Greek Shipping News Cuts
Week 14 - 2005


She wants it all, and she wants it now

---YOU DON'T GET much more tragic than the tale of the Onassis family. Blighted by the perils of fame and bewildering wealth, they have been a regular feature in the headlines of society press for over half a century. Athina Onassis, the last descendant of the shipping magnate Aristotle may have hoped that with the passing of her grandfather, grandmother, mother and uncle, the family's curse might be laid to rest.
At the age of 18 she became the world's richest teenager, and perhaps thought her huge inheritance would buy her happiness. But, as the young heiress approaches her 21st birthday, she looks set to begin the toughest, most closely watched feud of the family's history. She wants control of her grandfather's estate. And she wants it all.
What ended as a Greek tragedy began as a fairytale. Aristotle Onassis arrived in the docks of Buenos Aires with $60 in his pocket, and proceeded to amass a multi-billion-dollar fortune in the shipping industry. He secured his personal happiness, too, by marrying Athina Livanos and having two children - Christina and Alexander. But the couple divorced in 1960 when Athina discovered his affair with the opera singer Maria Callas. He later left Callas to marry Jacqueline Kennedy, with whom he shared seven years before his death in 1975.
The dream began to unravel when Onassis's son, Alexander, died in a freak plane crash in 1973. He was just 24 years old and both parents struggled to cope with his death. Within two years they too had both died: she from a suspected overdose of barbiturates; he from cancer. Christina was left as the only remaining Onassis and continued to live a lonely, desperate - if fantastically wealthy - life.
At the time of his death, Aristotle Onassis's fortune was valued at around $500 million. In his will he directed that his estate should be split in two: half to be given to his daughter, Christina, and half to be invested in a charitable fund, representing what would have gone to his son. Although Athina will inherit the balance of her mother's share when she turns 21, it is the second half, the charitable foundation, to which she is now staking claim.
The estate - which consisted of $426 million in cash and securities, more than 50 ships, Olympic Tower in New York, as well as the private Greek island, Skorpios - was divided into two lots, and Christina was asked to choose one. She picked lot B and then, as directed, handed back the administration of both lots to a board of trustees, whom Onassis had previously nominated.
Having fallen in love with Thierry Roussel, Christina had fought to secure his affections - even tolerating the discovery that, while she was pregnant with Athina, his Swiss mistress, Marianne "Gaby" Landhage had borne him a son, Erik. When it emerged, three years later, that Gaby was carrying their second child, Christina admitted defeat and divorced him. When she died her $400 million fortune - half of the Onassis estate plus the money she inherited from her mother - passed to three-year-old Athina. And that's when Athina's troubles began.
In her will, Christina stipulated that Roussel - now married to Gaby - should have nothing whatsoever to do with Athina's fortune. The trustees in charge of the Onassis Foundation were to give him a princely allowance for raising the girl, but investment decisions were to rest with them. Christina also instructed that Athina should be raised in the Greek Orthodox religion, and educated to speak Greek.
Roussel was not happy. Not only was he unwilling to indulge Athina's Greek heritage, he had problems with the financial decisions of the trustees. Even though both halves of the estate had been handed over to the board, the success of each fund differed dramatically. While the charitable foundation had tripled in value to more than $1 billion, Christina's half, now Athina's, had merely doubled to $600 million. The board claim this was the result of Roussel's own bad judgment - he had requested significant withdrawals to fund Athina's upkeep and sold investments in the burgeoning shipping industry - but the friction grew so intense, they resorted to a court battle.
It was during these legal proceedings in 1997 that Athina, encouraged by her father, denounced her Greek heritage. The notes from the Swiss Court of First Instance reveal that at the time she testified she felt "a great abhorrence to anything which is Greek although she [was] aware that her mother, her grandfather and her estate are Greek. She [wished] the four Greek administrators to go out of her life."
Eventually, even the judicial system got tired of the bickering, and so in 1999, the authorities declared neither Roussel nor the board should administer Athina's wealth, and handed it over to the accounting firm KPMG. They controlled the fund until Athina's 18th birthday in 2003.
You'd have thought it might all end there, but you'd be wrong. Until this point, Athina's relationship with Roussel had been turbulent, but intact. Roussel was renowned for his outbursts, yet commanded great respect from Athina as her only living parent. She was desperate to please him and always remained close to his side. Until this point.
When Athina turned 18, Roussel battled for and won her power of attorney. He took control of her wealth and gave her an allowance of around $9,000 per month. Athina seemed happy and went off to indulge her passion and talent for horse-riding, at a prestigious school in Brussels.
The couple are due to wed in December, but sceptics - including Neto's former wife, model Sibele Dorsa - have suggested he is interested in more than her physical assets. Dorsa has spoken a number of times about his new partnership, saying: "He always told me he found her fat and ugly."
While it's true that Athina's appearance has changed dramatically since their romance began others close to the couple insist he is simply encouraging her to step out of her father's shadow and take control of her own destiny. The honorary Greek consul in Brazil, Konstantinos Kotronakis - who will be Neto's best man - said recently: "Doda's been a strong influence, and a very positive one, in my opinion. He's the one urging her to take control of her own financial affairs... and not to turn her back on her Greek heritage."
That heritage will prove crucial if Athina is to take control. First on her agenda was to win the complete rights to her fortune, thus removing her father's power of attorney. This she did by the end of last year, when she chose to settle with Roussel to the tune of a rumoured $100 million. The fight was fierce, but they've both accepted it as fair.
Now she is seeking the second half of the Onassis legacy, the Alexander S Onassis Public Foundation, which she feels should be chaired by a member of the family. According to Aristotle's will, she could take over as president when she turns 21. Article six of the document instructs that: "The President of the Foundation will be a descendant of Aristotle S Onassis, so long as at least one such descendants shall be available and eligible by reason of attaining the age of 21 years, having the capacity to serve and being willing to serve."
Sounds fairly simple: Athina, the only living relative, will be 21 in 2006, and is already willing and able to serve. Or is she? The current president, Stelio Papadimitriou, one of her grandfather's closest advisers, thinks not. In the May edition of Vanity Fair, he says: "This is the most prominent foundation in Greece. We are not going to turn it over to someone who has no connection with our culture, our religion, our language, or our shared experiences, and who never went to college... Athina's qualifications for the job are nil." Cynics would argue that it is for this reason that Athina renewed her Greek passport in 2003; hired a tutor to teach her Greek; and joined an Athenian horse-riding club with a hope of competing for the country in the Beijing Olympics in 2008.
Or perhaps it is simply that she, as the last Onassis, wants to be at the helm. Given her mother's dramatic, and ultimately doomed, quest for happiness, perhaps Athina wants to command her own destiny. Much like our young Princes William and Harry, she is trying to balance the wishes of two families while forging a path of her own. And all the while, she will be mindful of her late mother's legacy, and the responsibility of carrying on her grandfather's work. Would we pour similar scorn over the princes' right to manage Diana's charitable patrimony?
Perhaps it's time for Athina to be given a chance.
Source:, Apr 10, 2005, ANNA SMYTH

Shipowners worried over delivery delays
---As the frenzy in new ship orders continues, many questions are arising over delays in delivery times by shipyards.
Over the past three years hundreds of shipping companies have submitted new orders due to the exploding global demand for ships available for chartering. This fact, along with the compulsory withdrawal of about 50 percent of the existing fleet (ships over 25 years of age) by 2010, have led nearly all shipowners, and certainly the Greeks, to order new ships.
Today there are outstanding orders for ships totaling 230 million dwt, according to a recent survey by Clarkson Research. As a result, many shipyards are being forced to operate at maximum capacity while delivery times have been significantly extended. The number of ships to be delivered in 2009 has already multiplied, and there is already a delivery scheduled for 2010, Clarkson Research suggested.
This phenomenon has been mainly observed over the last couple of years. In 1994 the average waiting time until delivery (for all types and sizes of vessels) did not exceed 19.3 months, just over a year-and-a-half. The situation did not really change until 2002, when that time was extended to 22.2 months. Now, in the past three years, we have reached 29.3 months, almost two and a half years of waiting. In short, shipowners are forced to wait for their newbuildings for up to a year more than they did a decade ago.
The classification attempted by Clarkson Research, regarding vessels under and over 100,000 dwt, yields significant differences between the two categories. In 1995, delivery times were almost the same: 21.2 months for the smaller ships, 21.5 months for the bigger ones. In 2005 the times are at 28.7 months for ships under 100,000 dwt and at 36.6 months for those over that level.
Consequently, if a shipping company's strategy is to grow using bigger vessels, which in fact the market demands more and more, then it will have to wait for over three years. Certain types of ships show even longer delivery times. For instance, delivery times for a VLCC tanker (over 300,000 dwt) now reach 40.8 months.
This delay naturally worries not just shipowners but also shipyard managers. From the shipowners' side, Clarkson's survey stresses, the greatest worry is where chartering prices will be when their new ships are delivered. If demand has subsided, dragging prices down, company profits will be severely diminished, while shipowners will also have to give the shipyard the bulk of the payment as new ships are traditionally paid for on delivery.
For shipyards, the greatest problem is to forecast future shipbuilding costs, as unforeseeable factors such as the cost of steel and currency exchange levels are significant. As a result, many shipyards have passed the risk on to shipowners, by raising prices.
What is more, every newly built ship costs more for shipowners than in the past. Today VLCC tankers of 300,000 dwt cost about $120 million, while at end-2003 they would not exceed $77 million, representing a 55 percent rise. Similarly, Capesize dry cargo ships cost some $66 million today, up from $48 million in December 2003, an increase of 37.5 percent. The picture is similar across the market.
This does not mean that shipyards are goldmines. Besides the sharp increase in the price of steel internationally, managers of several shipyards are troubled by pressures on currency rates stemming from the continuous decline of the dollar. This mainly affects European shipyards, which cannot really benefit from the higher prices of ships due to the strong euro.
Source: By Nikos Roussanoglou - Kathimerini, 9 Apr 2005

Greek-Italian cooperation memorandum on sea transportation
---Greece and Italy signed a cooperation memorandum on inter-European transportation networks and sea avenues. The Greek Ministry of Merchant Marine and the Italian Ministry of Infrastructures and Transportations signed the memorandum representing the governments of the two countries.
The memorandum mainly concerns the participation of as many seaports as possible in the inter-European transportations networks and the construction of major infrastructure projects to improve the Greek seaports.
At the same time, efforts will be made to promote short distance shipping lines and combined transportation in the Mediterranean region, while Greece's role in the wider region will be strengthened.
Source:, Athens, 6 April 2005 (19:20 UTC+2)

Piraeus Port container volume declines 4%
---According to press reports OLP posted a 4% decline in its container volume in FY04 for the first time in 10 years of consecutive growth.
However, note that FY04 internal cargo imports increased by 11.5% with exports increasing 7.8% supporting full year results.
Source:, 15:35 - 08 April 2005 -

Greece: Structural challenges remain says Citigroup
---Citigroup expects that in 2005 and 2006 GDP growth will be clearly below the government's projections while general government deficits likely will overshoot government targets. Moreover Citigroup points out that there are major structural challenges that Greece has to face in the short and medium term.
The April 1 VAT-rate hike by 1 percentage point highlights that consolidation of public finances is the main challenge for Greece. Greece is the EMU member state with the highest debt-to-GDP ratio and the highest deficit-to-GDP ratio in the past three years. In addition, despite progress in previous years, recent reports highlight the need for far-reaching structural reforms in Greece to boost productivity. Prime Minister Costas Karamanlis' centre-right government has introduced some structural reforms in addition to the recent fiscal measures that are likely to improve the medium term outlook for economic growth and public budget consolidation.
According to latest Eurostat readings, Greece's general government deficit-to-GDP ratio of 6.1% in 2004 was more than double the 3% threshold of the Stability and Growth Pact (SGP). Thus, after last year's significant upward revisions of the previous years' deficits, Greece probably breached even the SGP for the fifth consecutive year (see Figure 1). Furthermore, the public debt-to-GDP ratio of 110.5% in 2005 remained the highest in the euro area for the fourth year in a row and is way above the SGP limit of 60% (see Figure 2).
In the late March update of the Stability and Growth Program, the Greek government targets a reduction of the general government deficit-to-GDP ratio to 3.5% in 2005. The ratio should decline further to 2.8% in 2006 and 2.2% in 2007. According to government plans, a cut in public capital spending after the completion of the 2004 Olympic Games by 1 percentage point of GDP should significantly contribute to reduce the deficit ratio this year. Furthermore, the 1-percentage point increase in VAT rate and higher tax rates on alcohol and cigarettes on Apr 1 should generate EUR 1bn (0.6% of GDP) additional tax revenues in 2005. The government also announced the enactment of measures reducing tax evasion and trimming the increase in outlays for pensions and public employment.
With a corporate tax reform and recently announced fiscal measures, the Greek government enacted steps towards a medium-term budget consolidation. The planned fiscal auditing system is also likely to boost the efficiency of public expenditures and revenues. Furthermore, a proposed health care reform and a plan to implement more market based management standards in public enterprises probably will contribute to a more efficient public sector. However, with EU funding of currently around 3% of GDP probably to shrink from 2006 on, fiscal challenges for Greece will remain high.
According to Citigroup, in the updated Stability and Growth Program the government assumes that above par GDP growth of 3.9% will contribute to reduce the general government deficit- and debt-to-GDP ratios in 2005. For 2006 and 2007 the government projects GDP growth rates of 4% and 4.2% respectively contributing to reduce general government deficits further.
In Citigroup's view, the proposed post-Olympics cut in public capital spending and measures to increase revenues will help to reduce the budget deficit ratio in 2005. However, we doubt that the government will meet the targeted slowdown in outlays for pension benefits and public wages. Furthermore, we suspect that GDP growth will decline to 3% in 2005, leading to lower tax revenues and higher social benefit expenditures compared to government plans. Thus, we expect that the general government deficit-to-GDP ratio will decline only to 41/2% in 2005 rather than the government's target of 3.5%. With a GDP growth forecast of 3% for 2006, we are looking for a deficit-to-GDP ratio of 4% next year - a seventh consecutive breach of the SGP's 3% limit. While our deficit-to-GDP forecast for this year is in line with the latest EU Commission forecast, we are somewhat more optimistic on the 2006 outlook than the EU Commission, which forecasts it at 4.4%.
Despite the recent correction in March, the significant fall in Greek business sentiment since 1H 2004 supports our forecast of a slowdown in economic growth. Furthermore, the VAT rate increase is likely to accelerate the downward pace in consumer sentiment (see Figure 3). In addition to the proposed fiscal tightening in coming years, we expect that the boost to growth from falling interest rates in the advent of joining EMU in 2002 probably will fade out. Thus, looking forward, Greece's outperformance of average euro-area growth is likely to diminish. However, supported by ongoing tailwinds from strong global trade (boosting the important Greek shipping sector) GDP growth in Greece probably will stay above the euro-area average (see Figure 4).
Greece's Structural Challenges
The appreciation of the EUR in recent years and Greece's real appreciation against the rest of EMU led to a loss in competitiveness that probably will also dampen growth over time. The real appreciation against the rest of EMU mainly reflects a strong acceleration in unit labor costs (see Figure 5). In fact, unit labor costs in Greece were up by 4.4% 2004 compared with a moderate increase by 0.7% in the euro area. The acceleration in Greek unit labor costs reflects strong increases in compensation that are likely to continue in 2005 and 2006. Furthermore, the slowdown in labor productivity growth from 3.3% in 2003 to 1.6% in 2004 contributed to higher unit labor costs.
Eurostat data suggest that the catch-up in labor productivity to the euro-area level (which is low compared to the US) lost momentum in recent years. Thus, Greece still ranks 11th out of 12 in terms of labor productivity. However, thanks to high actual weekly working hours (Greece: 42.1h compared to Euro Area: 37.2h) the gap between productivity per person is much smaller than the gap in productivity per hour (see Figure 6). Although a recent OECD report and the CER Lisbon Scorecard highlight Greece's progress in terms of labor and product market reforms in recent years, Greece has still formidable structural disadvantages in these areas compared to most euro area countries. The remaining structural problems probably mainly explain the EU Commission forecast of a halt to the productivity catch-up in coming years.
According to recent recommendations of international organizations like the IMF, the OECD and the EU Commission, Greece needs significant reforms to cope with current and upcoming economic and fiscal challenges:
The centre-right government elected last year is trying to comply with international organizations' recommendations to boost productivity and to implement fiscal soundness in Greece. So far, the government has unveiled plans to increase competition in key network industries and to reduce the public expenditure ratio via more privatizations and Public-Private Partnerships. Furthermore, new legislation to reduce red-tape for business start-ups is under discussion. Moreover, Greece is taking measures to position itself as the EU's link to the fast growing Balkan Countries.
However, with little public awareness about the existing structural problems, because unemployment continues to fall and GDP growth has been above average in recent years, crucial structural reforms are unlikely. In fact, fearing large public opposition, the government has not so far made any proposal for a full-fledged reform of the pension system.
Source: 11:17 - 05 April 2005 -