Opinion
By Michalis Sophokleous
The ever-increasing duration of military operations in Iran shows no sign of ending anytime soon unless the United States and Israel choose to step back. While that option is at least being considered in Washington, along with the search for a pretext, it appears inconceivable in Israel to retreat from what it has framed as its own “mother of all battles.” As a result, concerns about the global economy are intensifying, along with fears of a new wave of inflation driven by prolonged disruption to oil exports from the Persian Gulf.
For Cyprus, the risks go beyond rising prices. There is also the possibility that the growing flow of tourists will slow down. This would hurt the economy and, even more importantly, employment, since the sector supports tens of thousands of jobs. Last week, I argued that Cyprus should adopt a more effective communication strategy by emphasizing its European identity, the European Union’s commitment to treat any threat against Cyprus as a threat against Europe, and the already increased multinational presence of strong defense forces capable of deterring new threats.
Unfortunately, the government continues to downplay legitimate international concern. At the same time, the President of the Republic is rightly raising the issue of European territorial security at the European Council, along with the mechanisms for activating Article 42. He is also bringing up the issue of the British bases without clearly defining what he wants to achieve. These initiatives increase the perception of insecurity among foreign observers and contradict the effort to project a sense that nothing serious has happened.
These government choices raise another equally serious question: are we moving quickly and flexibly enough to take advantage of the opportunities created by today’s difficult circumstances? This is especially important given the significant pullback of companies and the outflow of migrants from Gulf countries that are now being affected as collateral damage in the Iranian regime’s effort to stay in power.
In the spring of 2022, after Russia’s invasion of Ukraine, Cyprus faced a similar situation. The strong flow of tourists from Russia disappeared almost overnight, and with it came a sharp decline in direct investment from Russian capital and in service exports to that country. At that time, the Anastasiades government, led by Constantinos Petrides, reacted immediately. It accelerated the process of reducing the economy’s dependence on Russia and pivoted quickly toward new markets in Europe, the United States, Israel, and India.
Most importantly, an attractive framework was quickly established to encourage the relocation of foreign companies and highly paid professionals and entrepreneurs to Cyprus. This led to a significant inflow of investment and capital, particularly in the technology sector. At the peak of that crisis, Cyprus ranked among the top ten countries worldwide in terms of growth in foreign direct investment. That is the real reason our economic indicators have remained among the strongest in Europe to this day.
Today, a similar opportunity is emerging. Cyprus could attract foreign investment, companies, and individuals currently based in Israel, Lebanon, and the Gulf, especially those active in technology, regional communications hubs and data centers, investment funds, supply chains, trade, energy, and air and maritime transport. If the current uncertainty continues, the next few months will be critical.
At the same time, issues such as suspending green taxes and accelerating major development projects like the GSI need to return to the agenda with urgency. Undermining our own electricity interconnection to serve domestic interests could now prove deeply damaging.
If the crisis deepens, Cyprus will face two major challenges. First, the government must abandon the slow, risk-averse pace that has defined it and move quickly to establish the necessary framework, incentives, and infrastructure, just as it did in 2022. Second, and more importantly, Cyprus must convince the outside world that it is a safe place. Without a sense of security, we risk losing even those who are already here. This can only be achieved by emphasizing our European identity and the security umbrella the country currently enjoys, instead of acting like ostriches and ignoring the problem.
