The Week in the Cyprus Region, 15 Mar 2024
Links to regional developments of relevance to Cyprus
Photo source: Shutterstock purchase.
Welcome to the Week in the Cyprus Region (formerly Sapienta Cyprus Selection), a 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. The Week in the Cyprus Region is part of the Sapienta Cyprus Snippets series. Learn more about the different subsections here.
Turkey-Egypt relations. While Turkey’s relations with Israel remain poor, it continues to improve relations with Egypt. Health ministers of Turkey and Egypt agreed in February to establish an Egyptian-Turkish Friendship Hospital in Cairo. Relevance to Cyprus: some officials might see this as negative development given that the Republic of Cyprus worked hard to bolster relations with Egypt during a period in which Egypt’s relations with Turkey were fractious. Personally I view it as a development that reduces security risks in the region.
*Egypt-Israel relations. In our last regional issue we said that the 1978 peace deal between Egypt and Israel is at risk of unravelling. But since then the Chevron-led licensees in Israel’s offshore natural gas field have agreed to ramp up gas production for export to Egypt—something that will help Egypt meet its extremely high energy needs. Relevance to Cyprus: this is doubtless all part of the huge diplomatic back-channels being used to stop the Israel-Gaza war blowing up into a regional one, which would be de-stabilizing for Cyprus too.
Egypt economy. Egypt’s economy is looking more stable following a new loan deal with the International Monetary Fund (IMF) and an agreement by the United Arab Emirates (UAE) to invest $35bn in Egypt within the space of just two months. Relevance to Cyprus: see above comment.
*Israel economy. Israel’s real GDP contracted by 20.7% compared with the previous period in the fourth quarter of 2023, as the entire economy was affected by the war in Gaza that began after the attack by Hamas on Israel on 7 October 2023. Relevance to Cyprus: Israel was the second largest tourism market for Cyprus in 2023 and helped offset the disappearance of Russian tourists after sanctions relating to the war in Ukraine. But arrivals from Israel started to drop sharply from October. This means that the Cyprus tourism sector will have to diversify even more than it is already doing to make up the difference.
EU environmental laws. Tougher rules for making “green” claims are coming from the EU, following an agreement by the European Parliament on 12 March on the “Directive on Green Claims”. This also bans claims that rely solely on carbon offsets. Separately the European Parliament approved a forthcoming directive that aims to reduce energy consumption in buildings. Relevance to Cyprus: in theory, demand for retro-fitting older commercial buildings, for example by installing thicker windows, ought to increase but in practice I suspect older buildings will simply be abandoned in favour of the more environmentally costly construction of newbuilds.
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Links to the free-to-read Sapienta Cyprus Reflections series
· Cyprus interest rates: how do they compare? 21 Feb 2024
· Green finance: how will it affect your business? 25 Jan 2024
· How to bring the people into a Cyprus peace process, 18 May 2023
· Three mega trends to define the decade, 11 May 2023
· Cypriots and sanctions: lessons for other professionals in Cyprus, 18 Apr 2023
· Cyprus and security: it’s time to change the toolbox, 14 Feb 2023
· What do we know about Turkish Cypriot banks? 4 Jan 2023
· How much is Russian business worth to Cyprus? 12 Dec 2022
· The amazing Cyprus growth machine 17 Nov 2022
You can find a full list of all posts here.