Address by the Minister of foreign Affairs, H.E. Mr Ioannis Kasoulides
Organised by the 'Cyprus-American Business Association'
Under the Auspices of C.C.C.I
Hilton - December 2, 1997
Mr. Ambassador,
Mr. President (of KEBE),
Mr. President (of CYABA),
Ladies and Gentlemen,
First of all I would like to congratulate the "CYPRUS AMERICAN BUSINESS ASSOCIATION" and the Cyprus Chamber of Commerce and Industry for organising this dinner and thank them for giving me the opportunity to address such to a gathering of distinguished guests.
From the first day I took office as Foreign Minister I made economic diplomacy one of my most fundamental goals. A fundamental pillar of our foreign policy is our European orientation and the efforts to become a full member of EU and to belong to the wider market of more than 330 million consumers. This policy is pursued along with the geographic advantage of Cyprus to become a bridge between Europe and the Middle East.
Our trade and economic relations in today's world are not and cannot be contained within our European continent and our region. It will be a great mistake if these relations were not to be expanded with the richest nation in the world, the United States of America.
Our excellent political relations with the United States should also be matched by a growing mutually beneficial co-operation in the Middle East region. You, as members of the "Cyprus American Business Association" are the best ambassadors of Cyprus to the United States and the United States to Cyprus who can do a lot to cement this economic partnership.
The world is changing at a fast pace. The developments of the last few years have not only led to an enormous increase in the amount of trade between nations but also to fundamental qualitative adjustments. Competition is fierce presenting each country with new challenges. In order to survive and prosper Cyprus like all other nations must build on its relative advantages mobilising all its resources. For Cyprus it is clear that the competitive advantage consists in the high quality of its human resources and its geographic position.
Developing into a provider of services and a business centre, with regional but also global reach is, therefore, Cyprus's natural course, being a small country, with a small market and limited natural resources.
The liberalisation of trade and the globalization of money markets, investment and production have greatly expanded economic opportunity. With hundreds of millions of new people participating in production and consumption the future of the world economy looks promising. At the same time Governments are learning hard lessons of economic reality as recent events in the financial markets of Asia, most recently, and Latin America and Europe, a few years ago, have clearly demonstrated.
Cyprus, affected by the changes outlined above, and in response to them had to move from its dependence on the primary sector of the economy to the development of the secondary sector but more importantly, to the development of its tertiary sector by placing an emphasis on the provision of services. Let me remind you that agriculture in the sixties contributed to approximately 22% of the Gross Domestic Product, 40% of employment and 28% of exports. Today the contribution of Agriculture to the economy ranges between 4-6 percent, depending on climatic conditions.
The flexible speedy reaction of policy and the adaptability of the Cypriot private sector went a long way towards overcoming the catastrophe brought about by the invasion of Cyprus by Turkey which resulted in 1974 to the occupation of 37% of its territory and the loss of 70% of its total productive capacity. I must take the opportunity, here to thank the United States of America for the financial aid extended to Cyprus for the displaced persons and other humanitarian purposes.
Once the economy was rebuilt and immediate pressing needs were met the crucial issue became now to ensure long-term prospects for prosperity but also security. Since the 1987 signing of a Customs Union with the European Community Cyprus has followed an accelerating course towards integration with the European Union. It is our belief that full membership in the EU will provide for long-term prosperity but at the same time for Cyprus' future security and stability. At the same time accession will address, we believe, all the concerns of the T/C community as well and help bring them out of isolation and underdevelopment.
As you all know accession talks between Cyprus and the European Union will begin next spring. Cyprus meets the economic criteria for early accession. At the same time the accession process will prove to be a catalyst in the efforts for a solution of Cyprus' political problems and will lead to the reunification of the island and its people.
Present economic indices bear no resemblance to those of the past. The services sector today contributes almost 70% to the Gross Domestic Product and average growth in real terms in the 90's has been higher than the average of other European Countries. Per capita income exceeds US$ 14,000 while inflation has been kept under control with unemployment not exceeding the 3% mark.
It is also important to note that with more than 2.700 ships exceeding a registered tonnage of 27 million tons the Cyprus merchant fleet is among the top in the world. Furthermore, more than 30,000 offshore enterprises have been incorporated in Cyprus since 1975 making the island an important offshore business centre.
The success of Cyprus as a business centre is owed to the combination of a number of factors, such as its healthy market economy, the availability of highly skilled professionals, high quality services and infrastructure, as well as its unique geographical position at the cross-roads of three continents. These factors coupled with the governmental policies of encouragement through fiscal and other incentives have helped to make Cyprus the business centre it is today. There is still room to grow and improve with the enhancement of Cyprus as a regional hub for air transport.
As peace gradually comes to the troubled region of the Middle East opportunities for US and other Western companies are opening up. Cyprus with its excellent relations with born the Arab World and Israel offers itself in a very unique way as a centre from which to do business in the Middle East.
The Cypriot Authorities are firmly convinced of the absolute necessity to preserve our country's good reputation by avoiding that it be used for the concealment of proceeds of crime.
The openness of the Cypriot society and the country's commitment to the market economy give rise to challenges that are known to all other countries with the same characteristics.
The prevention and combating of money laundering constitute two of the main challenges faced by the Cypriot Government, which fully understands the need to provide an adequate response.
The Government has introduced the necessary legal and institutional framework, developed appropriate operational activities and intensified bilateral and multilateral co-operation to address and deal with the problem effectively.
In order to secure Cyprus's exemplary operation as a business centre and enhance its further development, the Government has put in place the necessary legal framework to prevent the infiltration of criminally derived funds in its financial and social structures. Cyprus was among the original signatories of the Vienna Convention which is considered to be the first significant international action against money laundering.
Cyprus has also signed and ratified the European Convention on money laundering which criminalises laundering of proceeds from various serious criminal offences in addition to drug trafficking.
This legal framework enabled the establishment of new regulatory institutions which contribute positively to the prevention and fight against the concealment of proceeds of crime.
Furthermore, the Central Bank of Cyprus has been setting guidelines designed to prevent and combat money laundering since 1989. All banks in Cyprus both domestic and offshore have been directed by the Central Bank to take various actions in order to ensure legitimacy.
Notwithstanding the strict measures we adopted and our sustained efforts against money laundering, we do not intend to be complacent. Our main aim remains to preserve our financial sector operating in an exemplary manner and secure its further development.
The United States of America has always been a valued economic partner of Cyprus. In 1996 alone, goods worth more than USD 630 million were imported in Cyprus from the US marking a rise of over 40% from the year before. It must be noted that this sharp increase followed a change made to Cypriot legislation for the protection of intellectual property. At the same time Cyprus exported to the US goods worth approximately USD 7 million which we naturally consider insufficient. Efforts must be made in order to increase these exports. In that effect, it should be noted that, in 1996, Cyprus was represented in more than ten expos and exhibitions all over the United States.
Co-operation in the economic field exists between the governments of Cyprus and the US since 1960, based on several bilateral agreements. It is worth mentioning that a number of American businesses have chosen Cyprus as their operational centre in the region. Referring more specifically to the offshore sector, in 1995, 372 new companies were authorised by the Central Bank following applications from the United States and Canada.
We believe, however that an even greater number of American investors could come to Cyprus. The role of your association in promoting Cyprus to the American public is very crucial and I would encourage you to focus your efforts in this direction.
Ladies and Gentlemen,
Cyprus has been blessed by an exceptional geographic position. Being historically and culturally a European country, it is nevertheless very close to the Middle East and Northern Africa. Today and even more tomorrow, when it will become a member of the European Union, Cyprus has a vocation at becoming a bridge between the Western world and the countries of the region. Our active participation in the Euro-Mediterranean partnership has already shown very concretely that Cyprus, is in a perfect position to assume this role. I am therefore confident that Cyprus will remain an important link between the Western World and the region, this being one of its major assets which may allow its further development as a regional business centre.