They crossed swords in a round table discussion at the 12th Economic Conference, in Nicosia, DISY President and presidential candidate Averof Neophytou, AKEL Secretary General Stefanos Stefanou and DIKO President Nicolas Papadopoulos, focusing on sanctions against Russia, accuracy and golden passports.
The discussion revolved around recent developments in the economy, with the political leaders expressing their positions on a realistic and feasible vision for the development of the Cypriot economy in the coming period, after the shocks it has suffered in recent years.
Ambivalent barbs on the impact of sanctions on Russia due to the war in Ukraine, as well as references to a "stain", as the gold passport scandal was described, set the tone for the debate, during which the political leaders were asked to take positions on issues of attracting foreign companies and investments to Cyprus, developing renewable energy sources, supporting tourism, digital reform, as well as the rapidly rising prices of basic goods and fuel.
DISY President Averof Neophytou referred to the "disenchantment of Europe and the Western world" and added that passports were indeed a "stain" for Cyprus, but he said that the financial services structure was also a stain, saying that now "it is an opportunity to remove this stain as well".
"The government has taken steps to bring companies to Cyprus, along with human resources that pay taxes, that contribute to consumption, that use offices and buildings," he said, explaining that Cyprus for years had been a tax haven for many companies, but the benefits to the real economy were not so strong. "Smaller companies, bringing their entire workforce to Cyprus, requesting both offices and relocating staff seeking residence, will bring more benefits to the real economy," he explained.
He addressed the other two political leaders who supported the tax reform, saying "welcome to the club" and clarifying that their party's position as a liberal party is "less taxes for more growth and more incentives for the private sector."
He said he was optimistic about the outcome of the current crisis, "because we also came out of the 2013 fiscal and banking crisis stronger," he said. He argued that tourism income in 2022 will be higher, pointing to 2019 as one of the best years in tourism, when "the biggest tour operator that brought tourists to Cyprus declared bankruptcy and three of the airlines that were the main carriers in Cyprus closed down."
Regarding energy prices, he extended his hand to both sides for the opening of the market, saying that his party is against monopolies, but is forced as a government to compromise.
Regarding accuracy, he said that "as far as public finances are concerned, there are two directions: subsidies and tax cuts. Wherever necessary, based on the state's capabilities, with support for weak groups and tax cuts for the middle and higher social strata, you can expect the government to take the right decisions."
He referred to AKEL's actions regarding the prices per kilowatt-hour for wind energy, noting that these were set under the Christofias government. As for the ceilings, he stressed that they should be set with care, so as not to leave the market without products, in case the ceiling is below cost and would create damage.
AKEL Secretary General Stefanos Stefanou argued that Cyprus needs a "new development model, based on addressing the imbalances between sectors of the economy, which also creates over-dependence on specific sectors, such as tourism."
Restoring the imbalance in the economy, sustainability and spreading risks to reduce the negative impact of events that we cannot deal with, are the priorities as far as the economy is concerned, according to Stefanou.
Regarding traditional sectors important to the economy, such as tourism, he said that they need to be reformed through strategic planning and especially for tourism he said that there is a need for timelessness, but also an emphasis on domestic tourism.
To attract investment and companies, he said tax reform is needed "for simplicity and a holistic approach to the issues, which will give incentives that will add depth and goodwill to the economy", while he stressed that there is also a need to "tackle the complexity of corruption, which prevents investors who want to come to Cyprus, because we have made a bad name internationally".
Commenting on the situation that has developed after the sanctions against Russia, Stefanou said that we must safeguard vital interests of the Cypriot economy and argued that "there is an inherent weakness in the government, because when you are considered the black sheep of Europe and a laundry country and a haven for fraudsters, then it is difficult to stand up and ask for compensatory measures." He stressed that Cyprus must ask Europe for practical solidarity to deal with the consequences.
Cyprus must remember the primary sector again because of the food crisis as a consequence of the war, as well as the price increases before the war, he said.
He said the increase in goods and energy started before the war in Ukraine and intensified. He noted that in energy, the limited use of renewables resulted in fines due to pollutants and said that in fuel, the oligopoly resulted in increased prices.
Commenting on the civil service reform, he said it was not substantial, but merely a change in the system of appointments and promotions.
DIKO President Nicolas Papadopoulos referred to the need for a plan to address the imbalances in the Cypriot economy through a new model for the development of the Cypriot economy, "with incentives for new activities, for companies active in innovation, technology, promoting the health sector, promoting e-government and tax reform, abolishing the special tax for defence and increasing the corporate tax to 15%", so that Cypriot companies can compete on equal terms with foreign companies operating in Cyprus.
He also argued that "with the passport scandal we lost our credibility" and emphasised the preservation of services, which largely involve services to Russian companies. "We should not abandon the service sector, so we need a plan to curb business activity and not continue to see the mass exodus of companies to Dubai," he said.
He said other countries, such as the Czech Republic, Malta and Ireland, "have no problem attracting Russians in their workforce who want to leave Russia" and added that "in Cyprus we do not even issue visas, perhaps because the present government, after the passport scandal, is afraid of its own shadow."
Responding to comments by Averof Neophytou, who called the financial services sector a "stain", he said it reminded him of references to Cyprus' banking system as a casino for Greek bonds before the 2013 bank haircut. "It is easy to shoot ourselves, but I don't agree that the whole financial system of the country is stained. The other European countries that will take the stains that will leave Cyprus have no problem welcoming them and that is what is happening right now," Papadopoulos said.
As for sectors that can experience further growth, he said such sectors include innovation and technology, "which went from zero to 7% of GDP, they are sectors that can have growth and boost other sectors," as well as higher education and healthcare.
He also made special reference to the need for competition, not oligopolies, in order to bring down prices in sectors such as energy, while he also criticised the fact that little progress has been made in digital reform.
Source: CNA
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