Greek shipping and the financial crisis
Posted on | April 13, 2010 | No Comments
What do Greek shipowners make of their country’s current fiscal crisis, and how will it affect their willingness to invest? As we scratch our heads about what might happen to all that Chinese-built tonnage, whether or not we buy the story that lots of it has been or will be “cancelled” for- ever, a study of Greek shipping’s history may be instructive.
I recently asked a Greek shipowner how he was taking his country’s Euro crisis. He replied: “Look, Clay, except for a few olive trees, I have relativelyfew significant investments that could be affected”.
The history of Greece has not encouraged much investment. Like the Chinese, the Greeks have flourished in many parts of the world; and like the Chinese, they are a nation of traders.
But the broadly distributed Greek diaspora cannot be unaffected by what is occurring. Greeks borrow from Greek banks, and many non-Greek lenders, like Lloyds HBOS (ex Bank of Scotland) are now largely out of the market. Greece’s national debt is now so huge that it may be unable to restructure without a devaluation, default or international rescue. This can only impair the ability of Greece’s banks to lend.
There is another, more subtle problem. For decades, successive Greek governments, even Socialist ones, have been solicitous of the commercial interests of Greece’s shipowners, to the extent of making the Greek flag a friendly and welcoming locale. The maritime sector is, after all, Greece’s only “national champion”. Once banking support for shipping, ashore in Greece, ends, under the lash of the European Central Bank and the IMF, it is hard to see any future incentive for future Greek governments to legislate in favour of the largely expatriate shipping sector.
During the crisis, depositors have withdrawn ten billion euros from the Greek banking system. If, as now seems likely, capital flight brings about a collapse of credit, the Greek recession will get worse. Debt markets will cease to function, and it will not be possible to refloat at sustainable rates. No wonder the Greek shipping sector isn’t too keen on Greece.
What do you think?
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