The Presidency has before it four scenarios for dealing with the issue of purchased citizenships. The most likely possibility is that of suspending the investment program for a short period, as revealed by Kathimerini on Sunday.

The four scenarios are as follows:

1. Termination of the investment program
2. Suspension for a period of time and examination of problematic cases for potential revocation of passports
3. A more detailed briefing of the European Commission on the people receiving a Cyprus passport as a result of investment
4. A continuation of the program as currently structured with a strict adherence to rules

Government circles are already sceptical about whether the scenario involving a suspension of the program could come about, as given the difficult economic period, stakeholders will push in the opposite direction, with a potential suspension expected to be short.

The issue of revoking passports, due to the serious blow suffered by the country, was raised by the President of DISY Averof Neophytou at a press conference on Monday morning.

Already in Brussels, resentment has flared once again, with the European Commissioner for Justice examining the possibility of legal action against Cyprus over the granting of citizenship through investments.

A timeline of warnings

Brussels has long been sounding the alarm and warning about the investment program. The first reactions came when a Cyprus link came to the fore in the case of the Russian oligarch Oleg Deripaska.

Indicative is what the President of the Republic heard from MEPs about the investment program in 2018, when he was in Strasbourg to speak before the European Parliament.

He then defended the program, noting that Cyprus gave only 0.3% of the citizenships granted by European countries to third-country nationals. “It is not in my country that third-country oligarchs own football teams, nor is it in my own country that large squares and buildings belong to oligarchs,” he said.

Besides, there was a serious dispute between the President and the European Commissioner Christos Stylianides over this issue, who unsuccessfully asked for restraint on the part of the Republic of Cyprus.

Le Monde and Vera Jourová

The issue certainly did not end there. There followed publications, shortly before the Report on the Cyprus program, dealing with controversial figures who were granted Cyprus citizenship such as the Malaysian fugitive Jho Low and the Cambodian dictator, that stirred discussions in Cyprus over the need to put an end to the program.

There was also the move of the Vice President of the European Commission for Values and Transparency, Vera Jourová, to share on her personal account an article of the French newspaper Le Monde entitled ‘The Golden Passport Scandal in Cyprus’.

A move that had its own semiology. Not only because it was published by a newspaper that has excellent relations with the Commission but also because it is a well-known secret that when the EU wants to send a warning to a Member State about its actions, but also about what it intends to do, it first channels the news in well-known media to cultivate the soil. This was also done before the slashing of deposits.

Cyprus put on the stand

It is in this context that everything that was published by the Al Jazeera Investigative Unit is considered to fall. European Commissioner for Justice Didier Reynders has already revealed in a comment to Al Jazeera that he is considering legal action against Cyprus over its citizenship-by-investment scheme.

He had noted that he would like to see some action from the European Union on new legislation, but most of the responsibility lies with Cyprus.

In addition to the Commission, German MEP Sven Giegold, who is a fierce critic of Cyprus’ investment program, raised the issue last Friday of referring Cyprus to the European Court of Justice for violating European law.

The truth, however, is that at the level of the College of Commissioners, the issue of Cyprus and the investment program has not been discussed at the moment. Political circles in Brussels note that it is acknowledged that Cyprus has made improvements on the investment program and that what is coming to light is a past ‘sin’.

According to the same circles, it is very likely that the Commission will make a proposal regarding the program, which will not only concern Cyprus but all EU Member States that implement such schemes.

There are also circles that estimate that although the Commission cannot impose a suspension of the program as it does not have such a mechanism, it will push through other channels to either suspend the investment program, or to tighten the implementation of the new regulations. Political circles note that while citizenship is within the jurisdiction of the Member States, the EU can initiate infringement proceedings by claiming that Union principles and values are being violated.

(This article was first published in KNEWS, the English edition of Kathimerini Cyprus,
on 31 August 2020.)

The ‘Cyprus Papers‘ revealed by Al Jazeera that humiliated the administration should be a wake-up call to everyone on this island that the goose that lays the golden egg has long gone.

It was probably cooked by some oligarch and the prize of a banquet with local politicians, lawyers and accountants.

It’s time to move on and ‘rediscover Cyprus’, not just as a tourist destination, but as a vibrant business model.

The services model of the 1970s, conceived out of a necessity to restart the economy in the wake of the Turkish invasion, which decimated our farming and destroyed half the country, is far outdated and should be mutated into something new.

A low-tax programme was developed to help Cyprus rise out of the ashes of the 1974 war.

It started well and soon spun off into two main areas – the ‘offshore sector’ with the “best-kept secret” and the shipping sector.

Both did well and attracted thousands of companies and personnel to place their business under the Cyprus tax umbrella.

By the 1980s, we had the expats who operated financial service companies.

Regional and global events, such as the Lebanese civil war, the collapse of the Soviet Union, the dismantling of Yugoslavia and others brought foreign communities to our island, transforming Limassol into a bustling multicultural port city, with brass-plate companies registered in every building in every neighbourhood.

Despite being ripped off with exorbitant rents, some stayed, while newcomers arrived bringing with them the benefits and ills of the lands they left behind.

However, our services sector, driven by complacency and the need for a quick buck, did not evolve as fast and gradually saw business going to rival destinations, the exception, again, being the maritime sector which started to become a proper hub.

In the meantime, we had the fallout from the first Gulf War in 1990-1991, the stock exchange boom and bust in 1999-2002, and a chain of economic aftershocks from the collapse of Lehman Brothers, culminating in our locally nurtured banking and financial crisis.

Throughout these troubles, the services survived and provided some cushion of safety.

However, this sector kept on losing ground to smarter and more versatile jurisdictions while the maritime industry quietly and safely evolved.

The final nail in the services coffin was the golden passports scheme, devised by a few to accommodate the few, lubricating the legal and financial services professions.

But this time it helped to save the over-borrowed property developers, who had earlier bankrupted the banks, exposing them to billions in non-performing loans which ordinary depositors were called to bail out.

After harshly criticised from day one, and with some government officials still keeping their heads in the sand, the investment-for-citizenship programme was adjusted to allow a small measure of transparency, a smokescreen for all those pointing their fingers at the evil Cypriots.

Instead of abolishing the programme altogether, another variation was concocted whereby a fraction of the €2.5 million ‘invested’ in Cyprus would be used to fund low-cost homes and some money trickling into innovation and research while we ‘sacrificed’ the project by lowering the ceiling to ‘only’ 700 passport applications a year.

Cyprus now has a mature and highly educated human resources treasure that remains unutilised.

European funds have been well invested in many areas of agriculture and rural Cyprus, manufacturing, albeit in specialised sectors are on the rise and some success stories, such pharmaceuticals and energy, are booming.

Shut the golden passports scheme down now, before it’s too late and we are humiliated even further, especially by our European partners, in whose eyes we are nothing but a joke.

If not, it just goes to prove that the present administration still has a few favours to pay off and needs to keep the programme going a while longer.