Greek shipping, the government and a land of promises

At the national level the government’s promise that terms of the new bailout loan would be finalised before the end of the month, was honored, just, when first acceptance within the Greek parliament squeaked through, and then the country’s creditors 29 July finally cleared the way for the new loan tranche of EUR5.7bn ($7.75bn) to be disbursed.

Materalisation of the loan came after a new round of promises by the government, both to its international creditors and to Greeks. Creditors are calling for tough measures to allow a final disbursement in the autumn, which the government says it will meet, while telling the country’s citizens it will try and keep hardship to a minimum. How this is going to work promises to be interesting.

Shipping and Aegean minister Miltiadis Varvitsiotis has been forced to defend Greek shipowners accused by some of not keeping their promise to take part in the voluntary tonnage-tax scheme agreed by Prime minister Antonis Samaras and the Piraeus-based Union of Greek Shipowners (UGS). The scheme seeks to raise a minimum Euro 635m ($833m) for state coffers over four years.

Varvitsiotis says criticism of shipping taxes is populist talk stemming from ignorance or expediency. He told the media "tax free shipping has existed in Greece since 1952, with owners quickly able to opt out or leave the country if higher levies are introduced". He said: "The reality is if we introduce taxes to shipping funds, then the shipping operations will move from Piraeus.”

Mid-July 441 companies operating 2,769 ships had pledged to be part of the scheme, a relatively small number claim some analysts.

UGS president, Theodore Veniamis promised continued support from shipping. “We were, are, and always will be present in anything Greece asks us," he has said.

Samaras has also told heads of the country’s banks the banking system needs to make a substantial contribution toward strengthening liquidity and helping the ailing economy rebound. They have promised to examine conditions for the reduction of interest rates of loans, aimed at reducing the burden on borrowers.

A key goal of the government moving forward more slowly than hoped is the privatisation of Piraeus port. Varvitsiotis says Chinese group Cosco is keenly interested, but both Cosco and Greece are facing a "problem with the EU over the issue of competitiveness".

Meanwhile, Cosco, which holds a 35-year concession to operate box terminals II and III, has put a brake on a EUR224m investment it wishes to complete while the tender for the port authority’s sale has been delayed. Cosco is the main suitor, but it cannot be certain it will win the tender so the investment is on hold.

Brussels has asked for clarifications of the memorandum officially signed 27 June by Cosco's then president, Wei Jiafu, Varvitsiotis, Piraeus Port Authority boss, George Anomeritis and the privatisation body. All had ‘promised’ to do all in their power to complete the sale process by 25 July.

Varvitsiotis has told Piraeus business leaders, the city should reap more benefits from the port. He said "privatisation is dictated by the government's need to boost revenues by attracting investment, creating jobs for young people, broaden the cruise policies and strengthen the profitable strategic cooperation with China”.

With Greek state employee firings set to rise to meet creditors’ targets Varvitsiotis has assured Hellenic Coast Guard personnel "there is no possibility of further cuts to wages and pensions, particularly for the uniformed,” which he says are now “more productive than ever”.

Varvitsiotis has told short-sea ship operators crew composition would be reviewed in a bid to stem the flow of ships of around 3,000gt leaving the home flag, a move costing Greeks their jobs. “My goal is for the Greek flag to become more competitive and so to prevail in the Mediterranean and European seas,” said the minister.

Promises, promises, promises.