Greece is currently enduring one of the worst economic depressions to hit a developed country in historians' memory. The figures compare with  – and in some areas even exceed – the Great Depression of the 1930s: Greece has lost more than one-quarter of its economic output in just a few years since the imposition of austerity policies to attempt to tackle the nation's debt crisis. Unemployment jumped to 27% and youth unemployment has reached a high of 60%.

As one of Greece's chief industries, where does shipping stand amid this terrible crisis, and how is it being affected?

The answers to these questions have profound importance for Greece's future, but they also have importance for Europe and should be clearly understood by policy-makers in Brussels.

The Greek-owned fleet is first internationally, no matter whether counted by carrying capacity, value or even quality. Comprising nearly 4,000 vessels of over 1,000 gt and a total of about 285 million tons dwt, it represents 17% of world tonnage. While the Greek-flagged fleet ranks second in the EU, the combined total of Greek-owned ships under all EU flags accounts for nearly half of all European-registered tonnage.

Greek shipping was not always based predominantly in Greece. At the dawn of the 20th century, in the early days of steam, it developed mainly in the UK. In the aftermath of World War II, shipowners were chiefly to be found in London and New York. Piraeus only became a flourishing modern shipping centre after Greek shipowners began to be attracted back to the mother country by friendly taxation laws introduced in the 1950s. These were reinforced by legislation in the 1970s.

Subsequently, the model of tonnage tax begun in Greece has been internationally recognised as a suitable form of taxation for the shipping industry and it has been adopted in various forms by most other countries in Europe.

MONEY IN

Although shipping has great importance for the Greek economy, it is peculiar among the country's industries in deriving almost no business from Greece. Being global in scope, its shipping companies take 99% of their cargoes from the international market. Less than 1% come from Greek exports or imports. Greek shipping has never received any subsidies from the Greek state, nor do shipping operations (with the exception of the domestic ferry companies) depend on Greek infrastructure. Meanwhile the vast majority of finance for Greek ships comes from international banks and international funds, with only a minority financed by Greek banks.

Therefore, shipping is purely a positive contributor to the Greek economy, differentiating itself from the country's other main economic 'pillar' – tourism, that relies on spending on airports, roads, ports, hotel facilities and other infrastructures. Touristic enterprises from time to time have also been supported by Greek and EU grants.

Yet for decades revenues from shipping have covered more than 35% of the country's trade deficit. Given the plunge in the overall economy, shipping now accounts for an estimated 8% of national GDP, despite the reduction in its own revenues due to the long-running international freights crisis. The industry provides 200,000 shore-based jobs with above-average pay.

The country's sole world-leading industry and its massive contribution to the economy have been maintained with the help of the friendly tax regime, which is vital for keeping Greek vessels (and Europe's shipping sector) internationally competitive. The regime was specifically accepted when Greece joined the EU in 1981 and nowadays the tonnage taxes paid by Greek shipowners are higher than those of many of their European counterparts, not to mention competitors in Asia.

Greek shipping has not rested on its laurels since the real threat of Greece bankruptcy first emerged. The Union of Greek Shipowners launched its own social solidarity programme to help feed thousands of children and at-risk families, as well as funding community centres and medical programmes for those left too poor to afford such basics.

Additionally, during the crisis government revenues from the industry have been dramatically increased. This has included payment of emergency solidarity taxes by all companies. Two years ago the contribution was further increased by extending tonnage taxes for the first time to non-Greek flagged vessels at the same rate paid by Greek-flag ships. At the same time shipowners have promised to triple their payments of the tonnage levies voluntarily for four years. The deal is calculated to bring in a further Euro 420 million over the period. Altogether, the shipowners' association calculates that tax revenues from the industry are now more than eightfold what they used to be prior to the outbreak of Greece's debt crisis.

NEED FOR COMPETITIVENESS

In return for the industry's commitment to Greece, and countless individual and often private contributions made by Greek shipowners to the country's economic life and social fabric, shipping has never asked for anything except stability and maintaining the system that has allowed it to be internationally competitive.

Unfortunately for the first time in recent history, shipping's status in Greece has come under serious threat as the agenda of the country's creditors – the European Central Bank, the European Commission and the International Monetary Fund – has now openly included squeezing still higher tax revenues out of the industry.

Greece is currently facing a further round of austerity measures in order to qualify for a possible third bail-out and to hope to remain afloat as a member of the eurozone. At a recent referendum held to gauge if Greeks supported a tough new deal proposed by the creditors, an unexpectedly high 60% of voters said 'No', even though polls consistently show a large majority of Greeks support remaining in the EU and the euro currency. Ironically the vast majority of shipowners and other members of the maritime sector will have voted 'Yes', despite the fact that the package proposed to increase tonnage taxes and phase out special tax arrangements for shipping.

Voting 'Yes' was simply consistent with Greek shipping's belief in doing what's right for Greece, and the course most likely to deliver the stability cherished not only by shipowners but by all economic sectors as a natural prerequisite for business and investment. But this does not mean that the shipping industry will sit still for any measure that will dramatically alter the framework for the industry in Greece, and further undermine companies' competitiveness.

In total, there are estimated to be about 700 separate shipping groups – large and small – that call Greece home. Each individual company will have its own financial breakeven level, and its own threshold which, when crossed, may prompt it to relocate to a more competitive environment. Other shipping capitals, including Cyprus, London, Singapore, Monaco, Dubai etc have either openly or more subtly made marketing approaches to gain a share of the benefits if large numbers of Greek shipowners decide to leave. At the time of writing, it does not seem that a significant exodus has begun yet as most shipowners wait and see what exactly might be contained in new legislation. However, a couple of major publicly-listed companies have outsourced management to third party managers in other maritime centres.

For quoted companies with international shareholders, it is their plain duty to carefully monitor any developments threatening their ability to compete profitably with peers in other countries. Most shipowners, public or private, have a 'Plan B' already prepared that can be put into action if cnditions in Greece become intolerable.

WILLING AND ABLE

Shipping has communicated its willingness to contribute more to the national economy at this difficult time in the country's history, as long as there are not excessive tax increases and the foundations of the industry in Greece are not undermined. But the intrusions on the industry's traditional tax status have already been significant and it may be that for many tolerance is already at its limit. Any further additions to the burden, no matter whether taxes relate to the shipowner or the shipmanager, the ship or the dividend, could be the straw that breaks the camel's back.

I believe that the majority of the Greek shipping community, including ourselves at Tsavliris Salvage Group, is determined to continue its presence in Greece, despite offers of attractive terms worldwide. Our founding father Alexander G. Tsavliris, owner of a fleet of oceangoing cargo vessels, relocated to Greece in the 1950s while maintaining an office in London. It was considered a daring and patriotic decision at the time. The new company, Tsavliris (Hellas) Maritime Co. was just the third shipping company registered under the then-new fiscal regime introduced to foster the country's fledgling shipping sector.

As well as being a significant employer, with over 1,000 mostly Greek and British seamen, our father had long contributed to supporting the Greek economy through the importing of significant amounts of foreign currency. He also patronised the development of the country's shiprepair sector by repairing and maintaining his fleet locally, and he even built ships in Greece. His example was followed by many other successful maritime companies contributing to the so called "Greek shipping miracle".

My brothers George, Andreas and myself wish to maintain our father's legacy and continue growing our business activities and life in Greece.

* Nicolas A. Tsavliris, FICS, is Chairman of the Institute of Chartered Shipbrokers - Greece Branch and principal of Tsavliris Salvage Group.