Is 'Crisis' a Fair Assessment?

Even in the context of affirmations from Cyprus' Department of Merchant Shipping, Shipping Chamber and owners that the country is working through its financial challenges, the OGSR sees media outlets attempting to stir up controversy.

We recently came across the Lloyd's List article, "Cyprus Crisis carries threat of 'deeply worrying' fallout", citing Safe Bulkers Chief Executive and Cypriot national Polys Hajinioannou.

While Hajinioannou expresses both concern and optimism for the Cypriot and European economy, the publication seems to be shaping the article to emphasize the worst possible outcome.

At the same time, it reports that Hajinioannou intends to register six newbuildings with Cyprus over the next three years, and has called on others to do the same.

So we ask, do you want your news to come with trouble-making headlines or calm insight?

Read the full text of the article below and let us know your thoughts.

Cyprus crisis carries threat of ‘deeply worrying’ fall-out, warns Hajioannou 

ALTHOUGH Cypriot shipping will haul through the country’s banking crisis, the decision to force a haircut on depositors could have “deeply worrying” consequences for the world and European economies in the decade ahead, according to one of the country’s most prominent shipowners.

Polys Hajioannou, chief executive of Safe Bulkers, pledged to place six newbuildings due for delivery in the next three years under the Cyprus flag and called on his countrymen to rally around the leading open register.

Although Safe Bulkers operates principally from the Greek capital and international shipping centre of Athens, Mr Hajioannou’s roots are within the island’s legendary Hajioannou shipping dynasty, and he remains vice-president of the Cyprus Union of Shipowners.

Safe Bulkers will not endure the losses likely to be inflicted on shipping and other business concerns that have more than $100,000 deposited in Laiki Bank or Bank of Cyprus, as it does not have any locally based bank accounts, he confirmed.

Likely victims are thought to include Sovcomflot management arm Unicom and Intership, an affiliate of Germany’s Hartmann Group.

Mr Hajioannou told Lloyd’s List that he was not aware of any Greek companies likely to be damaged seriously in the fallout, although inevitably some companies with operations on the island would have money with Laiki or Bank of Cyprus.

However, even those that do are likely to have additional bank accounts elsewhere and to be able to continue to trade.

The recent decision to bring in capital controls to stem capital flight is a headache, in theory, but bankers and government officials are even now putting together a workaround solution for companies that need to pay such things as third-party expenses and crewing costs that cannot be delayed indefinitely.

“Most important is not who lost €500,000 ($641,245) or €1m; this will not affect bottom lines disastrously,” said Mr Hajioannou. “Most important is the effect of this wrong decision on the Cyprus issue and what will happen to Europe as a whole, not only to the Cypriot economy.

“We are monitoring here the world economy and I think this is a very bad message to the whole of Europe’s people. It’s very clear that depositors are not safe anywhere in the periphery of Europe.”

Most shipping concerns with substantial operations on Cyprus are likely to stay put, as they are happy with the quality of the skilled professional employees available, he said.

“It will be very difficult for companies to say they will relocate because the island is not safe. I think the worst has happened for Cyprus. You have a haircut on deposits, what worse can happen?

“There’s absolutely no point to leave the island now. If you have your infrastructure there and your people there, I don’t think anybody will move out.”

The real risk, Mr Hajioannou believes, flows from creating a negative climate for the whole European economy, pushing more countries into deep recession, thereby increasing sovereign risk and thus banking risk, and raising the risk of deposit flight across southern Europe.

“This decision may look small, because Cyprus is a small island and a small economy, but the knock-on effects could be tremendous. Spain could have a serious problem, Slovenia is another country that may end up suffering depositor losses,” Mr Hajioannou said.

The future of the euro as a currency, and even of European unity itself, might be at risk in the long run, he went on.

“The intention of the European Union was to turn Germany into a European Germany and not for Europe to turn into a German Europe... I’m deeply worried about where this thing will end up in five or 10 years.

“Nevertheless, Cyprus owners are fully supportive of the country and we are fully backing the Cyprus flag... All shipowners that have origin on the island should support the Cyprus flag now even more than we did in the past.”