That was the TRNC week that was – 10th November

The events this past week bring into sharp focus issues that, as ever, are of great concern to all people living in North Cyprus and these issues, as reported by the TRNC Information Office, are shown below.

5 NOVEMBER 2012

ÖZGÜRGÜN “SEIZING THE RIGHTS OF TURKISH CYPRIOTS IS OUT OF QUESTION”

TRNC Foreign Affairs Minister Hüseyin Özgürgün emphasized that Turkish and Greek Cypriots are the equal partners of Cyprus and have the equal and inseparable rights on researching, taking out and processing of the natural resources and said “Greek Cypriot side’s seizing the rights of Turkish Cypriot side by creating ‘fait accompli’ on this subject despite of our warnings is out of the question”.

In the written statement, Minister Özgürgün underlined that their determination in taking any steps with Turkey in order to protect rights and benefits of Turkish Cypriot side will continue.

Özgürgün said “if Greek Cypriot side gives positive response to this constructive proposal, a rational step for solving its existing economic problems will occur, and at the same time an important problem which increases the tension in the area will be solved and will contribute to the formation of environment of confidence between two sides in Cyprus”.

Drawing attention that an opposite attitude will be a new example for the policy of Greek Cypriot side which causes problem in the island and in the territory and which avoids to be a part of cooperation and solution, Özgürgün said “if unilateral and intransigent attitude of Greek Cypriot side continues, Turkish Cypriot side will continue to research and excavate hydrocarbon in the permitted areas in order to protect the rights and benefits of Turkish Cypriot side”.

TRNC Foreign Affairs Minister Hüseyin Özgürgün also pointed out that the statement of the Greek Cypriot Administration that they are ending up the tender bid with foreign companies for the parcels 2,3,9 and 11 is the last unilateral and provocative step on the hydrocarbon research issue and it is unacceptable. Özgürgün said ‘Greek Cypriot Administration is not taking into consideration the agreement signed between Turkey and the TRNC, which the Council of Ministers approved the issuing of a license to the Turkish Petroleum Corporation in order to carry out exploration efforts around the island on 22 September 2011’ and added that the above mentioned four parcels and some others are part of the agreement. Özgürgün underlined that companies which believes the claims of the Greek Cypriot Administration and make any cooperation with them for this issue will find themselves in a controversial issue.

TURKISH MINISTRY OF FOREIGN AFFAIRS: ‘TURKISH CYPRIOTS HAVE EQUAL RIGHTS’

Turkish Ministry of Foreign Affairs made a statement regarding  activities of Greek Cypriot Administration that Turkish Cypriots have the same equal rights over whole natural resources in the continental shelf and it is not acceptable for both Turkey and TRNC to disregard this reality.

It was noted in the statement of the Turkish Ministry of Foreign Affairs that it has been clear that Greek Cypriot Administration disregarded the rights of the Turkish Cypriots and started to realize meetings with various international petrol companies and consortiums regarding some parcels in so-called restricted economic zone.

Moreover, it was expressed in the statement ‘Turkish Cypriots have the same equal rights like the Greek Cypriots over natural resources in the whole continental shelf of the island. Greek Cypriots’ disregarding this reality and continuing provocative behaviors unilaterally is not acceptable for both Turkey and TRNC. Within this framework, Turkish Ministry of Foreign Affairs supports the statement of TRNC Ministry of Foreign Affairs strongly which was issued on 2nd. November 2012’.

Moreover, it was reminded that it is very threatening for the international petrol companies to make activities in the conflict zone.

It was also noted in the statement that ‘As our Prime Minister expressed, the companies which will make cooperation with Greek Cypriot Administration will not be included in Turkey’s new energy projects in the future. So, we want to renew our call for international petrol companies to behave right-minded and withdraw from the tender’.

6 NOVEMBER 2012

German Intelligence Report: “Aid to Cyprus Could Benefit Russian Oligarchs”

Cyprus could soon seek aid from the European Union’s bailout fund. But according to a secret report by Germany’s BND intelligence service, the aid might mainly benefit Russian oligarchs who have parked illegal money in bank accounts in Cyprus, SPIEGEL has learned. Russian deposits there total $26 billion.

The German foreign intelligence agency, the BND, has written a report suggesting that the European Union aid that may soon be paid to Cyprus could mainly benefit Russians who have deposited illegal income in accounts on the Eastern Mediterranean island, SPIEGEL has learned.

In a confidential report, the BND said Russians have deposited $26 billion (€20.25 billion) in Cyprus banks, an amount greater than the island’s annual gross domestic product. These deposits will be guaranteed if European bailout money is paid to shore up the island’s banks. The BND also accused Cyprus of still providing opportunities for money laundering.

Officially, Cyprus is sticking to all the agreements on combating money laundering. The necessary laws have been passed and institutions have been set up. But there are problems with their implementation. The rules aren’t being applied properly, the BND said in the report. Money laundering is being facilitated because the Cypriot authorities have made it easy for rich Russians to obtain Cypriot citizenship. The BND said 80 oligarchs have managed to gain access to the entire EU in this way.

SPD To Attach Conditions to Cyprus Bailout

Germany’s opposition, center-left Social Democratic Party says it will only accept a rescue package for Cyprus if certain conditions are met. “Before the SPD can approve loan assistance for Cyprus the country’s business model must be addressed,” SPD lawmaker Carsten Schneider told SPIEGEL. “We can’t use German taxpayers’ money to guarantee deposits of illegal Russian money in Cypriot banks.”

The Cypriot government decided in the 1970s to use the country’s favorable location between Europe, Africa and the Middle East to turn Cyprus into a tax haven. But the boom only started 20 years later when the Soviet Union collapsed. The number of shell companies registered on the island multiplied to more than 40,000, and no one asked the investors where the money had come from.

When Cyprus applied for EU membership at the end of the 1990s, its central bank cleaned up the domestic financial sector, allowing Cyprus to join the EU in 2004. The country’s accession to the euro single currency further strengthened the island’s attractiveness as a financial location. At their peak, financial services accounted for 70 percent of the country’s economic output. (From DER SPIEGEL-5.11.2012)

 

Bailing Out Oligarchs EU Aid for Cyprus A Political Minefield for Merkel

 By Markus Dettmer and Christian Reiermann

The EU is likely to bail out the banks of tiny member state Cyprus with 10 billion Euros of credit. But a secret German intelligence report reveals that the main beneficiaries of the aid would be rich Russians who have invested illegal money there. It’s a big dilemma for Chancellor Angela Merkel.

Last Friday, the sun was shining in this paradise for Russians. The sky was a deep blue and the palms along the beach promenade swayed in a light breeze as the temperature climbed to 29 degrees Celsius (84 degrees Fahrenheit) before noon. No doubt Limassol offered a welcome relief from the cold and wet autumn weather of Moscow. Russians appreciate this spot on the southern coast of Cyprus.

The boutiques sell sable coats even in summer, the restaurants serve salted herring and vodka, apartments near the pier cost upwards of €300,000 ($383,000) and there’s no shortage of luxurious villas priced at millions of euros.

The city park has a bust of Russian poet Alexander Pushkin, there’s a Russian radio station, Russian newspapers, a Russian Orthodox church, private schools offering Russian diplomas and signposts in Cyrillic writing. The mayor of Limassol himself speaks fluent Russian and studied in Moscow during the Soviet era.

There’s one drawback, however: all the yachts, however luxurious they may be, are moored in the rather dreary old port. But relief is in sight. The new Limassol Marina will be finished soon, and if you you put your name down soon for one of the 650 available berths, you can get a special rate: €150,000 per year, depending on the size of your boat.

There’s something else that is probably a greater cause for concern for the Russians of Limassol, though. They are at risk of losing their paradise because Cyprus is virtually bankrupt. The island’s economy has been dragged down by the recession ravaging Greece, with which it has close business ties. In addition, Cypriot banks bought billions of euros in Greek government bonds that are practically worthless now. The banks have already had to write off large portions of their investments, and are in trouble as a result.

Application for EU Aid

This prompted the government of President Dimitris Christofias to make a pre-emptive application for EU aid in the summer. Russia had already provided a loan of €2.5 billion. That money has been used up and Russian President Vladimir Putin is reluctant to provide a further €5 billion.

Now the euro countries, and especially Germany, will have to step in with a €10 billion aid injection to prop up the island’s banks. That will confront German Chancellor Angela Merkel, Finance Minister Wolfgang Schäuble and their European colleagues with a major dilemma because a secret report written by the German foreign intelligence service, the Bundesnachrichtendienst (BND), outlines who would be the main beneficiaries of the billions of euros of European taxpayers’ money: Russian oligarchs, businessmen and mafiosi who have invested their illegal money in Cyprus.

The Russians don’t just love Cyprus for its great climate. The shell companies here are conveniently anonymous, the banks discreet and the taxes are low. Dirty money bestowed a lasting boom on Cyprus and the inhabitants of “Limmasolgrad” are still doing well.

The European aid will help the country stabilize its controversial core industry and keep it going for the next few years. In Brussels and in the EU capitals, the Cypriot financial sector doesn’t enjoy an especially good reputation. Cyprus and its banks are widely seen as a tax haven and a money-laundering base.

Domino Theory Makes Refusal Impossible

But refusing aid is not an option. Angela Merkel has become a firm believer in the domino theory, which in this case would take on the following shape: allowing Cyprus to fall would put the entire euro zone at risk of collapsing. It would be a disastrous message to send to financial markets. Why should the Europeans save Spain or Italy if they can’t even bail out a dwarf like Cyprus?

The German government is in an awkward position. It is forced by overriding considerations to make decisions that it can’t really justify. There are considerable political risks. “A rescue package for Cyprus could be very incendiary,” one member of her government admitted. Merkel is in danger of discrediting her entire euro policy by agreeing to bail out Cyprus.

The Europeans won’t be able to plead ignorance, either. The BND has analyzed the situation in Cyprus and then debated it with experts from the “troika,” made up of the European Commission, International Monetary Fund and European Central Bank (ECB).

The BND officers didn’t bring good news. Formally, the island nation sticks to all the rules on combating money laundering laid down by the EU and other international agreements, the agency said. The country had passed the necessary laws and set up the required organizations. But there were problems when it came to implementing those rules, it added. They weren’t being applied properly. The Cypriots, the BND said, sign everything, pledge a lot, but keep few of those promises.

Money laundering is facilitated by generous provisions for rich Russians to gain Cypriot citizenship, according to the BND which found that some 80 oligarchs have gained access to the entire EU in this way.

In 2011 alone, some $80 billion flowed out of Russia and much of that money had been channelled though Cyprus, according to the BND. Russians have deposited $26 billion in Cypriot banks, says the BND. That is well above the annual GDP of Cyprus.

The figures show the scale of the problem. The Cypriot government is banking on the Europeans being unable to refuse aid. When the euro finance ministers voiced criticism, their Cypriot counterpart reacted furiously, saying his country would solve its problems without the Europeans if necessary and threatening to leave the single currency.

EU Taxpayers Protecting Illegal Money

The BND regards that as an empty threat, though. If Cyprus leaves the euro zone, its business model will no longer be as attractive, it says.

But the BND’s conclusions also mean that if Cyprus gets an EU bailout so that it can keep the euro, the money of German and other European taxpayers will be protecting illegal Russian money.

Cyprus has been a tax haven since the 1970s. At first, it kept taxes low to attract shipping companies that registered their ships in Limassol. But the big boom didn’t come until after the collapse of the Soviet Union.

The billions made out of that then needed a safe haven and found it in Cyprus. The Russian oligarchs, businesspeople and Mafiosi channelled funds to Cypriot companies to keep tax costs down and to be able to re-invest at least part of it in Russia at a later date.

Cyprus became a member of the EU in 2004 and joined the euro zone three and a half years later. And suddenly it was in more demand than ever. The number of firms registered has doubled since it acceded to the EU. The country had to tighten up its regulations on money laundering before it was accepted into the EU but in practice it only stopped the most flagrant abuses.

Since then, the Cypriot economic model has been highly attractive. The country is a tax haven within the EU, but has been given a clean bill of health by the OECD because it supposedly does enough to stop money laundering.

However, a paper by the European Parliament about organized crime in Russia mentions Cyprus in a number of places. And a World Bank report on 150 international corruption cases cites several companies and accounts in Cyprus.

Mistakes Made With Greece Being Repeated

The European Commission, the EU’s executive body, is more lenient with the new member, though. German government officials complain that the Commission has never seriously urged Cyprus to take tougher action to fight money laundering and close tax loopholes.

In the case of Cyprus, many of the mistakes made by Greece are now being repeated. Greece was allowed to join the euro despite blatant misaccounting. And Cyprus was allowed in even though it isn’t implementing EU standards for a clean financial center.

And now the EU has to help this of all countries. Compared with the other European rescue packages the planned €10 billion aid for the banks of Cyprus is miniscule in financial terms. But it’s a political minefield. The share of the aid to be paid by German taxpayers amounts to €2 billion. This poses a new challenge for Merkel.

She is already having trouble justifying continuous aid payments to Greece because Athens has proven itself to be an unreliable partner that keeps coming up with new excuses for its omissions. Now she has to explain payments to a country whose success rests on illegal money.

Cyprus a Political Problem for Merkel

In addition, the beneficiaries of the help won’t be ordinary workers or farmers but a caste of nouveau-riche immigrants that shamelessly boast their wealth while making virtually no contribution to solving the country’s problems. Companies registered in Cyprus pay just 10 percent in taxes.

Germany’s opposition Social Democrats, which have voted in favor of previous bailouts in the crisis, are determined to challenge Merkel this time and to attach conditions to their approval of support for Cyprus.

“Before the SPD can approve loan assistance for Cyprus, the country’s business model must be addressed,” SPD budget expert Carsten Schneider said. “We can’t use German taxpayers’ money to guarantee deposits of illegal Russian money in Cypriot banks.”

The low rate of corporate tax and the silent approval of money laundering were unacceptable to Social Democrats, he added.

Merkel is unlikely to disagree with the SPD’s demands. But will she be able to force Cyprus to meet them? If she doesn’t, she won’t be able to rely on opposition support in a German parliamentary vote on aid to Cyprus. And she needs opposition votes because EU aid to Cyprus is so controversial in her coalition that she won’ be able to rely on securing her own majority.

As one Merkel confidant put it: “Cyprus isn’t an economic problem, it’s long since become a political one.”(From DER SPIEGEL-5.11.2012) 

7 NOVEMBER 2012

1 BILLION EURO CREDIT DEMANDED FROM RUSSIA

It was reported that the Greek Cypriot Administration demanded 1 billion Euros credit from Russia for not signing a memorandum with Troika until the Presidential elections to be held in February, 2013. In return, permission has been given for 9th parcel within the context of 2nd tour royalty tender.

According to the Greek Cypriot daily Alithia, Greek Cypriot Council of Ministers announced the decision on 30th. November and it disturbed the companies which participated in the tender but Russian President Vladimir Putin looks positive for credit demand of Greek Cypriot Administration.

EDUCATION EMBARGOE FROM GREEKS

It was claimed that two universities have given up attending the fair to be organized by British Council in Lefkoşa Atatürk Culture Center when the Greek Cypriot students studying in the UK have reacted.

According to the news of Greek Cypriot daily Fileleftheros, it was claimed that the Greek Cypriot students have ganged up in order to put pressure on the universities which will attend the fair in TRNC for not attend to the fair and as a result of this pressure, Lancaster University and Swansea University drawn from attending the fair.

It was defended in the news that British Council has not made an announcement concerning the fair in its web-page; however it only gave information about the fair to be organized in South Cyprus between the dates of 7-8 November.

40 THOUSAND UNEMPLOYED IN SOUTH CYPRUS

According to the Greek Cypriot Newspaper number of unemployed in South Cyprus increased from last month to this month. Newspaper pointed out that 8 thousand 5 hundred of the 40 thousand unemployed people are graduates.

The newspaper also underlined that the recorded unemployment number in last year October was 27 thousand however this year in October the number was increased to over 34 thousand.

8 NOVEMBER 2012

EROGLU SENDS CONGRATULATIONS MESSAGE TO OBAMA

TRNC President Derviş Eroğlu has sent a message of congratulations to Barack Obama who has been elected to the USA Presidency for the second time.

Making a statement Eroğlu wished that Barack Obama shall take more brave and efficient decisions for the establishment of peace and justice in Cyprus and in the World in his new presidential term.

Eroğlu also evaluated that Obama’s being re-elected to the USA presidency in spite of the difficulties in his country and in the world with his patient and decisive attitude was an important success.

Eroğlu continued: “we wish that Barack Obama who has been re-elected to the USA Presidency for the second time shall increase his success in the new period and take fruitful steps for the USA people and for the world. The world which belongs to all of us needs reciprocal understanding, cooperation justice and peace.

Pointing out that USA could contribute a lot to the peace in Cyprus, Eroğlu said: “We believe that USA led by Obama shall use their power over our Greek neighbors and shall do whatever is needed towards reaching an agreement in Cyprus and towards getting rid of the embargoes imposed on the Turkish Cypriot people by the Greek Cypriots.   

GOETHE INSTITUTE DIRECTOR: “FLAG ON THE BEŞPARMAK MOUNTAINS IS NOT TURKISH FLAG IT IS TURKISH CYPRIOT FLAG”

The Director of the German Goethe Institute in South Cyprus Bjom Luley gave a speech in a panel where ‘Cypriot Literature Perspective’ was discussed and blamed Greek Cypriots for the flag of Greece, Makarios and National Days and said that the huge flag on the Beşparmak Mountains is not a Turkish flag but it is a Turkish Cypriot Flag.

DAVUTOĞLU “TO CARRY WATER AND ELECTRICITY TO TRNC IS FOR THE BENEFIT FOR EVERYBODY”

Turkish Foreign Affairs Minister Ahmet Davutoğlu pointed out the project of carrying water and electricity to TRNC and said “we will show that geologic, geo-economic relation  of Cyprus island is naturally with Anatolia Peninsula. If peace is required, this is for the benefit of everybody”.

Making self-criticism that they did not emphasize on Cyprus problem because they focused on other subjects, Davutoğlu stated that they took every measure in order to protect the rights of Turkish Cypriots.

Davutoğlu added: “We will take such a strategic step which was a dream before, we will carry water from Manavgat, Turkey to Cyprus. This means connection of Cyprus with Turkey with a line. We will also supply electricity. We will show that geologic, geo-economic relation of Cyprus Island is naturally with Anatolia Peninsula. If peace is required, this is for the benefit of everybody. The relations with Egypt in Eastern Mediterranean progress in the direction of setting the balances in Eastern Mediterranean on a new ground”.

Davutoğlu stated in the summit of Organization of Economic Cooperation held last year that TRNC became the observer member under the name of ‘Cyprus Turkish State’ and the number of TRNC representative offices in different countries has reached to 19.

9 NOVEMBER 2012

SOUTH CYPRUS IS GOING BANKRUPT

According to the Greek Cypriot Newspaper Alithia European Commission stated that South Cyprus whose public debt reached to 89.7 of Gross National Product (GNP) is going to be bankrupt if they do not have a memorandum or a support package. The commission also underlined that unemployment range will reach to 12% at the end of the 2012 and in 2013 it will be 13% and in 2014 it will be 13.95%.

The newspaper also mentioned that German Die Welt newspaper said that Tanzania saved South Cyprus from bankruptcy by renewing their credit from the Federal Bank of Middle East however if South Cyprus had to pay the 240 billion Euros credit they will be bankrupt for sure.

Source of Information ; TRNC Public Information Office.