Official Visit by OPEC Secretary General

An official visit to Nicosia on 15-17 January by the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Abdalla Salem El Badri (Libya), generated added interest because of Cyprus’ hopes of becoming a significant oil and gas producer from its offshore sector of the Eastern Mediterranean (see CN 08/2007). Mr El-Badri met President Papadopoulos and other leaders and also addressed the Nicosia Chamber of Commerce and Industry (NCCI) on the state of the international oil market.

Asked by journalists after his talks with President Papadopoulos whether Cyprus could become an OPEC member, Mr El- Badri replied jokingly that at one time no one would have predicted that his country, Libya, would qualify to join the organization. He said that he and President Papadopoulos had not specifically discussed Cyprus’ offshore activities, although he described the President as very knowledgeable about oil and gas developments.

In his address to the NCCI gathering, President Papadopoulos noted that Cyprus is currently entirely dependent on petroleum imports, which in 2006 made up 18 per cent of import costs. The Government’s priority, he said, is to ensure adequate, secure and sustainable energy supplies in line with EU directives, so the time had come for Cyprus to embark on hydrocarbons exploration in its exclusive economic zone.


Contract Signed for Artemida Rebuilding

An €8.5 million contract for the start of the reconstruction of the village of Artemida in the Greek Peloponnese, which was devastated in the forest fires of August 2007, was signed by the Cyprus Interior Ministry and the J&P ABAX construction company in Nicosia on 11 January. The Cyprus Government has pledged to meet the full cost of the reconstruction, which is put at €14.5 million.

The contract with J&P ABAX covers work on 80 structures, including 48 houses, and the reconstruction of Artemida’s main square, which will be renamed Cyprus Square. Interior Ministry Permanent Secretary Lazaros Savvides described the project as further proof of the close fraternal relations between Greece and Cyprus.

A delegation led by Demetris Christofias, President of the House of Representative and AKEL presidential candidate, on 28 January presented a cheque for €61,000 to the community of Ayia Anna in Greece, which was also badly hit by the forest fires. He was accompanied by a delegation of Turkish Cypriot trade unionists, who presented 1,000 olive tree saplings to Ayia Anna to help revive its agriculture.


Transition to Euro Proceeds Smoothly

There was general praise for the smooth manner in which Cyprus carried out the replacement of the pound by the euro as its national currency from 1 January. Finance Minister Michalis Sarris was able to report on 28 January that 95 per cent of transactions were already being conducted in euros, three days before the withdrawal of the pound from circulation. The accession of Cyprus together with Malta brought euro-zone membership to 15 of the 27 EU member states.

Assisted by currency converters sent to 300,000 households, Cypriots quickly got to grips with the official conversion rate of C£1=€1.71 used in mandatory dual pricing displays. There were few reports of unfair price increases through rounding-up in euros. Conversion of pounds into euros will be available free of charge until the end of June, whilst any Cyprus pounds retained by citizens will be changeable up to end-2017.

In Turkish-occupied northern Cyprus, where the EU acquis communautaire’s application is suspended pending a political settlement and where the Turkish lira remains the official currency, many businesses began making transactions using the euro. Cypriot euro notes and coins feature both Greek and Turkish, the two official languages of the Republic of Cyprus. The euro also became legal tender in the British sovereign base areas.

“This momentous step will bring Cyprus to the very heart of the EU”, said European Commission President Jose Manuel Barroso on 1 January. “It means that Cyprus has joined a world-class currency and a powerful economic area of nearly 320 million citizens with an almost 15 per cent share of world GDP.” He added that euro-zone membership “should give a healthy boost to foreign direct investment, while the disappearance of exchange rate risks and transaction costs will make Cyprus a more attractive trading partner”.

Sr Barroso was one of an array of EU dignitaries who attended celebrations in Nicosia on 18 January marking Cyprus’ adoption of the euro. A concert in Nicosia Municipal Theatre was followed by a dinner hosted by President Tassos Papadopoulos, who described euro-zone entry as the third landmark date in Cyprus’ history, after the achievement of independence in 1960 and
accession to the EU in 2004.

After participating in EU meetings in Brussels, Mr Sarris visited London on 23-25 January. He gave addresses at the London School of Economics (LSE) and to the National Federation of UK Cypriots on Cyprus’ successful transition to the euro and on the challenges ahead for the country’s economy.


EU Support for Fisheries Spending

Spending of €39.4 million on Cyprus’ fishing industry is provided for under the European Commission’s operational programme for 2007-13 published on 25 January, with half coming from EU funds and half from the Government’s budget. The programme’s aim is to develop a viable fisheries and aquaculture sector which respects nature and meets the needs of both consumers and producers.

Priorities under the programme include adaptation of Cyprus’ fishing fleet, the development of fish farming and inland fishing, the improvement of fish processing and marketing, and measures to ensure the sustainable development of fisheries areas.

Commission fi gures showed that in 2004-06 Cyprus received €3,419,073 under the EU’s Financial Instrument for Fisheries Guidance (FIFG). The funding went to aquaculture projects, the improvementof fishing shelters, investment in fish processing and the reduction of the capacity of the fishing fleet by 560 gross tonnes.


CSE Expansion Plans

Plans for the further expansion of the regional role of the Cyprus Stock Exchange (CSE) and the development of new services were outlined by CSE chairman George Koufaris on 14 January. A strong performance in 2007, he said, had maintained the CSE’s steady recovery from the dark days of its near meltdown in 2000, assisted by robust economic growth and prospective accession to the euro-zone.

Mr Koufaris said that the CSE is examining the possibility of expanding its joint trading platform with the Athens Stock Exchange launched in October 2006 to include the bourses of neighbouring countries. He also confirmed that plans were in train for the creation of a semi-regulated market for new investors, in line with the EU’s new investment services directive (MiFID).


Tourism Industry’s Encouraging Results

Statistical Service figures issued on 28 January confirmed the recovery in Cyprus’ vital tourism industry in 2007, showing that tourist arrivals totalled 2,416,081 over the year, representing a 0.6 per cent increase on the 2006 figure of 2,400,924. Revenue from tourism in 2007 totalled C£1,087.5 million, an increase of 5.9 per cent on 2006 and of 8.1 per cent on 2005. Particularly encouraging was increased expenditure per tourist, to C£407.7 in December 2007 compared with C£404.9 a year earlier.

Confidence that the tourist industry would not be adversely affected by Cyprus’ switch to the euro was expressed on 17 January by the chairman of the Cyprus Tourism Organization (CTO), Panos Englezos, although he warned that the changeover should not be used as an excuse to increase prices unfairly. Mr
Englezos said that, although the UK had not adopted the euro, British tourists – making up over half of arrivals - were unlikely to be deterred by its use in Cyprus because they were familiar with the currency from traveling to other euro-zone countries.

UK-Cyprus air travellers will have more choice of flights with the opening of new services later this year. British Airways (BA) will begin scheduled flights between London Gatwick and Paphos on 1 July, supplementing BA’s existing London Heathrow to Larnaca service. Budget airline Flymonarch.com, which already operates between Luton and Larnaca, will launch a Gatwick to Larnaca service in March, followed by Manchester to Larnaca flights in May.


Microsoft Role in Cyprus a Real Prospect

The Government on 22 January signed a memorandum of understanding (MoU) with US computer software giant Microsoft envisaging that a licensing agreement of up to five years would be reached for Microsoft operating systems. In return, Microsoft would establish innovation and information technology centres in Cyprus.

The MoU was signed at a Leaders’ Forum in Berlin attended by Commerce, Industry and Tourism Minister Antonis Michaelides, who had a 30-minute meeting with Microsoft chief executive Bill Gates. Mr Michaelides said that the conclusion of an agreement with Microsoft would be an important step in the Government’s quest to make Cyprus a net exporter of computer software rather
than a net importer.