach Hartlepool's nuclear power station, next to the Graythorp yard which is to be its home for at least three months, and possibly for ever.

This is the face of Britain seldom seen. The huge chemical works next door, the belching, flaring steel mills opposite and the piles of scrap metal stacked around, shock many, but Peter Stephenson, Able UK's owner, is ebullient, and talks of wanting to build ships again, too. Under the terms of the contract with the US government, he takes ownership of the boats on delivery.

Now he must again persuade the local council and various quangos that his yard can handle the 13 ships, which according to the US authorities between them carry 1,400 tonnes of asbestos and almost 700 tonnes of PCBs. The fact that his yard, described by the company and the government as a "world-class facility" for dismantling ships, is in reality little more than a large square of open water without dock gates or evidence of much heavy-lifting equipment, is immaterial. Possession being vital, he believes he is now in a strong position to dismantle them.

By now the Caloosahatchee has been made fast to the dockside and the Environment Agency and Able staff swarm aboard the old hulk.

"All this ship contains is two wagon-loads of asbestos," says Mr Stephenson. "There is less risk here of pollution than in all other work we have done. Environment secretary Margaret Beckett made a statement on the basis of what she was told by the Environment Agency, which was wrong."

Will the ship be returned to the US, or be scrapped in Hartlepool?

"If I were Mr Stephenson I wouldn't be too confident about scrapping any boats here," said Neil Marley, a resident. "This is our home, not America's dump."