Cyprus on the road to recovery

A resilient nation 4 Saving the banks 6-7 A place in the sun 10 Wednesday February 18 2015 2 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 3 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very

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As the recovery gathers Nation turns page to a pace, cafés have sprung Facts and figures behind a proud republic up across the island 6 With a land area of attracted waves of the EU since 2004. The summers when 9,251 square kilometres, invaders, Greek, ruling party is the temperatures rise Cyprus is the third Assyrian, Roman and Democratic Rally. above 80F in the hills brighter, vibrant future largest island in the Turkish, each leaving and on the coast and Mediterranean and sits traces of their culture. 6 The population is just into the 90s in Nicosia. between Turkey, Israel The British ruled from below 900,000 and the and Egypt in the east. 1878 until granting currency is the euro, 6 Total number of International Monetary Fund and significant reserves of natural gas in Nicosia is the capital independence in 1960. which replaced the tourist arrivals last year The calm stoicism ratings agencies all anticipate a return the Aphrodite field in Cyprus’s and Mount Olympus pound in 2008. was 2,440,000, with to growth in 2015 and the trade and exclusive economic zone. If the the highest point at 6 The government of 871,000 from Britain, of its people has hospitality sectors are already leading reserves are large enough, they could 1,952m. the Republic of Cyprus 6 The Cyprus climate 637,000 from Russia the way. turn Cyprus into an exporter rather is a democracy, which is subtropical, with and 100,000 from both played a major President Nicos Anastasiades, than importer of energy but that will 6 Its strategic position has been a member of mild winters and hot Greece and Sweden. elected in the depths of the crisis in almost certainly require co-operation part in recovery, February 2013, told an investors from Israel and also faces opposition summit last week: “I can state with from Turkey. confidence and certainty that we have The Turks occupied the north of the writes Tony Dawe turned the page, that the economy is island in 1974 and are now claiming now on the road towards full recovery. rights to the gas reserves which has hile Greece stands on “The financial sector has been further worsened relations with the the brink of ejection restructured and recapitalised, mainly Cyprus government and made any from the eurozone if it through big international investors, early hope of reconciliation even fails to reach and our credit institutions have passed more unlikely. Wagreement over the with success the recent European The war forced only a temporary terms of its financial bail-out, its stress tests. Fiscal imbalances have halt to tourism, which has remained a neighbour Cyprus, which was in even been addressed and important mainstay of the economy. Britain deeper crisis, is on the verge of structural reforms are well underway. continues to send the greatest number economic recovery. National Cyprus is returning to the of tourists to Cyprus but numbers have resilience, measures to safeguard the international markets, far earlier than been dropping and the recent boom in shipping and tourism industries and anyone predicted.” Russian tourists has also halted with continued support for its business and While foreign investors led the the revaluation of the rouble. financial services have saved the recapitalisation of the country’s failing The country still offers delightful country from disaster and brought banks, international institutions are and diverse choices for visitors, with smiles to faces that have been defined now looking at the opportunities that wooded hills and mountains sweeping by sadness. growth might offer, especially in retail down to spectacular beaches, The latest figures show Cyprus still and resort developments. The Neolithic, Roman and medieval in recession, with the economy president is also hoping that investors monuments, a late-developing wine shrinking by 0.7 per cent in the fourth will support an ambitious privatisation industry and a full range of sporting quarter of last year, but the statistics programme, targeted initially at the activities. With new airlines and routes are in line with forecasts that also state telecoms and power companies. arriving, the tourism sector seems set predict the economy will recover this The long-term outlook will be to match the growth expected across year. The European Commission, the further boosted by the discovery of the whole country.

The 10 days that rocked Cyprus Island’s resilience eases pain of biting recession

Cyprus became the fifth to spare savings under bank that is investing €100m in the recapitalise the financial sector and role in Europe’s changing energy victim of the eurozone crisis €20,000 from the tax. The The medicine has country, forecasts 0.7 per cent growth. consolidate public finances. dynamic. “We have already seen in 2012 as mounting problems government had to scramble Libor Krkoška, head of the EBRD’s This helped Cyprus return to the foreign direct investment from in Greece put its banks under to put together a new plan been hard, but the office in Nicosia, says: “Consumer capital markets last June with an companies like Halliburton and intense pressure. Its lenders to find the billions of euros spending held up better than was oversubscribed €750m sovereign bond Schlumberger, with other major had made loans to Greek needed to meet the bailout economic outlook expected initially.” He pointed to issue. A few months later, Moody’s, the international energy players setting up borrowers worth almost twice conditions. strong performances in the tourism ratings agency, upgraded the country’s shop in Cyprus to use it as a regional the island’s economy. By the end of the week, MPs is healthier, says and leisure sectors as firms moved rating to B3. energy hub in southeast Europe.” In June it began had approved a plan to split swiftly to cut prices and offer better The vote of confidence by financial But the country still faces negotiations for an the second largest bank, Laiki, value to holidaymakers. investors is echoed by overseas challenges, both domestic and international bailout but the into “good” and “bad” banks, Phil Thornton “Overseas companies continued to businesses coming to the island. external. Unemployment remains issue came to a head early which would take on use Cyprus’s business services, such as Foreign direct investment actually stubbornly high at 15 per cent. And one Saturday in troubled assets and t the depths of its financial crisis accounting and legal services, and did rose during the crisis. while youth unemployment has fallen March 2013, when deposits over almost two years ago, the not leave as was initially predicted.” Charis Papacharalambous, director by 18 per cent since October 2013, one Cypriots woke up €100,000. But Aoutlook for Cyprus was a long Harris Georgiades, who took over as general of the Cyprus Investment in three is still out of work. to discover that arguments about and painful recession in the wake of a the country’s finance minister in 2013, Promotion Agency, says: “For a lot of Cyprus has a close financial the government the levies on multi-billion euro bailout that saw its says the root cause of the optimistic investors, it is a combination of a relationship with Russia and the had agreed a individual second largest bank shut and a hefty outlook is the “resilience” of the transparent legal framework based on ongoing crisis in Ukraine will have a €10bn rescue savers still tax slapped on wealthy savers. island’s businesses and citizens. English common law, probably the negative impact — as will the latest deal that threatened to The troika of the European “Key industries like tourism, best all-around tax system in the EU, speculation of a break-up of the imposed a one- sink the deal. Commission, International Monetary shipping, business and financial and the strength and expertise of eurozone following Syriza’s victory in off tax of 6.75 per Finally in the Fund and European Central Bank that services have retained their Cyprus’s legal, financial and the Greek election. cent on bank early hours of funded the €10bn rescue package competitive edge, their strength and administrative support services, which Harris Georgiades: cautious optimism But Krkoška remains upbeat. “Given deposits below Monday, March 25, expected the island’s economy to their prospects,” he says. “It is this makes the country an attractive what both the public and private €100,000 and 9.9 per Cyprus struck a last- contract by almost 9 per cent in 2013 resilience which has shielded us from investment destination.” customers get better value for money.” sectors have shown over the last two cent above that. ditch deal for the €10bn and 4 per cent 2014. the worst of consequences from an The government has also pressed Now that the foundations have been years, I believe Cyprus will be able to The announcement on bailout that prevented a But, instead, it shrank by only 5.4 otherwise severe financial and ahead with a privatisation programme put in place, the question is where overcome those negative external March 16 of what economists sovereign bankruptcy. per cent in 2013 and 2.8 per cent last economic crisis.” with greater determination than fellow medium-term sustainable growth will factors. Of course it will make call a “bail-in” triggered a Deposits below €100,000 were year. It was still painful, but Christian The medicine prescribed by the bailout countries, such as Greece. come from. Krkoška was clear: recovery much harder but I am still political storm that raged for saved from a tax, the burden Schulz, an economist at Berenberg, the troika was demanding. In what it Krkoška says that Cyprus had lagged “Cyprus is a small, open economy confident that they will succeed.” 10 days. Monday was a bank falling instead on wealthy German bank, says: “The crisis was far called a “strong and ambitious reform behind in the past but “now we are so tourism, business services and Georgiades echoed that cautious holiday and withdrawals from depositors and the banks’ less bad than expected and the programme”, it set out a strategy of looking at privatisation of telecoms, shipping-related activities are areas optimism. “Of course, we are worried cash machines were tightly bondholders and recession was not as deep as feared.” restructuring the banking sector private concessions for ports as well as where we expect most of the about regional developments but we limited to prevent a run. shareholders. A full-scale Most forecasters now expect Cyprus and restoring the health of the reforms and eventual privatisation in expansion.” do feel our effort is delivering, so we With banks staying shut, crisis that could have to post growth this year. The public finances. the energy sector. Papacharalambous pointed to the expect 2015 to be a better year. Cypriot lawmakers voted destroyed the eurozone had European Commission has pencilled In its annual assessment of the “It is not just about raising revenues “huge role” that discoveries of energy “The early wins, which are already down the bailout terms been averted. in 0.4 per cent, while the European Cypriot economy last winter, the IMF but also about maximising the benefits reserves in the eastern Mediterranean happening, should be a signal and an despite a revision to the deal PHIL THORNTON Bank for Reconstruction and said Cyprus had made “considerable of privatisation that lead to improved would play. incentive for all of us to continue and Development (EBRD), the multilateral progress”. It praised the efforts to and more efficient services so that “Cyprus has the potential to play a to do the job.” 4 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 5 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very

GETTY IMAGES REX FEATURES Three pillars Privatisation and curb on bureaucracy at the heart of investment plan President Anastasiades managers and heads of Asia and Africa. power company and told the first Cyprus international banks and The president said he prime properties. Investors Summit that the Arab world last was confident that an The Cyprus his government has a week, he outlined ambitious privatisation Investment Promotion to support our strategy to curb reasons to invest in programme will attract Agency presented 18 bureaucracy, simplify Cyprus, including its “sound and sizeable projects, with most procedures and fully EU harmonised foreign investments”. interest expressed in regulation and create tax and legal system, During the two-day the Mall of Cyprus a more positive competitive corporate event, officials development in Nicosia climb back to environment for tax regime, top quality explained the road map and Limni Bay Resort. business and professional services for selling Cyta, the Foreign investors also investment. and location at the telecommunications asked about the Venus full recovery Addressing fund crossroads of Europe, company, EAC, the Rock Resort in Paphos.

was necessary to bring public finances President Nicos on a corrective course. “The final pillar has to do with Anastasiades public sector reform, health care Spirit of ‘74 helps nation reform, welfare reform and, of course, outlines his vision the privatisation prospects of state owned enterprises. It is through such for Cyprus as a reforms that we will build the survive financial crisis foundations of a multi-dimensional, more viable and more sustainable global energy hub economic model for Cyprus.” its own rescue package, the Cypriot The president says that interest in Work ethic, family government is “fully committed” to fierce determination to new investments has increased implementing its own bailout implement the tough terms significantly in various sectors over support and a café adjustment programme, which it says of the deal agreed with the the past twelve months. He notes that has already helped to stabilise the troika of European powers the two largest banks were Afollowing the economic recapitalised almost exclusively culture keeps hope economy and unemployment levels. The €18billion Cypriot economy is crisis of March 2013 has put Cyprus on through international investors, that alive, says Michael much smaller than Greece’s, making it the path to recovery, says President tourism has witnessed investment and easier to manage. Cyprus was also Nicos Anastasiades. that the health sector is also about to President Anastasiades: ‘The road ahead will require lots of stamina and faith’ forced to take much of the pain up In an interview for The Times, he attract funds for greenfield projects. Theodoulou front two years ago, with its rescue says the first pillar of the Economic Recent statistics show that the rate resources of our country should be the one, and will require lots of stamina, package conditional on scalping Adjustment Programme, signed with of new companies registered has most powerful incentive for a faith in ourselves and determination. ne of my neighbours, a tourist uninsured deposits of over €100,000 at the IMF, European Central Bank and picked up once again, while the funds substantial dialogue, far from any “But we are confident that the guide, dipped heavily into her its two largest banks. the EU Commission, concerns the under management have risen by 6 threats or blackmail, to reach a economic recovery will soon Omodest savings last year to This hit many ordinary Cypriots restructuring, recapitalisation and per cent in the first half of the year. mutually acceptable solution of the materialise. This belief is based on the open a small café to create jobs for her who were savers rather than spenders, enhanced supervision of the President Anastasiades continues: Cyprus problem, benefiting both the significant competitive advantages of two adult children. They cannot afford losing money put aside for their old banking system. “Last, but certainly not least, the Greek Cypriots and the Turkish our economy, but also from the further staff so she does shifts with her feisty, age or their children’s university “Considering that the banking energy sector is expected to prove the Cypriots, but also all the countries in development of existing sectors and 72-year-old mother, Androulla. education. But it meant the system was on the brink of collapse, largest yet foreign direct investment the region, including Turkey.” the emergence of new sectors of “We are a small society and families government did not have to cut as the progress achieved so far has been attraction for Cyprus, as the country He stressed the importance of the economic activity, relating for instance pull together. We work hard and never much of its expenditure quite remarkable. The capital controls could grow into the Eastern country’s historic links with the UK, to tourism, professional services, the give up,” says Androulla who, despite proportionately as Greece. imposed after the decisions by the Mediterranean’s energy hub following reflected in the hundreds of thousands funds industry, ICT and energy. her aches and pains, also does Unlike Greece, Cypriot society Eurogroup have gradually been the confirmation of significant of British tourists visiting the country “Through the disciplined pedicures from home. remains very conservative, with no lifted to almost full abolition,” the hydrocarbon reserves in Cyprus’s every year and the thousands of implementation of the Adjustment Many Cypriots were forced to culture of violent protest, making it president says. Exclusive Economic Zone.” Cypriot students at UK universities. Programme, the decisive efforts of the re-build their lives after losing easier for the government to push “The second pillar deals with fiscal He accuses Turkey of violating “Finally, I would like to emphasise Cypriot people and with the support of everything in the 1974 invasion of through economic reforms. consolidation; from an early stage, we international law by laying claim to that my government acknowledges our European partners and the IMF, northern Cyprus. Within years, the Unemployment has eased but have been determined to do whatever part of the zone and says: “The natural that the road ahead will be an uphill Cyprus is on its way to full recovery.” resilience and work ethic of people hovers around 16 per cent, while many like Androulla transformed the private sector workers have had steep GETTY IMAGES shattered economy into a remarkable wage cuts. But Cyprus is not suffering success story. When recession hit in the prolonged agony of Greece. You From marina to Mickey Mouse, casino to cosmopolitan mid-2011, they encouraged younger do not see homeless people on the Cypriots to summon courage from the streets. The younger jobless often live luxury, Limassol is the place to be for the jet-ski set “spirit of ’74”. with their parents, who give them Now, just two years after Cyprus’s money while they hunt for work. While British property waterfront development €700,000 for in the €10billion bailout, the European The most obvious sign of the recent hunters in search of of villas, apartments, Paphos region — and Commission forecasts 0.4 per cent downturn is the To Let signs in shop value have historically shops and restaurants in one of the sought- growth this year and 1.6 per cent next. windows on Makarios Avenue, once headed to Paphos, in the Old Town. Over after areas most James Ker-Lindsay, an expert on Nicosia’s prime shopping street. But those with deeper 80 per cent of the popular for rentals, southeastern Europe at the London dozens of cafes have sprung up nearby pockets seeking a truly apartments have been such as Germasogeia, School of Economics, says: “It has in the medieval, walled heart of the cosmopolitan coastal sold — 60 per cent to you could pay far more. been incredible how much Cyprus has city, a picturesque area now pulsating city have gravitated to Russian buyers. Prices Back in the city, bounced back. It is still a great place to with life. Limassol. start from €450,000 there are also some be based to do business in the region.” Many cafés, like Androulla’s, are The city is on the up: but there are villas high-rise opportunities. Cyprus has a well-educated modest, relying on bohemian or niche it is well-located just a from €1,751,000 Cybarco is behind the workforce, low corporate tax rate and appeal. Families often chip in, 40-minute drive from (£1.3million) that Oval, Cyprus’s tallest a British-based legal system. Since the financially or in other ways: a young the beach in one come with a berth. commercial building at bailout, these benefits, along with Cypriot IT specialist in London does direction and ski “Now, if someone 75 metres in the heart on-going economic reforms and a the digital marketing for his mother’s resorts in the other, it wants a luxury home in of Limassol and nick- restructured banking sector, have Cypriots taking parcels organic café in Nicosia. has new motorway Cyprus, they head for named “the egg” for its Elias Eliades, are in the pipeline.” redevelopment of old helped attract substantial foreign of basic necessities to a There are also plush cafés with links and there are Limassol marina,” says striking architecture. chairman of Pafilia, There are also big Larnaca airport, as investments. concert at the height of wonderfully artistic interiors, often plans mooted for a Giorgos Georgiou, of Meanwhile, Pafilia, says: “We are planning plans in the pipeline well as extending its At a major conference this week the banking crisis in launched by professionals who lost Euro Disney and Cybarco, the developer. another leading the Pafilia Tower, 36 for Cyprus’s other Mall of Cyprus and aimed at wooing more, President 2013, above. Admission their jobs but viewed the crisis as an Europe’s largest casino. Outside the marina, developer, is designing storeys high, on the main cities. Mall of Engomi, both Nicos Anastasiades told international to the concert was by opportunity to bring forward a dream. The new marina, you will pay €2 million the highest residential seafront in the heart The Shacolas Group, in Nicosia. investors: “The economy is now on the donating the parcels, Among them is a British-trained capable of servicing for a quality, detached building on the of Limassol. More for example, is ELIZABETH road towards full recovery.” which were distributed fashion designer, who says: “It was the superyachts, is part of a villa that you would pay Mediterranean. projects of this kind contributing to the ROWLINSON While Greece is pushing to overhaul to needy families best move I ever made.” 6 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 7 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very Banks take tough medicine GETTY IMAGES ‘We have to convince our customers on slow road back to health through action, not through rhetoric’

CORBIS come out of this difficult juncture in largest player, has been through under level of ambition you have to set for Better working a strong and healthier condition,” the leadership of John Hourican, the John Hourican, any company, or any country, has to she said. Irish banker brought on board in be significantly above where you are practices and focus This marks a radical change in October 2013 to lead its recovery. chief executive of today, simply because that is what fortunes from the nadir of the “We raised 6 per cent of GDP, the makes you perform. So I am openly on bad debts help financial crisis in March 2013, when largest-ever foreign direct investment Bank of Cyprus, saying we will list on Athens and the government had to recapitalise the into Cyprus, and we recapitalised the Cyprus happily, but we will absolutely rebuild trust, says Bank of Cyprus and close the troubled bank to more than 15 per cent on his 1,000-day explore whether there is a more Laiki Bank. common equity tier 1 to place it appropriate, more liquid, larger Irena Georgiadou, head of Hellenic amongst the better-capitalised banks index-inclusive venue to host the Phil Thornton Bank, one of the four systemic banks in Europe,” he said. strategyfor growth value of this company, and we are to gain the ECB’s seal of approval, says He brought in Josef Ackerman, the exploring that, but we haven’t made he declaration last that confidence in the system had former chief executive of Deutsche Cypriot banks have been a decision yet. November by the governor been “restored”. Bank, as chairman, and new investors Qrecapitalised and have passed of Cyprus’s central bank that “This can also be measured by the such as the American billionaire and through the pan-European What are the biggest challenges the island’s banking sector fact that the deposits in the system are restructuring expert Wilbur Ross. “We comprehensive assessment. Should we Qyou face? Thad achieved a “turning now increasing. All banks are fully have got a whole new raft of investors, now have confidence in Cyprus’s point” was a critical moment in capitalised, and the systemic banks we have got a whole new board and banks? There is no question that the restoring the financial system back have new international shareholders, that is quite exciting,” Hourican says. Anon-performing loans remain a to health. new international boards of directors BoC has taken bold moves to You can have confidence that very high priority for us, having Chrystalla Georghadji applauded and management and, most deleverage its balance sheet by ACyprus’s banks have recognised almost 50 per cent of our balance the banks for passing the asset review importantly, new working practices.” €1billion a quarter, selling its the reality of their undercapitalisation sheet in Cyprus being greater than carried out by the European Central This is the programme that the Ukrainian business, downsizing its and recognised that they needed to 90 days overdue. It is a big issue. Bank. “It is pleasing to see the sector Bank of Cyprus (BoC), the island’s Romanian operations, disposing of change how they lend, how they Now, a lot of it is because of the surplus UK assets and closing a third manage risk, how they are organised way the loans were structured and of its branches. “That’s all done and and, indeed, recognise the level of risk interest rates are very high and you now, having done all that, we can say on their balance sheets and therefore have got a very property intensive we are not just talking about it, we are recapitalise accordingly. economy, so you are going to have doing it. But we must retain the We passed the European stress test high levels of non-performance. urgency,” he says. and we stood alongside all of the The moves have helped restore systemic banks in Europe. That is the You say you have given yourself confidence dented when the troika of validation of the strategy for our Qthree to five years to complete the European Commission, depositors. That is what should give John Hourican says actually the key questions are “are we the job — how is it going so far? International Monetary Fund and people the confidence to begin to that listing the Bank of serving our customers better; are they European Central Bank decided to It had been touch and Georgiadou describes this as triggered anger among small bring their money back to the Bank of Cyprus on the London feeling like we’re trying to help them: We have got a whole new raft impose losses on deposits of more go but the prognosis for “number one” on her agenda. “We borrowers, Georgiadou says it will Cyprus in particular. Stock Exchange is a are we trying to reduce the cost of Aof investors, we have got a than €100,000 — an unprecedented the Bank of Cyprus is are being very active in working enable banks to act “more decisively”. possibility borrowing; are we doing everything whole new board and that’s quite move known as a “bail in”. now much better out loans,” she says. “We do have a The European Bank of Can you restore the reputation of we can to re-stimulate the economy; is exciting. We have got Josef ”The third smallest economy in specialised loan workout department Reconstruction and Development, the Qa banking sector that has been our corporate and social responsibility Ackermann in the chair. We have been Europe became a petri dish for future within the bank, where we have multilateral lender that is investing through what Cyprus’s has? agenda sufficiently plugged into the able to attract the world’s best business bail-in legislation by the European also insourced advisers from €100m into Cyprus, has also made mood of the nation; are we trying to people, the world’s most sophisticated Union,” Hourican says. “The system [British consultancy] FTI to NPLs one of its priorities, according to We have a very damaged influence government policy in a way investors and we have been able to was effectively experimented on for contain, restructure and ultimately Libor Krkoška, head of its Nicosia Areputation and it will take time. It that creates prosperity for the nation, tell a story that people have been able the benefit of, perhaps, the rest of reduce NPLs.” office. “At the moment, our focus is on is not until the economy starts to not for the bank?”. to believe. Europe. I think Cyprus, as a small and BoC now has 500 people wholly the crisis recovery and working out recover and people start to feel “Shrink-to-strength” is our mantra young nation, should have expected focused on restructuring and NPLs,” he says. prosperous again that you really begin Bank of Cyprus was listed again at the moment inside the bank. This better treatment in its time of distress.” recoveries, segmented into the “I hope that in a few years’ time to recover the reputation. Qon the Athens and Nicosia stock means “let’s get tight and strong so The banks are now looking to the businesses. “Their only job is to look at we will have a chance not to talk We have to engage very personally exchanges in December 2014. Is a that we can play our part in this future, which still holds challenges. delinquent accounts and try to find about what reforms need to be with our customers and we have to try London listing on the horizon? economy so that we can then grow Chief among these is the number of viable restructuring, trying to protect implemented, but how Cyprus and convince them through action, again.” If we do that, that is a non-performing loans (NPLs) that the jobs because it’s bad for us to just managed to turn round its economy not through rhetoric. It is very easy to Yes, it is a possibility. The decision fundamentally good strategy for the make up around half of all bank shut businesses and kill off following the crisis.” stand up and make a big speech, but Ahasn’t been made but I think the next 1,000 days. loans. These bad debts weigh on the employment,” Hourican says. banks, straining their already tight The government introduced a law capital and liquidity positions, accelerating foreclosures on business hindering credit and thus a full loans and mortgages after two years economic recovery. rather than 15. Although the move

Countdown to disaster: the statistics that sealed the fate of Cyprus banks 6Since the turn of the and by the first quarter millennium, Cyprus’s of 2014 they had fallen banking system by 26 per cent from expanded quickly. It their peak in 2008. grew from 360 per cent 6Cypriot banks were of GDP in 2002, to heavily exposed to around 750 per cent in Greece, with banks’ 2010, of which domestic holdings of Greek loans banks represented 750 and Greek government per cent. The two and 2010, while 6This in turn bonds amounting to largest banks, Bank of deposits by Greek underpinned a rapid about 130 per cent and Cyprus (BoC) and Laiki savers rose 75 per cent. rise in property prices: 40 per cent of Cyprus’s Bank, made up 500 per 6This fuelled an in 2004 alone, prices GDP respectively at cent. expansion in credit, rose by 30 per cent June 30, 2011. 6The growth was with domestic credit to year-on-year and more 6As a result of the funded by a rapid rise the private sector than doubled in the five Greek debt in foreign deposits. growing from 210 per years between 2003 restructuring, Non-resident deposits cent of GDP to 284 per and 2008. The housing BoC and Laiki suffered in Cyprus rose by 50 cent over the previous bubble burst when the combined losses of per cent between 2000 decade. global crisis erupted, 25 per cent of GDP. 8 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 9 times2Cyprus: road to recovery thetimes.co.ukuk/Cyprus Cyprus: road to recotimes2very GETTY IMAGES On the trail of mououflon, myth and perfect peace

GETTY IMAGES the dusty path and lizards recline on Helen Ochyra dons the sunbaked earth. I walk past plant-cloaked ruins, her walking boots admiringthe mosaic floor of a Byzantine monastery, and climb up to savour the through olive trees and bright yellow wildflowers, all the while gazingout to quieter side of a the impossibly blue, shimmering Mediterranean. It is a dazzling sight in more ways beautiful island that one. But, for me, it is the island’s Holidaymakers at Makronissos enjoying the delights of sun, sea and sand other extremity, some 200km away in t is the height of summer, yet the the east, that is its crowning glory. air is cool. Scented with pine and Cape Greco is the first place in the the pungent sweetness of juniper, it European Union to see the sun each A holiday romance wafts across the landscape, rustling morning, illuminatingthe honeycomb Ithe needles on the trees and of sea caves along the coastline and carrying with it the occasional bird bouncing offthe white domed of prey. A buzzard, perhaps, or a churches. that has no ending Bonelli’s eagle. This area was dynamited for I am walking through the forest in materials to build the Suez Canal but the heart of Cyprus, a vast, green since 1993, it has been protected as a downside on the Russian-Ukrainian landscape in which on most hikes you nature reserve and the wildlife is The British adore part would see an increase from the can expect to see more mouflon — flourishing. Wild garlic, poppies and other markets in which we operate.” wild sheep— than people. And it is anemones carpet the headland, tiny Cyprus but they This message has yet to be heeded, highly unlikely you will see a mouflon. birds — once captured to be served certainly in the UK. Wes Porter, chief This is the Cyprus you have not yet up as a Cypriot delicacy — dart are being tempted executive of Hermes Airports, says: discovered. Far from the coast and from bush to tree, and sea turtles “When I go to London, I ask about devoid of mass tourism, it is the island float offshore. by other suitors, Cyprus and a lot of people don’t know at its authentic best. Here you can But my favourite spot is around the about it, don’t know what it has to weave on foot or by bike between offer. I look for promotions for Cyprus juniper and cedar trees to stumble warns Tony Dawe but often I can’t find them.” upon regimented rows of remote Noel Josephides, chairman of Sunvil, vineyards and emerge on to hillsides Cape Grecoisthe he British love affair with Cyprus which has been taking holidaymakers that look down over diminutive, “ is an enduring one and has for to Cyprus for 45 years, says: “If the whitewashed villages. Tdecades accounted for the Russian market is threatened because The villages are an attraction in firstplace in the largest number of tourists to the of the collapse of the rouble, a lot themselves. With locals leaving for the EU to seethe sun Eastern Mediterranean country. We more marketing and emphasis should coast or offshore, plenty of traditional are attracted by the fine beaches and be directed at the UK, a traditional homes were left empty. They have eachmorning clean waters — Cyprus has 57 blue market for the country but one which now been turned into agrotourism flag beaches meeting strict is not really growing. businesses, offering a distinctly across the valley to the byzantine everything you need to know about Forest and mountains know the area, taking in views over into wilderness once more, hiking headland to the north. Here, visitors environmental criteria; by the wooded “It is a family destination where you Cypriot brand of hospitality. monastery of Saint John Lampadistis. this sun-soaked island adrift in the lie at the heart of bizarre igneous rock formations and along trails that lead out towards taking a walk with Andreas, the owner hills and mountains, the climate and can get the benefit of an Eastern The 28 guest rooms at Casale This is one of the ten Unesco-listed eastern Mediterranean. Cyprus, the perfect passing ancient Venetian fortifications the island’s westernmost point, of the eco-sensitive Artisan Resort, the history, which taps the visitor on Mediterranean locality that is safe and Panayiotis, in the village of painted churches dotted around the Cyprus liesat the crossroads antidote to bustling on the Artemis Trail, which stretches accessible by foot and can find an ancient Neolithic the shoulder at every turn. stable with a good climate, beautiful Kalopanayiotis, were all once village Troodos mountains. Although modest between Europe, Asia and Africa and seaside resorts for seven kilometres around the four-wheel-drive vehicles only. settlement. Today it appears as just a We enjoy the range of activities on mountains, fine beaches and where homes. I find my room tucked away in their construction, with rough stone it has seen conquering invaders flood mountain, before crossing log bridges Here, I walk the Adonis Trail, a hole carved in the rock, but once it offer, from bungee jumping to most people speak English.” off a courtyard, it is all dark chunky walls and steep-pitched wooden roofs, its lands at regular intervals on the Kaledonia Trail to reach the circular route that takes in the Baths would have sheltered a family. beachcombing, golf to hang gliding. Angelos Loizou, chairman of Cyprus beams and crocheted white curtains. their outsides belie their interiors: each throughout history. island’s tallest waterfall, at 15 metres. (really a small spring said to be where I hike out here over jagged The very British-ness of the place Tourism Organisation, agrees that the In the lounge, bottles of sweet one is decorated differently, with Each has left its mark, from It is impressive — certainly far more the goddess bathed with her lover). limestone rocks, startling the lizards appeals. Cypriots drive on the left, use country wants “to see the good British Commandaria wine wash down lamb Byzantine mosaics, or Italian Neolithic stone-age dwellings to the so than the popular Baths of From here, the path pushesout and disturbing the birds. I look out to the same electric plugs and most speak tourist coming back to Cyprus because moussaka. A wooden balcony that I Renaissance-influenced paintings. British radar station that still Aphroditefarther west on the Akamas towards the rugged coastline, through sea and I have it to myself. It is the English, all the result of British we have so many things to show and am sure must be sturdier than its The combination of eastern and dominates Mount Olympus. Peninsula. Here, though, despite the dense forest and out into arid pine height of summer and yet nobody is colonial rule which ended in to offer and they will not regret it. appearance implies affords views western design is striking and says I spend the next few days getting to coach parties, it is possible to escape scrub, where butterflies dance above within sight. independence in 1960. British forces “There is an effort to enhance the still maintain a presence and infrastructure of the country thousands of Britons own as a whole, the facilities of homes in the country. the hotels and the Capital projects combine the historicc with hi-tech modernism BA and Aegean keep the airports busy after company’s collapse But the numbers are establishments dropping. The total of themselves and to British Airways and Cyprus, from the art to British tourists last provide additional icosia may be the last divided of smart shops and restaurants. Gallery, opened last year, is dedicated Aegean Airlines, the the culture to the way year was 871,000, services. We want to capital in Europe, but these Around it lies a necklace of graceful to the private collection of Anastasios leading Greek operator, people are.” Ndays the chances are parks and sweeping boulevards. compared with 1.5 develop and make the you will Leventis, the late Cypriot entrepreneur are ready to step into In partnership with million in 2001, as most of products such not snatch so much as a glimpse of a The most dramatic of the city’s and philanthropist. the gap left by the the government, thousands are lured by as gastronomy, the spas UN peacekeeper. Instead, in the urban renewal projects is around The strikingmulti-storey building collapse in January of Hermes has also spent the competing charms of and sports, our culture rapidly emerging south of the city an Eleftheria (Freedom) Square and which houses the collection was Cyprus Airways, the money on Paphos the Canaries, Croatia, and history and medical array of new galleries, swish cafés and nearby Solomou Square. Iraqi-born designed by British architects Feilden national carrier. airport, where some Greece and Dubai. The tourism.” ambitious urban redevelopment architect Zaha Hadid is Clegg Bradley Studios. The 800 When the summer BA flights from Russians, also attracted by the Loizou agrees that Cyprus must do programmes beckon amidst the masterminding this ambitious attempt paintings are by Cypriot, Greek and schedules come into Gatwick and those run beaches, the climate and relatively low more to promote its diversity: for hulking, Venetian-era buttresses and to revitalise the heart of Nicosia European artists. operation at the end of by holiday airlines such prices, were catching up: 640,000 example, to contrast the bustle and juniper-kissed gardens that have long with a pedestrianised oasis that is At the other end of the spectrum is March, BA will launch as Thomson, Thomas visited last year. The collapse of the busy beaches of Ayia Napa with made this such an intoxicating home to an outdoor theatre and a the more classical Cyprus Museum. Its extra flights from Cook and Jet2 land. rouble, however, has seen numbers nearby Makronissos, which offers a Mediterranean city. wealth of cafés. Then there is the new exhibits delve deep into the nation’s Heathrow and Gatwick Porter adds that start to drop, leading to calls for the long stretch of golden sand. Numerous civilisations have left town hall, a collage of buildings that history, with exhibits dating back to to Cyprus and Aegean’s south east, which has departure hall. incentives offered to tourist authorities to make more The tourist chief says the experience their indelible imprints on deeply combines age-old architecture with Neolithic times, spread across 14 service from Heathrow benefited from Wes Porter, chief airlines and the strenuous efforts to lure visitors. he would recommend to British historic Nicosia. None more so than the ultra-modern. rooms. The most striking collections will become daily. The investment, including executive of Hermes government policy of Michalis Louis, chief executive at visitors would be to explore the hills, the Venetians, whose walls still wrap Reconstruction is not an easy take in the Roman, Greek and Greek airline will also the opening of a £450m Airports, which runs opening up the skies Eurobank Cyprus, says: “The staying in a traditional old house. Or around an old core awash with task anywhere on the island, given Egyptian periods. increase the number of new terminal five years Larnaca and Paphos has attracted new significant devaluation of the rouble they could stroll into Old Paphos, a atmospheric littles lanes. It is easy to that every building project inevitably Nicosia may be Europe’s last divided direct services to ago. The most recent airport, says:“Customer carriers and routes. He obviously makes Cyprus a more Unesco world heritage site, inhabited lose more than a few centuries unearths a wealth of archaeological Ancient meets modern: offers free walking tours of the capital, but the dynamic south of the Cyprus to 14, mostly improvement has been service is outstanding, says that a survey found expensive destination than it used to since Neolithic times and at the centre meandering around this warren. treasures. an electronic circuit Kaimakli suburb, where 19th century city today is a must see for anyone from western Europe. the introduction of we carry great retail that every new daily be. So, I am hoping that the of the cult of Aphrodite. By contrast, the newer Nicosia, one There is real ground-up dynamism board outlining the homes are being restored and, in some visiting Cyprus and for city slickers The majority of the electronic gates to scan brands and the food is flight could create government, the Cyprus Tourism As Loizou says: “Our history, ancient of the Middle East’s key business and in Nicosia, with young families, map of Cyprus cases, redesigned. looking for a rewarding short break flights will land at boarding passes, easing good. It is around 100 new jobs. Organisation and the hoteliers are and modern, as well as our culture, are commercial hubs, sports a modern Cypriot artists and entrepreneurs Inevitably, culture is at the heart of beyond all the usual suspects. Larnaca airport in the congestion in the representative of TONY DAWE taking the proper steps so that any experiences not to be missed.” glass and steel skyline, plus a phalanx moving in. The local authority now this ancient city. The A.G. Leventis ROBIN McKELVIE 10 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 11 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very Personal touch ALAMY Cultural blend GETTY IMAGES allows wine to at this culinary breathe again crossroads

ypriot wine has changed “Easter bread”, a sesame-seed pastry The vineyards of more in the last decade or so Nick Wyke hails filled with local flaouna cheese, raisins than it has in the previous and mint; shoushouko, strings of Cyprus can boast two thousand years, with halloumi and almonds or walnuts dipped in Cnew wines appearing and concentrated grape must and left to again that they old ones thriving thanks largely to tucks into tavas as dry like rock candy; and avgolemoni, a smaller, personally managed, family- traditional soup made from chicken are fit for a king, run businesses. he discovers the stock and rice, and finished with Aes Ambelis Commandaria wine beaten eggs and lemons. scooped a gold at the Decanter World Cypriots have learnt to make the writes Nick Wyke Wine Awards last year. It is a fruit- tastes of Cyprus most of the land and they tend to use rich, amber-coloured “sticky” wine wild and foraged ingredients in their that, according to legend, was served Johnson’s Pocket Wine Book 2014, He admits that the island has been he average Cypriot is said to cooking, including wild asparagus at the wedding of Richard the including Zambartas, an “exciting new slow to promote its wines but is consume about 8kg of (usually fried with eggs), capers, Lionheart in Limassol in 1191. winery making intense Cab. Fr- Drink in the starting to recognise their potential halloumi a year but the mallow, mushrooms, game and tiny Other wines have begun to appear Lefkada Rose, very good Shiraz- now. Last November, the CTO British are fast catching up. snails (karaoli). in the reputable pages of Hugh Lefkada red and excellent landscape... inaugurated the Month of Wine in TUndeterred by its saltiness “We have a lot of recipes with snails Maratheftiko and zesty Xynisteri”. Cyprus and has developed six wine and rubbery texture, grilled halloumi when they appear after the autumn A handful of specialist “We have some magnificent wines routes to explore 40 boutique wineries. has become a staple on menus at both rains,” Mallas says. “Smaller snails are A selection of meze wine bars are emerging nowadays,” says Angelos Loizou, Marcos Zambartas’ winery on the trendy London restaurants and as an cooked in a tomato and onion pilaf (appetisers), at a in the larger towns of chairman of the Cyprus Tourism southern slopes of the Troodos alternative to meat at barbeques. rice; larger snails are eaten with olive taverna near the the island but the best Organisation (CTO). “We have always mountains features on the In rural areas of Cyprus, where the oil and lemon or sometimes taken out small town of Polis way to experience had good grapes but the method of Krasochoria wine route. He agrees best halloumi is made from sheeps’ of their shell, battered and fried.” Cyprus’s wine harvesting them was so bad that we that we are at the beginning of a new milk, local women still gather to make For an authentic taste of Cyprus she revolution is to take to could not make good wines.” era in Cyprus viticulture, with its key the semi-hard cheese by straining, suggests heading to villages away from the road. Cyprus joined the EU in 2004, characteristics being “Renaissance and heating and pressing curds and An informative guide ending its wine industry’s reliance on intensity of aroma and flavour”. stuffing them with dried nana mint has been published, heavily subsidised exports of vast “We have been able to manage our or thyme. featuring six wine quantities of cheap wine to Europe. own vineyards and use consultants “Halloumi is best cut thickly and routes exploring the Since then there have been huge from abroad to help with such things cooked on charcoals for more flavour,” We eat snails main wine producing strides in cultivation and production. as machinery for grape handling and says Yiota Mallas, who runs Cyprus “ areas of the island, Because of its isolation, Cyprus was tanks,” says Zambartas, who studied Taste Tours, which explores the when they appear from the pines and also spared diseases, such as chemistry in London and winemaking island’s culture and cuisine away from vines of Pitsilia to the phylloxera, that ravaged the in Australia and will produce up to tourist traps. “We eat it when it’s after the rains southern slopes of the vineyards of mainland Europe in 80,000 bottles this year. matured in brine so that it is harder, Troodos mountains. the late 19th century, so some So what should visitors look out for? more yellowy and saltier than the the main towns, especially along the A seventh wine route, seriously old native vines still thrive. “Good value, everyday fruity whites; standard supermarket stuff, served mountain road from Limassol up to covering the mountains Today, family-run estates focusing exceptional, intense red-fruit rosés and with watermelon in the summer the Troodos mountains. “Villages such of Larnaca and Nicosia, on quality over quantity are working half a dozen international-standard months. It is an amazing combination as Vouni, Omodhos and Lofou have has recently been to revive indigenous grape varieties reds that use the distinctive violet of flavours.” very good fare at reasonable prices launched but does not such as xynisteri, which can be aroma of maratheftiko grapes.” As well as halloumi, Cyprus, which and many venues cook only what is in appear in the guide. blended with higher acid varieties, Meanwhile, Aes Ambelis and sits at a culinary crossroads between season, using their own fruit, The routes are well and maratheftiko. Kyperounda wineries both make a Mediterranean and Middle Eastern vegetables and meat that they rear. signposted and each “We have a lot of smaller wineries commandaria that perfectly captures, flavours, has a number of unique “People usually go to Zygi village for takes about a day by that grow their own vineyards, so they in a glass, the tradition of the oldest dishes worth looking out for. These fresh fish, prepared at the many car. Check ahead to know every single grape, how it grew, named wine in the world (according to include tavas, a traditional lamb dish restaurants there. But for somewhere a ensure the vineyards who nourished it, who sprayed it, who Guinness World Records) and the cooked with a base of cumin, onions little less commercial, Liopetri village are open for your visit. picked it, how it came in the winery,” ambitions of Cyprus’s new breed of and tomatoes and finished with has a lovely harbour and a few Loizou says. winemakers. seasonal vegetables; flaouna, or restaurants right on the water.”

CORBIS For the less energetic, Limassol also world. Both are Unesco World A warm welcome in the hosts a flower festival in May and a Heritage Sites. wine festival in September. By For the archaelogical wow factor, contrast, June’s Festival of the Flood head to Kourion on Episkopi Bay, west land of festival and fable involves a lot of splashing about in of Limassol. Perched atop a hill water to “purify body and soul”— a overlooking the Mediterranean, ochre surefire seaside winner with parents columns stand sentinel over the well- ypriot life revolves around the and celebration that lead up to “Pure and children alike. preserved city that was established family, and it is not unusual for Monday”, the begining of Lent in the You are never far from history and during the Mycenaean and Dorian Ctw Greek Orthod legend on Cyprus. The beach and in o, three or even four oxy. Towns and villages vasions of 1,200 BC, although, most generations to descend on a local across the island celebrate with swirling waters around Petra tou of the surviving structures and the beach, restaurant or picnic spot to parades and events. Romiou, the rock known in mythology stunning 3,500-seat theatre are of enjoy a meal together, especially on a Nothing comes close to the as the birthplace of Aphrodite, off the Roman origin. Sunday. The close-knit nature of the spectacle at Limassol, however. There, main road from Paphos to Limassol, The Cyprus Museum in Nicosia Cypriot family is only one facet of the the festival really gets going on the have much to offer: in the valleys west houses an extensive collection of island psyche and belies the open, first Thursday with the arrival of the of Larnaca are the Neolithic sites of artefacts from across the island and is welcoming character of the people, so King Carnival procession, right, with Tenta and Choirokoitia, originally a great way to familiarise yourself with do not be surprised if complete its brass bands, serenaders and settled about 9,000 years ago. the island’s turbulent past. strangers ask you to join them for a drummers, in the elaborately Just outside Paphos lie the Tombs For peace and tranquility, and to drink or a little something to eat — it decorated city. Daily events follow, of the Kings, a city of the dead cut escape the worst excesses of the heat is all part of the culture. including a children’s parade, costume into the rock and dating back to the of summer, join the locals in a trip into Indeed, gatherings on a grand scale carnival, medieval ball and serenading third century BC, while the the Troodos mountains to visit some are dear to the Cypriot heart. Last procession. It will all culminate in a archaelogical park to the north of the of the relatively unspoilt villages and week was the start of the Cypriot grand parade through the city centre city boasts some of the most monestaries that dot the landscape. Apokreo festival, two weeks of feasting on Sunday, February 22. impressive Roman mosaics in the MARK BARBER 12 1GZ Wednesday February 18 2015 | the times the times | Wednesday February 18 2015 1GZ 13 times2Cyprus: road to recovery thetimes.co.uk/Cyprus Cyprus: road to recotimes2very

GETTY IMAGES Sea and sun set to energise the Top-notch spas trigger rise in health tourism There are a number of is the appeal of to just gaze at the sea reasons why Cyprus thalassotherapy — the rather than be always punches above use of the mineral-rich pampered in it and nation’s drive towards recovery its weight in the spa seawater to treat a slathered in algae, categories of global range of conditions seaweed and mud, the travel awards. from cellulite to views from the infinity Choice, sunshine rheumatism. pools at the Almyra Spa Although small compared with those The republic has signed a have substantial reserves, while others without the jet lag and The magnesium and in Paphos and Reserves of oil and in the Gulf and even compared with memorandum of understanding with might be a disappointment. It is in affordability are all saline pools at Le Aphrodite Hills Resort nearby fields, such as Israel’s Total, the French oil company, to build Cyprus’s best interest to explore and important factors. The Meridien Limassol Spa are breathtaking. The gas, plus solar and Leviathan, the impact of Cyprus’s a £4.4 billion liquefied natural gas develop its reserves as quickly as island has a range of and Resort, and the latter offers plenty to do reserves on the country’s finances look (LNG) terminal in Vasilikos to service possible, since the income from the top-notch spas, from natural sulphur springs for sporty partners, too, wind power, are set to be important: already there is the Aphrodite Field and a final export, the lower electricity prices on the award-winning at the boutique Ayii from golf to tennis. talk of an oil and gas boom in the investment decision is expected to be the island, the creation of new Hebe Spa at the five- Anargyri Natural Look out for grounds for hope, region, injecting much-needed cash taken later this year. If built, it would industries from gas and oil and their star Columbia Beach Healing Resort, add an treatments that use into an economy holed by the global have an initial capacity of processing exports and the potentially large Resort in Pissouri Bay, extra dimension to the local, natural products financial crisis. 5million tonnes of LNG a year but a number of jobs created should benefit to holistic eco-retreats average spa experience. such as citrus fruits, writes Mark Frary Efthyvoulos Paraskevaides, green light is likely to depend on gas the whole of the population of Cyprus such as Zening, tucked There are also honey, pomegranates, chairman and chief executive of EP prices and proven reserves. and the European Union, which would away on the hillside thalassotherapy centres pepper and olives. And, he sea and sun have long Global Energy, believes Cyprus could Yiorgos Lakkotrypis, the energy increase its security of supply.” above Latchi. at the luxurious if you’re travelling been central to the Cypriot become a regional energy hub, hosting minister, says the Vasilikos decision is Despite the finds, renewables are According to the Roman-style spa at the en famille, for family- economy but these rigs and other exploration and of strategic importance but that going to make up an increasingly large latest visitor figures Anassa hotel and at the friendly resort spas traditional tourism draws production infrastructure. monetising the gas reserves proportion of the country’s energy from the Cyprus Four Seasons, Limassol, such as the Anassa, that Tcould soon prove to be a “The safety, stability, good telecoms, themselves is the number one prioirty. usage. In 2005, Just 2.9 per cent of Tourism Organisation, which has the only offer well-organised very welcome boost to the nation’s high standard of education and The new discoveries would help energy use was met from renewable health and medical Japanese-based crèche and kids’ clubs wealth in another way — energy. Cyprus’s European Union status, as Cyprus emerge from its banking and sources and this is expected to reach a tourism is a growing Shiseido spa in the and activities while you Emerging from the sea, Aphrodite- well as its very convenient geographic currency crisis, but there are notes of target value of 13 per cent by 2020. sector for the island. Mediterranean region. relax and unwind. like, are the country’s recently position, make it a natural for this caution. Lakkotrypis says the oil and According to the national Driving this growth For those who prefer NICK WYKE discovered hydrocarbon reserves. purpose,” Paraskevaides says. gas finds are the “cherry on the cake”, renewables action plan, solar power rather than being the life-changing (a combination of photovoltaics and discoveries experienced in the concentrated solar) is expected to Middle East. provide 533GWh of energy output “Hydrocarbons are a big cherry but by 2020. a cherry nonetheless. If we don’t Cyprus’s southerly location in implement the right structural reforms Europe and its renowned 300 days of that led us to this situation, when we sunshine annually mean it is ideally have new prospects all we are going placed to benefit from solar: it already to be doing is probably making the leads Europe in terms of solar heating same mistakes.” on a per capita basis. But it is not only Paraskevaides agrees that the the sun that Cyprus is banking on. country must remain cautious. Onshore wind turbines are forecast to A fuel storage tank that we have had with solar water of photovoltaic panels and that has Although the Aphrodite Field seems provide another 499GWh of output by under construction heaters, which you can see now in created a lot of interest and new jobs. promising, he says: “I would not get 2020, for example. at Vasilikos. The every home. We will certainly continue with that extremely excited until we see how Lakkotrypis says: “We are certainly discovery of oil and “We have launched a very intensity on the household front, but much is actually proven in the end. I on track on renewables. What we are gas reserves will innovative programme where we allow we will continue on larger-scale expect that some of the blocks will trying to do is replicate the success boost employment households to install up to three kVA projects as well.”

ALAMY The research company, vesselsvalue. com estimates that over $10.5 billion Why shipping flies (£6.8 billion) worth of shipping operates under the Cyprus flag. While the country’s economy underwent a massive shock during the the flag for growth banking crisis, the profitability of its shipping businesses meant that international bailout teams were shipping companies than the disposed to ensuring its liquidity Overseas owners corporation tax regime present during the initial, critical period. That throughout the rest of the EU, which left it in particularly good shape as the are attracted by taxes on profits. country recovers. Shipping contributes about 7 per Its case as an international hub for the favourable tax cent to the country’s GDP, far above shipping could receive a substantial international averages, especially shot in the arm later this year if regime, reports traditional maritime nations with large Chrysostomou succeeds in becoming registries such as the UK, Germany the next secretary-general of the and Norway. International Maritime Organization, Gavin van Marle Its growth has been fuelled by its the UN body that develops global status as an open registry, whereby it shipping regulations and co-ordinates t is a maxim for those working in will register ships owned by overseas the industry’s position on anything shipping that they are employed in companies — Cyprus is the tenth from shipping emissions to piracy. Ithe large more of Vo world’s largest “invisible st flag in the world, with about 80 The port at Limassol. ten described as “flags of ting is due to take place in June. industry”. About 90 per cent of the per cent of shipping flying the Cyprus The government hopes convenience”. Additionally, the recent discovery world’s trade in physical goods is flag owned by northern European that the island will This is important because shipping of offshore natural gas deposits in carried by sea, from crude oil to interests. It has also become a centre become a hub for companies have been experiencing a Shipping Cypriot waters will increase the consumer goods, while the general of ship management operations, merchant shipping downturn for most of the past seven “ demand for different types of shipping, public remains largely ignorant of the undertaking functions such as vessel years, caught between stagnant cargo is the such as offshore support vessels, to fundamental role that shipping plays. repair and maintenance, maritime volumes and growing vessel be owned and managed through Cyprus is one of the few countries regulatory compliance and crewing. overcapacity, and have had to cut costs first the country. where this maxim does not exist. The Not only is ship management a to stay in business. Shipowners have Speaking in August last year, nation punches above its weight in valuable source of income, worth just migrated to Cyprus from more cousin Thomas Kazakos, director-general of shipping because its tonnage tax under £260 million in the first half of expensive regimes. of the the Cyprus Shipping Chamber, said: regime is better than the corporation 2014, according to the Central Bank of “The difference between Cyprus and “We say that shipping is the first tax levied by other EU countries. Cyprus, but the technical expertise it the other open registries is that we energy cousin of the energy industry. The Tonnage tax, under which a offers puts Cyprus’s open registry in a also provide a fully fledged maritime latter will find oil and gas and bring it shipping company pays tax based on different category from others, such as centre,” says Andreas Chrysostomou, industry to the surface, but who is going to amount of tonnes of cargo its fleet can Panama, Liberia and the Marshall acting director at the department of carry it to the international energy transport, is vastly more efficient for Islands. These open registries are merchant shipping. market? We are.” 14 1GZ Wednesday February 18 2015 | the times times2Cyprus: road to recovery thetimes.co.uk/Cyprus Plunging prices and sunnier GETTYIMAGES outlook tempt UK buyers

The historic cultural ties of the estate agency. “They are looking at Property is back in British with the island remain a big coastal Paphos where properties are part of the pull — English is widely 20-35 per cent down after the global fashion but do spoken, the legal system is the same crisis — inland, this figure is 40 to 50 and the comforting familiarity of per cent — or in Limassol, which has your research first, driving on the same side of the road — not been hit as hard as Paphos, at 8 to coupled with 330 days of sunshine a 15 per cent.” cautions Elizabeth year at the end of a short-haul flight. But market confidence is also Property taxes compare favourably returning: there is a real feeling that with those in the UK. Cyprus is beginning a new chapter Rowlinson Cyprus is essentially a small, user- after an era muddied by corruption friendly and incredibly hospitable issues. Hundreds of British and fter a tumultuous few island where around 70,000 British German buyers are going through the years, Cyprus is putting its ex-pats reside, many of them around courts to recoup losses after house in order and with the hot spots of Paphos, but also misguidedly taking out Swiss franc some green shoots of Lanarca and Limassol. With the euro mortgages on their Cypriot homes Aeconomic recovery, the currently at a seven-year low against during the property boom. With many overseas property hunters are back. the pound, there has been an increase developers going bankrupt during the For despite the country’s banking in UK property hunters keen to take global crisis, owners have been unable crisis, the appeal of Cyprus, a unique “double” advantage of currency rates to obtain the title deeds on their stepping stone between the and low prices. homes and therefore cannot sell. Mediterranean and the Middle East, “In the past six months, the British But under the new progressive remains strong, especially among market started moving again,” says government, Cyprus is becoming a British and Russian buyers. Tina Sarikas, of Unique Living, the much safer place to invest, says Stylianos Christoforou, of TCA Law. “The government has laid down guidelines to expedite and simplify the process of obtaining title deeds. It is one of the procedures introduced to bring greater transparency in Cyprus. There are still bargains Hills luxury golf resort, set among the “Add to this the fact that Cyprus is to be had but when wine-growing valleys of the Paphos predicted to be out of its economic buying a property, region, officially opened by the crisis by 2016 and things are moving in ensure it comes president last summer, and plans for the right direction.” with the title deeds new marinas at Larnaca and Paphos. The discovery of hydrocarbons in It remains crucial for property- Cypriot waters is an added boost, with hunters to do their research before global oil companies already setting up parting with their cash (and it does offices in the country. Tourism and air need to be cash, as mortgages are still traffic also rose in 2014. In addition, hard to come by). Agents recommend last year saw the opening of the negotiating hard after using the country’s biggest infrastructure services of an independent lawyer to project, the €350 million, state-of-the- perform the due diligence on a art Limassol Marina which has property. attracted high-end investors and The lawyer should check the validity wealthy yacht owners. The fact that of title deeds and whether the they can get Cypriot citizenship if property is encumbered by a mortgage they invest €5 million in the island is (taken out by the developer). And an added incentive. avoid buying a resale property that Other new projects include Minthis does not come with title deeds.

Perfect Paphos still the pick for ex-pats, but make room for the Russians The Paphos region in properties at Cybarco’s for €55,000, but sale the west of Cyprus has Akamas Bay command agreed at €38,000; or a been a much-loved around €1 million. three-bed villa in Tala, destination for the Inland, there is offered at €175,000 but British for decades for Aphrodite Hills, sold for €160,000.” its fantastic beaches, arguably Cyprus’s most There is a good good infrastructure and successful resort, where choice of detached authentic villages – all luxury villas, starting villas with private pools within an easy drive of from €700,000, sit if you have a budget of the airport. among world-class golf, €300,000 but if you About 30,000 British spa and equestrian want a new property, ex-pats live here, as facilities. expect to pay more. well as a growing An excess of The re-emerging population of Russians. properties in many new-build sector is Paphos receives more areas such as Kouklia, coastal developments targeting the higher inquiries for rentals Kato Paphos, Peyia, translates into great end of the market. At than anywhere else in Sea Caves — a low- opportunities to buy a Minthis Hills, 500 Cyprus, according to density area with lovely resale apartment or properties will be holidaylettings.co.uk. views — and Tala for its villa at the bottom end launched this year, In the run-up to charming square and of the market. “The while at Limni Bay, Cyprus joining the EU, exclusive suburb of market has really near Polis, the Shacolas the market began to Kamares. begun to move below Group is developing a boom in and around Heading northwards, €200,000,” says Gloria 3,330 acre site to the region. A large Polis and Latchi are Aubrey, of Cyprus include 800 residences, proportion of the rental hotspots abutting Property Services. two golf courses and a 40,000 UK second- the beautiful, unspoilt “I have recently sold beachfront hotel. home owners in Cyprus Akamas peninsula, an older one-bed ELIZABETH bought a property in where high-end apartment advertised ROWLINSON the times | Wednesday February 18 2015 1GZ 15 Cyprus: road to recotimes2very After 40 years, the agony continues

GETTY IMAGES government, a single international No one wants the legal sovereignty and a series of constitutional checks and balances. status quo but both However, it is becoming difficult to see how either side can now find a way sides still agree to of changing the status quo, as each has accommodated to the situation as it is. disagree, writes The raw wounds of the tragedies from the 1974 fighting — the flight of Michael Binyon refugees from north and south, the quest for the missing whose bodies have never been found, the t is now more than 40 years since abandonment of property, the splitting Turkish troops, in support of of historic communities – have faded. Ankara’s claim to uphold its right There is now a generation in power to guarantee the neutrality of that never knew a Cyprus where ICyprus, invaded and occupied the Greeks and Turks lived amongst each island — three times the total period other. And some of the sharpness of in which Cyprus enjoyed division has been softened: since 2008 independence as a unified country. the spontaneous opening of crossing The history of the past 41 years has points, especially the key check-point been one of repeated frustration: of on Ledra Street in Nicosia, has failed agreements, broken promises allowed limited human contact, A girl mourns a missing changed. Turkish negotiators showed Last year the leaders of the two and of repeated visits by European and community leaders are able to meet loved one as a soldier greater readiness for compromise. But communities, Nicos Anastasiades and United Nations officials which occasionally and neither side feels as stands guard outside at Greek Cypriot opposition stiffened Dervis Eroglu, issued a joint promised much but led to nothing. embattled as it used to. a checkpoint in Ledra and they overwhelmingly rejected a declaration insisting that the status Many outsiders, determined to bring For years, the key issue was how to Street, Nicosia — in a referendum on the UN proposals. quo was unacceptable. They again peace to Europe’s last divided nation, reassure the Turkish community, picture taken in 2008 Since then, the UN has said it will not agreed the basic shape of a united have tried to dream up new ways of reckoned at about 20 per cent of the before the crossing take up the issue again unless both Cyprus. But they said all negotiations repackaging the same proposals, which population, that it would not be point between the sides make clear their readiness to were based on the principle that emerged within the first year after the overwhelmed by the majority. Greek and Turkish break the impasse. nothing was agreed until everything 1974 war: Cyprus would become a Rauf Denktas, the veteran wily sides was opened The atmosphere has now worsened, was agreed. That has led some bi-zonal, bi-communal federation, with Turkish Cypriot leader, rarely gave an with accusations by the Greek side of analysts to suggest that formal complete autonomy for the Turkish inch in negotiations. On his Turkish harassment of Cypriot vessels partition is now the best and and Greek sectors, a loose central retirement, however, the dynamics engaged in offshore oil exploration. only solution.