When I was in high school, we had a session, every Monday, called ‘Current Events’. All you had to do was read the 10-question quiz that was published every Sunday in the New York Times. The quiz is gone, alas, along with much of the knowledge of the events of the week, or the year.
Current events, however, are important as former British prime minister Harold Macmillan was famously quoted as saying in the headline above when asked about what he most feared about his job. Just this week, events occurred that will influence the fate of many shipowners in the years to come. The tentative deal with Iran will increase the supply of oil on the market, and held in storage. This should drive down the price of a barrel of crude for the rest of the year, at least.
Tanker tonnage, which is already in short supply, will be needed to store much of the extra oil, because very little additional tank space is available ashore; much-needed relief for the tanker market.
Then, there’s Greece. What has been described as the slow-moving disaster of the Greek economy is likely to have a long-term effect on the shipping industry, or rather its employees, based in that long-suffering country. At some point, quality of life issues are likely to make it desirable for shipping companies to relocate some or all of their employees (particularly those with young families) somewhere other than the Athens area. Within the EU, Cyprus, Malta and Monaco beckon; perhaps not just yet, but a new Greek diaspora can be seen on the horizon.
Regardless of whether the Iranian détente is a mirage, it is clear that the embargo on Iranian oil is essentially over. Together with the growth in US shale oil and gas production, the global supply of oil approaches the G word as in glut.
Current events have a longer reach: one that ranges far beyond Greece itself. The underlying idea behind the European dream – that of an ever-stronger union – lies in ruins. While the concept of the EU has meant the resolution of problems through consensus, the ultimate 17-hour negotiation binge, this past weekend, was marked by a level of bitterness that will take a long time to fade. Not only between Greece and the European leaders, but also between Germany and France; between German finance minister Schauble and the head of the European Central Bank. Not only does the Greek debt crisis have no end in sight, but the spirit of unity that was said to prevail has been replaced by a room full of national leaders on the verge, in some cases, of coming to blows over what to do with a bankrupt member state.
The Greek parliament is going to accept the deal, because there is no choice but to avoid national collapse. But national humiliation is a dangerous and toxic pill to swallow. Growing austerity will require large doses of foreign aid, including shipments of food and other basic needs. The Greek economy has been plunged back into the distant past; in 1948, not to mention 1944, Greece faced starvation, and the bodies of some dead were removed every morning from the squares of Athens. The slashing of pensions and the destruction of the social safety net, described blandly in the media as growing austerity will involve real suffering in that part of the Greek public not particularly visible to the guests at Posidonia, the biennial Greek shipping trade fair. It may well be that at Posidonia 2016 for the first time, the poverty and hunger will be truly conspicuous.
The impact of the Iran deal and the Eurozone crisis will be with the shipping industry for a long time to come. Shipping is famous for its fixation on the short-term, but we will be wise to reflect on these developments, and their long-term meaning. A Greek historian of long ago, writing of the Persian wars, warned us.