Restoring Icaru’s Wings: A New Mythology For Cyprus
Ladies and Gentlemen,
I am truly honoured to be here tonight.
I would like first of all to thank Christos Ioannides, the Director of the Centre for Byzantine and Modern Greek Studies, and the Advisory Council of the Centre for their kind invitation. I wish to also extend special thanks to a close friend of mine whose dedication to this Centre is exemplary. I am certain it is clear to all that I am referring to Effie Lekas, an honorary Cypriot, who not only offered me invaluable guidance in view of tonight’s lecture, but who also stood by me as a true friend during my studies at Queens College.
As alumni of this great institution – where seventeen years ago I completed one of my majors – I consider it a great privilege to address the 40th Annual Certificate of Achievement Awards dinner. The Centre, established in 1974 by the late Harry Psomiades, embodies all those qualities that Psomiades represented:
– a commitment to high standards of scholarship,
– a deep sense of humanity and community.
Despite the huge obstacles he faced, it was Psomiades’ enduring dedication to scholarship which led him to create this flourishing Centre, that has become a nurturing home to thousands of students, including many Cypriots like myself. His personal commitment to supporting the Centre’s students, particularly the less privileged, is nothing less than inspirational. I, myself, feel blessed and fortunate to have met, taught and worked with Harry Psomiades.
Ladies and Gentlemen,
During my time here I was part of the Icarus Greek Orthodox Club and I was fortunate enough to be President of the Club during 1994-1995. While reflecting on the topic for today’s lecture it struck me how topical the story of Icarus is when addressing the recent developments in Cyprus, and the lessons the story teaches us as we look to the future.
Did we, too, fly too close to the sun?
I don’t think so.
I think we simply lost our course.
As we return to flight the future holds great promise for a prosperous, and stable, Cyprus.
When I travel abroad I often hear a question to which this crowd certainly knows the answer:
Where is Cyprus?
Beyond its mere location, US Ambassador Thomas D. Boyatt, in a presentation at the Foreign Service Institute in Washington DC in 1992, very succinctly captured the critical geographical position of Cyprus:
“Cyprus” he said, “is an island in the northeast corner of the Mediterranean. It sits there like an aircraft carrier and dominates between east and west, as well as between north and south. Every empire from the Egyptians to the British, which has sought to dominate the Middle East has had to control Cyprus, and they all have.”
And while Boyatt disagreed with Henry Kissinger’s policy on Cyprus in 1974, the year of the Turkish invasion that has left 37% of the territory of the Republic of Cyprus under Turkish military occupation, I am certain they would both agree that geography has to a very large extent defined the history of this island state in the Eastern Mediterranean. And they would also most probably agree that when it comes to Cyprus’s political history, geography has been more of a curse than a blessing.
Cyprus, an island blessed with abundant sun, lies at the crossroads of Europe, Asia and Africa, at the south-eastern-most corner of the European Union, of which it has been a full member state since 2004. It is a country with an incredibly rich and diverse history, a melting pot of cultures and religions of the Mediterranean that co-existed respectfully and peacefully for hundreds of years. This unique island and its resilient people have managed not only to survive numerous conquerors and hardships, but also form an inextricable part of European civilisation.
Regrettably Cyprus is a country whose modern history is dominated by a protracted, anachronistic division, leaving it the sole European country with a divided capital.
And while the island’s long-standing division has often captured the attention of international media, in March of last year, Cyprus was at the forefront of international news for a different reason – Eurogroup’s decision to apply a bail-in model for the first time since this unprecedented global crisis which started here, in the United States. The result was an economic crisis that could only be compared to the one that followed the 1974 invasion.
The new government, elected that same month, was called within weeks of taking office to stave off an economic meltdown. The problem was a multidimensional one related to structural imbalances in the Cypriot economy:
– the unsustainability of our public finances and the oversized public sector;
– the chronic overspending of the private sector;
– private debt levels, which were the highest in the EU;
– the over concentrated structure of the island’s economy on finance and the over-reliance on an offshore banking and real estate industry, which created a property bubble.
Just like Icarus, who ignored Deadalus’ warnings not to fly too close to the sun or the sea, Cyprus ignored warnings. In fact, many of the corrective measures that Cyprus was forced to take following the Eurogroup’s decision were measures that should have been taken long before March in order to prevent the ensuing economic meltdown. The decision was also a wake-up call for us, the people of Cyprus, who inevitably got carried away by the economic bubble created.
Yet, despite the soothsayers and their ominous predictions, Cyprus turned the economic crisis into an opportunity to reform and restructure its economy. Over a year since the bail-in we can now safely say that the hard work, perseverance, sacrifice and resilience of the Cypriot people have put us on the road to economic recovery, surprising even the most optimistic economic analysts.
We have drastically cut public expenditure and have created fiscal buffers beyond the targets set by the Troika -composed of the European Commission, the European Central Bank and the IMF. Reforms in the civil service, health care and welfare systems, and tax administration are currently being implemented. We have improved supervision and oversight of our financial sector and have restructured and recapitalised our banks. As a result, capital controls imposed following last year’s Eurogroup decision on Cyprus are gradually being lifted, soon to be removed fully. The decline in the spreads of Cyprus Government bonds is remarkable; the spreads are now at their lowest level since 2011.
Economic recession in 2013 was less severe than initially expected. In fact, our fiscal targets for 2013 were met by a considerable margin, while the financial sector is showing clear signs of stabilisation due to the determined implementation of the agreed Economic Adjustment Programme.
Key productive sectors such as the tourist industry, the shipping industry and the business services industry are demonstrating a stronger than expected resilience. At the same time we are encouraging the emergence of new sectors of economic activity, such as the energy sector.
The Troika has already issued four very positive reviews on the Cyprus Government’s implementation of its economic reforms. In addition, the Cyprus economy received a series of upgrades by Standard & Poor’s and Fitch, following three years of successive downgrades. The forecast for a quick recovery and return to growth, as early as 2015, is supported by the Troika’s own forecast. The recession is expected to ease in 2014 and much needed growth is set to return in 2015 as domestic demand rebounds.
Ladies and Gentlemen,
Energy is key to restoring Cyprus’ injured wings as well as in changing the geopolitical landscape of the Eastern Mediterranean. The US firm Noble Energy has identified significant quantities of Natural Gas in one of the blocks of Cyprus’s exclusive economic zone – the third largest discovery in the Levantine Basin to-date. The extensive seismic data acquired by the French energy giant Total and the Italian-Korean consortium ENI-KOGAS – which have been granted hydrocarbon exploration licences in five additional offshore blacks – provide evidence of significant potential waiting to be tapped. Based on the preliminary evaluations made for all licensed Blocks, we are cautiously optimistic for even further discoveries in our exclusive economic zone In fact, exploration activity will continue in 2014 in all six Blocks.
Fully aware of the importance of strategic planning, the government has built its energy policy around three pillars: to shield the geostrategic, geopolitical and geo-economical role of the country; to contribute in enhancing the security of Europe’s energy supply through the creation of a third corridor; and to diversify Cyprus’s energy mix by integrating natural gas and renewable energy resources in its energy system so that the island may gradually become energy self-sufficient.
Through the continuous assessment of all possible alternatives, the Government of Cyprus believes that construction of an onshore plant for the Liquefaction of Natural Gas (LNG) remains the best strategy forward for the monetization of our hydrocarbon resources. In our view this regional infrastructure project could prove to be a game changer. It will contribute to the diversification of European energy supply sources and provide a flexible hub that can link the large quantities of natural gas throughout the Eastern Mediterranean and transport them to European and global markets. The recent crisis in Ukraine has undoubtedly exposed the dependency of the EU on Russian energy supplies and has illustrated the need for alternative energy corridors, a diversified energy portfolio that will lead to increased energy security. During President Anastasiades’ recent visit to Germany and United States Vice President Biden’s visit to Cyprus last week, Cyprus’s role in increased regional energy security was highlighted.
I need to underline that Cyprus is pursuing its energy policy in accordance with international law and the UN Convention on the Law of the Sea. It has defined its exclusive economic zone and continental shelf boundaries and has proceeded with concluding bilateral delimitation agreements with its neighbours Egypt, Israel and Lebanon. These agreements provide legal security to international oil and gas companies to freely pursue exploration and exploitation activities in the region. Cyprus aspires to bring interested stakeholders closer together – as it has done in the case of Israel and Lebanon – through opportunities for maritime boundary agreements and the joint development of potentially common and adjacent fields of hydrocarbon deposits.
The role of Cyprus as an energy hub is highlighted by the presence of large multinationals in the country, aiming to serve the region from a politically stable, business friendly, country, with full EU membership, such as Cyprus. Beyond the three consortia – Noble, ENI and Total – operating in Cyprus’s exclusive economic zone, companies such as Halliburton and Schluberger have recently setup their operations on the island targeting to service the offshore activity in Easter Mediterranean. In a similar fashion, Vitol has invested hundreds of millions of euros in taking advantage of Cyprus’ proximity to the Suez Canal, in order to tap into the liquid-fuel lucrative trade, to and from Europe and Asia. A number of other similar projects are currently on the making.
Regrettably Turkish threats are the only exception to the regional cooperation with respect to energy in the Eastern Mediterranean. Turkish claims in relation to Cyprus’s exclusive economic zone cannot be sustained by international law while Turkish threat of use of force undermine regional stability and seek to harm efforts to unlock the region’s energy potential. Despite the fact that history and first-hand experience oblige us to take Turkish threats seriously, Cyprus will not be deterred from exercising its sovereign rights and pursuing its energy policy for the benefit of its people and for the EU.
One thing is abundantly clear. That GEOGRAPHY will play a significant role in shaping the future of Cyprus over the next decades. As a Government, we are determined to explore this potential fully, and transform our country into a source of stability and peace in the region.
I am a fervent believer that the single development that can unleash Cyprus’s full potential and that can ultimately secure prosperity, what will allow Cyprus to truly create a new mythology, is the reunification of the island. Ending the division of Cyprus will have ramifications that ripple beyond Cyprus’s shores, throughout the Eastern Mediterranean and deep into the fabric of Europe.
We have repeatedly underlined that our steadfast commitment to reach a comprehensive settlement to the Cyprus problem, in line with the relevant United Nations Security Council Resolutions, High Level Agreements, and EU principles.
Following painstaking and strenuous negotiations with the Turkish side – under the auspices of the United Nations, and with the decisive influence of the Government of the United States, which is demonstrating a keen interest in the Cyprus Problem – we reached agreement on a Joint Declaration on 11 February 2014. This Declaration, which signalled the launching of the new round of negotiations, sets the overall framework and the general principles guiding the negotiations.
The ultimate goal is reunification, but short term measures are vital to achieving long term goals. We must enhance trust between Greek and Turkish Cypriots while Turkey needs to secure the trust of Greek Cypriots since our painful history has taught us not to trust Turkey. To that end President Anastasiades has proposed a bold package of confidence building measures which includes, among other, the return of the fenced area of Varosha to its lawful inhabitants, in accordance with the relevant UN Security Council resolutions.
The Famagusta Proposal could be a game-changer. It would lead to a win-win result and most importantly it would inject dynamism and momentum to the negotiations. Moreover, it can contribute decisively to creating a climate of mutual trust, restoring at the same time the hope and confidence in the prospect of reaching a settlement and, particularly, in defining Turkey’s intentions.
Moreover, the reconstruction and rehabilitation of the fenced city of Famagusta, which has been uninhabited for four decades, will lead to the creation of new jobs within a wide-variety of occupational fields, giving a huge boost to the economy of the country. Working on rebuilding the city and thereafter enjoying what it has to offer, Greek Cypriots and Turkish Cypriots will come closer together, realising the benefits and the advantages that can be derived from a shared and prosperous future in a united Cyprus, just as their forefathers did in the past.
This proposal has been supported by the European Union, by individual member states, not to mention the White House. Unfortunately, as of yet, we are still awaiting a positive response from the Turkish side.
Though I began this lecture by warning about flying too close to the sun, I believe that the future of Cyprus is bright, and that was not evident one year ago. During the visit of Vice President Biden to Cyprus last week – the first visit to Cyprus by a US Vice President since 1962 – Mr. Biden referred to Cyprus as an island uniquely situated at a critical time. He called Cyprus a strategic partner and a key player in the region with incredible potential.
I believe Cyprus is on the road of fulfilling its potential.
As we return to flight we will proceed with purpose and resolve, we will embrace the sun on the horizon.
Thank you very much for your attention.