Cyprus Seeks Shipping Industry Help from EU Over Russia Sanctions

February 19, 2023

NICOSIA – European Union sanctions on Russia have driven Cyprus to look to the European Union to help its shipping industry, the third-largest in the 27 country bloc behind Greece and Malta.

Almost 20 percent of the fleet has left or removed its flags in the wake of the penalties imposed over the invasion of Ukraine, the island especially reliant on Russian businesses and interests.

Cyprus wants an automatic extensions of so-called tonnage tax systems – which come under EU state aid rules – as well as tonnage tax discounts for fleets with European and Ukrainian seafarers.

The government also wants better terms for EU operators in third jurisdictions, Shipping Minister Vassilios Demetriades told the news agency Reuters about dealing with the predicament.

Tonnage tax is a system where ship owners or operators can opt to pay an annual tax calculated on the basis of the carrying capacity of a ship rather than a profit. It is subject to reviews by the EU.

The EU looked at supporting the shipping industry during the sanctions implementation as a way to counterbalance the impact of a oil price cap on Russian crude shipments although Russian supplies are exempt.

“We have not received a negative answer, but an answer that shows that the commission is not ready, at this stage, to take measures,” Demetriades said as Cyprus is waiting for a response.

“We don’t pretend to know everything, but if a sector is challenged you expect to dedicate resources and think what measures should be brought to counterbalance negative consequences,” he told the news site.

Demetriades, who is expected to leave office at the end of this month following a general election that brought a new President, said he would advise his successor to deal with the matter as a priority.

“I believe we are also responsible to better communicate this need, and that’s why we have turned to other member states to share our concerns and make our voice stronger,” he said he recommended.


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