Sapienta Cyprus Selection 14 Jun 2023
Regular Cyprus-relevant links
Welcome to Sapienta Cyprus Selection, a regular selection of links to articles of medium- to long-term relevance to people living and doing business in Cyprus. Topics marked with * will be or already have been analyzed in our monthly issues of Sapienta Country Analysis Cyprus. Sapienta Cyprus Selection is part of the Sapienta Cyprus Snippets series. Learn more about the different subsections here.
Photo source: Shutterstock.
It has been a while since I produced a Sapienta Cyprus Selection article so here goes.
Cyprus and gas.* What happened during the meeting of energy companies hosted by the Republic of Cyprus energy minister, George Papanastasiou, on 29-30 May? In this 20-minute podcast, Andromachi Sophocleous and I pick through the evidence to work out what really happened. Relevance to Cyprus: as long as Cyprus continues to burn diesel and mazut (dirtier than natural gas) for most of its electricity, we shall all pay the price of high and rising emissions penalties.
Egypt-Saudi Arabia interconnector.* Egypt and Saudi Arabia have agreed to connect their electricity networks via a submarine interconnector. See tweet from Charles Ellinas with a link to the (probably paywalled) article. Relevance to Cyprus: in my recent monthly Sapienta Country Analysis Cyprus reports I have noted that Mr Papanastasiou has switched energy policy from one that was always used as a political weapon for the Cyprus problem (essentially used to bash Turkey) to one that focuses first and foremost on reducing energy costs. I hope he is not too late, given that other countries are happily making regional deals that might be implemented more quickly than Cyprus’ forever complex plans.
ESG (green) investment. At a conference the other week, which I wrote about here, I gave my reasons for saying that the focus on Environmental, Social and Governance (ESG) investments, green bonds etc is here to stay, despite efforts by some US state-level legislators to fight the climate-friendly trend. This article by S&P Global suggests that company shareholders also agree. If you hit a paywall a summary slide is tweeted here. Relevance to Cyprus: the ESG focus of the European Central Bank (ECB) means that Cypriot banks will also be forced to answer, “who green is your loan portfolio?” in future. This means that banks will also be asking you how carbon-free is your car, house, product, service, production line and so on.
Turkey’s economy.* The Turkish lira continues to slide despite the end of the presidential elections and the appointment of a new finance minister, Mehmet Şimşek, who is more trusted by international investors than his immediate predecessors. How close is Turkey to a classic balance-of-payments crisis when the currency enters freefall and inflation hits 1000%? This is a bit of a technical read but the bottom line is that respected Brad Setser of the US-based Council on Foreign Relations is worried. Relevance to Cyprus: practically it means more painful inflation if you live in northern Cyprus and more cheap petrol if you happen to be a “petrol tourist” living in the south. But an all-out crisis is not something anyone in Cyprus wants in case some kind of move on Cyprus is used by Turkey as a distraction from an economic crisis at home.