Cyprus

In the early 21st century the Cypriot economy has diversified and become prosperous. However, in 2012 it became affected by the Eurozone financial and banking crisis. In June 2012, the Cypriot government announced it would need €1.8 billion in foreign aid to support the Cyprus Popular Bank, and this was followed by Fitch downgrading Cyprus’s credit rating to junk status.Fitch said Cyprus would need an additional €4 billion to support its banks and the downgrade was mainly due to the exposure of Ban

Cyprus, Cyprus Popular Bank and Hellenic Bank, Cyprus’s three largest banks, to the Greek financi crisis.

The 2012–2013 Cypriot financial crisis led to an agreement with theEurogroup in March 2013 to split the country’s second largest bank, the Cyprus Popular Bank (also known as Laiki Bank), into a “bad” bank which would be wound down over time and a “good” bank which would be absorbed by the Bank of Cyprus. In return for a €10 billion bailout from theEuropean Commission, the European Central Bank and the International Monetary Fund, often referred to as the “troika”, the Cypriot government was required to impose a significant haircut on uninsured deposits, a large proportion of which were held by wealthy Russians who used Cyprus as atax haven. Insured deposits of €100,000 or less were not affected.^]

According to the latest International Monetary Fund estimates, its per capita GDP (adjusted for purchasing power) at $30,769 is just above the average of the European Union Cyprus has been sought as a base for several offshore businesses for its low tax rates. Tourism, financial services and shipping are significant parts of the economy. Economic policy of the Cyprus government has focused on meeting the criteria for admission to the European Union. The Cypriot government adopted the euro as the national currency on 1 January 2008.^]

In recent years significant quantities of offshore natural gas have been discovered in the area known as Aphrodite in Cyprus’ exclusive economic zone (EEZ) about 175 kilometres (109 miles) south of Limassol at 33°5′40″N and 32°59′0″E. However, Turkey’s offshore drilling companies have accessed both natural gas and oil resources since 2013.^[] Cyprus demarcated its maritime border with Egypt in 2003, and with Lebanon in 2007.^[] Cyprus and Israel demarcated their maritime border in 2010, and in August 2011, the US-based firm Noble Energyentered into a production-sharing agreement with the Cyprios government regarding the block’s commercial development.^[]

Turkey, which does not recognise the border agreements of Cyprus with its neighbours,^[] threatened to mobilise its naval forces if Cyprus proceeded with plans to begin drilling at Block 12.^[] Cyprus’ drilling efforts have the support of the US, EU, and UN, and on 19 September 2011 drilling in Block 12 began without any incidents being reported.^[]

Because of the heavy influx of tourists and foreign investors, the property rental market in Cyprus has grown in recent years.^[In late 2013, the Cyprus Town Planning Department announced a series of incentives to stimulate the property market and increase the number of property developments in the country’s town centres.^[]This followed earlier measures to quickly give immigration permits to third country nationals investing in Cyprus property.^[]