Cyprus could achieve its full economic potential through a settlement, US official says

Cyprus could become a commercial hub in the Eastern Mediterranean and achieve its full economic potential following the reunification of the island, Kenneth Hyatt US Deputy Undersecretary for International Trade at the Department of Trade told a gathering of Greek Cypriot and Turkish Cypriot businesspeople.

Hyatt addressed an event organised by the US Embassy to Cyprus, the Greek Cypriot Chamber of Commerce and Industry and the Turkish Cypriot Chamber of Commerce, the leaders of which noted that a Cyprus settlement would create growth opportunities both to Cyprus and the region.

“The United States is committed to seeing Cyprus prosper and achieve its full economic potential. But in order to achieve that important goal, this fundamentally requires a comprehensive settlement of the Cyprus issue. This is our longstanding policy,” Hyatt said in his speech.

Praising the role of the two Chambers Hyatt, said “through their continuous support Cyprus can realize a bi-zonal bi-communal federation that would create the conditions necessary for attracting foreign investment, increase employment and increase jobs.”

The US Undersecretary said that Cyprus at this point is a small market to the US “but we do think there is a foundation here on which to build and on which to grow.”

He said, bilateral trade amounted to $130 million in 2015, with US investment at approximately 2 billion, an increase sevenfold over the last three years largely due to opportunities in energy and banking. “But there are a number of companies that see opportunities in IT, medical equipment, agricultural products. Cyprus is becoming an increasingly attractive destination in an increasingly complex region,” he said.

The US official also referred to the belief shared by businesspeople about how attractive the companies see Cyprus to be a commercial hub for the eastern Mediterranean. “And I think that`s a strategic opportunity here.” “And in an increasingly unstable region, Cyprus is a more appealing commercial venue than it has ever been. That is why the United States strongly believes that this is Cyprus’s moment to develop into an even broader commercial hub in the Eastern Mediterranean, linking economies throughout the region,” he went on to say.

Hyatt highlighted that one of the key factors behind any company’s decision to do business in a country is stability. “Simply put, reunification would unleash Cyprus’s economic potential by creating the stability and predictability that is necessary for increased bi-lateral trade and investment,” he said.

He referenced four sectors that would emerge as growth drivers for a post-settlement Cyprus.

Particularly, he said tourism which counts for about one quarter of Cyprus’s GDP, stands to benefit greatly as a post-settlement tourist industry would be a boon in terms in creating jobs and modernising infrastructure development, whereas the shipping industry “offers much potential for U.S. companies seeking to export shipping-related goods and services, including shipping insurance services, and marine support services for Cyprus’s budding offshore energy sectors.”

“A settlement,” he added, “will accelerate trade and shipping between Cyprus and Turkey, significantly expanding the sector’s contribution to the island’s economy.”

He also referred to science and innovation, but added that the energy sector holds perhaps the most potential.

Recalling that one US Company has already invested heavily in Cyprus and expressing hope that future discoveries will emerge, Hyatt noted however that “under the current arrangement, Cyprus’s hydrocarbons sector does not have access to its closest commercial market –Turkey – which also happens to be one of the fastest growing markets in the G20 and certainly the region.

The US official also pointed out that post-settlement, Cyprus will present many opportunities, including modernization of the transportation system, upgrade of the ICT sector, and a central location that will allow foreign businesses to be able to properly serve customers throughout the Eastern Mediterranean.

Concluding Hyatt, said the United States is committed to its relationship with Cyprus, and we’re in it for the long-term.

On his part, Phidias Pelides, President of the Greek Cypriot Chamber of Commerce and Industry said our Chambers are convinced that a comprehensive solution to the Cyprus problem will bring considerable benefits not only to Cyprus and enhancing the welfare and prosperity of all Cypriots but also to the entire region and geographical area that encompasses Cyprus, Greece and Turkey within an enlarged EU where democratic principles, human rights and fundamental freedoms will be respected.

Pelides added that a solution will increase the stability and security in the region and will create huge opportunities of cooperation and economic exchanges between Cyprus, Greece and Turkey focusing not only on their own markets but also with other European and Middle Eastern markets in the area.

A settlement, he added, will create additional opportunities that would consolidated the role of Cyprus as the leading business and services centre in the wider Eastern Mediterranean region, he said, adding that US companies could use Cyprus as their base for the operations in the region.

On his part, Fikri Toros, referred to recent academic studies which “have shown that the island`s total GDP is expected to rise from just over €20 billion to approximately €45 billion by 2035, meaning a total dividend of approximately €25 billion during the initial twenty years, adding this means a GDP per capita of €12,000 and an average economic growth rate of 4.5%.”

He said that specific sectors like tourism will generate additional income of approximately €550 million euros per annum coupled with €725 per annum in the construction sector, whereas the financial and insurance services expect to generate a total dividend of €380 million and professional services sector as whole is expected to generate over €1 billion. Finally he said the shipping sector is estimated to generate an annual average dividend of €760 million and higher education is estimated to yield an additional income of €270 per annum.

On natural gas resources located in Cyprus EEZ, Toros said a regional cooperation between Israel, Lebanon, Cyprus and Turkey is crucial to exploit these resources in the most commercially viable way. “This has been proven to be through a pipeline to Turkey with a view to be marketed to Turkey and ultimately in the European markets,” he said.