Cyprus Can Become an East Med Economic Hub

With Brexit finally achieved and COVID-19 seemingly under control, the UK is now preparing to benefit from a predicted fast return to economic growth. Stephen Lillie, British High Commissioner to Cyprus, answers questions on a wide range of issues, from UK trade relations with the EU and Cyprus’ potential to become a regional economic hub, to resolving the Cyprus Problem, halloumi and what he likes most about living here.

By Marianna Nicolaou

Six months after Brexit, where do UK businesses and trade relations stand with Europe and Cyprus in particular?
UK-Cyprus business relations are in an excellent position. The UK-EU Trade and Cooperation Agreement (TCA) was the largest free trade deal ever agreed by both sides, and it allows imports and exports between Britain and Cyprus to continue without tariffs and without quotas. We keep in close touch with Cypriot business organisations and there have been very few problems. Of course, the impact of the pandemic on trade is a serious concern but we are optimistic about the outlook. As economic growth recovers in the UK and Cyprus, there will be even more opportunities in future, including in new areas like the green economy and digital.

How do you believe the registration of Cyprus’ traditional cheese halloumi as a product of Protected Designation of Origin (PDO) by the EU is going to affect exports to the UK as well as competition with UK cheesemakers?
Halloumi is incredibly popular in the UK, and about 40% of Cyprus’ halloumi exports end up on British plates. The Trade and Cooperation Agreement means it can continue to be exported to the UK tariff-free, which is obviously great news for consumers and producers alike. The new PDO is an EU geographical indicator and it won’t apply in the UK but there is an existing collective trade mark which remains in force. My personal prediction is that, as long as Cypriot producers can produce the cheese, the British will continue to buy it.

How serious a blow do you think Al Jazeera’s Cyprus Papers revelations regarding the abuse of the Cyprus Investment Programme have dealt Cyprus’ status and reputation?
It’s fair to say that the documentary didn’t paint aspects of the Cypriot political and professional system in the best light. However, the Government has taken decisive action by ending the ‘golden passports’ scheme and launching the ongoing investigation led by former Supreme Court President Nicolatos. Cyprus is, of course, not alone in seeking to attract overseas investment. All of us who seek to create a favourable investment environment need to ensure that checks and balances are in place to ensure that criminal or corrupt actors cannot exploit the system for their own gain. As the UK, we want to work with friends and partners like Cyprus to tackle illicit finance and maintain trust and confidence in the global financial system.

Can Cyprus become an attractive business/investment hub for UK businesses and organisations wishing to deal more easily with the EU? What does it need to do?
The UK is Cyprus’s top trading partner with strong links across a number of sectors, from food to cars, shipping and of course, legal and financial services. For the latter, our shared common law systems, professional talent pools and use of the English language create a real competitive advantage for partnerships. At the same time, it’s important to think about geography. As ‘Global Britain’ we are looking to open up new markets beyond the EU. Cyprus is at the crossroads of Europe, Asia and Africa. I think there’s a real opportunity for it to position itself as a hub or interconnector for British companies looking to access the Eastern Mediterranean region outside the EU.

How do you see the latest moves regarding the Cyprus problem unfold? What is your reaction to local media accusations that the UK has its own plan for the island which may not take the form of a bi-zonal, bicommunal federation?
The UK’s position on the Cyprus problem is longstanding and it hasn’t changed. We want to see a united Cyprus, so that Greek Cypriots and Turkish Cypriots can live together in conditions of peace, prosperity and security. I think a business audience should understand that better than anybody, because solving the Cyprus problem will create a more stable and prosperous Eastern Mediterranean. Cyprus will be at the centre of this and can be an economic hub for the whole region. But to get there, we need a greater sense of urgency by all sides, because the absence of progress creates a sort of vacuum and that vacuum creates instability. So we support the UN’s decision to hold further informal talks aimed at finding common ground to resume negotiations. I hope that all participants will come to them in the spirit of openness, flexibility and compromise called for by the UN Security Council in January this year. The parameters which the Security Council has laid down over the years for a solution of the Cyprus problem are quite broad, and we firmly believe that there is space within them to achieve a solution which meets the needs of both communities.

When do you think the global economy will have recovered from the COVID-19 crisis and what do you expect it to look like in 2030?
If I could answer all that I would be in investment banking rather than diplomacy! But just looking to the next couple of years, I’ll highlight that the UK is expected to be the fastest-growing advanced economy, with the IMF forecasting 5.3% growth in 2021 and 5.1% next year. I’ll add two further points. First, a critical element in addressing the pandemic and supporting global recovery is to ensure effective vaccine production and distribution. The UK was one of the first countries to back COVAX, the international initiative to accelerate the development and manufacture of COVID-19 vaccines, and to guarantee fair and equitable access for every country in the world. Second, when we talk about economic recovery, it’s not just the size but the type of recovery. We need to build back better and greener. That means putting climate, biodiversity and the environment at the heart of the worldwide COVID recovery to create a greener, more prosperous future. This is a key theme for our G7 presidency this year and for the international climate summit, COP 26, which we will host in Glasgow in November.

How would you describe Cypriot society and your life here? What do you like the most about living in Cyprus?
Cyprus is a dynamic and fascinating country, particularly for a Brit; seeing traces of our own past, but in a beautiful Mediterranean setting, with excellent food and wines. I love the countryside, especially for hiking in the mountains. One of my favourite drives is from Nicosia to Latsi, via Pyrgos and Pomos.

What has been your greatest achievement during your service in Cyprus?
That’s for others to judge really… but I do believe we’re at a point where UK-Cyprus ties are stronger than ever. Last year, we celebrated the 60th anniversary of Cypriot independence, and therefore of relations between our two countries as friends and equals. It was a chance to reflect on the depth and breadth of our shared history, values and connections through our people – and how far we’ve come. We’ve continued to widen and deepen that relationship in my three years here, with particular emphasis on cooperation in the digital sector, trans-national education, defence cooperation and non-military development in the British Bases. With the UK hosting COP 26, we are also strengthening engagement on climate protection and the green economy. I’m also very pleased with the way we supported our large British community as they prepared for Brexit, ensuring that they had their residency status in good order before the end of the Transition Period last year. That means that they can continue to enjoy the same rights here as they did when we were in the EU and access the Cypriot national healthcare system.

You have served in various posts around the world (the Philippines, Cyprus, Beijing, New Delhi and others). Which one has been your favourite so far, and why?
That’s an unfair question! They’ve all been great. The Philippines has a special place in my heart because it was my first posting as an ambassador, and Cyprus because it’s my first posting as a High Commissioner. What I also love about Cyprus professionally is the great depth and variety of UK interests and connections, while at a personal level it’s so much easier to get to the sea and mountains than it was in any of the Asian mega-cities where I served before.

There’s a real opportunity for Cyprus to position itself as a hub or interconnector for British companies looking to access the Eastern Mediterranean region outside the EU