Despite having the full weight of international law on its side, Cyprus has not been able to dislodge Turkey’s claims to the northern third of the Mediterranean island nation since Turkish military forces invaded in 1974 and remain to this day.
Will Ukraine – which also enjoys international backing in its war against Russian invaders – still be trying to remove the Kremlin from Crimea and the eastern Donbas 47 years after the war started in 2014?
The sad answer is that, yes, indeed, Ukraine may still be trying to end the Russian occupation of its territory in 2061.
But there’s also a more hopeful lesson to take from Cyprus: The nation of nearly 1 million people, mainly Greek Cypriots, did not let the ongoing conflict with Turkey prevent it from joining the European Union, unlike Turkey and, of course, unlike Ukraine. Cyprus joined in 2004.
Veteran Cyprus Ambassador to Ukraine Louis Telemachou told the Kyiv Post that Cypriots today are some of the biggest fans of the 27-nation bloc, and proud to have been a net financial contributor to the EU budget rather than a net recipient.
“The level of Euro-skepticism is quite low on the island,” Telemachou said. His fellow citizens have adopted the reasoning that within the EU’s “big family, you have some kind of voice.”
‘Golden passport’ scandal
Cyprus, a former British colony that gained its independence in 1960, has been trying to change its international reputation as a haven for money laundering and tax evasion. Besides the Turkish issue, Telemachou said one of his diplomatic goals is to “take away the bad name of Cyprus as a money launderer.”
But progress was dealt a setback last year by an Al Jazeera investigation that exposed abuses in the Cyprus Invest Program, known colloquially as the “golden passport program.”
Journalists discovered that wanted criminal suspects and criminal convicts bought Cyprus citizenship for 2 million euros, often through real estate investments, to obtain a passport that effectively grants EU citizenship as well. Among the beneficiaries were Ukrainian bank fraud suspect Oleh Bakhmatyuk and embezzlement suspect Mykola Zlochevsky, owner of Burisma energy company, journalists said.
The country made $8 billion from the program since its inception in 2008, according to Al Jazeera’s information.
After the sensational disclosures, Telemachou noted that Cyprus ended the Cyprus Invest Program on Nov. 1, 2020, and that an investigation is under way.
“We have to explore the weaknesses that gave room for abuse of its provisions,” Telemachou said. “It gave a bad name to Cyprus. We have seen it. We have stopped it. We are having an independent criminal investigation.” An independent Committee of Inquiry, appointed by the attorney general of Cyprus, is conducting the probe.
The investigation has already prompted Cyprus to revoke the citizenship of 26 foreign investors, but he doesn’t know their identities or what nations they came from.
“We are not talking about huge numbers,” he said. “During the whole program, citizenship was given to approximately 3,000 people plus 3,000 members of their families since 2008.” In 2018, for instance, Cyprus accounted for less than one-half of 1 percent of all citizenships granted by EU member states, he said.
After Turkey invaded Cyprus in 1974, its military forces remain in control of the northern part of the island nation. Turkish President Recep Tayyip Erdogan believes the island should be divided into two separate nations, a territorial claim that no one recognizes as legal except Turkey.
Banking clean-up
In a March 18, 2013 article in The Atlantic magazine, author Matthew O’Brien wrote: “There are four things you need to know about Cypriot banks. First, they have assets equal to roughly eight times the country’s gross domestic product. Second, they get a huge percentage of their deposits from tax-dodging Russians. Third, they invested a ton of money in Greece. And fourth, they are highly dependent on central bank financing to stay afloat. In other words, Cypriot banks are too big for Cyprus to save. But somebody needs to save them.”
The sector’s 2013 collapse, fueled by unsustainably high-interest rates offered depositors, led to a $13 billion EU bailout along with another $7.5 billion in taxes assessed against depositors, especially wealthy ones.
Telemachou blamed the sector’s sordid collapse on “our bankers not being very clever and being very greedy.”
He insisted that everything has changed for the better.
“Banking is not as important a sector anymore. This was a conscious decision by the European Union, the International Monetary Fund, the European Central Bank, and by the government of Cyprus.”
He said that Moneyval, which monitors anti-money laundering efforts for the Council of Europe, has given Cyprus favorable ratings for its clean-up of the banking sector and efforts to combat money laundering and the financing of terrorism.
While a May 2019 Moneyval evaluation does indeed find many areas of praise, it also criticizes Cyprus for “not yet sufficiently pursuing money laundering from criminal proceeds generated outside of Cyprus, which pose the highest threat to the Cypriot financial system” and for not being “very proactive at freezing and confiscating foreign criminal proceeds at their own initiative, although they have been instrumental in assisting other countries,” among other shortcomings.
But Telemachou said the banking sector is sound today, much smaller, and caters mainly to Cypriot depositors.
“Before 2013, there were some mistakes. We have learned from them the hard way and we have corrected them,” the ambassador said. “We cannot accept anymore the claim that our banks are corrupt. We are following the strictest of regulations.”
Cyprus Ambassador to Ukraine Louis Telemachou speaks with the Kyiv Post on Jan. 16, 2021, in the newspaper’s headquarters on 68 Zhylianska St. in the KADORR building. (Volodymyr Petrov)
Cyprus Ambassador to Ukraine Louis Telemachou speaks with the Kyiv Post on Jan. 16, 2021, in the newspaper’s headquarters on 68 Zhylianska St. in the KADORR building.
Cyprus No. 1 investor
Cyprus is the top origin of Ukraine’s low $50 billion in foreign direct investment since independence almost 30 years ago, accounting for some $9 billion. Of course, this money is not coming from Cypriots, but rather from Ukrainians with money in Cyprus.
The ambassador said that, while the origins of Ukrainian money in Cyprus banks may date back to the poorly regulated pre-2013 era, he said his nation today is a safe place to invest and keep money.
He cited three reasons why wealthier Ukrainians and others still find Cyprus an attractive place to invest: A sophisticated financial services sector, tax and other benefits for setting up physical headquarters on the island, and a well-respected independent judiciary.
Cyprus, he said, is simply “a competitive destination for investments, with an excellent regulatory structure, strong business support services, and a positive economic outlook.”
Personal ties
Those who focus on Cyprus’ “outdated stereotypes” and scandals, he said, are missing out on the 9,251 square kilometer island’s many charms – including an innovative economy, a world-class tourism destination and a Mediterranean climate that makes real estate a popular commodity.
These advantages are not lost on Ukrainians. Cyprus imposed a tough lockdown on tourists on March 20, 2020, because of COVID-19 and has kept it in place. Consequently, Cyprus has suffered only 225 deaths and 32,707 infections during the pandemic.
But pre-COVID, 100,000 Ukrainians would visit yearly as tourists. Some 10,000 Ukrainians live in Cyprus permanently, and the nation counts 3,200 marriages between Ukrainians and Cypriots. By contrast, possibly no more than 10 Cypriots live in Ukraine.
“We had about 16 flights per week, 24 during the summer” between Cyprus and Ukraine, he said. “That’s a lot for a small country. The people-to-people contact is quite big here.”
Tourism is clearly a huge part of Cyprus’ economy – accounting for 27% of total economic output.
“It’s in our genes to treat the foreign tourist well,” he said, noting that four million visitors came yearly – four times the island’s population.
But lesser-known sectors are also important. He said Cyprus’ network of highly ranked private universities, leaders in many areas of research and innovation, accounts for about 10% of gross domestic product. Some 30,000 foreign students study in Cyprus, but very few of them are Ukrainian.
He also noted that Cyprus has among the largest shipping industries, which accounts for 8 percent of GDP and employs 50,000 Ukrainian sailors. The nation has also been at the forefront of “green shipping” with eco-friendly vessels, among other investments in green technology.
He also cited the popularity of the medical tourism industry.
Ukraine policy
As a member of the EU, Cyprus is fully supportive of the bloc’s sanctions imposed on Russia for its war in Ukraine. He also wants to impress upon Ukraine that Cyprus is a victim of international lawlessness by Turkey that should be condemned as well. Ukraine, however, has not imposed sanctions on Turkey over its actions in Cyprus and, to the contrary, is seeking closer ties with its Black Sea neighbor. Turkey, meanwhile, does not impose any sanctions on Russia.
The main goal of Cypriot foreign policy is for Ukraine to be “a secure and peaceful neighbor.” To those ends, Cyprus is focused on helping Ukraine advance its European aspirations. He brings extensive experience to the goal, including assignments in Brussels. Prior to coming to Kyiv, the ambassador served as Cyprus’ deputy director of the EU Department in Nicosia, the island nation’s capital.
“My career path was focused on the European Union. I was very happy to accept the challenge asked to come to Ukraine to bring all the knowledge of how the European Union works to Kyiv,” he said.
“The problem that I found here is that – this is, of course, normal within the Ukrainian establishment — is that they think that Ukraine is the only thing that the EU is concerned with in terms of foreign policy,” the ambassador said. “If you want to come out and make progress, you have to understand that Ukraine occupies only so much” of the attention of the EU, which is also focused on Syria, Libya, Lebanon, China, climate change, and a host of other foreign policy issues.
Cyprus policy on Ukraine will remain clear and consistent, he said. “Cyprus gives its full support to Ukraine for its reforms, not because they’re going to be better for the EU, but they will be better for the Ukrainian citizen,” Telemachou said.
About Louis Telemachou
- Ambassador in Ukraine since 2017
- 27-year career diplomat
- Graduated from the University of Reading in the United Kingdom with an M.A. degree in European Studies and from the London School of Economics in the United Kingdom with an economics degree.
- Speaks English, French & German
- Born in Nicosia, Cyprus
