With the blame game getting in to full swing in Cyprus, as to what caused the economic mess which very nearly bankrupted the small Mediterranean island, president Nicos Anastasiades has vowed no one will escape investigation.
The three-member investigative committee set up to probe the banking sector and possibly allocate civil, criminal or political responsibility for Cyprus’ financial crisis, has been instructed by Anastasiades, to investigate himself and his family, at which some fingers have been pointed.
As the Nicosia government battles to extract the best possible final terms for a Euro10bn bailout deal and restart the economy, it is evident the rescue plan could have a much bigger impact on the shipping industry than previously acknowledged.
With Cyprus’ transport minister, Tasos Mitsopoulos saying domestic shipping operations “have been and will continue to operate as usual” it is being seen the strong ties between shipping and government have helped Cyprus through its crisis.
Further, it is being recognised the fall out on shipping goes way beyond Cyprus. It involves the prospects of the Eurozone as a whole, it being the natural home of the greatest part of the Cyprus shipping community.
Tasos Papadopoulos, an analyst with Athens-based Intermodal Shipbrokers, believes failure to quickly hammer out a solid agreement will put the future of the Euro bloc at risk.
Not only have cracks begun to appear in the Cyprus shipping model, the levy on bank deposits above Euro 100,000, has, points out Papadopoulos, “triggered a general state of unease among depositors throughout the Eurozone as it leaves the door open for a potential expansion of these measures to other troubled European banks". Major flags, Greece and Malta are among this troubled group.
Many Eurozone officials are working overtime trying to persuade markets to the opposite, claiming Cyprus should not be regarded as a template for future bail-out deals and should be seen as a unique case.
But not all. Eurogroup president, Jeroen Dijsselbloem, has indicated Cyprus could be a model for other nations with struggling banks. Such remarks, intensify concerns, despite a carefully drafted Eurogroup message Cyprus is in fact "unique".
Papadoupolos says : “For sure, there will be serious knock-on effects.” He says : “Shipping is the faithful servant of global trade and as such any uncertainty created in the global economy might dampen trade growth and further prolong the much anticipated market recovery.”
He also fears ship finance, a major concern over the past four years, might well become even scarcer. Banks, “having already had their fingers burnt”, shall have less to lend at “ever higher rates of interest” while having to “impose even stricter covenants in order to minimise risk exposure”. He believes the plug will be pulled on non-performing loans and they will be declared in default.