EVEN when squeezed by an economic crisis, there are non-negotiable values which need to be preserved, as these have been passed on from generation to generation, says Marios Kountourides, ambassador of the Republic of Cyprus to Slovakia. He lists culture and traditions unique to each nation as being among such values. Slovakia has a special aura for the ambassador, who is enchanted by Slovakia’s natural beauty but above all the warmth of its people.

The Slovak Spectator spoke to Ambassador Kountourides about the rotating presidency of the EU, the current economic challenges, and the €17-billion financial bailout package that Cyprus is currently negotiating, as well as the tourism potential between Cyprus and Slovakia.

The Slovak Spectator (TSS): What are the major achievements of the six-month presidency of Cyprus that finished at the end of 2012, and what are the areas where hoped-for progress was not made?
Marios Kountourides (MK): How does one measure a country’s achievements during its presidency? Is it by the number of agreements adopted, for example the Single Supervisory Mechanism, an important step towards the realisation of the Banking Union and the direct recapitalisation of banks? Or is it through the Agreement on the Unitary Patent, which will support competitiveness, particularly of SMEs? Or by the progress made in negotiations over key issues such as the Multiannual Financial Framework, the Common European Asylum System? Or is it through its general contribution towards the common European agenda?

Cyprus, one of the smallest members of our European Family, with limited administrative resources, took over the Presidency of the Council of the EU under extremely adverse circumstances both in Cyprus, but also in the EU as a whole. When a crisis unfolds, we need to recognise that the real victims are the people. Our daily routine is suddenly put out of orbit, uncertainty becomes an unwanted part of life and values are brushed aside. Thus a ‘Better Europe’ was the theme adopted for our presidency.

It is my personal conviction that Europe will be a ‘Better Europe’ if it sees the crisis as an opportunity for change that finally turns the EU into something visible, something concrete that one can hold onto, but above all something one can look up to. Thus, Cyprus’s greatest achievement was to make the European citizen a little bit more aware of the fact that we all need to try harder to make Europe become a Europe that we all can associate with and feel proud to say that this is our Europe.

TSS: Cypriots recently elected centre-right leader Nicos Anastasiades to be their next president. EU officials have welcomed the election of Anastasiades. What does his victory mean for your country?
MK: The new president of the Republic of Cyprus, Nicos Anastasiades, stated very clearly from the night that he was declared the winner that there are no winners or losers in this election. Cyprus cannot afford to have winners or losers, especially in a time of crisis. He was very specific that we must all work together, irrespective of political ideology, to face the problems and solve the economic crisis as quickly as possible. The message from the president is a message of unity, not only within Cyprus, but an extended message of unity to all the EU partners, especially at this time of need for the republic.

TSS: Cyprus is still awaiting a long-delayed EU bailout worth €17 billion, and a decision is due this month. What are the main challenges that your government faces in relation to the bailout package?
MK: The biggest challenge is for our economy to be set on the path of stabilisation and growth. The government is constructively engaged in discussions with the Troika, whilst cooperating with our European partners to achieve completion of the agreement of the Memorandum of Understanding in a way that safeguards vulnerable groups, social cohesion and peaceful labour relations. It is furthermore committed to the continuous implementation of wide-ranging reforms and restructuring of the economy and the banking sector. An indication of our commitment is the fact that the Cypriot Parliament has, since December 2012, adopted 23 legislative amendments, even before the adoption of the Memorandum of Understanding, in order to take the necessary steps to recovery. The people of Cyprus though, especially at these challenging times, need to feel that Europe is standing by our side. Cyprus after all belongs in Europe and we need to feel the solidarity of our European partners more than ever.

TSS: You are the first resident ambassador of Cyprus to Slovakia. How do you assess the level of contacts between the countries?
MK: I would like to extend my gratitude to the people and the government of Slovakia for all they have been doing for the cause of our national problem in Cyprus: for helping to bring the two communities closer together and for working towards peace. Politicians have been engaged in a bi-communal dialogue under the auspices of Slovak diplomats and we can only be grateful for all that successive Slovak foreign ministers have been doing for Cyprus.

All Slovak ambassadors have played a paramount role in Cyprus and I wish to thank the current ambassador of Slovakia to Cyprus, Anna Tureničová, who was awarded by both the [Cypriot] president and parliament for her efforts in bringing the two communities together.

Slovakia has made a practical contribution towards the enhancement of peace in Cyprus through the presence of the Slovak contingent in the UN Peacekeeping Force on the island, currently having 140 soldiers there. It is an issue that the Cypriot people are very much aware of. Relations between Slovakia and Cyprus are at an excellent level and this is why in times of economic crisis we opened in 2010 the first Embassy of Cyprus in Bratislava, which was something that we owed to Slovakia.

TSS: Based on official data, 767 Slovak companies have owners based in Cyprus and this number continues to increase. In addition to tax optimisation, what else draws Slovak companies to have their seats in Cyprus?
MK: Based on the available data as of 30 September 2012, the number of Slovak entities in an inward direct investment relationship with residents of Cyprus is 13, while the number of the Cypriot entities with an outward direct investment in Slovakia is 18. This number includes investment in equity capital and reinvested earnings, including investment in real estate, by both physical persons and legal entities, and other capital.

It must be pointed out that the data covers only direct investment relationships with Slovak residents in the government-controlled area [of Cyprus]. Cyprus has a market-driven economy, supported by a stable democracy, and by a highly qualified, multilingual labour force. Its advanced telecommunications and infrastructure networks constitute further positive factors, especially when considering the island’s strategic geographical location. In addition to its efficient legal, accounting and banking services, Cyprus has a low corporate tax rate as well as a large number of double taxation treaties.

TSS: Cyprus, which is often dubbed a tax haven, has started cooperating with Slovakia in enquiries into risky companies. Slovakia hopes that this cooperation may cast light on some past financial irregularities. What has led Cyprus to launch such cooperation with Slovakia?
MK: The simple answer to those who claim that Cyprus is considered to be a tax haven country is that Cyprus may definitely not be considered as such. Despite this, I would like to substantiate this position by citing the following facts: the Cypriot direct tax system fully complies with European Union legislation and with the Guidelines of the Code of Conduct for Business Taxation of the Council of the European Union. Cyprus has eliminated from its direct tax regime all harmful tax measures which were conducive to a tax haven regime. Moreover, Cyprus is also committed not to introduce any new such measures. Cyprus is not included in the Tax Havens list issued by the OECD, due to its immediate and positive response to the OECD’s initiative to eliminate preferential tax regimes. Indicative of this is the fact that Cyprus was amongst the six countries which undertook the Advanced Commitment to eliminate tax practices considered harmful as per the OECD’s 1998 Report.

Cyprus has an extensive network of Agreements for the Avoidance of Double Taxation, covering almost all EU Member States, which is continuously being expanded. All such agreements concluded by the Republic of Cyprus contain exchange of information provisions which ensure transparency in tax matters. This is certainly not a characteristic of tax haven countries. In the specific case of Slovakia, cooperation in the field of the exchange of direct tax information is based on two legal bases: the Exchange of Information Article of the Double Tax Agreement applicable since 1980 between the two states and the EU Administrative Cooperation Directive applicable for Cyprus and Slovakia since their accession to the EU in 2004.

TSS: How many Cypriot companies are active in Slovakia? Where do you see room for cooperation between the countries in the area of business?
MK: Cypriot companies have always shown an interest in being actively involved in Slovakia and vice versa. Cypriot entrepreneurs feel that there is lot of room for improvement and enhancement of the cooperation between our two countries, especially in the fields of conventional and renewable sources of energy, immovable property, and transfer of know-how on a reciprocal basis. Additionally, priority investment sectors including financial intermediary institutions, research and development, medical and educational services, information and communication technologies, professional and maritime services may form further sectors of cooperation.

TSS: Cyprus and Slovakia are among those EU countries with double-digit unemployment rates. How has Cyprus addressed the issue of high unemployment and what are the main challenges the labour market of your homeland faces?
MK: Cyprus, until 2008 and for over 35 years, enjoyed almost full employment. The current unemployment rate, of around 12 percent in the third quarter of 2012, is a rather unfamiliar phenomenon for us. As a result of the crisis and the adverse external environment, domestic demand was reduced, leading to the slowdown of the economy and subsequently the loss of jobs. In 2012 two additional factors joined in: the haircut on Greek debt, which caused great losses to Cypriot banks which were operating in Greece. Second was the introduction of strict budget reconciliation measures and the extension of talks over the Memorandum of Understanding. Then the global character of the crisis and large labour migration flows between member states led to substitution of nationals by ‘mobile’ workers. Cyprus experienced an inflow, disproportionate to its size, of EU workers who are mainly low-skilled or unskilled and were attracted by the good condition of our economy.

Our strategy to combat the phenomenon includes the improvement of job matching, job searching and career guidance services for rational use of the labour force, combating segmentation and facilitating the participation of specific groups in the labour market such as the young, long-term unemployed, women, and low-skilled and disadvantaged groups. We also need to restructure the education system to respond more effectively to the changing working environment and improve the attractiveness of technical education. We also want to address forms of discrimination in the labour market, and specifically the gender pay gap.

TSS: Is the tourism potential between Slovakia and Cyprus being fully explored?
MK: The tourism industry is one of the backbones of the Cypriot economy, and for Cyprus there are no small or big markets, and I would like to think that we do not see tourists merely as numbers. Slovak tourists are especially welcomed to Cyprus. There are approximately 5,000 Slovaks employed on the island and currently a similar number of Slovak tourists visit Cyprus annually.

We would like to see more Slovaks visiting Cyprus. In order for that to happen first and foremost the issue of direct flights needs to be addressed. It became apparent during the brief spell that Czech airlines operated a direct flight from Bratislava to Larnaca in 2011 that there was a substantial increase in tourist arrivals to Cyprus from Slovakia. Based on that fact alone, the embassy is encouraging all those concerned to include Bratislava in their strategic plans, as a new destination. I am convinced that this step would prove catalytic in improving tourism between our two countries.

While charter flights from Bratislava to Cyprus during the summer period are always full, it is nonetheless recognised that further steps must be undertaken to incite more airlines to reap the benefits of the destination and increase the flight seats available. Based on our experience the Slovaks visiting Cyprus tend to repeat their visits to the island. Our guests from Slovakia treasure in particular the diverse aspects that they can enjoy during their visit, from sandy beaches, officially the cleanest in Europe, to the picturesque mountain villages, the gastronomy and the historical sights, among other things. There is still more to be done though in bringing Cyprus closer to Slovakia.

A major issue of concern is the promotion of tourist packages by Slovak tour operators to the northern, Turkish-occupied area of Cyprus. Due to the current political situation on the island, travellers entering the Republic of Cyprus via closed airports and ports – that is, all ports and airports in the northern, occupied area – are in breach of the national law of the Republic of Cyprus.

TSS: What are the most important objectives you would like to achieve during your diplomatic service to Slovakia?
MK: The cultural dimension is very important for me and thus I put cultural exchange on the top of my checklist. Cyprus, which is a collage of myths, legends and history, has played a significant role in Europe, despite its size. One opportunity to bring Cyprus closer to Slovakia was given during our EU presidency, when, despite our limited resources, we managed to prepare about 11 events, and the response was fantastic.
Education, for example, is another area where we have not fully explored our relationships. We have about 100 students from Cyprus at Slovak universities and the prospect of further cooperation between Slovak and Cypriot universities are bright. We hope that soon three agreements will be signed between our respective universities setting the mark for the future.


Read also:
Cyprus: General facts

Cyprus and the UNFICYP mission