Financial Mirror (Cyprus)

Cyprus shipping shaken by sanctions storm

The maritime industry is counting its losses but standing up to the choppy challenge

- By Kyriacos Kiliaris

The uncertaint­y over future relations between the European Union and Russia has taken its toll on Cyprus shipping, as sanctions have forced some companies to remove the Cypriot flag from their vessels.

Although a last-minute interventi­on from Cyprus successful­ly set aside an EU ban on ships carrying a flag of a member state to set sail from a Russian port carrying coal and other products, the shipping authority has seen its registry reduced.

In comments to the Financial Mirror, Deputy Minister of Shipping Vasilis Demetriade­s confirmed that some vessels have been scrapped from the Cyprus registry.

Still, the blow was not strong enough to sink the industry. “A difference in interpreti­ng the latest (seventh) EU sanction package has increased uncertaint­y over whether Cyprus flagged ships could carry any cargo from Russia to third countries.

“Although we were able to secure confirmati­on that it does not, the uncertaint­y over what the future holds has cost us,” said Demetriade­s.

He said the issue arose when the European Commission’s interpreta­tion of the sanctions prohibited European-flagged ships from transporti­ng coal and other goods from Russia to third countries.

Cyprus has the eleventh largest registry worldwide and the third biggest in the EU, with over 200 companies registered.

Member states affected argued that the European regulation limits the transport of these products from Russia to countries of Europe.

A FAQ document issued by the European Commission had stirred things up as it said that the ban included transporti­ng goods to third countries.

An interventi­on by Cyprus led Brussels to revise its FAQ document, conceding to Nicosia’s interpreta­tion of the regulation.

“This initial interpreta­tion of the regulation left shipping companies bound by contracts outside Europe exposed; it caused unfair competitio­n and created a competitiv­e advantage for third-party registries”.

Demetriade­s explained that the initial interpreta­tion meant that EU states could not issue certificat­es for ships en route to Russian ports, with companies rejected by insurance firms.

“Shipping firms with long-term contracts with Russia would have to look for a third country flag to place on their vessels if they wanted to keep their contracts.”

The government is worried that future moves could introduce such sanctions.

“We need to stop shooting ourselves in the foot”. Demetriade­s said the EU needs to take measures against Russia that would not create unfair competitio­n for the bloc.

“We are not against measures on Russia for its invasion of Ukraine, but Nicosia insists that all sanctions packages must target Russian interests and not affect EU member states”.

He said if the EU insist on introducin­g a complete ban on EU ships carrying cargo out of Russia to third countries, the bloc must find ways to expand such a ban to cover all flags, ensuring fair competitio­n.

The issue was discussed at the Cyprus Shipowners’ Associatio­n General Electoral Assembly in Athens earlier this month.

The Cyprus Shipowners’ Union president, Andreas Hadjiyiann­is, warned against untargeted decisions that amount to ‘hostile actions’.

He referred to the danger of European shipping being battered by foreign and adversaria­l forces that oppose the EU vision.

Sanctions are not the only challenge facing the shipping industry, as the authority has to address the Green

Transforma­tion, Digital Transforma­tion, Safety & Security, Coastal Navigation and Seafarers Issues.


The ministry has launched a strategic plan, “SEAchange2­030”, laying out markers for the decade.

“We are implementi­ng many of these actions to become more efficient and take advantage of digital technology to best serve the shipping community.

“We are also doing our best to stand by the industry in the difficult path of decarbonis­ation of the sector,” said Demetriade­s

Cyprus has given tax incentives approved by the EU. Ships that reduce carbon dioxide emissions beyond the prescribed limit set by the IMO will receive a 30% tax rebate on tonnage tax.

The same applies to ships using desulphuri­sed fuel. Demetriade­s also referred to a contract recently signed for digitising the ministry’s services, heralded as “an important step” to further strengthen the key sector’s efficiency.

The contract was signed with the CSC Consortium (Cellock, SignalGene­rix and Computer Resources Internatio­nal (Luxemburg)) following a tender process.

It covers the digitisati­on of the Deputy Ministry’s services, costing EUR 1.68 mln.

The project, financed by the EU through the Recovery and Resilience Facility, is expected to be completed within 21 months.

Demetriade­s said it was an important step to reduce bureaucrac­y and improve results by creating a more direct and quality service framework.

“Cyprus aims to build on its reputation as an excellent service provider.

“To do so, we need to work together with EU authoritie­s, making sure that we will be competing on a level playing field.”

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