Cyprus President Nicos Anastasiades announced on Sunday a series of measures aiming at mitigating to some extent the damage the Russian Business Community has endured due to the decision taken by Eurogroup on March 15, for a haircut on bank deposits in Cyprus.
Addressing the 4th Global Russia Business Meeting, organized in Limassol by the Cyprus Investment Promotion Agency and Horasis organisation, Anastasiades said the measures which he has suggested and which will be approved during the two-day meeting of the Council of Ministers to start on Monday, inter alia, provide that non-resident investors who held deposits prior to the 15th of March, 2013 and suffered a loss amounting to at least 3 million Euros will be eligible to apply for the Cypriot citizenship. The “Citizenship by Investment” programme will be revised in order to reduce the required minimum investment amount for acquiring the Cypriot citizenship to 3 million Euros and widen the eligible investment sectors for acquiring the citizenship and that the existing legislation, which provided for committing assets worth 15 million Euros for up to 5 years in order to acquire the Cypriot citizenship will be modified in order to lift such a restriction and for the assets to be readily available for use.
The President noted that these decisions will be deployed in a fast-track manner and other measures, currently under consideration and legal scrutiny, will soon follow, which will focus on promoting growth, offering favourable tax incentives for existing or new companies doing business in Cyprus, encouraging foreign investments, increasing Cyprus’ competitiveness and creating a more effective and business-friendly environment.
At the same time, he said, “my Government is examining various scenarios which could permit the compensation of part of the losses which shareholders of banks, holders of debt securities and depositors have suffered.”
He stressed that the Russian business community can rest assured that Cyprus will remain a reliable partner to all those entrepreneurs and investors interested in international expansion and will retain its position as a significant international investment hub for Russian and Cypriot business.
Anastasiades also pointed out that Cyprus is neither a money-laundering hub nor a tax haven, noting that there are many credible analyst reports from internationally recognized organizations, including MONEYVAL, which can confirm this.
He said that “this meeting takes place at an inflection point in the contemporary history of Cyprus, as we bear witness to a paradigm shift that calls for adaptation, readjustment and evolution. All these pre-require characteristics that both Cypriots and Russians boast aplenty: endurance, perseverance, determination and a drive to succeed, all empowered by a shared sense of pride.”
He said that his government recently had to face a staggering dilemma: either to lead the country to disorderly bankruptcy- since the Emergency Liquidity Assistance to the two largest banks would be discontinued- or to accept a very difficult, but controllable and manageable, situation, which would eventually lead to the stabilization of the economy and its recovery.
“We chose the latter. It was an historic, but painful decision, not taken light-heartedly. The way forward is not easy. But I have absolute confidence in the persistence, diligence and determination of our people who, as in the past – in a spirit of unity and social cohesion- managed to overcome any problems confronted, either political or economic, either imposed or self–created,” he noted.
He said that he fully acknowledges and shares the understandable bitterness and apprehension of the Russian business community in Cyprus caused by the coercive manner with which the Eurogroup Agreement was imposed on his Government.
“I am also fully aware of the difficulties they are facing, as well as the financial losses they have suffered. It is for these reasons that I wish to assure you that as a State, and, particularly, as a Government, we will do all that is humanly possible to alleviate, to the greatest extent possible, the impact of the Eurogroup Agreement,” he said.
“To this end, fully assuming our responsibilities – aside our aim of lifting restrictions on transactions as soon as conditions permit so – we believe that a number of measures to be adopted could on the one hand mitigate to some extent the damage the Russian Business Community has endured, restore trust and confidence, and on the other hand demonstrate our friendly feelings, gratitude and recognition of their valuable contribution to Cyprus and its economy,” he added.
He expressed confidence that the Cyprus–Russia business Association, the respective Chambers of Commerce and Industry, the relevant professional associations and bodies, and the extensive network of collaborations developed throughout years of business, trade and investment interaction, will continue taking advantage of Cyprus’ competitive edge in the financial services sector, including the comprehensive legal framework between the two countries and especially the Agreement on the Avoidance of Double Taxation.
He noted that it is highly encouraging that the first signs point in this direction. I cannot but express my satisfaction and gratitude for this vote of confidence, as well as for the solidarity displayed by the people of Russia to Cyprus, its economic system and its people, he said.
This also proves that, contrary to unfounded rumours circulated in specific directions, Cyprus and Russia continue to enjoy a mutually beneficial economic partnership, a vibrant partnership which, founded on a concrete basis, has a prosperous future: a partnership which both countries aim at further deepening and strengthening, he added.
He said that towards this common cause, Cyprus Minister of Foreign Affairs will soon visit Moscow, in order to prepare his own visit, “during which President Putin and I will comprehensively review all dimensions of our co-operation”.
He noted that at this juncture, he feels obliged to stress “what is self-explanatory and which you all know: Cyprus is neither a money-laundering hub nor a tax haven. There are many credible analyst reports from internationally recognized organizations, including MONEYVAL, which can confirm this,” he added.
“What saddens me deeply – and I refrain from using the word angers – is that since the Eurogroup Agreement was reached, some EU partners’ businesses and companies involved in the financial services industry have been preying upon our financial services sector, in order to encourage a re-allocation of funds into their economies,” he noted.
Ironically, he added, “their Governments claim that these funds were deposited and invested in Cyprus through money–laundering activities. This is obviously an absurd paradox. Although, as you are aware, I am a firm believer of the rules of the free market, allow me to comment on the hypocrisy of such methods.”
He said he was convinced that substantial relocation of funds will not take place, as the existing legal system, the beneficial tax regime and the qualified professionals that have provided high quality services to local and foreign investors and have contributed to Cyprus’ establishment as a highly competitive center for International Businesses and an attractive investment destination are intact, still well-built and this will remain to be the case.
“The extensive double tax treaties network of Cyprus is still in place, offering its benefits to the great number of foreign investors on the island who still enjoy favourable tax incentives, whilst the EU Directives, which have been fully implemented in Cyprus and are still applicable, and the high level of confidentiality and secrecy rules remain unaltered,” he noted.
He expressed certainty that the EU–sponsored independent audit on money-laundering will once again verify Cyprus’ effectiveness and compliance with international standards.
However, I believe that, for reasons of transparency and an all-embracing extensive implementation, it could be useful if the extension of similar types of audits to all EU Members is seriously considered, especially since some Independent Studies argue that a number of partners are ranked higher from Cyprus as regards the risk levels associated with money laundering and on other categories such as financial regulations, public transparency, corruption and rule of law, Anastasiades added.
After all, he went on, “Cyprus cannot be named, short of substantive argumentation, as a sui generis case, to which one-off policies have been applied. Particularly so, when the universal and pan-European application of EU rules and regulations is the founding principle of the Union, and more particularly in this case, of the Monetary Union.”
He noted that “Cyprus can, and will, enter a new period of stability and growth. There are major opportunities for growth in various sectors, such as shipping, tourism, large infrastructure projects, the filming industry, education, health, research and development and, of course, energy.”
As regards energy, he stressed that the discovery of natural gas reserves within Cyprus’ Exclusive Economic Zone has created a new impetus in encouraging opportunities for co-operation between Cypriot and foreign businesses.
Furthermore, he noted, “we aim at creating a web of natural gas transportation projects in the Eastern Mediterranean which will serve as a means to potentially strengthen regional energy security and attract foreign investments, leading to job creation; this should serve as a boost to the economies of all the countries in the region.”
He said he Government “is determined to swiftly proceed and implement all the necessary steps in order to realize the significant potential for Cyprus to become Eastern Mediterranean’s energy hub. The recent visit of my Foreign Affairs and Energy Ministers to Israel and of the Minister of Energy to Lebanon, as well as my upcoming visit to Israel in early May verifies just that.”
“I therefore urge more companies from the Russia Federation involved in the oil and gas industry to demonstrate interest in getting involved and exploiting the great prospects of Cyprus’ energy sector. My Government will offer all help deemed necessary towards this end. This is an aspect of our relations that I look forward to discussing with President Putin during my upcoming visit to Moscow,” he noted.
