Our shipping is being prodded to abandon the Greek flag

By Yannis Marinos

As it turns out, 1997 did not begin in the most propitious manner for the government of Mr. Simitis. One had a shipwreck with dead people, flooding with dead people, and missiles in Cyprus that triggered Turkish threats of war, which would bring who knows how many dead, regardless of the outcome.

While all this and other similar events left their mark with their negative repercussions on the new year, along came the strikes of seamen over new taxes, which the government imprudently imposed with the new tax law, to highlight an already major problem – which began casting its heavy shadow last year (a lucky year according to those journalists who offer praise on order) – the provocative ignoring of which can have a devastating impact on the only economically healthy and internationally competitive sector of the Greek economy – our Merchant Marine.

The readers of Oikonomikos Tachydromos have long ago been informed. For years one has heralded the repercussions of the tragicomic irresponsibility of shipping policy over the last 15 years, which has served in the short term certain seamen and shipowners, but which rendered unavoidable the crisis that is already breaking out.

However, “informed” citizens (those misinformed by the electronic media of radio and television) have no idea, as it never was mentioned in newscasts, and naturally there was no televised discussion of the fact that for months, one after another, our merchant marine ships have been abandoning the Greek registry, taking down the Greek flag and raising that of another country.

That is because the (non) shipping policy of our government does not help them maintain and bolster their international competitiveness.

On the contrary, in seeking new roads for a wayward left-wing ideology, the government now conceived the bright idea to make life even more difficult for our shipping, to prod our ships toward an even more rapid abandonment of Greeks registries, and to enrage our seamen, already tried by repeated drownings, with a more unfavourable tax regime.

This “bright” policy was hatched at a time when other EU countries were hammering out opposite policies, aiming at bolstering their Merchant Marine with the boldest measures, the mere mention of which can provoke a collective heart attack in reactionary left-wing circles of the ruling party and of the KKE Greek Communist party, which has overtaken seamen’s unions.

Let us be perfectly clear. There is a problem of a prospective complete de-Hellenisation of our Merchant Marine. That is not just a manner of speaking. It can occur within a few days, because, as the late Georgios Papandreou said, “Ships have a propeller and leave.” The reason is both simple and enormously painful. Each day that goes by, the competitiveness of Greek ships is being downgraded, while the competitiveness of many other flags, especially European ones, is improving significantly.

Thus, as the Greek flag becomes a disadvantage for our shipowners, they abandon Greek registries en masse. As the Union of Greek Shipowners warns, it is possible that in the near future an “irreversible” situation will be created. The “great naval power Greece will be left without a Greek fleet”, as the Greek Shipping Cooperation Committee of London noted, underlining that “our European competitors are already celebrating”, (as are the forces of the Marxist left, I might add).

Let us offer first a representation of the problem with data, though it has been outlined in many articles by our collaborator Dimitris Kapranos, and by the president of the Committee, Ioannis Hadjipateras, in an interview with Oikonomikos Tachydromos.

In 1996, 193 ships with a total capacity of 4,340,457 register tons were removed from the Greek registries, while only 81 ships with a capacity of 2,356, 028 register tons were registered. Hence, the Greek flag lost 112 ships with a capacity of two million tons. Hence, the fleet was limited to 2,000 ships, approaching a 15-year low.

It should be noted that in 1981, the Greek-flag fleet numbered 3,896 ships, with a total capacity of 42.4 million register tons. Since then, due to the socialist policies of the then government, which was unfortunately supported by the unions, which as always were comprised of non-working individuals who were seamen only in name, the Greek flag began a ceaseless decline. The number of Greek-flag ships in 1996 had declined to 2,019, with a capacity of 27.9 million register tons, about half the original number!

This dramatic development never preoccupied the mass media, and never attracted the interest of political parties (which can concern themselves for days with whether the price of petrol will be hiked by one drachma or if the price of tomatoes at Christmas will rise by 10 drachmas per kilo). It limited the presence of the Greek-flag fleet (which remains the world’s largest), with all the ramifications that may have on the loss of currency revenues, and the prestige of the only sector is which Greece is the sole superpower. It cost 30,000 jobs, which were lost from 1974 until today.

While in 1974 there were 120,000 Greek seamen, today there are only 27,000 serving. There are 65,000 retired seamen, triple the number of those who are active. That makes it easier to understand why the Seamen’s Pension Fund (NAT) has gone bankrupt. Its deficit is expected to reach 130mn drachmas this year, which is largely covered by the state budget, as its revenues are only 32 million drachmas!

To better understand why the problem lies in Greece and in the absence of a serious shipping policy, one may note that in 1988, while the Greek-owned (regardless of flag) Merchant Marine fleet numbered 2,487 ships, in March, 1996, it exceeded 3,240 ships, with a total capacity of 75,156, 763 register tons, and is the largest in the world.

Greek-owned shipping was able to become the largest in the world, and today can be saved, because the Greek state cannot drown it, as it does other productive sectors, as if it is pressured it can change flag.

In order to better understand what all this means and where it leads, one must call to mind that the Greek Merchant Marine is the world’s largest, and why it is the only sector of the national economy that is growing ceaselessly, and why it does not exhibit the weaknesses and misery of industry, agriculture, and light industry.

The answer is simple. Greek shipping (which we must never forget had as its stable starting point Greek seamen, who from sailors and captains became shipowners) developed in such a noteworthy fashion , because it works as a transport player on a global level, and is not dependent on any economic conditions in Greece.

At the same time, it can avoid the suffocating intervention of the Greek state, as it has the ability to withdraw from the Greek registries and sail under another flag.

Thus, the Greek state, despite its vibrant wish to pressure and if possible destroy the shipping sector, is unable to do so, due to the prospective flag switch. The same applies to the forces of the left and of “progress”, which harbour a deadly hatred for anything related to shipowners.

The only thing that saves the shipping sector is that it invests large amounts of money to support football teams, and more recently basketball teams as well, so that the influence of their fans will deter political parties from destroying shipping, the par excellence expression of capitalist triumph, and the only genuinely capitalist sector in our country, operating in free market conditions, without subsidies and protectionism.

The safety valve of a flag change make it difficult for state bureaucrats to offer protection and toleration in return for bribes, about which we do not know whether there is still a 500mn drachma ceiling, as the late Andreas Papandreou once said famously.

The regular readers of this column know that the precondition for the survival of a business and of a productive sector of a national economy in a globaliseed world is its international competitiveness. That may be hidden from the Greek people, because it is not in the interest of populist politicians and of the broader occupation army (the broader public sector). It has a political cost and entails the reform of the economy, shrinking the state, and putting public finances in order.

Yet, Greek shipowners know this well. If they do not have an internationally competitive cost, and if they cannot offer their transport services with low fees and with the terms mandated by the international market, then their clients will turn to ships with a different flag.

Until now, those who have Greek-flag ships (usually newer vessels), thanks to their low taxation, to the profit margin, to their good name in the international market, and to their (internationally acknowledged) entrepreneurial daemon, survived and maintained about half their ships under the Greek flag, while keeping the rest under foreign flags of opportunity , so as to balance revenues and losses with an adequate amount left over.

However, over the last years, the conditions of international commerce and transport have been changing dramatically, as Third World countries develop their own shipping, with lower fares. China is entering the game with the ambitions of a potential shipping superpower. There are neo-capitalist countries of the former Eastern Bloc with incredibly lower labour costs than Greece. A Greek First Captain has a monthly salary of 6,500 dollars. A Yugoslav makes 3,600 dollars, a Pole 3,475, and an Egyptian 2,300 dollars.

A Greek sailor is paid 2,100 dollars, while the Yugoslav receives 900, and the Egyptian sailor 500.

At the same time, EU countries – which are tested by their much higher costs and feel like poor relatives of European shipping, as half the European fleet is Greek-flag – decided to save their own shipping and bring back their ships that sail under foreign flags to the EU registries.

The sense of disappointment was aggravated by stubbornly low fares, which although they sent a lot of old ships to dissolution, were maintained by the new shipbuilding of more automatised ships at lower cost, while the latest predictions are ominous for dry freight, due to overstaffing.

Thus, almost suddenly, the Greek Merchant Marine fleet began to confront a problem of competitiveness, and consequently of survival.

While shipowners’ organisations were ringing the alarm bell for some time, without being heard by Greek governments, which change shipping ministers more frequently than their shirts, along came the new convergence budget, which seeks revenues from everywhere to cover huge public sector deficits (which are now covered only by borrowing), to impose new burdens on Greek shipping.

With a tax hike, the government riled up the until now peaceful seamen, who never used to strike. Hence, the shipowners, especially those engaged in coastal shipping and cruise ship owners, who were suffering more in terms of low competitiveness, backed the disgruntled seamen, demanding not only that their low taxation rate be maintained, but that their taxation be abolished entirely, as is the case in most EU countries.

At the same time, they are demanding that the government change existing tax and labour laws which, as much as it may seem a lie (since that is what left-wing propaganda against shipowners maintains), are the most burdensome in almost the entire EU, and not only.

Under the existing taxation system, Greek ships are taxed based on their capacity, regardless of whether they make profits or losses. According to a study by the Centre of Programming and Economic Research (KEPE), based on the existing tax system, ships registered with the Piraeus tax bureau paid 7.8bn drachmas for 1994, and 7.7bn for 1995. If they were burdened with income tax based on their true profits, they would pay just 614 million drachmas for 1994, and zero drachms for 1995! (as the KEPE study says they made no profits that year).

Labour law forces shipowners to make sure that 60 percent of their crews be Greek seamen. The remaining 40 percent can include other nationalities, mainly in lower-level crew staff. There is no analogous obligation in most other shipping countries, including EU countries.

The EU is already adopting measures to increase its competitiveness, which among other moves abolish the mandatory staffing of ships with seamen who are nationals of the country under whose flag they are sailing. Oikonomikos Tachydromos reported recently that The Netherlands decided that only the captain must have Dutch citizenship. That brought 70 ships back to the country’s shipping registry.

In the UK, which once ruled the seas, the freeing up of the labour market was even more radical, as the law provided that even the captain can be a non-UK national.

With such bold measures, accompanied by the full exemption of seamen from income tax, and with subsidies for shipyards – which for unknown reasons is not implemented in Greece, even though it would give work to shipyards – it is obvious that the international competitiveness of Merchant Marine fleets of other EU countries is growing with leaps and bounds.

Greece is the only country that by exception maintains the aforementioned unfavourable regime at the expense of its shipping, and indeed adds even new tax burdens, full of shoddy provisions that ignore the problems that lead Greek shipowners to abandon the Greek flag.

In their view, given the behavior of the Greek state, if they maintain the Greek flag, they will be led to certain bankruptcy due to higher costs. Moreover, they will lose their clientele if they increase fares, in which case the economic result is again bankruptcy.

It is obvious that handling the problem of the Greek Merchant Marine is neither easy, nor without repercussions. Not accepting the demands of shipowners will expedite the flight of ships from the Greek registries, and will lead to the de-Hellenisation of the healthiest sector of the national economy. It brings foreign currency into the balance. The national income increases, 30,000 Greek nationals are offered work, and the Greek name is promoted positively on an international scale.

However, accepting the demands of shipowners, if it is done in a raw manner and without mutual commitments, can trigger a sudden increase of unemployment in the seamen’s sector, which until today has had high employment rates, with extremely low or zero unemployment. This is despite the opposing arguments advanced by their unions, after they came under the control of cadres of the Greek Communist Party KKE, which is attempting to inflate the problem, so that it can seek votes as the only interested protector of our seamen.

“Take measures now for our shipping, to maintain its predominant position, which makes us proud internationally, because we believe that one will bear an historic responsibility if suitable measures are not taken in a timely manner to confront its serious problems,” warned the Union of Shipowners of Passenger Ships president Andreas Potamianos and vice-president Gerasimos Strintzis.

The Pan-Hellenic Seamen’s Federation’s general secretary, Yannis Halas, in his last interview with Oikonomikos Tachydromos, underlines that, “What is required is the launching of a national crusade to save our Merchant Marine. The state must take the initiative, calling all players to enter into a national dialogue, in which we shall all participate as equal partners.”

Yet, I shall have to revisit this issue.