14 Aug 2016 Russia-Turkey warm up is an opportunity for Cyprus

The visit to Moscow by Turkish President Recep Tayyip Erdogan to meet Russian President Vladimir Putin this week consolidated the rapprochement that had already begun shortly before the attempted coup in mid-July.

Turkey promised to give strategic investment status to the Akkuyu nuclear power plant to be built by Russia in Turkey’s south-east, the two countries said they would push ahead with the Turkish Stream natural gas pipeline and they also said they would set up a joint investment fund.

While the visit has set NATO countries fretting what it might mean for them, I see a significant opportunity for a united Cyprus.

The investment fund in particular could be important, for two key reasons. First, both parts of Cyprus already have strong ties with either Russia or Turkey. For the Greek Cypriots, Russia has long been a friend and ally. Based on the latest data, it competes with the UK to be the primary export market for tourism, accounting and legal services combined, with each country taking 20% of all services exports.

Data suggest that quality Russian business has also survived EU sanctions, a downturn in the Russian economy and (since I know what many will be thinking) the massive increase in regulations and checks that has put Cyprus’ anti-moneylaundering record on a par with Germany, the Netherlands and Luxembourg, based on OECD Peer Reviews.

Meanwhile in the north, Turkey is the primary market for tourism, higher education and goods. Turkish Cypriots also speak Turkish of course.

The second reason to see a Russia-Turkey investment fund as an opportunity is Cyprus’ small but rapidly growing funds business.

In an interview with the Cyprus Weekly last month, the chairman of the Cyprus Investment Funds Association (CIFA), Angelos Gregoriades, said there was “significant momentum” in the funds sector, with “an increasing number of new applications”.
At the moment, many key Cypriot businesses are only passively supporting a solution of the Cyprus problem. Yet with such no-brainer opportunities for facilitating Russian-Turkish rapprochement, I do wonder why they aren’t knocking down their leaders’ doors and demanding it yesterday.