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The foreign investment control (FDI) bill, often referred to as the ''Lonestar'' bill, has resurfaced in Cyprus, prompting fresh discussions about foreign ownership of critical sectors, according to a report by Panayiotis Rougalas in this Sunday's Kathimerini. The bill allows the government to intervene when it believes foreign investors might threaten significant local businesses, particularly those involved in essential infrastructure and sensitive technologies.
This renewed focus comes after foreign investment funds have taken over several private hospitals in Cyprus, stirring concerns among lawmakers. Investment firms like CVC Capital and ECM Partners have made notable purchases, including Apollonios Hospital, Aretaios Hospital, and the American Medical Center in Nicosia. These developments have raised questions about how much influence the state can exert over investments with European or Cypriot ties, particularly when these funds come from outside the European Union.
Investment firms like CVC Capital and ECM Partners have made notable purchases, including Apollonios Hospital, Aretaios Hospital, and the American Medical Center in Nicosia.
The current iteration of the bill differs from its 2022 version, which was prompted by attempts from LoneStar Funds to acquire the Bank of Cyprus. This time, the proposed law includes a commission made up of various Cypriot ministries, shifting away from a centralized decision-making process previously led by the finance minister. Lawmakers aim to safeguard EU interests and critical infrastructure while navigating the complexities of foreign investments.
The bill aligns with broader European Union regulations established in 2020, which provide a framework for member states to control foreign investments that could threaten security or public order. A report from the European Court of Auditors noted that foreign direct investment flowing into the EU reached around €117 billion in 2021, highlighting its importance. However, Cyprus currently lacks a formal mechanism for monitoring such investments, unlike several other EU nations.
In Cyprus, the government seems more favorable towards certain transactions, such as Eurobank's recent acquisition of a 56% stake in Hellenic Bank, indicating a more strategic approach to foreign investments in the banking sector. As the discussions around the FDI bill continue, lawmakers are grappling with the need to protect national interests while encouraging economic growth through foreign investments.
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