MIND, BODY & SPIRIT
1974 AND 2013
Overview of upcoming wellness exhibition in Limassol
Two different kinds of crises: two different kinds of solutions
TV and lifestyle supplements to see you through the week
April 7, 2013
COFFEESHOP: CUNNING COMMIES AND THE USED-BANK SALESMAN PAGE 17 INSIDE Cyprus ‘Don’t fight the crisis, use it’ say psychologists 5
World Talks fail to end nuclear stalemate with Iran 8
Business Cyprus’ gas future burns brightly, says KRETYK boss 22
Property What to do in the garden this month 23
Sport Auroras Encore wins Grand National back
Failed economy looks to tourism Hopes being pinned on the industry to help rescue economy but are they realistic? By George Christou
EY PLAYERS from the tourism industry say they have good reason to feel bullish about a successful summer season, but some industry watchers say it is not the magic bullet it once was and cannot save the island like it did after 1974. Proposed upgrades have boosted conﬁdence, with both the government and international lenders suggesting that investment in tourism has the best shot of plugging the gap left by the near demise of the ﬁnancial services industry. If forecasts are to be believed, the ﬁnancial sector will likely be halved, with brutal consequences for related industries such as wealth management, trusts, foreign exchange trading, fund administration and insurance. Now, after playing second ﬁddle to ﬁnance for two decades, hopes again rest on the holiday trade, which was once the mainstay of the economy but are these hopes really justiﬁed? On paper the prospects for growth look promising last year nearly 2.5 million people visited the island, boosting revenue from tourism up 10.2 per cent, with revenues of €1.927 million - which equates to about 10 per cent of GDP. At the end of the nineties however that ﬁgure was closer to 20 per cent. However, few deny that
since the bailout agreement a concerted effort is needed to tackle a whole raft of new headaches faced by tour operators, hoteliers and other related services. One major concern is that many foreign travel companies have already paid hotels to reserve rooms, but the haircut on those uninsured deposits sitting in the Bank of Cyprus and Laiki raises serious questions about how hotels will function with a highly reduced cash-ﬂow. “It is a real concern,” says Zacharias Ioannides, the Chairman of the Cyprus Hoteliers Association. “It is something that we are working on and we are conﬁdent that there will be an amicable result to this.” With government assurances that steps are being taken to address the issue, Ioannides anticipates that the banks and tourism sector will work closely to overcome any obstacles. Not everyone is so conﬁdent. Unburdened from the shackles of high ofﬁce, former ﬁnance minister Michalis Sarris said he understood the frustration expressed by tourism ofﬁcials, but offered a blunt message that everyone must share the pain of the savings raid. “I think with the tourism sector there will be problems, but they are manageable. I think the tourism sector has done well - it will do well in the coming year,” he told CyBC radio this week. “It’s not perfect,
Some industry observers say tourism is not the magic bullet it was in 1974 when it saved the economy. Back then, Cyprus had no competition in the region but I think under the circumstances, they also are paying something of their fair share of this problem,” he added. Industry players say clariﬁcations on the haircut on deposits need to come sooner rather than later, with Zacharias Manitaras from the Cyprus Chamber of Commerce and Industry
insisting that tourism be insulated from the worst effects of crisis. “Obviously the government should reimburse those in the tourism sector. As this is the biggest business we have - hotels and other related businesses cannot work without cash ﬂow,” he added. The Memorandum of Understanding (MoU)
with the international lenders focuses on tourism as a cornerstone for future economic growth, now that the ﬁnancial services sector has been destroyed. “Since tourism is one of Cyprus` largest sectors and an important potential driver of future
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2 April 7, 2013 • SUNDAY MAIL
23 2 LLarnaca
TODAY: Clear and sunny. Temperatures will reach 28C inland, 23C along the coasts and 24C over higher ground. OUTLOOK: Thickening afternoon cloud may bring rain in the early part of the week. Temperatures will decrease slightly
President Nicos Anastasiades (centre left) with Archbishop Chrysostomos at a Makarios event yesterday YESTERDAY
Nicosia Larnaca Limassol Paphos Paralimni Prodromos
max/min temp 29 - 12 23 - 11 24 - 14 22 - 10 27 - 14 24 - 10
Humidity 31% 51% 60% 69% 36% 42%
Final haircut figure expected tomorrow Anastasiades slams false reports leading to co-op panic By Peter Stevenson
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SUNRISE: 06.25 am
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OFFICIALS at the Central Bank will work through the weekend to come-up with a ﬁnal percentage for the levy on uninsured deposits of over €100,000 at Bank of Cyprus, it was reported yesterday. An announcement is expected tomorrow. The decision is dependant on calculations regarding the offset of loans against deposits according to head of internal audit at the Central Bank, Yiangos Demetriou. He expressed the belief that once measures were put in place it would breathe life back into
the market and to trading. Most reports suggest depositors with over €100,000 with the bank will take a hit of 60 per cent. Meanwhile reported rumours of a ‘haircut’ on deposits in cooperative institutions were labelled the work of irresponsible parties by President Nicos Anastasiades yesterday. “During these critical hours, responsibility is demanded from everyone and what happened on Friday is the work of irresponsible people,” he said at one-day conference celebrating Archbishop Makarios as the political leader of the EOKA struggle. Massive lines of people
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formed outside cooperative banks across the country on Friday with customers seeking ways to either get their money out or divide their ﬁxed deposit accounts into smaller ones of under €100,000. This was following the circulation of text messages claiming the government was about to impose a haircut on cooperative bank deposits. Head of the Cooperative Central Bank Erotocritos Chlorakiotis reassured the public again yesterday that deposits at the cooperative credit institutions were safe, insisting that the rumours of a haircut were completely “unfounded”. House President Yiannakis Omirou yesterday sought to ensure that the Memorandum of Understanding (MoU) deal reached with the troika earlier in the week would be presented to Parliament for
ratiﬁcation. He said the MoU would be submitted to the parliaments of six eurozone countries. They include, Germany, France, Holland, Finland, Slovakia and Belgium. Getting around having to present it to the Cyprus parliament would be unthinkable, he said. Omirou said it could be argued that in paragraph one of Article 169 of the constitution it states that international agreements of a ﬁnancial and trading nature with international organisations could be approved by the cabinet alone but he said he did not believe the MoU was an ordinary ﬁnancial or trading agreement. “No government and no President is authorised to make foundational commitments of such importance without consulting the House,” he added.
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3 SUNDAY MAIL • April 7, 2013
CYPRUS TODAY Antiquities theft TWO MEN, aged 26 and 65 were arrested late Friday in connection with antiquities theft. According to police a 26-year Syrian man had three amphorae in his possession which he was planning to sell for €900. He told police he had stolen them from a house in Limassol which belongs to a 65-year Greek-Cypriot who was also arrested on suspicion of possessing them illegally. Police found two more amphorae at the man’s house. All ﬁve items were taken to an archaeologist who determined they dated from the early to mid Bronze Age. The 26-year-old was held for questioning while the 65-year-old was written up and released.
Woman mugged A 78-YEAR-OLD woman was beaten and robbed during the early hours yesterday in Limassol. Police received a report around 2.40am that the woman was found in her home by a neighbour, with head and hand injuries. She was taken to Limassol Hospital where she was kept for observation. After receiving an eye-witness report, police are investigating the possibility that two people entered the pensioner’s home and after attacking her and beating her, stole her jewellery. The value of the stolen goods has yet to be estimated.
Brawl prevented POLICE in Larnaca prevented serious trouble from kicking off on Friday outside a clubhouse. A police spokesman said that members of the force were outside a clubhouse in Larnaca on Friday at 9.30pm after being tipped-off that around 50 people had gathered there. The crowd dispersed quickly after police arrived. Ofﬁcers found nine Molotov cocktails and four cylindrical ﬁrecrackers in the clubhouse’s surrounding area.
Failed economy returns focus to tourism sector ‘A bigger volume of tourists will have to mean lower prices’ (continued from front page) growth, a reinvigoration of the competitiveness of this sector is warranted,” the MoU document states. Yet critics say that the MoU’s suggestions as to how growth in tourism could be achieved are simply rehashed ideas that were ﬁrst touted decades ago. The ‘massive improvements’ to the current tourism sector business model the MoU suggests include lengthening the tourist season, increasing occupancy rates of hotels and promoting domestic vacations, especially during the winter months. Other ideas tout upgrading the island’s image by convincing discerning and afﬂuent tourists that Cyprus has much more to offer than just sun, sea and nightlife and taking another crack at tapping into thematic niches such as sport, cultural, medical tourism and individual tourism. All of these measures have been promoted by the Cyprus Tourism Organisation (CTO) many times over the years with varying degrees of success. Best-practices on upgrading the quality of services provided and improving the role of tourism-related infrastructure investment were also suggested, all of which will require diversiﬁcation, large scale investment - and ultimately may take years to come to fruition. According to Noel Jose-
There is some optimism but numbers have to be boosted signiﬁcantly phides, Managing Director of Cyprus and Greece specialists Sunvil Travel, who is an expert on the CyprusUK market, told the Sunday Mail the only way to make any inroads would be to bring in another one million arrivals. “Cyprus will need to bring in lot more volume and more volume means lower prices,” he said. “We are not going to get that volume at current prices. Prices must fall dramatically.” Josephides also said Cyprus’ complacency towards the UK market over the past ﬁve years had led not only to a drop in arrivals from Britain from a peak of 1.6 million a decade ago to around one million now, but has resulted in the decimation of the structure which was in place in the UK to boost the numbers. “Tourism to Cyprus from the UK is now almost entirely in the hands of TUI
and Thomas Cook. Cyprus also destroyed the UK market by paying no-frills carriers. They don’t ﬁll hotels and are not necessarily cheap,’ he said. As for hope of tourism saving the island like it did after 1974, Josephides said: “In 1974 there was no Turkey, no Tunisia, no Egypt nor Croatia in term of tourism. Now we have competition coming out of our ears. Tourism is not the magic bullet it once was.” With economists also pointing to strong competition from Greece and Turkey, foreign investment and large scale upgrades seems an unlikely prospect, given the lack of conﬁdence in the local economy. “Just the uncertainty about the future tends to be a killer in terms of activity,” says ABN Amro’s Nick Kounis. “Who is going to invest in Cyprus now?” Brushing the economic
considerations aside, CTO chief Alecos Orountiotis insists that Cyprus continues to be an attractive destination. In an attempt to counter the potential fallout from weeks of negative foreign press headlines, Minister of Tourism George Lakkotrypis said he predicted an “exceptional touristic year,” adding that he had been in contact with major travel companies to reassure them about the future of the sector. One lingering fear that has crept into news reports over the past fortnight is that Germans in particular will stay away, fearful of a hostile reception as a result of the savage austerity imposed in the EU-IMF bail-out. Nonetheless, Sibylle Zeuch, Press ofﬁcer at the Deutscher ReiseVerband, the leading lobby group of the German tourism sector, believes that hotel and restaurant owners will wel-
come holidaymakers from Germany, despite resentment. “At the moment they might wait a little bit before booking and see how the situation develops, this is what we experienced in Greece. If things start to return to normal they will surely go back because the product hasn’t changed,” Zeuch told the Sunday Mail. Prior to the bailout crisis, the CTO launched an “aggressive” policy to promote Cyprus as a destination for Germans. “In 2009 there were 130,000 visitors from Germany, in 2010 it was 140,000 and in 2011 it was 160,000. So it is becoming a more attractive destination for Germans, but 2012 saw 145,000 tourists - a bit less, but it doesn’t change that much,” says Zeuch. Despite a dip for Easter holidays, forecasts suggest that the British market is expected to remain stable this year, with bookings recovering last week according to online travel agency Lastminute.com. “The UK is by far the leading market to Cyprus, sending one million visitors a year. There is no reason for this to change. On the contrary, prices on the island will probably fall as recession bites,” says Ian Taylor from the Londonbased Travel Weekly magazine. Taylor predicts the Russian market will suffer, despite an inﬂux of Russian holidaymakers boosting tourist arrivals to a sevenyear high in 2012, with a jump of 42 per cent. “It’s hard to see Russians continuing to visit on the same scale,” he said. But CTO ofﬁcial Marios Hannides said he had sent a message to tourist agents and partners in Russia that “they can continue to operate in Cyprus without any problems”. Speaking last week he said that many Russian tourist agents had invested millions in Cyprus already on hotel maintenance and booking advances.
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4 April 7, 2013 • SUNDAY MAIL
Confusion and frustration over banks’ capital controls Companies still unable to pay overseas staff By a Staff Reporter PUBLIC SHOCK about the tough terms of the international bailout is turning into anger as millions of euros remain locked in the banks under capital control regulations. Anxiety is being deepened by confusion over how the hastily-imposed rules should operate. Hundreds of bank workers protested outside parliament on Thursday, worried that they could lose much of their pension savings under the terms of the bailout deal which stipulates that some depositors will contribute towards part of the rescue’s cost if their accounts hold more than 100,000 euros. “I am disappointed and angry,” said Iacovos Louca, 53, who works at Popular Bank, which is being wound down under the 10 billion euro deal with the EU and International Monetary Fund. “The politicians are out of touch with our problems and the big guys, who
had the information, managed to take their money abroad.” One company in Nicosia which has several ofﬁces abroad has been caught in limbo as the central bank now has to approve transfers out of Cyprus over 25,000 euros. As part of the company’s payroll is managed from the island, payments to employees abroad are being delayed because of the vetting process and currency controls to avoid a bank run. “We have held clients’ money for certain pre-paid jobs, and we have a cash ﬂow issue now,” the owner of the services company said, on condition of anonymity. “We have to make payments of more than 1 million euros on behalf of our clients, and now we can only use 100,000.” Lack of clear answers on where their money may end up is fuelling public frustration. Andrew Georgiou, a 55year-old British consultant who moved to Cyprus a year ago with the earnings
from the sale of his home in London, says all four accounts he holds with Popular - even a sterling account containing just 22 pence are blocked. These totalled 97,000 euros and under the bailout deal, deposits under 100,000 are fully insured. Nevertheless, Georgiou is now unable to access any funds. Georgiou, who is of Cypriot descent, said Popular Bank had justiﬁed its action on the grounds that he was also considered a beneﬁciary to an account held by his 78-year-old father. It also covered money held in a trust for medical expenses.
NO EXPLANATIONS “I wrote to the central bank and they came back saying that it was not their competence, so whose competence is it?” said Georgiou. “Nobody is explaining where anyone should go with a problem.” As a result, Georgiou has been told he and his father
could eventually be entitled only to a combined 40,000 euros despite the 100,000 euro guarantee, a fraction of their savings in Popular. “Absolutely nothing adds up,” he said. “They told us it was 140,000 last week.” Georgiou and others like him are in for a long wait to ﬁgure out what went wrong. Three judges appointed to look into the island’s ﬁnancial collapse started work on Thursday. With an extensive remit ranging from the business sense of Cypriot banks hoarding a mass of Greek government bonds while others were selling them and the prudence of government ﬁscal policies, the judges will need a small army of consultants. Many, in the meantime, are resigned to years of hardship. Iraklis Paraskeva, 53, has three children to support, now studying in Greece. “I am going to ﬁnd myself in the street with no future, only debts. But we will ﬁght to the end. We have nothing left to lose.”
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