the times cyprus report 18.02.15

A resilient nation Wednesday February 18 20154 A place in the sun 10Saving the banks 6-7

Cypruson the road to recovery

2 1GZ Wednesday February 18 2015 | the times

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Nation turns page to abrighter, vibrant futureThe calm stoicismof its people hasplayed a majorpart in recovery,writes Tony Dawe

While Greece stands onthe brink of ejectionfrom the eurozone if itfails to reachagreement over the

terms of its financial bail-out, itsneighbour Cyprus, which was in evendeeper crisis, is on the verge ofeconomic recovery. Nationalresilience, measures to safeguard theshipping and tourism industries andcontinued support for its business andfinancial services have saved thecountry from disaster and broughtsmiles to faces that have been definedby sadness.The latest figures show Cyprus still

in recession, with the economyshrinking by 0.7 per cent in the fourthquarter of last year, but the statisticsare in line with forecasts that alsopredict the economy will recover thisyear. The European Commission, the

International Monetary Fund andratings agencies all anticipate a returnto growth in 2015 and the trade andhospitality sectors are already leadingthe way.President Nicos Anastasiades,

elected in the depths of the crisis inFebruary 2013, told an investorssummit last week: I can state withconfidence and certainty that we haveturned the page, that the economy isnow on the road towards full recovery.The financial sector has been

restructured and recapitalised, mainlythrough big international investors,and our credit institutions have passedwith success the recent Europeanstress tests. Fiscal imbalances havebeen addressed and importantstructural reforms are well underway.Cyprus is returning to theinternational markets, far earlier thananyone predicted.While foreign investors led the

recapitalisation of the countrys failingbanks, international institutions arenow looking at the opportunities thatgrowth might offer, especially in retailand resort developments. Thepresident is also hoping that investorswill support an ambitious privatisationprogramme, targeted initially at thestate telecoms and power companies.The long-term outlook will be

further boosted by the discovery of

significant reserves of natural gas inthe Aphrodite field in Cyprussexclusive economic zone. If thereserves are large enough, they couldturn Cyprus into an exporter ratherthan importer of energy but that willalmost certainly require co-operationfrom Israel and also faces oppositionfrom Turkey.The Turks occupied the north of the

island in 1974 and are now claimingrights to the gas reserves which hasfurther worsened relations with theCyprus government and made anyearly hope of reconciliation evenmore unlikely.The war forced only a temporary

halt to tourism, which has remained amainstay of the economy. Britaincontinues to send the greatest numberof tourists to Cyprus but numbers havebeen dropping and the recent boom inRussian tourists has also halted withthe revaluation of the rouble.The country still offers delightful

and diverse choices for visitors, withwooded hills and mountains sweepingdown to spectacular beaches,Neolithic, Roman and medievalmonuments, a late-developing wineindustry and a full range of sportingactivities. With new airlines and routesarriving, the tourism sector seems setto match the growth expected acrossthe whole country.

A t the depths of its financial crisisalmost two years ago, theoutlook for Cyprus was a longand painful recession in the wake of amulti-billion euro bailout that saw itssecond largest bank shut and a heftytax slapped on wealthy savers.The troika of the European

Commission, International MonetaryFund and European Central Bank thatfunded the 10bn rescue packageexpected the islands economy tocontract by almost 9 per cent in 2013and 4 per cent 2014.But, instead, it shrank by only 5.4

per cent in 2013 and 2.8 per cent lastyear. It was still painful, but ChristianSchulz, an economist at Berenberg, theGerman bank, says: The crisis was farless bad than expected and therecession was not as deep as feared.Most forecasters now expect Cyprus

to post growth this year. TheEuropean Commission has pencilledin 0.4 per cent, while the EuropeanBank for Reconstruction andDevelopment (EBRD), the multilateral

bank that is investing 100m in thecountry, forecasts 0.7 per cent growth.Libor Krkoka, head of the EBRDs

office in Nicosia, says: Consumerspending held up better than wasexpected initially. He pointed tostrong performances in the tourismand leisure sectors as firms movedswiftly to cut prices and offer bettervalue to holidaymakers.Overseas companies continued to

use Cypruss business services, such asaccounting and legal services, and didnot leave as was initially predicted.Harris Georgiades, who took over as

the countrys finance minister in 2013,says the root cause of the optimisticoutlook is the resilience of theislands businesses and citizens.Key industries like tourism,

shipping, business and financialservices have retained theircompetitive edge, their strength andtheir prospects, he says. It is thisresilience which has shielded us fromthe worst of consequences from anotherwise severe financial andeconomic crisis.The medicine prescribed by the

troika was demanding. In what itcalled a strong and ambitious reformprogramme, it set out a strategy ofrestructuring the banking sectorand restoring the health of thepublic finances.In its annual assessment of the

Cypriot economy last winter, the IMFsaid Cyprus had made considerableprogress. It praised the efforts to

recapitalise the financial sector andconsolidate public finances.This helped Cyprus return to the

capital markets last June with anoversubscribed 750m sovereign bondissue. A few months later, Moodys, theratings agency, upgraded the countrysrating to B3.The vote of confidence by financial

investors is echoed by overseasbusinesses coming to the island.Foreign direct investment actuallyrose during the crisis.Charis Papacharalambous, director

general of the Cyprus InvestmentPromotion Agency, says: For a lot ofinvestors, it is a combination of atransparent legal framework based onEnglish common law, probably thebest all-around tax system in the EU,and the strength and expertise ofCypruss legal, financial andadministrative support services, whichmakes the country an attractiveinvestment destination.The government has also pressed

ahead with a privatisation programmewith greater determination than fellowbailout countries, such as Greece.Krkoka says that Cyprus had laggedbehind in the past but now we arelooking at privatisation of telecoms,private concessions for ports as well asreforms and eventual privatisation inthe energy sector.It is not just about raising revenues

but also about maximising the benefitsof privatisation that lead to improvedand more efficient services so that

Islands resilience eases painThe medicine hasbeen hard, but theeconomic outlookis healthier, saysPhil Thornton

Cyprus: road to recovery

The 10 days that rocked Cyprus

Cyprus became the fifthvictim of the eurozone crisisin 2012 as mounting problemsin Greece put its banks underintense pressure. Its lendershad made loans to Greekborrowers worth almost twicethe islands economy.In June it began

negotiations for aninternational bailout but theissue came to a head earlyone Saturday inMarch 2013, whenCypriots woke upto discover thatthe governmenthad agreed a10bn rescuedeal thatimposed a one-off tax of 6.75 percent on bankdeposits below100,000 and 9.9 percent above that.The announcement on

March 16 of what economistscall a bail-in triggered apolitical storm that raged for10 days. Monday was a bankholiday and withdrawals fromcash machines were tightlylimited to prevent a run.With banks staying shut,

Cypriot lawmakers voteddown the bailout termsdespite a revision to the deal

to spare savings under20,000 from the tax. Thegovernment had to scrambleto put together a new planto find the billions of eurosneeded to meet the bailoutconditions.By the end of the week, MPs

had approved a plan to splitthe second largest bank, Laiki,into good and bad banks,

which would take ontroubled assets and

deposits over100,000. Butarguments aboutthe levies onindividualsavers stillthreatened tosink the deal.Finally in the

early hours ofMonday, March 25,

Cyprus struck a last-ditch deal for the 10bnbailout that prevented asovereign bankruptcy.Deposits below 100,000 weresaved from a tax, the burdenfalling instead on wealthydepositors and the banksbondholders andshareholders. A full-scalecrisis that could havedestroyed the eurozone hadbeen averted.PHIL THORNTON

thetimes.co.uk/Cyprus

the times |Wednesday February 18 2015 1GZ 3

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Facts and figures behind a proud republic6With a land area of9,251 square kilometres,Cyprus is the thirdlargest island in theMediterranean and sitsbetween Turkey, Israeland Egypt in the east.Nicosia is the capitaland Mount Olympusthe highest point at1,952m.

6 Its strategic position

attracted waves ofinvaders, Greek,Assyrian, Roman andTurkish, each leavingtraces of their culture.The British ruled from1878 until grantingindependence in 1960.

6 The government ofthe Republic of Cyprusis a democracy, whichhas been a member of

the EU since 2004. Theruling party is theDemocratic Rally.

6 The population is justbelow 900,000 and thecurrency is the euro,which replaced thepound in 2008.

6 The Cyprus climateis subtropical, withmild winters and hot

summers whentemperatures riseabove 80F in the hillsand on the coast andinto the 90s in Nicosia.

6 Total number oftourist arrivals last yearwas 2,440,000, with871,000 from Britain,637,000 from Russiaand 100,000 from bothGreece and Sweden.

of biting recession


customers get better value for money.Now that the foundations have been

put in place, the question is wheremedium-term sustainable growth willcome from. Krkoka was clear:Cyprus is a small, open economyso tourism, business services andshipping-related activities are areaswhere we expect most of theexpansion.Papacharalambous pointed to the

huge role that discoveries of energyreserves in the eastern Mediterraneanwould play.Cyprus has the potential to play a

Harris Georgiades: cautious optimism

role in Europes changing energydynamic. We have already seenforeign direct investment fromcompanies like Halliburton andSchlumberger, with other majorinternational energy players setting upshop in Cyprus to use it as a regionalenergy hub in southeast Europe.But the country still faces

challenges, both domestic andexternal. Unemployment remainsstubbornly high at 15 per cent. Andwhile youth unemployment has fallenby 18 per cent since October 2013, onein three is still out of work.Cyprus has a close financial

relationship with Russia and theongoing crisis in Ukraine will have anegative impact as will the latestspeculation of a break-up of theeurozone following Syrizas victory inthe Greek election.But Krkoka remains upbeat. Given

what both the public and privatesectors have shown over the last twoyears, I believe Cyprus will be able toovercome those negative externalfactors. Of course it will makerecovery much harder but I am stillconfident that they will succeed.Georgiades echoed that cautious

optimism. Of course, we are worriedabout regional developments but wedo feel our effort is delivering, so weexpect 2015 to be a better year.The early wins, which are already

happening, should be a signal and anincentive for all of us to continue andto do the job.

As the recovery gatherspace, cafs have sprungup across the island

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Spirit of 74 helps nationsurvive financial crisisWork ethic, familysupport and a cafculture keeps hopealive, says MichaelTheodoulou

One of my neighbours, a touristguide, dipped heavily into hermodest savings last year toopen a small caf to create jobs for hertwo adult children. They cannot affordstaff so she does shifts with her feisty,72-year-old mother, Androulla.We are a small society and families

pull together. We work hard and nevergive up, says Androulla who, despiteher aches and pains, also doespedicures from home.Many Cypriots were forced to

re-build their lives after losingeverything in the 1974 invasion ofnorthern Cyprus. Within years, theresilience and work ethic of peoplelike Androulla transformed theshattered economy into a remarkablesuccess story. When recession hit inmid-2011, they encouraged youngerCypriots to summon courage from thespirit of 74.Now, just two years after Cypruss

10billion bailout, the EuropeanCommission forecasts 0.4 per centgrowth this year and 1.6 per cent next.James Ker-Lindsay, an expert on

southeastern Europe at the LondonSchool of Economics, says: It hasbeen incredible how much Cyprus hasbounced back. It is still a great place tobe based to do business in the region.Cyprus has a well-educated

workforce, low corporate tax rate anda British-based legal system. Since thebailout, these benefits, along withon-going economic reforms and arestructured banking sector, havehelped attract substantial foreigninvestments.At a major conference this week

aimed at wooing more, PresidentNicos Anastasiades told internationalinvestors: The economy is now on theroad towards full recovery.While Greece is pushing to overhaul

its own rescue package, the Cypriotgovernment is fully committed toimplementing its own bailoutadjustment programme, which it sayshas already helped to stabilise theeconomy and unemployment levels.The 18billion Cypriot economy is

much smaller than Greeces, making iteasier to manage. Cyprus was alsoforced to take much of the pain upfront two years ago, with its rescuepackage conditional on scalpinguninsured deposits of over 100,000 atits two largest banks.This hit many ordinary Cypriots

who were savers rather than spenders,losing money put aside for their oldage or their childrens universityeducation. But it meant thegovernment did not have to cut asmuch of its expenditureproportionately as Greece.Unlike Greece, Cypriot society

remains very conservative, with noculture of violent protest, making iteasier for the government to pushthrough economic reforms.Unemployment has eased but

hovers around 16 per cent, while manyprivate sector workers have had steepwage cuts. But Cyprus is not sufferingthe prolonged agony of Greece. Youdo not see homeless people on thestreets. The younger jobless often livewith their parents, who give themmoney while they hunt for work.The most obvious sign of the recent

downturn is the To Let signs in shopwindows on Makarios Avenue, onceNicosias prime shopping street. Butdozens of cafes have sprung up nearbyin the medieval, walled heart of thecity, a picturesque area now pulsatingwith life.Many cafs, like Androullas, are

modest, relying on bohemian or nicheappeal. Families often chip in,financially or in other ways: a youngCypriot IT specialist in London doesthe digital marketing for his mothersorganic caf in Nicosia.There are also plush cafs with

wonderfully artistic interiors, oftenlaunched by professionals who losttheir jobs but viewed the crisis as anopportunity to bring forward a dream.Among them is a British-trained

fashion designer, who says: It was thebest move I ever made.

Cypriots taking parcelsof basic necessities to aconcert at the height ofthe banking crisis in2013, above. Admissionto the concert was bydonating the parcels,which were distributedto needy families

Afierce determination toimplement the tough termsof the deal agreed with thetroika of European powersfollowing the economic

crisis of March 2013 has put Cyprus onthe path to recovery, says PresidentNicos Anastasiades.In an interview for The Times, he

says the first pillar of the EconomicAdjustment Programme, signed withthe IMF, European Central Bank andthe EU Commission, concerns therestructuring, recapitalisation andenhanced supervision of thebanking system.Considering that the banking

system was on the brink of collapse,the progress achieved so far has beenquite remarkable. The capital controlsimposed after the decisions by theEurogroup have gradually beenlifted to almost full abolition, thepresident says.The second pillar deals with fiscal

consolidation; from an early stage, wehave been determined to do whatever

was necessary to bring public financeson a corrective course.The final pillar has to do with

public sector reform, health carereform, welfare reform and, of course,the privatisation prospects of stateowned enterprises. It is through suchreforms that we will build thefoundations of a multi-dimensional,more viable and more sustainableeconomic model for Cyprus.The president says that interest in

new investments has increasedsignificantly in various sectors overthe past twelve months. He notes thatthe two largest banks wererecapitalised almost exclusivelythrough international investors, thattourism has witnessed investment andthat the health sector is also about toattract funds for greenfield projects.Recent statistics show that the rate

of new companies registered haspicked up once again, while the fundsunder management have risen by 6per cent in the first half of the year.President Anastasiades continues:

Last, but certainly not least, theenergy sector is expected to prove thelargest yet foreign direct investmentattraction for Cyprus, as the countrycould grow into the EasternMediterraneans energy hub followingthe confirmation of significanthydrocarbon reserves in CyprussExclusive Economic Zone.He accuses Turkey of violating

international law by laying claim topart of the zone and says: The natural

Three pillarsto support ourclimb back tofull recoveryPresident NicosAnastasiadesoutlines his visionfor Cyprus as aglobal energy hub


From marina to Mickey Mouse, casino to cosmopolitanluxury, Limassol is the place to be for the jet-ski set

While British propertyhunters in search ofvalue have historicallyheaded to Paphos,those with deeperpockets seeking a trulycosmopolitan coastalcity have gravitated toLimassol.The city is on the up:

it is well-located just a40-minute drive fromthe beach in onedirection and skiresorts in the other, ithas new motorwaylinks and there areplans mooted for aEuro Disney andEuropes largest casino.The new marina,

capable of servicingsuperyachts, is part of a

waterfront developmentof villas, apartments,shops and restaurantsin the Old Town. Over80 per cent of theapartments have beensold 60 per cent toRussian buyers. Pricesstart from 450,000but there are villasfrom 1,751,000(1.3million) thatcome with a berth.Now, if someone

wants a luxury home inCyprus, they head forLimassol marina, saysGiorgos Georgiou, ofCybarco, the developer.Outside the marina,

you will pay 2 millionfor a quality, detachedvilla that you would pay

700,000 for in thePaphos region andin one of the sought-after areas mostpopular for rentals,such as Germasogeia,you could pay far more.Back in the city,

there are also somehigh-rise opportunities.Cybarco is behind theOval, Cypruss tallestcommercial building at75 metres in the heartof Limassol and nick-named the egg for itsstriking architecture.Meanwhile, Pafilia,

another leadingdeveloper, is designingthe highest residentialbuilding on theMediterranean.

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resources of our country should be themost powerful incentive for asubstantial dialogue, far from anythreats or blackmail, to reach amutually acceptable solution of theCyprus problem, benefiting both theGreek Cypriots and the TurkishCypriots, but also all the countries inthe region, including Turkey.He stressed the importance of the

countrys historic links with the UK,reflected in the hundreds of thousandsof British tourists visiting the countryevery year and the thousands ofCypriot students at UK universities.Finally, I would like to emphasise

that my government acknowledgesthat the road ahead will be an uphill

one, and will require lots of stamina,faith in ourselves and determination.But we are confident that the

economic recovery will soonmaterialise. This belief is based on thesignificant competitive advantages ofour economy, but also from the furtherdevelopment of existing sectors andthe emergence of new sectors ofeconomic activity, relating for instanceto tourism, professional services, thefunds industry, ICT and energy.Through the disciplined

implementation of the AdjustmentProgramme, the decisive efforts of theCypriot people and with the support ofour European partners and the IMF,Cyprus is on its way to full recovery.

Privatisation and curb on bureaucracy at the heart of investment planPresident Anastasiadestold the first CyprusInvestors Summit thathis government has astrategy to curbbureaucracy, simplifyprocedures andregulation and createa more positiveenvironment forbusiness andinvestment.Addressing fund

managers and heads ofinternational banks andthe Arab world lastweek, he outlinedreasons to invest inCyprus, including itsfully EU harmonisedtax and legal system,competitive corporatetax regime, top qualityprofessional servicesand location at thecrossroads of Europe,

Asia and Africa.The president said he

was confident that anambitious privatisationprogramme will attractsound and sizeableforeign investments.During the two-day

event, officialsexplained the road mapfor selling Cyta, thetelecommunicationscompany, EAC, the

power company andprime properties.The Cyprus

Investment PromotionAgency presented 18projects, with mostinterest expressed inthe Mall of Cyprusdevelopment in Nicosiaand Limni Bay Resort.Foreign investors also

asked about the VenusRock Resort in Paphos.


President Anastasiades: The road ahead will require lots of stamina and faith

Elias Eliades,chairman of Pafilia,says: We are planningthe Pafilia Tower, 36storeys high, on theseafront in the heartof Limassol. Moreprojects of this kind

are in the pipeline.There are also big

plans in the pipelinefor Cypruss othermain cities.The Shacolas Group,

for example, iscontributing to the

redevelopment of oldLarnaca airport, aswell as extending itsMall of Cyprus andMall of Engomi, bothin Nicosia.ELIZABETHROWLINSON

REX FEATURES

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The declaration lastNovember by the governorof Cypruss central bank thatthe islands banking sectorhad achieved a turning

point was a critical moment inrestoring the financial system backto health.Chrystalla Georghadji applauded

the banks for passing the asset reviewcarried out by the European CentralBank. It is pleasing to see the sector

come out of this difficult juncture ina strong and healthier condition,she said.This marks a radical change in

fortunes from the nadir of thefinancial crisis in March 2013, whenthe government had to recapitalise theBank of Cyprus and close the troubledLaiki Bank.Irena Georgiadou, head of Hellenic

Bank, one of the four systemic banksto gain the ECBs seal of approval, saysthat confidence in the system hadbeen restored.This can also be measured by the

fact that the deposits in the system arenow increasing. All banks are fullycapitalised, and the systemic bankshave new international shareholders,new international boards of directorsand management and, mostimportantly, new working practices.This is the programme that the

Bank of Cyprus (BoC), the islands

largest player, has been through underthe leadership of John Hourican, theIrish banker brought on board inOctober 2013 to lead its recovery.We raised 6 per cent of GDP, the

largest-ever foreign direct investmentinto Cyprus, and we recapitalised thebank to more than 15 per centcommon equity tier 1 to place itamongst the better-capitalised banksin Europe, he said.He brought in Josef Ackerman, the

former chief executive of DeutscheBank, as chairman, and new investorssuch as the American billionaire andrestructuring expert Wilbur Ross. Wehave got a whole new raft of investors,we have got a whole new board andthat is quite exciting, Hourican says.BoC has taken bold moves to

deleverage its balance sheet by1billion a quarter, selling itsUkrainian business, downsizing itsRomanian operations, disposing ofsurplus UK assets and closing a thirdof its branches. Thats all done andnow, having done all that, we can saywe are not just talking about it, we aredoing it. But we must retain theurgency, he says.The moves have helped restore

confidence dented when the troika ofthe European Commission,International Monetary Fund andEuropean Central Bank decided toimpose losses on deposits of morethan 100,000 an unprecedentedmove known as a bail in.The third smallest economy in

Europe became a petri dish for futurebail-in legislation by the EuropeanUnion, Hourican says. The systemwas effectively experimented on forthe benefit of, perhaps, the rest ofEurope. I think Cyprus, as a small andyoung nation, should have expectedbetter treatment in its time of distress.The banks are now looking to the

future, which still holds challenges.Chief among these is the number ofnon-performing loans (NPLs) thatmake up around half of all bankloans. These bad debts weigh on thebanks, straining their already tightcapital and liquidity positions,hindering credit and thus a fulleconomic recovery.

Georgiadou describes this asnumber one on her agenda. Weare being very active in workingout loans, she says. We do have aspecialised loan workout departmentwithin the bank, where we havealso insourced advisers from[British consultancy] FTI tocontain, restructure and ultimatelyreduce NPLs.BoC now has 500 people wholly

focused on restructuring andrecoveries, segmented into thebusinesses. Their only job is to look atdelinquent accounts and try to findviable restructuring, trying to protectthe jobs because its bad for us to justshut businesses and kill offemployment, Hourican says.The government introduced a law

accelerating foreclosures on businessloans and mortgages after two yearsrather than 15. Although the move

Countdown to disaster: the statistics that sealed the fate of Cyprus banks6Since the turn of themillennium, Cyprussbanking systemexpanded quickly. Itgrew from 360 per centof GDP in 2002, toaround 750 per cent in2010, of which domesticbanks represented 750per cent. The twolargest banks, Bank ofCyprus (BoC) and LaikiBank, made up 500 percent.6The growth wasfunded by a rapid risein foreign deposits.Non-resident depositsin Cyprus rose by 50per cent between 2000

and 2010, whiledeposits by Greeksavers rose 75 per cent.6This fuelled anexpansion in credit,with domestic credit tothe private sectorgrowing from 210 percent of GDP to 284 percent over the previousdecade.

6This in turnunderpinned a rapidrise in property prices:in 2004 alone, pricesrose by 30 per centyear-on-year and morethan doubled in the fiveyears between 2003and 2008. The housingbubble burst when theglobal crisis erupted,

and by the first quarterof 2014 they had fallenby 26 per cent fromtheir peak in 2008.6Cypriot banks wereheavily exposed toGreece, with banksholdings of Greek loansand Greek governmentbonds amounting toabout 130 per cent and40 per cent of CyprussGDP respectively atJune 30, 2011.6As a result of theGreek debtrestructuring,BoC and Laiki sufferedcombined losses of25 per cent of GDP.

Banks take tough medicineon slow road back to healthBetter workingpractices and focuson bad debts helprebuild trust, saysPhil Thornton


It had been touch andgo but the prognosis forthe Bank of Cyprus isnow much better



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We have to convince our customersthrough action, not through rhetoricJohn Hourican,chief executive ofBank of Cyprus,on his 1,000-daystrategyfor growth

QCypriot banks have beenrecapitalised and have passedthrough the pan-European

comprehensive assessment. Should wenow have confidence in Cyprussbanks?

AYou can have confidence thatCypruss banks have recognisedthe reality of their undercapitalisationand recognised that they needed tochange how they lend, how theymanage risk, how they are organisedand, indeed, recognise the level of riskon their balance sheets and thereforerecapitalise accordingly.We passed the European stress test

and we stood alongside all of thesystemic banks in Europe. That is thevalidation of the strategy for ourdepositors. That is what should givepeople the confidence to begin tobring their money back to the Bank ofCyprus in particular.

QCan you restore the reputation ofa banking sector that has beenthrough what Cypruss has?

AWe have a very damagedreputation and it will take time. Itis not until the economy starts torecover and people start to feelprosperous again that you really beginto recover the reputation.We have to engage very personally

with our customers and we have to tryand convince them through action,not through rhetoric. It is very easy tostand up and make a big speech, but

actually the key questions are are weserving our customers better; are theyfeeling like were trying to help them:are we trying to reduce the cost ofborrowing; are we doing everythingwe can to re-stimulate the economy; isour corporate and social responsibilityagenda sufficiently plugged into themood of the nation; are we trying toinfluence government policy in a waythat creates prosperity for the nation,not for the bank?.

QBank of Cyprus was listed againon the Athens and Nicosia stockexchanges in December 2014. Is a

London listing on the horizon?

AYes, it is a possibility. The decisionhasnt been made but I think the


triggered anger among smallborrowers, Georgiadou says it willenable banks to act more decisively.The European Bank of

Reconstruction and Development, themultilateral lender that is investing100m into Cyprus, has also madeNPLs one of its priorities, according toLibor Krkoka, head of its Nicosiaoffice. At the moment, our focus is onthe crisis recovery and working outNPLs, he says.I hope that in a few years time

we will have a chance not to talkabout what reforms need to beimplemented, but how Cyprusmanaged to turn round its economyfollowing the crisis.

level of ambition you have to set forany company, or any country, has tobe significantly above where you aretoday, simply because that is whatmakes you perform. So I am openlysaying we will list on Athens andCyprus happily, but we will absolutelyexplore whether there is a moreappropriate, more liquid, largerindex-inclusive venue to host thevalue of this company, and we areexploring that, but we havent madea decision yet.

QWhat are the biggest challengesyou face?AThere is no question that thenon-performing loans remain avery high priority for us, havingalmost 50 per cent of our balancesheet in Cyprus being greater than90 days overdue. It is a big issue.Now, a lot of it is because of the

way the loans were structured andinterest rates are very high and youhave got a very property intensiveeconomy, so you are going to havehigh levels of non-performance.

QYou say you have given yourselfthree to five years to completethe job how is it going so far?

AWe have got a whole new raftof investors, we have got awhole new board and thats quiteexciting. We have got JosefAckermann in the chair. We have beenable to attract the worlds best businesspeople, the worlds most sophisticatedinvestors and we have been able totell a story that people have been ableto believe.Shrink-to-strength is our mantra

at the moment inside the bank. Thismeans lets get tight and strong sothat we can play our part in thiseconomy so that we can then growagain. If we do that, that is afundamentally good strategy for thenext 1,000 days.

John Hourican saysthat listing the Bank ofCyprus on the LondonStock Exchange is apossibility

CORBIS

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A holiday romancethat has no endingThe British adoreCyprus but theyare being temptedby other suitors,warns Tony Dawe

The British love affair with Cyprusis an enduring one and has fordecades accounted for thelargest number of tourists to theEastern Mediterranean country. Weare attracted by the fine beaches andclean waters Cyprus has 57 blueflag beaches meeting strictenvironmental criteria; by the woodedhills and mountains, the climate andthe history, which taps the visitor onthe shoulder at every turn.We enjoy the range of activities on

offer, from bungee jumping tobeachcombing, golf to hang gliding.The very British-ness of the placeappeals. Cypriots drive on the left, usethe same electric plugs and most speakEnglish, all the result of Britishcolonial rule which ended inindependence in 1960. British forcesstill maintain a presence andthousands of Britons ownhomes in the country.But the numbers are

dropping. The total ofBritish tourists lastyear was 871,000,compared with 1.5million in 2001, asthousands are lured bythe competing charms ofthe Canaries, Croatia,Greece and Dubai. TheRussians, also attracted by thebeaches, the climate and relatively lowprices, were catching up: 640,000visited last year. The collapse of therouble, however, has seen numbersstart to drop, leading to calls for thetourist authorities to make morestrenuous efforts to lure visitors.Michalis Louis, chief executive at

Eurobank Cyprus, says: Thesignificant devaluation of the roubleobviously makes Cyprus a moreexpensive destination than it used tobe. So, I am hoping that thegovernment, the Cyprus TourismOrganisation and the hoteliers aretaking the proper steps so that any

downside on the Russian-Ukrainianpart would see an increase from theother markets in which we operate.This message has yet to be heeded,

certainly in the UK. Wes Porter, chiefexecutive of Hermes Airports, says:When I go to London, I ask aboutCyprus and a lot of people dont knowabout it, dont know what it has tooffer. I look for promotions for Cyprusbut often I cant find them.Noel Josephides, chairman of Sunvil,

which has been taking holidaymakersto Cyprus for 45 years, says: If theRussian market is threatened becauseof the collapse of the rouble, a lotmore marketing and emphasis shouldbe directed at the UK, a traditionalmarket for the country but one whichis not really growing.It is a family destination where you

can get the benefit of an EasternMediterranean locality that is safe andstable with a good climate, beautifulmountains, fine beaches and wheremost people speak English.Angelos Loizou, chairman of Cyprus

Tourism Organisation, agrees that thecountry wants to see the good Britishtourist coming back to Cyprus becausewe have so many things to show andto offer and they will not regret it.

There is an effort to enhance theinfrastructure of the country

as a whole, the facilities ofthe hotels and theestablishmentsthemselves and toprovide additionalservices. We want todevelop and make themost of products suchas gastronomy, the spas

and sports, our cultureand history and medical

tourism.Loizou agrees that Cyprus must do

more to promote its diversity: forexample, to contrast the bustle andbusy beaches of Ayia Napa withnearby Makronissos, which offers along stretch of golden sand.The tourist chief says the experience

he would recommend to Britishvisitors would be to explore the hills,staying in a traditional old house. Orthey could stroll into Old Paphos, aUnesco world heritage site, inhabitedsince Neolithic times and at the centreof the cult of Aphrodite.As Loizou says: Our history, ancient

and modern, as well as our culture, areexperiences not to be missed.

It is the height of summer, yet theair is cool. Scented with pine andthe pungent sweetness of juniper, itwafts across the landscape, rustlingthe needles on the trees and

carrying with it the occasional birdof prey. A buzzard, perhaps, or aBonellis eagle.I am walking through the forest in

the heart of Cyprus, a vast, greenlandscape in which on most hikes youcan expect to see more mouflonwild sheep than people. And it ishighly unlikely you will see a mouflon.This is the Cyprus you have not yet

discovered. Far from the coast anddevoid of mass tourism, it is the islandat its authentic best. Here you canweave on foot or by bike betweenjuniper and cedar trees to stumbleupon regimented rows of remotevineyards and emerge on to hillsidesthat look down over diminutive,whitewashed villages.The villages are an attraction in

themselves. With locals leaving for thecoast or offshore, plenty of traditionalhomes were left empty. They havenow been turned into agrotourismbusinesses, offering a distinctlyCypriot brand of hospitality.The 28 guest rooms at Casale

Panayiotis, in the village ofKalopanayiotis, were all once villagehomes. I find my room tucked awayoff a courtyard, it is all dark chunkybeams and crocheted white curtains.In the lounge, bottles of sweetCommandaria wine wash down lambmoussaka. A wooden balcony that Iam sure must be sturdier than itsappearance implies affords views

across the valley to the byzantinemonastery of Saint John Lampadistis.This is one of the ten Unesco-listed

painted churches dotted around theTroodos mountains. Although modestin their construction, with rough stonewalls and steep-pitched wooden roofs,their outsides belie their interiors: eachone is decorated differently, withByzantine mosaics, or ItalianRenaissance-influenced paintings.The combination of eastern and

western design is striking and says

On the trail of mouHelen Ochyra donsher walking bootsto savour thequieter side of abeautiful island


N icosia may be the last dividedcapital in Europe, but thesedays the chances are you willnot snatch so much as a glimpse of aUN peacekeeper. Instead, in therapidly emerging south of the city anarray of new galleries, swish cafs andambitious urban redevelopmentprogrammes beckon amidst thehulking, Venetian-era buttresses andjuniper-kissed gardens that have longmade this such an intoxicatingMediterranean city.Numerous civilisations have left

their indelible imprints on deeplyhistoric Nicosia. None more so thanthe Venetians, whose walls still wraparound an old core awash withatmospheric littles lanes. It is easy tolose more than a few centuriesmeandering around this warren.By contrast, the newer Nicosia, one

of the Middle Easts key business andcommercial hubs, sports a modernglass and steel skyline, plus a phalanx

of smart shops and restaurants.Around it lies a necklace of gracefulparks and sweeping boulevards.The most dramatic of the citys

urban renewal projects is aroundEleftheria (Freedom) Square andnearby Solomou Square. Iraqi-bornarchitect Zaha Hadid ismasterminding this ambitious attemptto revitalise the heart of Nicosiawith a pedestrianised oasis that ishome to an outdoor theatre and awealth of cafs. Then there is the newtown hall, a collage of buildings thatcombines age-old architecture withthe ultra-modern.Reconstruction is not an easy

task anywhere on the island, giventhat every building project inevitablyunearths a wealth of archaeologicaltreasures.There is real ground-up dynamism

in Nicosia, with young families,Cypriot artists and entrepreneursmoving in. The local authority now

Capital projects combine the historic

Ancient meets modern:an electronic circuitboard outlining themap of Cyprus

thetimes.co.uk

Holidaymakers at Makronissos enjoying the delights of sun, sea and sand

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everything you need to know aboutthis sun-soaked island adrift in theeastern Mediterranean.Cyprus lies at the crossroads

between Europe, Asia and Africa andit has seen conquering invaders floodits lands at regular intervalsthroughout history.Each has left its mark, from

Neolithic stone-age dwellings to theBritish radar station that stilldominates Mount Olympus.I spend the next few days getting to

know the area, taking in views overbizarre igneous rock formations andpassing ancient Venetian fortificationson the Artemis Trail, which stretchesfor seven kilometres around themountain, before crossing log bridgeson the Kaledonia Trail to reach theislands tallest waterfall, at 15 metres.It is impressive certainly far more

so than the popular Baths ofAphrodite farther west on the AkamasPeninsula. Here, though, despite thecoach parties, it is possible to escape

BA and Aegean keep the airports busy after companys collapseBritish Airways andAegean Airlines, theleading Greek operator,are ready to step intothe gap left by thecollapse in January ofCyprus Airways, thenational carrier.When the summer

schedules come intooperation at the end ofMarch, BA will launchextra flights fromHeathrow and Gatwickto Cyprus and Aegeansservice from Heathrowwill become daily. TheGreek airline will alsoincrease the number ofdirect services toCyprus to 14, mostlyfrom western Europe.The majority of the

flights will land atLarnaca airport in the

south east, which hasbenefited frominvestment, includingthe opening of a 450mnew terminal five yearsago. The most recentimprovement has beenthe introduction ofelectronic gates to scanboarding passes, easingcongestion in the

departure hall.Wes Porter, chief

executive of HermesAirports, which runsLarnaca and Paphosairport, says: Customerservice is outstanding,we carry great retailbrands and the food isgood. It isrepresentative of

ouflon, myth and perfect peaceCyprus: road to recovery

Forest and mountainslie at the heart ofCyprus, the perfectantidote to bustlingseaside resorts

into wilderness once more, hikingalong trails that lead out towardsthe islands westernmost point,accessible by foot andfour-wheel-drive vehicles only.Here, I walk the Adonis Trail, a

circular route that takes in the Baths(really a small spring said to be wherethe goddess bathed with her lover).From here, the path pushes outtowards the rugged coastline, throughdense forest and out into arid pinescrub, where butterflies dance above

the dusty path and lizards recline onthe sunbaked earth.I walk past plant-cloaked ruins,

admiring the mosaic floor of aByzantine monastery, and climb upthrough olive trees and bright yellowwildflowers, all the while gazing out tothe impossibly blue, shimmeringMediterranean.It is a dazzling sight in more ways

that one. But, for me, it is the islandsother extremity, some 200km away inthe east, that is its crowning glory.Cape Greco is the first place in theEuropean Union to see the sun eachmorning, illuminating the honeycombof sea caves along the coastline andbouncing off the white domedchurches.This area was dynamited for

materials to build the Suez Canal butsince 1993, it has been protected as anature reserve and the wildlife isflourishing. Wild garlic, poppies andanemones carpet the headland, tinybirds once captured to be servedup as a Cypriot delicacy dartfrom bush to tree, and sea turtlesfloat offshore.But my favourite spot is around the

headland to the north. Here, visitorstaking a walk with Andreas, the ownerof the eco-sensitive Artisan Resort,can find an ancient Neolithicsettlement. Today it appears as just ahole carved in the rock, but once itwould have sheltered a family.I hike out here over jagged

limestone rocks, startling the lizardsand disturbing the birds. I look out tosea and I have it to myself. It is theheight of summer and yet nobody iswithin sight.

Cyprus, from the art tothe culture to the waypeople are.In partnership with

the government,Hermes has also spentmoney on Paphosairport, where someBA flights fromGatwick and those runby holiday airlines suchas Thomson, ThomasCook and Jet2 land.Porter adds that

incentives offered toairlines and thegovernment policy ofopening up the skieshas attracted newcarriers and routes. Hesays that a survey foundthat every new dailyflight could createaround 100 new jobs.TONY DAWE

offers free walking tours of theKaimakli suburb, where 19th centuryhomes are being restored and, in somecases, redesigned.Inevitably, culture is at the heart of

this ancient city. The A.G. Leventis

Gallery, opened last year, is dedicatedto the private collection of AnastasiosLeventis, the late Cypriot entrepreneurand philanthropist.The striking multi-storey building

which houses the collection wasdesigned by British architects FeildenClegg Bradley Studios. The 800paintings are by Cypriot, Greek andEuropean artists.At the other end of the spectrum is

the more classical Cyprus Museum. Itsexhibits delve deep into the nationshistory, with exhibits dating back toNeolithic times, spread across 14rooms. The most striking collectionstake in the Roman, Greek andEgyptian periods.Nicosia may be Europes last divided

capital, but the dynamic south of thecity today is a must see for anyonevisiting Cyprus and for city slickerslooking for a rewarding short breakbeyond all the usual suspects.ROBIN McKELVIE

c with hi-tech modernism

Cape Greco is thefirst place in theEU to see the suneach morning

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Personal touchallows wine tobreathe againThe vineyards ofCyprus can boastagain that theyare fit for a king,writes NickWyke

Cypriot wine has changedmore in the last decade or sothan it has in the previoustwo thousand years, withnew wines appearing and

old ones thriving thanks largely tosmaller, personally managed, family-run businesses.Aes Ambelis Commandaria wine

scooped a gold at the Decanter WorldWine Awards last year. It is a fruit-rich, amber-coloured sticky winethat, according to legend, was servedat the wedding of Richard theLionheart in Limassol in 1191.Other wines have begun to appear

in the reputable pages of Hugh

Johnsons Pocket Wine Book 2014,including Zambartas, an exciting newwinery making intense Cab. Fr-Lefkada Rose, very good Shiraz-Lefkada red and excellentMaratheftiko and zesty Xynisteri.We have some magnificent wines

nowadays, says Angelos Loizou,chairman of the Cyprus TourismOrganisation (CTO). We have alwayshad good grapes but the method ofharvesting them was so bad that wecould not make good wines.Cyprus joined the EU in 2004,

ending its wine industrys reliance onheavily subsidised exports of vastquantities of cheap wine to Europe.Since then there have been hugestrides in cultivation and production.Because of its isolation, Cyprus wasalso spared diseases, such asphylloxera, that ravaged thevineyards of mainland Europe inthe late 19th century, so someseriously old native vines still thrive.Today, family-run estates focusing

on quality over quantity are workingto revive indigenous grape varietiessuch as xynisteri, which can beblended with higher acid varieties,and maratheftiko.We have a lot of smaller wineries

that grow their own vineyards, so theyknow every single grape, how it grew,who nourished it, who sprayed it, whopicked it, how it came in the winery,Loizou says.

He admits that the island has beenslow to promote its wines but isstarting to recognise their potentialnow. Last November, the CTOinaugurated the Month of Wine inCyprus and has developed six wineroutes to explore 40 boutique wineries.Marcos Zambartas winery on the

southern slopes of the Troodosmountains features on theKrasochoria wine route. He agreesthat we are at the beginning of a newera in Cyprus viticulture, with its keycharacteristics being Renaissance andintensity of aroma and flavour.We have been able to manage our

own vineyards and use consultantsfrom abroad to help with such thingsas machinery for grape handling andtanks, says Zambartas, who studiedchemistry in London and winemakingin Australia and will produce up to80,000 bottles this year.So what should visitors look out for?

Good value, everyday fruity whites;exceptional, intense red-fruit ross andhalf a dozen international-standardreds that use the distinctive violetaroma of maratheftiko grapes.Meanwhile, Aes Ambelis and

Kyperounda wineries both make acommandaria that perfectly captures,in a glass, the tradition of the oldestnamed wine in the world (according toGuinness World Records) and theambitions of Cypruss new breed ofwinemakers.

Drink in thelandscape . . .A handful of specialistwine bars are emergingin the larger towns ofthe island but the bestway to experienceCypruss winerevolution is to take tothe road.An informative guide

has been published,featuring six wineroutes exploring themain wine producingareas of the island,from the pines andvines of Pitsilia to thesouthern slopes of theTroodos mountains.A seventh wine route,

covering the mountainsof Larnaca and Nicosia,has recently beenlaunched but does notappear in the guide.The routes are well

signposted and eachtakes about a day bycar. Check ahead toensure the vineyardsare open for your visit.


Cypriot life revolves around thefamily, and it is not unusual fortwo, three or even fourgenerations to descend on a localbeach, restaurant or picnic spot toenjoy a meal together, especially on aSunday. The close-knit nature of theCypriot family is only one facet of theisland psyche and belies the open,welcoming character of the people, sodo not be surprised if completestrangers ask you to join them for adrink or a little something to eat itis all part of the culture.Indeed, gatherings on a grand scale

are dear to the Cypriot heart. Lastweek was the start of the CypriotApokreo festival, two weeks of feasting

and celebration that lead up to PureMonday, the begining of Lent in theGreek Orthodoxy. Towns and villagesacross the island celebrate withparades and events.Nothing comes close to the

spectacle at Limassol, however. There,the festival really gets going on thefirst Thursday with the arrival of theKing Carnival procession, right, withits brass bands, serenaders anddrummers, in the elaboratelydecorated city. Daily events follow,including a childrens parade, costumecarnival, medieval ball and serenadingprocession. It will all culminate in agrand parade through the city centreon Sunday, February 22.

A warm welcome in theland of festival and fable


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The average Cypriot is said toconsume about 8kg ofhalloumi a year but theBritish are fast catching up.Undeterred by its saltiness

and rubbery texture, grilled halloumihas become a staple on menus at bothtrendy London restaurants and as analternative to meat at barbeques.In rural areas of Cyprus, where the

best halloumi is made from sheepsmilk, local women still gather to makethe semi-hard cheese by straining,heating and pressing curds andstuffing them with dried nana mintor thyme.Halloumi is best cut thickly and

cooked on charcoals for more flavour,says Yiota Mallas, who runs CyprusTaste Tours, which explores theislands culture and cuisine away fromtourist traps. We eat it when itsmatured in brine so that it is harder,more yellowy and saltier than thestandard supermarket stuff, servedwith watermelon in the summermonths. It is an amazing combinationof flavours.As well as halloumi, Cyprus, which

sits at a culinary crossroads betweenMediterranean and Middle Easternflavours, has a number of uniquedishes worth looking out for. Theseinclude tavas, a traditional lamb dishcooked with a base of cumin, onionsand tomatoes and finished withseasonal vegetables; flaouna, or

Easter bread, a sesame-seed pastryfilled with local flaouna cheese, raisinsand mint; shoushouko, strings ofalmonds or walnuts dipped inconcentrated grape must and left todry like rock candy; and avgolemoni, atraditional soup made from chickenstock and rice, and finished withbeaten eggs and lemons.Cypriots have learnt to make the

most of the land and they tend to usewild and foraged ingredients in theircooking, including wild asparagus(usually fried with eggs), capers,mallow, mushrooms, game and tinysnails (karaoli).We have a lot of recipes with snails

when they appear after the autumnrains,Mallas says. Smaller snails arecooked in a tomato and onion pilafrice; larger snails are eaten with oliveoil and lemon or sometimes taken outof their shell, battered and fried.For an authentic taste of Cyprus she

suggests heading to villages away from

the main towns, especially along themountain road from Limassol up tothe Troodos mountains. Villages suchas Vouni, Omodhos and Lofou havevery good fare at reasonable pricesand many venues cook only what is inseason, using their own fruit,vegetables and meat that they rear.People usually go to Zygi village for

fresh fish, prepared at the manyrestaurants there. But for somewhere alittle less commercial, Liopetri villagehas a lovely harbour and a fewrestaurants right on the water.

Cultural blendat this culinarycrossroadsNickWyke hailshalloumi andtucks into tavas ashe discovers thetastes of Cyprus


A selection of meze(appetisers), at ataverna near thesmall town of Polis

For the less energetic, Limassol alsohosts a flower festival in May and awine festival in September. Bycontrast, Junes Festival of the Floodinvolves a lot of splashing about inwater to purify body and soul asurefire seaside winner with parentsand children alike.You are never far from history and

legend on Cyprus. The beach andswirling waters around Petra touRomiou, the rock known in mythologyas the birthplace of Aphrodite, off themain road from Paphos to Limassol,have much to offer: in the valleys westof Larnaca are the Neolithic sites ofTenta and Choirokoitia, originallysettled about 9,000 years ago.Just outside Paphos lie the Tombs

of the Kings, a city of the dead cutinto the rock and dating back to thethird century BC, while thearchaelogical park to the north of thecity boasts some of the mostimpressive Roman mosaics in the

world. Both are Unesco WorldHeritage Sites.For the archaelogical wow factor,

head to Kourion on Episkopi Bay, westof Limassol. Perched atop a hilloverlooking the Mediterranean, ochrecolumns stand sentinel over the well-preserved city that was establishedduring the Mycenaean and Dorianinvasions of 1,200 BC, although, mostof the surviving structures and thestunning 3,500-seat theatre are ofRoman origin.The Cyprus Museum in Nicosia

houses an extensive collection ofartefacts from across the island and isa great way to familiarise yourself withthe islands turbulent past.For peace and tranquility, and to

escape the worst excesses of the heatof summer, join the locals in a trip intothe Troodos mountains to visit someof the relatively unspoilt villages andmonestaries that dot the landscape.MARK BARBER

We eat snailswhen they appearafter the rains

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Sea and sun set to energise thenations drive towards recoveryReserves of oil andgas, plus solar andwind power, aregrounds for hope,writes Mark Frary

The sea and sun have longbeen central to the Cyprioteconomy but thesetraditional tourism drawscould soon prove to be a

very welcome boost to the nationswealth in another way energy.Emerging from the sea, Aphrodite-

like, are the countrys recentlydiscovered hydrocarbon reserves.

Although small compared with thosein the Gulf and even compared withnearby fields, such as IsraelsLeviathan, the impact of Cyprussreserves on the countrys finances lookset to be important: already there istalk of an oil and gas boom in theregion, injecting much-needed cashinto an economy holed by the globalfinancial crisis.Efthyvoulos Paraskevaides,

chairman and chief executive of EPGlobal Energy, believes Cyprus couldbecome a regional energy hub, hostingrigs and other exploration andproduction infrastructure.The safety, stability, good telecoms,

high standard of education andCypruss European Union status, aswell as its very convenient geographicposition, make it a natural for thispurpose, Paraskevaides says.

The republic has signed amemorandum of understanding withTotal, the French oil company, to builda 4.4 billion liquefied natural gas(LNG) terminal in Vasilikos to servicethe Aphrodite Field and a finalinvestment decision is expected to betaken later this year. If built, it wouldhave an initial capacity of processing5million tonnes of LNG a year but agreen light is likely to depend on gasprices and proven reserves.Yiorgos Lakkotrypis, the energy

minister, says the Vasilikos decision isof strategic importance but thatmonetising the gas reservesthemselves is the number one prioirty.The new discoveries would help

Cyprus emerge from its banking andcurrency crisis, but there are notes ofcaution. Lakkotrypis says the oil andgas finds are the cherry on the cake,rather than being the life-changingdiscoveries experienced in theMiddle East.Hydrocarbons are a big cherry but

a cherry nonetheless. If we dontimplement the right structural reformsthat led us to this situation, when wehave new prospects all we are goingto be doing is probably making thesame mistakes.Paraskevaides agrees that the

country must remain cautious.Although the Aphrodite Field seemspromising, he says: I would not getextremely excited until we see howmuch is actually proven in the end. Iexpect that some of the blocks will

have substantial reserves, while othersmight be a disappointment. It is inCypruss best interest to explore anddevelop its reserves as quickly aspossible, since the income from theexport, the lower electricity prices onthe island, the creation of newindustries from gas and oil and theirexports and the potentially largenumber of jobs created should benefitthe whole of the population of Cyprusand the European Union, which wouldincrease its security of supply.Despite the finds, renewables are

going to make up an increasingly largeproportion of the countrys energyusage. In 2005, Just 2.9 per cent ofenergy use was met from renewablesources and this is expected to reach atarget value of 13 per cent by 2020.According to the national

renewables action plan, solar power(a combination of photovoltaics andconcentrated solar) is expected toprovide 533GWh of energy outputby 2020.Cypruss southerly location in

Europe and its renowned 300 days ofsunshine annually mean it is ideallyplaced to benefit from solar: it alreadyleads Europe in terms of solar heatingon a per capita basis. But it is not onlythe sun that Cyprus is banking on.Onshore wind turbines are forecast toprovide another 499GWh of output by2020, for example.Lakkotrypis says: We are certainly

on track on renewables. What we aretrying to do is replicate the success


I t is a maxim for those working inshipping that they are employed inthe worlds largest invisibleindustry. About 90 per cent of theworlds trade in physical goods iscarried by sea, from crude oil toconsumer goods, while the generalpublic remains largely ignorant of thefundamental role that shipping plays.Cyprus is one of the few countries

where this maxim does not exist. Thenation punches above its weight inshipping because its tonnage taxregime is better than the corporationtax levied by other EU countries.Tonnage tax, under which a

shipping company pays tax based onamount of tonnes of cargo its fleet cantransport, is vastly more efficient for

shipping companies than thecorporation tax regime presentthroughout the rest of the EU, whichtaxes on profits.Shipping contributes about 7 per

cent to the countrys GDP, far aboveinternational averages, especiallytraditional maritime nations with largeregistries such as the UK, Germanyand Norway.Its growth has been fuelled by its

status as an open registry, whereby itwill register ships owned by overseascompanies Cyprus is the tenthlargest flag in the world, with about 80per cent of shipping flying the Cyprusflag owned by northern Europeaninterests. It has also become a centreof ship management operations,undertaking functions such as vesselrepair and maintenance, maritimeregulatory compliance and crewing.Not only is ship management a

valuable source of income, worth justunder 260 million in the first half of2014, according to the Central Bank ofCyprus, but the technical expertise itoffers puts Cypruss open registry in adifferent category from others, such asPanama, Liberia and the MarshallIslands. These open registries are

Why shipping fliesthe flag for growthOverseas ownersare attracted bythe favourable taxregime, reportsGavin van Marle

The port at Limassol.The government hopesthat the island willbecome a hub formerchant shipping

A fuel storage tankunder constructionat Vasilikos. Thediscovery of oil andgas reserves willboost employment



times2Cyprus: road to recovery

more often described as flags ofconvenience.This is important because shipping

companies have been experiencing adownturn for most of the past sevenyears, caught between stagnant cargovolumes and growing vesselovercapacity, and have had to cut coststo stay in business. Shipowners havemigrated to Cyprus from moreexpensive regimes.The difference between Cyprus and

the other open registries is that wealso provide a fully fledged maritimecentre, says Andreas Chrysostomou,acting director at the department ofmerchant shipping.

The research company, vesselsvalue.com estimates that over $10.5 billion(6.8 billion) worth of shippingoperates under the Cyprus flag.While the countrys economy

underwent a massive shock during thebanking crisis, the profitability of itsshipping businesses meant thatinternational bailout teams weredisposed to ensuring its liquidityduring the initial, critical period. Thatleft it in particularly good shape as thecountry recovers.Its case as an international hub for

shipping could receive a substantialshot in the arm later this year ifChrysostomou succeeds in becomingthe next secretary-general of theInternational Maritime Organization,the UN body that develops globalshipping regulations and co-ordinatesthe industrys position on anythingfrom shipping emissions to piracy.Voting is due to take place in June.Additionally, the recent discovery

of offshore natural gas deposits inCypriot waters will increase thedemand for different types of shipping,such as offshore support vessels, tobe owned and managed throughthe country.Speaking in August last year,

Thomas Kazakos, director-general ofthe Cyprus Shipping Chamber, said:We say that shipping is the firstcousin of the energy industry. Thelatter will find oil and gas and bring itto the surface, but who is going tocarry it to the international energymarket? We are.

that we have had with solar waterheaters, which you can see now inevery home.We have launched a very

innovative programme where we allowhouseholds to install up to three kVA

of photovoltaic panels and that hascreated a lot of interest and new jobs.We will certainly continue with thatintensity on the household front, butwe will continue on larger-scaleprojects as well.

Shippingis thefirstcousinof theenergyindustry

Top-notch spas trigger rise in health tourismThere are a number ofreasons why Cyprusalways punches aboveits weight in the spacategories of globaltravel awards.Choice, sunshine

without the jet lag andaffordability are allimportant factors. Theisland has a range oftop-notch spas, fromthe award-winningHebe Spa at the five-star Columbia BeachResort in Pissouri Bay,to holistic eco-retreatssuch as Zening, tuckedaway on the hillsideabove Latchi.According to the

latest visitor figuresfrom the CyprusTourism Organisation,health and medicaltourism is a growingsector for the island.Driving this growth

is the appeal ofthalassotherapy theuse of the mineral-richseawater to treat arange of conditionsfrom cellulite torheumatism.The magnesium and

saline pools at LeMeridien Limassol Spaand Resort, and thenatural sulphur springsat the boutique AyiiAnargyri NaturalHealing Resort, add anextra dimension to theaverage spa experience.There are alsothalassotherapy centresat the luxuriousRoman-style spa at theAnassa hotel and at theFour Seasons, Limassol,which has the onlyJapanese-basedShiseido spa in theMediterranean region.For those who prefer

to just gaze at the searather than bepampered in it andslathered in algae,seaweed and mud, theviews from the infinitypools at the Almyra Spain Paphos andAphrodite Hills Resortare breathtaking. Thelatter offers plenty to dofor sporty partners, too,from golf to tennis.Look out for

treatments that uselocal, natural productssuch as citrus fruits,honey, pomegranates,pepper and olives. And,if youre travellingen famille, for family-friendly resort spassuch as the Anassa, thatoffer well-organisedcrche and kids clubsand activities while yourelax and unwind.NICKWYKE

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Plunging prices and sunnieroutlook tempt UK buyersProperty is back infashion but doyour research first,cautions ElizabethRowlinson

After a tumultuous fewyears, Cyprus is putting itshouse in order and withsome green shoots ofeconomic recovery, the

overseas property hunters are back.For despite the countrys bankingcrisis, the appeal of Cyprus, a uniquestepping stone between theMediterranean and the Middle East,remains strong, especially amongBritish and Russian buyers.

The historic cultural ties of theBritish with the island remain a bigpart of the pull English is widelyspoken, the legal system is the sameand the comforting familiarity ofdriving on the same side of the road coupled with 330 days of sunshine ayear at the end of a short-haul flight.Property taxes compare favourablywith those in the UK.Cyprus is essentially a small, user-

friendly and incredibly hospitableisland where around 70,000 Britishex-pats reside, many of them aroundthe hot spots of Paphos, but alsoLanarca and Limassol. With the eurocurrently at a seven-year low againstthe pound, there has been an increasein UK property hunters keen to takedouble advantage of currency ratesand low prices.In the past six months, the British

market started moving again, saysTina Sarikas, of Unique Living, the

estate agency. They are looking atcoastal Paphos where properties are20-35 per cent down after the globalcrisis inland, this figure is 40 to 50per cent or in Limassol, which hasnot been hit as hard as Paphos, at 8 to15 per cent.But market confidence is also

returning: there is a real feeling thatCyprus is beginning a new chapterafter an era muddied by corruptionissues. Hundreds of British andGerman buyers are going through thecourts to recoup losses aftermisguidedly taking out Swiss francmortgages on their Cypriot homesduring the property boom. With manydevelopers going bankrupt during theglobal crisis, owners have been unableto obtain the title deeds on theirhomes and therefore cannot sell.But under the new progressive

government, Cyprus is becoming amuch safer place to invest, saysStylianos Christoforou, of TCA Law.The government has laid downguidelines to expedite and simplify theprocess of obtaining title deeds. It isone of the procedures introduced tobring greater transparency in Cyprus.Add to this the fact that Cyprus is

predicted to be out of its economiccrisis by 2016 and things are moving inthe right direction.The discovery of hydrocarbons in

Cypriot waters is an added boost, withglobal oil companies already setting upoffices in the country. Tourism and airtraffic also rose in 2014. In addition,last year saw the opening of thecountrys biggest infrastructureproject, the 350 million, state-of-the-art Limassol Marina which hasattracted high-end investors andwealthy yacht owners. The fact thatthey can get Cypriot citizenship ifthey invest 5 million in the island isan added incentive.Other new projects include Minthis

Hills luxury golf resort, set among thewine-growing valleys of the Paphosregion, officially opened by thepresident last summer, and plans fornew marinas at Larnaca and Paphos.It remains crucial for property-

hunters to do their research beforeparting with their cash (and it doesneed to be cash, as mortgages are stillhard to come by). Agents recommendnegotiating hard after using theservices of an independent lawyer toperform the due diligence on aproperty.The lawyer should check the validity

of title deeds and whether theproperty is encumbered by a mortgage(taken out by the developer). Andavoid buying a resale property thatdoes not come with title deeds.

Perfect Paphos still the pick for ex-pats, but make room for the RussiansThe Paphos region inthe west of Cyprus hasbeen a much-loveddestination for theBritish for decades forits fantastic beaches,good infrastructure andauthentic villages allwithin an easy drive ofthe airport.About 30,000 British

ex-pats live here, aswell as a growingpopulation of Russians.Paphos receives moreinquiries for rentalsthan anywhere else inCyprus, according toholidaylettings.co.uk.In the run-up to

Cyprus joining the EU,the market began toboom in and aroundthe region. A largeproportion of the40,000 UK second-home owners in Cyprusbought a property in

areas such as Kouklia,Kato Paphos, Peyia,Sea Caves a low-density area with lovelyviews and Tala for itscharming square andexclusive suburb ofKamares.Heading northwards,

Polis and Latchi arerental hotspots abuttingthe beautiful, unspoiltAkamas peninsula,where high-end

properties at CybarcosAkamas Bay commandaround 1 million.Inland, there isAphrodite Hills,arguably Cypruss mostsuccessful resort, whereluxury villas, startingfrom 700,000, sitamong world-class golf,spa and equestrianfacilities.An excess of

properties in manycoastal developmentstranslates into greatopportunities to buy aresale apartment orvilla at the bottom endof the market. Themarket has reallybegun to move below200,000, says GloriaAubrey, of CyprusProperty Services.I have recently sold

an older one-bedapartment advertised

for 55,000, but saleagreed at 38,000; or athree-bed villa in Tala,offered at 175,000 butsold for 160,000.There is a good

choice of detachedvillas with private poolsif you have a budget of300,000 but if youwant a new property,expect to pay more.The re-emerging

new-build sector istargeting the higherend of the market. AtMinthis Hills, 500properties will belaunched this year,while at Limni Bay,near Polis, the ShacolasGroup is developing a3,330 acre site toinclude 800 residences,two golf courses and abeachfront hotel.ELIZABETHROWLINSON


There are still bargainsto be had but whenbuying a property,ensure it comeswith the title deeds

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It is now more than 40 years sinceTurkish troops, in support ofAnkaras claim to uphold its rightto guarantee the neutrality ofCyprus, invaded and occupied the

island three times the total periodin which Cyprus enjoyedindependence as a unified country.The history of the past 41 years has

been one of repeated frustration: offailed agreements, broken promisesand of repeated visits by European andUnited Nations officials whichpromised much but led to nothing.Many outsiders, determined to bring

peace to Europes last divided nation,have tried to dream up new ways ofrepackaging the same proposals, whichemerged within the first year after the1974 war: Cyprus would become abi-zonal, bi-communal federation, withcomplete autonomy for the Turkishand Greek sectors, a loose central

government, a single internationallegal sovereignty and a series ofconstitutional checks and balances.However, it is becoming difficult to

see how either side can now find a wayof changing the status quo, as each hasaccommodated to the situation as it is.The raw wounds of the tragedies

from the 1974 fighting the flight ofrefugees from north and south, thequest for the missing whose bodieshave never been found, theabandonment of property, the splittingof historic communities have faded.There is now a generation in power

that never knew a Cyprus whereGreeks and Turks lived amongst eachother. And some of the sharpness ofdivision has been softened: since 2008the spontaneous opening of crossingpoints, especially the key check-pointon Ledra Street in Nicosia, hasallowed limited human contact,community leaders are able to meetoccasionally and neither side feels asembattled as it used to.For years, the key issue was how to

reassure the Turkish community,reckoned at about 20 per cent of thepopulation, that it would not beoverwhelmed by the majority.Rauf Denktas, the veteran wily

Turkish Cypriot leader, rarely gave aninch in negotiations. On hisretirement, however, the dynamics

changed. Turkish negotiators showedgreater readiness for compromise. ButGreek Cypriot opposition stiffenedand they overwhelmingly rejected areferendum on the UN proposals.Since then, the UN has said it will nottake up the issue again unless bothsides make clear their readiness tobreak the impasse.The atmosphere has now worsened,

with accusations by the Greek side ofTurkish harassment of Cypriot vesselsengaged in offshore oil exploration.

Last year the leaders of the twocommunities, Nicos Anastasiades andDervis Eroglu, issued a jointdeclaration insisting that the statusquo was unacceptable. They againagreed the basic shape of a unitedCyprus. But they said all negotiationswere based on the principle thatnothing was agreed until everythingwas agreed. That has led someanalysts to suggest that formalpartition is now the best andonly solution.

After 40 years, the agony continuesNo one wants thestatus quo but bothsides still agree todisagree, writesMichael Binyon


A girl mourns a missingloved one as a soldierstands guard outside ata checkpoint in LedraStreet, Nicosia in apicture taken in 2008before the crossingpoint between theGreek and Turkishsides was opened

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the times cyprus report 18.02.15

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