The Week in Cyprus, 15 Nov 2023
Collated news links of interest to ‘outsiders looking in’
Image source: ICIJ on X.com
ICIJ leaks and Russian impact on the economy. The big story on 14 November was the revelations by the International Consortium of Investigative Journalists (ICIJ), which said “how Cypriot financial enablers scrambled to help Russian oligarchs and Putin allies shield their assets and avoid Western sanctions”. Its investigations are up to April 2022. (Source: ICIJ.)
This is a placeholder to say that I am going to revisit the numbers I did last year on how much Russian business is worth to Cyprus. I suspect it will have shrunk. In January-September 2023 Russia did not even reach the top 10 for tourism arrivals (see chart) and yet Cyprus is still on track for a record year for tourism. We also know from the ICIJ that professional services have slashed Russian business too. And here I argue why I think the Cyprus economy has all the tools to survive without currying risky business.
Northern Cyprus economy: tourism booming. Where have the Russian tourists gone? There are multiple anecdotal reports that northern Cyprus is now home to tens of thousands of Russians. A surge in self-catering bookings has come to the attention of the Republic of Cyprus parliament. (Source: Kathimerini.)
AML: UBO register. The ICIJ had advertised that something was coming a few days ahead of the publication. No doubt quite by chance the government announced on 14 November that it had launched the Register of Ultimate Beneficial Owners (UBOs), a requirement of the European Council’s fourth and fifth Anti-Money Laundering Directives. (Source: Cyprus Business News.)
Energy: Chevron megaphone diplomacy. The ongoing spat continues between the Cyprus government and Chevron about plans for the offshore Aphrodite natural gas resource—the first discovery that has come anywhere close to being developed. According to this report the US is not happy with the megaphone diplomacy. (Source: Cyprus Business News.)
Economy: back to growth. As we had expected in our monthly flagship Sapienta Country Analysis Cyprus reports, the economy returned to quarter-on-quarter growth (of 1.1%) in the third quarter after a brief dip in the second and expanded by a seasonally adjusted 2.2% compared with the same period of the previous year. (Source: Cystat.)
Bank profits: After years of uneven profitability undermined by high non-performing exposures (NPEs), the banking system is now enjoying strong profits, with Bank of Cyprus reporting a net profit of €129m for the third quarter. (Source: Financial Mirror.) As we analyzed in our October issue of Sapienta Country Analysis Cyprus profits are being boosted by lending rates that are rising rather faster than the eurozone.
Politics: Gaza corridor. The Republic of Cyprus president, Nikos Christodoulides, is trying to drum up support for a maritime humanitarian corridor for Gaza. (Source Cyprus Mail.) It is mentioned frequently in the local media but it is difficult to tell how seriously the rest of the world is taking it.
Cyprus-Greece relations. Probably with a view to ensuring that the ongoing rapprochement between Greece and Turkey does not have a negative impact on Greek Cypriots, the Republic of Cyprus and Greece launched their first high-level cooperation council on 10 November. (Source: Kathimerini.)
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