| LIMASSOL, March 27
LIMASSOL, March 27 Cypriots say their island
paradise, home to thousands of Russians seeking sun, tax
benefits and an EU entry point, has not suffered from
deteriorating relations between Moscow and the West and some
have seen benefits.
The EU and euro member was worried its close links between
the two would be put to the test when Europe and the United
States started talking about sanctions on Russia to protest its
seizure of the Ukrainian territory of Crimea.
Any deepening of the crisis could still hurt the economy.
U.S. President Barack Obama appeared to toughen his stance on
Wednesday and agreed with the EU at a summit in Brussels to work
on possible harsher economic sanctions.
But the sanctions so far -- on individuals and one bank --
have not had an impact and some businesses have even reported
that interest has picked up from Ukrainian and Russian customers
since the crisis began.
"When they talked about sanctions first we were very scared
(of what it could mean for Cyprus), when we saw what they want,
(we see) it is a joke," said Phidias Pilides, president of the
Cyprus Chamber of Commerce, which represents about 8,000
businesses. "It's not just limited ... these are just for
Some 40,000 Russians live in Cyprus out of a total
population of 800,000. Many live in the port of Limassol, where
shop and menu signs in Russian are common on the main seafront
boulevard. There are three local Russian newspapers and children
can attend a Russian school.
Christos Panagi, general manager of Limassol-based property
developer Pandomus, said the bonds between Russia and Cyprus
could grow deeper as a result of the crisis.
Cypriot law allows those who buy a house worth 300,000 euros
to claim permanent residency rights, while those who spend 5
million euros of more on property can apply for passports.
Panagi said he had seen an increase in Russian and Ukrainian
interest in property that would qualify them for residency or
passports in the weeks since the crisis broke. "People don't say
that this (the crisis) is the reason," he said but added that
the timing of the interest suggested an obvious link.
Cyprus has long straddled the line between the powerhouses
of the east and west. It was a dynamic that featured prominently
a year ago when Cyprus agreed to rescue its banks by seizing
money from big savers, many of them Russian, as a condition of a
10 billion euros bailout from the EU.
Some Russians abandoned Cyprus after losing their savings
but most stayed.
Andreas Neocleous, chairman of the Limassol-based legal firm
Andreas Neocleous & Co whose work includes advising Russian
investors in Cyprus, said his clients had not been affected by
the political drama in Ukraine.
Further sanctions would not affect businesses and
individuals' setting up holding companies in Russia, he said.
"There were some wheelers and dealers who left Cyprus (after
the banking crisis) but the good businesses and good business
people are still here," he said.
"The bonds and relations between us and Russia go back in
history to the Byzantine times...I don't think the political
situation between the U.S. and Russia will be able to affect
those good relations."
TOURISM COULD SUFFER
However, Pilides said tourism could suffer if Russians were
forced to get visas for trips to EU countries as part of further
sanctions or if the Russian rouble became so weak against the
euro it becomes too expensive for Russian tourists to visit.
Data from the Cyprus Tourism Organisation (CTO) shows the
number of Russian visitors to Cyprus was second to visitors from
the UK in the first ten months of 2013. The CTO was expecting
Russian visitor numbers to increase by 25 percent in 2014.
Rouble weakness would also make it expensive for Russians to
do business in Cyprus. The rouble fell against the dollar and
the euro on Thursday after
Natalia Seleari, owner of a Russian bookstore in Limassol,
said up to 30 percent of her summer trade comes from tourists
but a weaker rouble would reduce the cost of her stock. She said
she was not worried about an escalation of the crisis.
The United States and EU agreed to work together to prepare
possible further economic sanctions against Russia.
But both Neocleous and Pilides say that other top locations
for Russians including the Netherlands, Luxembourg and Britain
would have a lot to lose from tighter restrictions.
"There are a lot of very wealthy Russians in London...There
are more Russians in London than in Limassol," said Neocleous.
(Editing by Anna Willard)