CHANGE OF SCENE AMID A DEEP RECESSION (1981-1990)

 

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By 1981, Greece was a full member of the European Community. Its membership meant the addition of 3,942 ships to the European merchant fleet, doubling its size. The combined European merchant marine accounted for over a quarter of the global fleet, as Greece had just overtaken Japan and was only second to Liberia in the world rankings.

At the time, market levels were still satisfactory and no one could predict the impending storm. A crisis that broke out shortly afterwards within the tanker market was a bad omen for the industry. Many owners began to realise it would not take long for the dry cargo sector to meet the same fate.

While the shipping industry was preoccupied with the collapsing market, the popularity of the New Democracy government under Georgios Rallis was fast losing ground. At the same time, the Panhellenic Socialist Movement (PASOK) of Andreas Papandreou was steaming towards power, largely supported by the working class and most trade unions.

PASOK’s electoral dominance was confirmed in October 1981, with almost one in two Greeks voting for the socialist party. At this time, world seaborne trade began experiencing its most dramatic crisis since WWII.

The excessive growth in the world fleet during the previous decade, along with the unprecedented energy crisis, had a devastating effect on very large crude oil carriers. Many of them were sold for scrap before they had even reached 15 years of operation. Soon, the crisis spread to the dry cargo market, resulting in massive lay-ups of ships in various Greek locations.

The Papandreou administration faced the challenging task of protecting the Greek registry during this difficult phase. The prime minister was well aware of most issues troubling the industry, however, the government’s first actions with regard to the shipping agenda caused new concerns. A characteristic example was the initiative of the Minister of Merchant Marine urging students of the maritime school in Aspropyrgos, Athens to shed their uniforms and establish unions in order to fight for their rights “with tenacity and consistency”. Despite this, a meeting between the Prime Minister and shipowners went ahead in 1982, with Papandreou assuring the owners of his intentions to take action on pending matters.

The Prime Minister held an official meeting with shipowners, during which he outlined government measures to combat the consequences of the crisis; however, time went on without any action being taken.

On 4 June 1982, a joint commitment by the Union of Greek Shipowners and the Panhellenic Seamen’s Federation led to the realisation of a unique project: the establishment of the Hellenic Marine Environment Protection Association, known as HELMEPA. Based on an idea by George P. Livanos, HELMEPA was founded well before any other such initiatives by international organisations aiming at combating maritime pollution.

A few weeks later, George Katsifaras took over as Minister of Merchant Marine. One of his first priorities was to resume discussions with owners in order to address issues related to the future of the ailing Greek registry. However, the adoption of appropriate measures was long overdue and the only substantial change during this period was the appointment of a civilian as director of the Seamen’s Pension Fund (NAT), instead of a Coast Guard senior officer as was the norm. Over the next few years, the NAT became one of the largest burdens on the Greek state budget following the government’s decision to provide pensions even to individuals who had never served on board a ship and had no relation whatsoever to the shipping industry.

In early 1983, the government finally announced measures to address the problems that had led 700 Greek ships to lay-up berths. However, whilst the relevant bill was being submitted to a vote in Parliament, differences emerged regarding the initial agreement, especially concerning the issue of the mandatory recycling of marine labour. This led to an unprecedented confrontation between the government and shipowners, resulting in a mass exodus from the Greek registry.

The freight market continued to decline at a fast pace over the next couple of years. This caused several financiers, especially those lacking experience in shipping finance, to adopt an inexorable stance towards several of their clients. This intransigence resulted in great losses for both banks and shipowners, leading many maritime enterprises to bankruptcy. However, there were financiers that showed understanding and tolerance. Many owners succeeded in collaborating with their financiers in order to substitute old tonnage with newer vessels whose values were severely depreciated due to the crisis. Nearly all vessels acquired at the time were placed under foreign flags, enabling them to operate competitively despite the crisis. When the freight market eventually rebounded, losses were recovered through the sale of these ships at substantially higher prices.

The process of acquiring new tonnage during those critical years was reminiscent of initiatives taken in the immediate post-war period, when almost the entire Greek-owned merchant fleet was re-established by ships under open registry flags. This time, however, the same trend was followed by representatives of other traditionally maritime European nations. Everyone involved in world seaborne trade appreciated that survival and progress depended on being competitive. Over the years, this led to the weakening of national registries and the prevalence of open ones.

On the occasion of the election of a new president of the UGS Board at the end of 1984, shipowners requested an official meeting with the prime minister. Andreas Papandreou, who had last met officially with industry representatives in January 1983, did not respond, maintaining this stance until he left power in 1989.

Consequently, the Greek shipping industry continued on its course without any meaningful dialogue with the government until the second victory of the governing party in the June 1985 elections. Gerasimos Arsenis, the then poweful Minister of Finance, was also sworn in as Minister of Merchant Marine. This surprising development was in fact a sign that the government was planning to abolish the Ministry of Merchant Marine.

The reaction of the maritime community was immediate, forcing the government to revise its decision to abolish the Ministry. A new minister of Merchant Marine was sworn in, while at the same time a Piraeus-elected MP, Costas Simitis, was appointed Minister of Finance. A short while later, the law for crew recycling was abolished by then Merchant Marine Minister Stathis Alexandris, who labeled it a law for the recycling of unemployment.

The dramatic decline of the number of Greek-flag ships and the parallel increase in Greek-owned foreign-flag vessels finally spurred the government into action. At the end of the summer of 1986, the freight market began to show signs of recovery. Taking advantage of the improved sentiment, the minister of Merchant Marine launched a campaign, during which he visited shipping offices in person, with an aim to create favourable conditions for the registration of ships under the Greek flag.

In late 1986, the Prime Minister accepted an invitation from shipowner John Latsis to attend a ceremony on the occasion of raising the Greek flag on board the giant tanker HELLAS FOS. A few months later, he laid the cornerstone of the Onassis Cardiac Surgery Centre, one of the largest charity projects in Greece funded by members of the shipping community.

However, it was too late for the revival of the registry. The shift to foreign flags which offered competitive operation to ships had been firmly established, not only among Greeks but also in most other countries. It was only natural for shipowners to endeavour to maximise returns after years of deep recession.

The constant change in Merchant Marine ministers and the shipping policy adopted in the following years only made matters worse. The Greek registry remained a mere observer of the explosive development of Greek-owned shipping which became once again the global leader in the industry with a renewed fleet.

In June 1989, a coalition government between the conservative party New Democracy and the Coalition of the Left (including the Greek Communist Party) was sworn in. One of the administration’s first decisions was the adoption of sandwich courses at maritime schools in order to upgrade the education system at a time when a census revealed a dramatic reduction in the number of Greek seafarers.

Another dramatic reduction, which was proved irreversible, concerned 1,900 Greek-flag ships that were lost from the national registry in just a decade. It was the biggest loss Greek shipping had suffered during peacetime.

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