KeepTalkingGreece — German finance minister Wolfgang Schaeuble attacked on Thursday prime minister Alexis Tsipras for “not having taxed Greece’s powerful shipowners as he had promised.” Tsipras had made many promises before the elections that he was forced by the lenders themselves to abandon.
Why then did Schaeuble care about taxing Greek shipowners but didn’t give a dam about the other promises?
The answer became clear after the Greek shipowners responded to Schaeuble: it is Schaeuble’s struggle to win the votes of German shipowners and has nothing to do with Tsipras pre-election promises. It is the struggle of German shipowners to win flag attractiveness the moment the German shipping realizes it had much better days.
In a statement released by the Union of Greek Shipowners, chairman and shipowner Theodoros Veniamis writes:
“The recent and unwarranted attack on our country by the German Finance Minister, Mr. Schäuble, and in particular against Greek shipowners has raised questions.
It seems Mr. Schäuble has chosen to ignore the particularly favourable regime enjoyed by German shipping, while attacking the regime of Greek shipping, which, also, amounts to 50% of EU shipping, an achievement that seems to cause annoyance.
At a time when the European Union is called upon to underpin and enhance the competitiveness of its shipping industry against fierce international competition, Mr Schäuble’s criticisms are especially inopportune and unfounded.
The question that also arises is whether, despite favourable arrangements at all levels (shipownership, ship management, natural persons), the inability of the German maritime policy to successfully support its shipping is the motivation behind the Minister’s statement.
If the aim of his statement is to undermine the close ties of Greek shipping with its homeland, then it demonstrates that he does not want to see Greece on a path of growth at last.
For Mr. Schäuble’s information, the Greek shipping community in its entirety responded to the need to enhance the national revenues with its decision four years ago to voluntarily double its annual tonnage tax liability per vessel, even though it historically enjoys constitutional guarantees regarding the level of taxation. This is an initiative that proves the unity and solidarity of the Greek shipping community with its homeland.”
It is not the first time that the German finance minister had asked Greece to tax the shipowners claiming that if they were taxed, the country would not need additional loans.
However, Greek shipowners say that behind Schaeuble’s statements is the fact that much of the commercial fleet Germany tried to build was bought by Greek shipowners. “And that, even though Germany has created the best tax framework for shipping within Europe,” shipowners sources told media. They attributed Schaeuble’s statements to European maritime interests.
Bad times for German Shipping
The German Reeder Association announced last year that the German commercial fleet decreased for the third consecutive year, losing a third of its fleet since 2012. In 2017, a total of 182 German ships were sold, 68 of them were container ships which are the backbone of German shipping. Many of them were bought by Greek shipowners.
A couple of months ago, German Transportation Minister Alexander Dobrindt had promised to German Reeder Association ‘state support in manpower and insurance contributions.’ He assured German shipowners that Berlin ‘will boost the competitiveness of the German shipowner.’ Dobrindt’s promises followed promises by Chancellor Angela Merkel to ‘create incentives in order to make the German flag attractive.’
German banks are the biggest providers of shipping loans.
High-profile shipping company goes bankrupt
Rickmers Holding (114 ships, 2,000 jobs) filed for insolvency on Thursday. Creditors demanded 275 million euro back. It is the first bankruptcy in German shipping since the crisis of 2008 broke out. However, “small shipping companies have disappeared from the market.” Rickmers bankruptcy may trigger large wake to hit the German shipping.
Rickmers is the most high-profile casualty in Germany’s shipping sector and another example of the deepening turmoil in a global container industry struggling with an oversupply of vessels and sluggish trade growth.
They pointed out that Schaeuble was wrong for one more reason “because Greek shipping is part of the European one, and if it moves to other countries outside Europe, the loss will be significant.”
A recent study conducted by Deloitte Monitor on behalf of the European Community Shipowners’ Associations (ECSA) pointed out at a number of policy gaps in EU’s shipping strategy that should be addressed in order to enhance EU’s competitiveness worldwide.
The study compares the overall EU policy framework for shipping with policies of Singapore, Hong Kong, Dubai, Shanghai and Vancouver. The benchmark exercise is based on eight criteria: taxation and fiscal incentives, availability of professional services, regulatory, economic and political factors, skills, flag attractiveness, ease of doing business, legal framework for vessel exploitation and availability of finance.
The study came to the conclusion that the EU policy for shipping has deficiencies especially in the criteria fields of taxation and fiscal incentives, flag attractiveness and legal framework.
According to the Deloitte tax department, the Greek tonnage tax (imposed on tonnage of the fleet) is estimated to be three times higher than the second highest in the EU. And ten times bigger than of Malta.
In fact, Deloitte calculates that a Greek shipowner pays a tax of 66,770 euros for a tanker of 51,000 tons (dwt) and 68,328 euros for a container ship of 58,000 tons (dwt), while for identical vessels a German shipowner pays 22,037 euros and 23,850 euros respectively.
