Cyprus Economic Summit

Focused On Economic

Integration Process

By Chris Elliott……..

I was invited to attend the Cyprus Economic Summit at the Grand Pasha Hotel Girne which had been arranged by Creditwest Bank, Private Banking and as was to be expected the arrangements were excellent and upon arrival I was greeted and given a headset so I could listen to a translation in English. As I could not record it, I am very grateful to Creditwest Bank for forwarding the following summary which helps greatly in conveying the discussion that unfolded.

Apart from Turkish Cypriots and Turkish delegates attending I noticed many expatriates including a representative from the British Residents’ Society.

The debate and questions afterwards were fascinating and were all keyed to the ongoing talks that could lead to the reunification of the Island of Cyprus with both sides then sharing the economic wealth of the country and the advantages of being a member of the European Union.

Perhaps the departing thoughts of those that attended could have been will the settlement and all the work that goes before it, bring equality to the Turkish Cypriot nation and also perhaps what the effects of adopting the Euro will be on our individual finances?

CYPRUS ECONOMIC SUMMIT FOCUSED ON

ECONOMIC INTEGRATION PROCESS

The influence of the global crisis on the world economy and the economic integration of North Cyprus with the world economy were discussed in the ‘Cyprus Economic Summit’ which was held under the initiative of Creditwest Bank Private Banking.

In the Summit, which assembled with the participation of the Cnbc-e economists Servet Yıldırım and Dr. Mahfi Eğilmez, the Chairman of the Executive Board of Altınbaş Holding from Turkey Mr. Cengiz Biçer, the President of Turkish Cypriot Chamber of Commerce Mr. Fikri Toros and the Dean of the Faculty of Business and Economics of Eastern Mediterranean University Assoc. Prof. Dr. Mustafa Besim were the key speakers.

The on-going influence of the global crisis on the economies of the developed and developing countries, the foreign exchange and interest rate expectations for 2015, the analysis of the current investment climate of North Cyprus, the foreign investors’ expectations from the countries and the competitive advantages of North Cyprus and the preparation process of the economy of North Cyprus for the integration were discussed in the panel.

Toros: The country must utilize its advantage with respect to real estate and water together with agriculture

The President of Turkish Cypriot Chamber of Commerce Mr. Fikri Toros indicated that, North Cyprus, as a small country with no competitiveness except for the tourism and higher education sectors, will have an access to international finance opportunities whilst the citizens that left the country will start returning to Cyprus in case of integration with the EU. Furthermore the business world will encounter many benefits from a possible reunification by getting prepared to the EU Acquis.

The President of Turkish Cypriot Chamber of Commerce Mr. Fikri Toros underlined that the TRNC ranks very low on the competitiveness scale in terms of economic potential for attracting foreign direct investment and noted that while the country experiences problems in accessing international financing and suffered from being a small market, it nevertheless benefits from having certain advantages.

Toros expressed that North Cyprus has real estate investment advantages in the Mediterranean region and pointed out that with the water to come from Turkey, 700 thousand idle farmland will create other advantages.

‘The fact that Turkey is a country growing fast in industry with a very high competitiveness is an advantage for the TRNC. The standards of the Famagusta port have to be improved and the opening of Maraş/Varosha might create a great opportunity. Proximity to Mersin creates an advantage for Cyprus as a centre’ stated Toros.

Besim: The businesses in the North can quickly integrate to issue of accessing markets

The Dean of the Faculty of Business and Economics of Eastern Mediterranean University Assoc. Prof. Dr. Mustafa Besim, in his speech, underlined that the preparation of the EU compliant legislation should start and that it is important to adopt the EU standards to the sectors in the TRNC.

Besim, stated that in order to ensure an income convergence, the Federal State should allocate a separate investment budget for the Turkish Cypriot side and added ‘it is vital to improve infrastructural investments otherwise income convergence will not take place and in the long run this will deteriorate the federal structure’.

Besim indicated that although finance and accounting sectors are more advanced in the South, the mainly private higher education is more advanced in the North. He also emphasized that for the two economies to readily access markets in the case of a reunification the business owners in the North would rapidly integrate with such a formation.

Biçer: Where there is trade a very strong legal foundation is essential

Mr. Cengiz Biçer, the Chairman of the Executive Board of Altınbaş Holding from Turkey, stressed that we must act with a forward vision without waiting for a solution in Cyprus, adding that the private sector and business world in the TRNC should analyse and evaluate carefully where business opportunities exist in light of many new developments throughout the world. He mentioned that Cyprus has been a trade centre for a long time throughout history, adding that where there is trade a very strong legal foundation is essential. Biçer stated ‘Where there is business and trade, accounting, banking and notary activities are always there. Therefore, you have to improve your legal foundation in this area, and especially invest in the field of tourism, finance and banking’ and he added ‘In Cyprus, as Altınbaş Group we constantly leap forward in these areas. This will generate a benefit to the whole economy in the case of the reunification of Cyprus’.

Eğilmez: Annan Plan was a huge opportunity foregone

Cnbc-e economist Dr. Mahfi Eğilmez, in the information he shared on economic crisis, stated that, the third biggest crisis in the world occurred in 2008 and added that one of the main reasons causing this crisis, which still is not over, was the free movement of capital and excessive capital following the dissolution of Soviet Union.

Global flow of capital did not have any effect on the crisis occurring in the TRNC as there is no inflow of global capital to the country indicated Eğilmez and added ‘The capital inflow to the country was mainly from the capital allocated by our banks and from the construction sector. Annan plan was a huge opportunity foregone. If it were up to me I would say yes immediately to the plan without hesitation because then North Cyprus would be a part of the global flow of capital.

The reunification of East and West Germany was a quite painful process. If the Annan Plan was accepted and the reunification took place, this would also initially cause difficulties however it would eventually be overcome. The global crisis is likely to continue for some time with the involvement of the developing countries and recently with the gradual involvement of China’.