What do you feel Cyprus has to offer Russian investors?
Cyprus offers the exact same things to all investors, regardless of their nationality; Russian investors are not dissimilar to any other foreign investors in any way. The best things Cyprus has to offer are the friendly business environment and the favorable tax regime; the factors which have always been the main attractions to foreign investors. What is crucially important for Cyprus right now is to secure stability through the safety of funds and trustworthy authorities; the basic elements which are important in any financial centre. As for the tax regime, its future handling lies in the hands of the Cyprus government, who I believe fully understands its importance for the future of Cyprus.
Do you feel that Russian investors in Cyprus have lost their confidence in the island following the financial crisis?
Russian investors were disappointed with the events which took place in Cyprus in March, but this is not to say they have entirely lost their confidence in the island; everybody understands that it wasn’t only the fault of the Cyprus government. All the financial problems the island is facing have been accumulating for years, probably decades. I highly doubt that Russian businessmen will abandon Cyprus so easily – at least not the Russian businessmen I know. They may be cautious, but they still want to stay. Cyprus still has the financial appeal it always did, but substantial damage has been caused and the country is going to spend 3-5 years to restore its image. I must say however that the businessmen who came here many years ago do not only view Cyprus as a money-making machine; to them, it’s more than a financial centre. Russians came here because they liked this place, they liked being able to establish personal relations with Cypriots, they liked the culture. I believe that the relations between Cypriots and Russians are far deeper than just financial and for this reason I believe that we are going to stay here and help Cyprus overcome the problems it is currently facing.
How do you predict the future of Cyprus economically in the next 5 years?
I can only make conclusions based on the figures I’ve seen in mass media; I think that by 2015 there will be a significant reduction in the Cyprus GDP and an overall slowdown in the economy, but my predictions for the Cyprus economy in 5 years’ time reflect the views of most economists, who believe that by 2018 Cyprus will restore its prestigious financial status. Until then, Cyprus should be prepared for difficult times; things always get worse before they get better.
What is the main factor that drives Russians to Cyprus?
Russians are attracted to Cyprus because of all the factors discussed earlier on – the appealing tax regime, the cultural semblance of Cypriots with Russians, and the deep rooted connections between the two nations.
Would a Russian exodus be disastrous for the island?
I don’t think a Russian exodus is at all likely. First of all, when considering the possibility of any such exodus, we need to examine the facts realistically. To leave Cyprus, investors would have to find other countries which could act as a replacement for Cyprus as a financial centre. Personally, I don’t see any suitable replacement. Indeed, some Asian countries have a very friendly tax regime, even friendlier than the Cyprus regime, but to consider Asia would be to consider a whole other culture, which would cause other problems. To find another country as similar in culture to Russia as Cyprus is extremely difficult; I don’t see any replacement. And I don’t think other Russian businessmen will be able to find a replacement for Cyprus as a financial centre either. Regarding the impact it would cause if Russians decided to move their capital, according to different estimations, Russian money in Cyprus banks is equal to 30% of deposits, so given the current situation it would inflict substantial damage to the economy, but it wouldn’t be disastrous. The statistics released in the last two months reveal that there wasn’t a significant withdrawal of money from Cyprus banks; it was big, but not drastic.
How do you think wealthy Russians have contributed to Cyprus’ economy in the past 10 years?
Again, it’s quite difficult for me to make any conclusions in this area because I’m not familiar with precise statistics; it’s easier for the Cyprus government to make such conclusions. I believe Russians have contributed significantly to the Cyprus economy but I also believe that we need to differentiate between the banking sector and other areas of the economy. For example, if Russian capital is equivalent to 30% of bank deposits in Cyprus, it doesn’t mean that Russians have invested 30% in the Cyprus economy as a whole. If we’re talking about other sectors of the economy and not just the banking sector, Russians have invested far less money than 30%. In many cases I believe that Russian influence and money in Cyprus is a significantly exaggerated topic.
Do you consider Cyprus to be your new home?
Yes, I do. I moved here one year ago and I still love this country as much as I did when I first came. It was unfortunate that I found myself in Cyprus in such a difficult period of time, but the crisis hasn’t changed my opinion of the country. I care about Cyprus in more ways than one, and I am particularly interested in how the government is planning to tackle environmental issues to preserve the natural habitats of the island. I feel that the government needs to invest more money in maintaining the beaches of Cyprus because from what I see the pollution is getting worse. The Cypriot government can also use this as an opportunity to occupy a significant amount of the unemployed population, by involving people in low paid jobs for the environmental maintenance of Cyprus. Perhaps some good can come of this crisis after all.
Note: The content in this interview comprises personal opinions and ideas and should not be taken or misunderstood as investment advice.