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FINANCIAL MIRROR, May 9 - 15, 2012




Will the Left bankrupt Europe? The anti-austerity wave that is sweeping across Europe could spell more trouble for the Euro zone as ignorant politicians are riding the popularity train and demanding that taxes be hiked in order to finance future growth plans. And where will the growth come from if taxpayers can no longer afford to pay more? As harsh as it may sound, Greece has gotten what it deserves – after years of cronyism and corruption, someone has to foot the bill. Even after their humiliating defeat in Sunday’s elections, the two traditional parties are acting as if they were not involved in the payoffs of the past two decades, or in placing relatives and voters in non-existent civil service positions which the ordinary workers have financed through their taxes (or whatever has been collected). Now, you have an alliance of leftist and anti-austerity parties

that want to show the finger to the EU’s paymaster Germany, not realising that they have no choice but to continue with the harsh terms and reforms imposed by the Troika before Greece disintegrates into a black hole. There is no doubt that in Greece, France and Spain, as in Cyprus, the only way out of the current crisis is growth, but this cannot come at the expense of further pressure on SMEs and employers. The Middle Class can barely afford paying more taxes, while the super-rich – some of whom are well-known financiers of the Leftist parties – will simply have to cough up more contributions, perhaps for a short period of time. Cyprus has been the slowest in the Union to implement austerity measures, which still have not reached the desired levels simply because we are ten months away from the next elections.

Unproductive civil servants are still clinging to their jobs, despite the somewhat improvements in the government machine and the efficiencies gained through selective online services. Tax collection is gradually picking up but state revenues are falling due to a negative business sentiment. Privatisations have not yet materialised, while the government is losing millions by the day simply because it refuses to license casinos and regulate the online gaming shops that have cropped up in every neighbourhood. Waiting for the next Russian or Chinese multi-billion loan will simply not solve the problem. But at least, for now, the current administration can blame everything on the former Central Bank chief Athanasios Orphanides. Maybe even the reasons that led to and the botched handling of the Mari disaster.

Natgas: 2nd licensing round starts on May 11 The second licensing round for the exploration of hydrocarbons is expected to get underway on Friday with the Trade Minister saying that “a very big number of companies” have shown interest to bid for the 12 plots in the Cyprus offshore Exclusive Economic Zone. Neoclis Sylikiotis said that official bids will be submitted as of May 11 and that bids are expected to come in from exploration and petroleum companies from the EU, the U.S., Canada and Norway, as well as from China and Russia. Perhaps the most encouraging outcome has been the interest from about 90 comapnies to buy the tender terms and the seismic

surveys, with the documents alone boosting state coffers by some 10 mln euros. As regards cooperation with Israel, either for undersea gas pipelines or for onshore liquefaction plants, Sylikiotis said he will discuss the matter during an upcoming visit in the next two months. He added that Cyprus can benefit from the import of natural gas from as early as 2016, probably from the adjacent plots within Israel’s EEZ, also developed by Texas-based Noble Energy that has already made the discovery of an average 7 trln cubic feet in the Cypriot block 12.

Steering Committee for EuroAsia Interconnector “on the right track” The working groups for the EuroAsia Interconnector energy bridge have been set up and work is already underway for the technical and financial studies to go ahead according to plan. These will be presented to the governments of Israel, Cyprus and Greece by the end of the year, the project’s Steering Committee heard at its first meeting held recently in Nicosia. The key objective of the meeting was to define the key areas of the feasibility study and its implementation. Present at the meeting, were senior executives from Israel Electric Corporation (I.E.C.), the Electricity Authority of Cyprus (EAC), DEHQuantum Energy, the Independent Power Transmission Operator of Greece, the Transmission System Operator of Cyprus, and the University of Cyprus. DEH-Quantum chairman Nasos Ktorides highlighted the endeavour as a work of life that fosters a feeling of security and freedom of choices between the people of the three countries. The representatives of the power utilities of Israel, Greece and Cyprus presented the potentials of the electricity power stations of their countries, provided information on energy production and described the national electricity transmission networks. During the presentation, it was confirmed that the networks of the three countries have the required technical compatibility to be interconnected for the transmission of electricity. After that, the Steering Committee discussed technical matters concerning the project, such as the installation, technology and routing of the undersea cable, as well as organisational issues, such as the structure of the feasibility study, the creation of working teams.

Prof Markou elected to Wayne State senate Professor Kypros Markou has been elected to a three-year term as member-at-large on the Academic Senate of Wayne State University of Michigan. His term will run from August 17, 2012 to August 2015. Cypriot-born Prof Markou has been conducting the Wayne State University Orchestra which has recently performed “Scheherazade” by Rimsky-Korsakov at the Max M. Fisher Music Center in Detroit.

The Business Development Director of DEH-Quantum Energy, George Killas, presented the key objectives to be considered and studied by the working groups, regarding the routing and installation of the submarine cable, as well as the proposed cable technology that could be used for project. The Steering Committee decided to complete the studies by the end of the year, and present these to the three governments and their responsible authorities for approval. The next meeting of the Steering Committee is expected to be held in mid-June in Israel.

HICP inflation rises to 3.6% in April The EU-harmonised consumer price inflation rate rose to 3.6% in April, from 3.5% in March. Meanwhile, the nationally based consumer price index fell to 3.1% from 3.4% in March 2012 and 3.3% in April 2011. Compared with the previous month, the consumer price index increased by 0.88%. The Statistical Service said this was owing to increases in the prices of certain clothing and footwear items, electricity and petroleum products. Decreases were recorded in the prices of certain fresh vegetables and fresh lamb. For the period January-April 2012, the CPI rose by 3.2% compared with the first four months of 2011. Eurostat has changed the rules on weighting for the harmonised index, which will now be based on national accounts data, rather than the household budget survey. The main change will be a bigger weight for accommodation services.

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CAIR says Canada’s Triple Five eyes stake Canadian conglomerate Triple Five is interested in acquiring a majority stake in Cyprus Airways, the airline said on Tuesday. The Canadian group, headed by the Iranian-Jewish Ghermezian family, had expressed its intention in a letter sent to the airline on May 4, Cyprus Airways said in a statement. The group had requested data on its financial situation and its activities, the carrier said. “Triple Five informed the company that it would make its final decision on the issue after assessing this data,” Cyprus Airways said. The loss-making carrier had said in February it planned a 45 mln euro capital raising, while authorities have said they would consider the sale of up to a majority stake in the airline. The state owns 69%.

Cyprus to host STEP conference for first time The Society of Trust and Estate Practitioners (STEP) is holding its annual STEP Conference in Limassol this week, the first time the event is being held in Cyprus. The conference, sponsored by Laiki Bank, will take place on May 1011 at the Le Meridien Limassol with the participation of more than 250 delegates from Cyprus and abroad. Peter G Economides, STEP Cyprus Chairman will welcome the speakers and the event will be opened by President Demetris Christofias with an address by the Minister of Finance, Vasos Shiarly. The opening speeches will be followed by the first official international presentation of the recently passed Amendment to the Cyprus International Trust Law 2012. The conference is a move that further consolidates the island’s position in the Trust Services world map. STEP was founded in 1991 in the U.K. and today is the leading worldwide professional body for practitioners in the fields of trusts, estates and related issues. STEP has more than 17,000 members in 66 countries. The Cyprus branch of STEP was established in 2003 and local membership exceeds 183 professionals.

Financial Mirror Special report  
Financial Mirror Special report  

Financial Mirror Special Report - May 9 2012