As Greece Struggles with Debt Crisis, Its Shipping Tycoons Still Cut a Profit

On December 5 last year, the Ob River, an 288-metre LNG (Liquefied Natural Gas) tanker with a capacity of 84,682 deadweight tonnes chartered by Russian energy giant Gazprom, arrived at the Japanese port of Tobata. The ship belonged to Dynagas, a privately held company owned by George Prokopiou, one of Greece’s preeminent shipping magnates.

It was a delivery of historic significance. To make it, the Ob River had traveled through more than 3,000 miles of the bleak, icy expanse of the Northern Sea Route, accompanied by two nuclear-powered Russian icebreakers. It was the first ever sea voyage of an LNG cargo through the frozen waters north of Siberia, cutting the distance traveled from Norway to Japan by more than 5,000 miles compared to the Suez Canal route.

Sitting in his office overlooking the Saronic Gulf in the southern suburbs of Athens, a large map of the globe lined with sea routes on the wall beside him, the forbidding Prokopiou remembers how he got into the LNG game. “The idea of transporting liquefied natural gas was droning around in my brain since 2003. I could see that this would be the century of gas. There are plentiful supplies, it is half the price of oil and it is also a quick fix for pollution and CO₂ emissions. This is particularly important for the cities of China and India as they expand, to keep pollution under control,” he tells TIME in a deep, gravelly voice.

Foreseeing the possibilities created by the accelerated melting of Arctic ice, in 2004, Prokopiou ordered two LNG tankers to be built according to ice-class specifications. The vessels had to be fitted with reinforced hulls capable of withstanding the Arctic ice and with equipment able to function in temperatures as low as -35 degrees Celsius. Because of the proximity to the North Pole, conventional navigation systems did not work properly, so they had to be replaced by custom-made, Pole-compatible ones. Crew training took a year-and-a-half, and included a spell at Russia’s Makarov Academy, based in St. Petersburg, where crew-members were taught the secrets of navigating through a frozen desert.

The epic journey of the Ob River is a testament to the farsightedness and the global reach of Greek shipping. Greece, a small country of 11 million, is the world’s foremost shipping superpower, and has been almost without interruption for the last four decades. According to the latest figures from the Union of Greek Shipowners, the Greek-owned ocean-going fleet consists of 3,428 ships, totaling 245 million deadweight tonnes in capacity. This equals 15.6 percent of the carrying capacity of the entire global fleet, including 23.6 percent of the world tanker fleet and 17.2 percent of dry bulk.

Greece’s shipping companies defy almost every stereotype that Greeks have been associated with these past years. They are ultra-competitive in a truly globalized market; their family-based structures are an indispensable source of strength rather than weakness; and they are unabashed proponents of the free market when it comes to the transcontinental sea trade, even while in Greece itself, most industries still struggle under the weight of over-regulation and barriers to competition. In a reversal of the narrative that has dominated headlines, in shipping – in particular the container sector – it is well-positioned Greeks who are “bailing out” mismanaged German shipping funds, which over-extended themselves before the global shipping crisis hit in 2008 and are now selling off their ships for a pittance.

Greek shipping was also a key enabler and a major beneficiary of the rise of China during the previous decade. It is estimated that in 2007, at the peak of the China boom, 60% of the Asian giant’s raw material needs were supplied by Greek-owned ships. As another major shipowner, Thanasis Martinos of Eastern Mediterranean Maritime, explains, Greeks benefited because “we are the taxi drivers of world shipping. We are mostly free of long-term contracts – unlike, say, the Japanese – and we can go wherever the highest profit opportunities take us.” This week, top names in shipping, including Prokopiou, are accompanying Greek Prime Minister Antonis Samaras to Beijing on a much-publicized trip aimed at strengthening commercial ties between the two countries.

At home, however, there are ominous signs on the horizon for Greece’s shipping elite. The preferential tax treatment they have enjoyed for decades is under threat, questioned – at times aggressively – by the country’s left-wing official opposition, SYRIZA, as well as the EU’s Directorate-General for Competition. As Greek politicians seek to divert attention away from their own failings and to quench the thirst of the public for the wealthy to pay their fair share, the Swiss bank accounts of shipowners have been leaked to the media and a number of them have been investigated by the tax authorities. None has been charged with any wrongdoing, and all other major shipping countries offer similarly “efficient” tax regimes to their shipping companies (though not necessarily to their shareholders). These facts have not dampened the emerging account, both at home and abroad, of Greece’s shipping community as an island of provocative privilege heedless of the sea of debt and deprivation surrounding it.

This new climate has already led to some changes: earlier this year, the shipping-friendly Nea Democratia-led government increased the tax rates paid by shipping companies based in the port of Piraeus, near Athens, on vessels listed on foreign shipping registers. It also imposed extraordinary levies of 6-10 percent, for the period between 2012-5, on the foreign exchange imported by all Piraeus-based shipping-related companies.

The decision of the Union of Greek Shipowners not to oppose this move is perhaps related to their concerns about the likely successors of the current government. The political rise of SYRIZA the previous spring sent an unseasonable chill through the offices of Greek shipping’s elite. In June, when fears of a SYRIZA election victory were at their peak, unnamed shipowners issued dire warnings in the press about preparations to move their offices abroad.

Since then, however, both sides have sought a more conciliatory tone. In a meeting with the Union of Greek Shipowners this past December, SYRIZA leader Alexis Tsipras voiced his support for the “continued leading role of Greek shipping” in the international market. George Stathakis, a moderate SYRIZA MP who was present at the meeting, explains to TIME that his party does not plan to repeal the exemptions on non-distributed profits or on the capital gains of Greek-based shipping companies. The only significant change proposed, he says, is that shipping dividends will no longer be exempt from personal income taxation.

Martinos, for his part, is sanguine about the future relations between government and the shipping community. “The perception in public opinion and in the political class – including SYRIZA – is that shipping benefits Greece. In coffee houses even in the smallest villages, people know this, and would not want to risk losing those benefits,” he says. In the trying years to come for Greece, this proposition will be sorely tested.