What does a Brexit mean for Cyprus?
UK has with one way or another played a major role for the Cyprus conflict and political situation. UK citizens has for decades chosen Cyprus for their vacation, for their business activities, for their residency and have bought properties and invested in various ways due to the Cyprus’ beneficial tax conditions and belonging to the Commonwealth. So, how will a Brexit affect this relationship?
Uncertainty is what very often creates economic shocks and instability. As UK has been one of the first partners of EU it’s a huge conversion for the whole European zone to have UK outside the Union however it’s not necessary that this change is negative.
The values of the EU are long now disputed due to the various decisions of the European political centers on several significant matters such as economy and immigration. The leading powers of the EU due to its large economical contribution, large representation and size of their country, have been dominating in crucial decisions thus smaller countries are not substantially characterized.
The Brexit will surely cause a redefinition of the goals and values of the Union which has long been needed.
It’s important to understand that the Brexit for the most, affects UK and its Citizens. UK will still need trading, economic and political partners within the EU and the Brexit doesn’t need to be interpreted that UK seeks to terminate all cooperation with the member states.
Nevertheless, we have already seen some consequences of the UK referendum on the 23/4/2016. Adevaluation of the pound has almost immediately taken affect which was however expected due to the uncertain climate prevailing. Still, this condition could very well be transient as UK has a strong economy and very likely it wont take long before an eventual stabilization. Even if stabilization will delay, the negative effects will mostly concern British business people investing in other countries. Cyprus on the other hand having Euro as currency will mostly benefit from any currency conversion. Perhaps Cyprus business people selling their goods and services in UK will have to adapt to the low rate of the pound and once converting they’ll get less Euros back.
A possible effect is that international investors will exclude UK as an option and even such case Cyprus has nothing to lose, in contrary Cyprus will still remain a competitive option offering all benefits of its EU membership to its investors.
As to the Cyprus conflict UK has long now shown understanding to Turkey and has kept a neutral stance once Turkey lately was violating Cyprus’ exclusive economic zone. UK has also been very positive with Turkeys EU- accession process despite the fact that Turkey is violating essential human rights not only in Cyprus but even at its own country and have not until today recognized Cyprus as an independent EU member state. Consequently, Cyprus from a political point of view can not highly be influenced.
Regarding the tourism from UK let’s don’t forget that Cyprus will get affected just as much as other EU member states. However I don’ t see the English to stop traveling due to the devaluation of the pound.
As provided in the article 50 of the Lisbon Treaty, UK as any other member state has the right to decide to withdraw from the Union so let's hope the remaining 27 states won’t act revengefully towards UK’s right to choose whether to stay or leave the EU.
By: Helena Naaman, General Manager of Sedinvest Enterprises Ltd
