Chronicles of the Cyprus Passport Saga Part 10

Хроники кипрской саги о паспортах. Часть 10
4 December 2020 Liza Medvetskaya

On Thursday, December 3, an online lecture was held at the Faculty of Economics and Management of the University of Cyprus entitled “One Year at the Ministry of Finance - when economic growth is followed by an unexpected severe health crisis. Problems and a new generation”.

The event was attended by the Minister of Finance of Cyprus Konstantinos Petrides.

During his speech, he stated that the Citizenship by Investment program would no longer be implemented in Cyprus in its previous form. Moreover, Petrides stressed that the resumption of the Cyprus investment scheme with similar conditions as the previous one is out of the question.

In addition, the Minister of Finance noted that due to the coronavirus pandemic, the Cyprus economy is in a very difficult situation.

'The outcome of the current financial crisis will largely depend on how quickly we can defeat COVID-19. Now there is complete uncertainty that will continue until a significant part of the population is vaccinated. You need to be prepared for any scenario. The pandemic is not over yet, and the economic situation is difficult. We are using all European instruments to deal with the crisis as much as possible. Unfortunately, the EU is not a financial union and there are no net financial transfers or "free money" as some think. We repay European funds either in the form of contributions (such as the Recovery Fund) or in the form of repayment of loans (such as SURE),' Petrides said.

The finance minister noted that "Cyprus will not emerge from the current crisis unharmed."

He also said that measures to support the economy "are continuing and being reviewed simultaneously with the revision of the epidemiological picture on the island." Because the lack of these measures "will lead to a much deeper and longer recession than the one the country is currently experiencing, approaching 10% with huge labor market implications and creating long-term structural problems in the economy."

Regarding to problem loans (NPL) in the banking sector, despite the very significant progress that has been achieved, thanks to a total reduction of € 23 billion in absolute terms or by 75.5%, according to the minister, Cyprus should continue to work in this direction.

'Despite the fact that the position of banks in relation to liquidity and the amount of capital remains strong, it is possible that the banking system will be under press because of the coronavirus pandemic. Therefore, it is extremely important to maintain a stable legal framework for reducing problem loans with an effective bankruptcy system. Any thoughts aimed at suspending or weakening this structure will do more harm than good,' Petrides continued.

Speaking about the economic model of Cyprus, he stressed that the government "from the very beginning made serious efforts to develop a strategy for its further development, some of which have already borne fruit, while others require much more attention."

Константинос Петридис: Кипр закрыл программу «Гражданство за инвестиции» навсегда

The finance minister went on to say that, in his opinion, "we are creating the wrong picture and damaging the economy by claiming that it is based on an investment scheme."

'Let me be clear about KEP. It will not return to its previous form and will not resemble it in any way. My words cannot be interpreted vaguely. A plan that is related to the main elements of the previous scheme cannot be re-implemented. I mean the systematic granting of citizenship in exchange for a predetermined level of investment without the need to establish a connection between the country and the investor in the form of permanent residence,' - he assured.

According to Petridis, "the inherent problematic nature of the plan made it vulnerable to abuse, but also perhaps attractive to people of questionable trust, rather than institutional investors."

'It is for this that the European Union criticized Cyprus, and not for economically important individual or institutional investments with high added value, which are calmly implemented in most European Union countries even in exchange for naturalization, without any problems,' Petrides said.

Finally, Constantinos Petrides mentioned, among other things, populism.

In Cyprus, society is justly outraged, I would say, angry. Because of incidents of corruption and the behavior of politicians in general, but also because of the pathogenesis of the political and economic establishment, with which it no longer wants to put up. Change in the system will come either through populism or the most beneficial path of evolution through rationalization and reform. I regret to note that there is no rationality in the realm of public debate. At the same time, I am confident that the role of the university community in the future and independently of governments will be crucial in rationalizing and developing a realistic and beneficial policy strategy for the country, concluded Petrides.

Хроники кипрской саги о паспортах. Часть 10

Meanwhile, the Deputy Chairman of the Audit Service, Irene Charalambidou, sent a letter to the Minister of Internal Affairs on Thursday, December 4, demanding information on cases of golden passports.

In a letter addressed to Nicos Nouris, she noted that “no information or response has been received from him on the issues raised in the letter, as the director general of the ministry promised on October 29”. Therefore, the minister was asked to give his answer before next Wednesday, December 9th.

We set the deadline for December 9, and this did not happen by chance, because next Thursday, December 11, we intend to continue discussing the issue of 18 naturalized foreign citizens, based on the report of the Auditor General, ”said Charalambidou.

It should be noted that the letter contains a request to provide information on legal or audit firms that were involved in accompanying naturalization, which belong to and / or are associated with politically exposed persons, as well as on the number of passports issued.

A list of law or audit firms that submitted the largest number of applications for naturalization was also requested, indicating the citizenship of the applicants and information on the number and type of 23 naturalization cases, for which instructions were given to accelerate the issuance of citizenship, according to the previous report of the Accounts Chamber. Finally, an annual analysis was requested of the number of naturalizations and the corresponding fees / income collected by the Population Department, from the start date of the KEP to the present day.

In turn, the Minister of the Interior of Cyprus Nicos Nouris continues to counterattack against the ultimatum of the parliamentary audit committee to provide data and answers on naturalization cases until December 9th.

The other day the minister said that he does not accept such demands in his direction. At the same time, Nouris noted that last Monday he had already responded to the first letter of the audit committee dated October 29.

'I replied that we are collecting the information requested by the Special Commission and will send it as soon as we are ready. However, it should be borne in mind that it includes personal data and trade secrets. At the same time, I want to emphasize that I do not accept ultimatums on such serious issues. If I provide information to the extent required by the Audit Service, I may be accused of creating problems for the Commission on Investigation of Golden Passports. Therefore, I must be careful. After all, there is a special commissioned committee, let it do its job,' - said the minister.

The debate that is developing at the parliamentary level over naturalization is expected to preserve the atmosphere of controversy that has been observed recently, especially given the pre-election period.

As you may know the latest report of the Audit Service of Cyprus caused a very mixed reaction from officials.

He apparently turned out to be just the tip of the iceberg in the case of the Cyprus investment program for the government of the country, which, as it became known, is already collecting evidence to appeal to the Supreme Court in order to remove the Auditor General from the investigation.

Chronicles of the Cyprus Passport Saga:

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