Cyprus Mail: News Articles in English, 99-02-07

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From: The Cyprus Mail at <http://www.cynews.com/>

February 7, 1999

CONTENTS

[01] Limassol man survives second bomb attack in two weeks

[02] Cem accuses government of new weapons plan

[03] US guns must go, Cassoulides will tell Albright

[04] Hilton board 'accused of irregularities'

[05] Four remanded as suspect 'illegals'

[06] Cyprus University campus by the sea?

[07] Cautious steps on the road to liberalisation

[08] Cyprus finish third in soccer tournament

[01] Limassol man survives second bomb attack in two weeks

Shoppers on the busy thoroughfare of Makarios Avenue were rocked by the 11am blast in which Evanthis Ioannou, 33, suffered only minor injuries to the hands and face.

Police said the bomb detonated as Ioannou went to turn the key to his office just off Makarios Avenue, and that he was fortunate to be still alive.

The explosion destroyed the office, and the force of the blast sent debris flying as far away as 100 metres.

The attempt on the victim's life is being treated by police as a gangland- related incident.

The daylight bomb attack has done nothing to dispel Limassol's reputation as the island's crime capital. Ioannou was a close friend of suspected underworld murder victim Marios Panayides.

Panayides, an unemployed bouncer, was gunned down at a Limassol petrol station last September, allegedly because of his close connections to the notorious Aeroporos clan.

When Andros Aeroporos was killed by masked hit-men outside a Limassol cabaret last July, Panayides vowed revenge for his death.

Ioannou was released from Limassol General hospital after being given first aid. He was later arrested after police found what they believed to be drugs at the scene of the explosion.

Yesterday was the second time he had narrowly survived a bomb attack.

Two weeks ago he was unhurt after a bomb placed at the entrance to his house went off. He was asleep at the time.

Limassol CID are treating both incidents as attempted murder.

February 7, 1999

[02] Cem accuses government of new weapons plan

"They are trying to create a balance by seeking to place new weaponry on the island," Cem told a news conference in Nicosia after meeting Turkish Cypriot leader Rauf Denktash during a one-day visit to occupied north.

He did not give details on the new armaments that he accused the government of seeking to install.

Cem said the security issue topped his discussions with the Denktash regime, which only Turkey recognises, because "it is a period where the Greek Cypriot side is developing new delusions".

"They are now chasing a new strategic agreement and as stated in the Greek (Cypriot) press they are seeking to create a new offensive initiative against Turkey and the Turkish Republic of Northern Cyprus (TRNC)."

Cyprus decided last December to divert the planned deployment of Russian- made S-300 missiles to Crete instead.

"A point people have to understand (is that) whatever threat is posed we will immediately respond and will take precautions," Cem said.

He and Denktash also discussed economic relations between Turkey and the self-declared 'TRNC', which is heavily dependent on aid from Ankara.

February 7, 1999

[03] US guns must go, Cassoulides will tell Albright

FOREIGN Minster Yiannakis Cassoulides plans to raise the issue of US-made weaponry in the occupied north of Cyprus when he meets US Secretary of State Madeleine Albright later this month.

CyBC radio yesterday reported that Cassoulides will ask for the withdrawal of US-manufactured weapons from the occupied areas. One condition under which the US sells arms to Turkey is that they not be used in any hostile action, which would include deployment in the occupied north.

The government says that Turkey has positioned its US-made tanks in an offensive posture in Cyprus.

CyBC said Cassoulides will raise the issue during a February 17 meeting with Albright in Washington.

Meanwhile, the vice-chairman of the Russian Duma Defence Committee Alexei Arbatov was reported yesterday as telling a Russian news agency that the withdrawal of foreign troops from Cyprus would be possible if the relevant UN Security Council resolutions were applied.

"Any decision on Cyprus could only pass through UN Security Council procedures and decisions," he said.

Arbatov added that no one would complain if Greece and Turkey agreed on the deployment of a Nato force on the island, as long as it was "consolidated by the UN Security Council, since it is not possible for Nato as a military alliance to replace the UN by signing an agreement with two separate states".

He said diplomatic pressure from Western countries along with increased military pressure from Turkey were the reasons behind Clerides' decision not to deploy the Russian made S-300 missiles in Cyprus.

Arbatov added that he was sceptical about recent statements by Nato Secretary-general Javier Solana in Athens that Clerides' decision on the missiles would contribute towards confidence building measures in the Aegean.

February 7, 1999

[04] Hilton board 'accused of irregularities'

SERIOUS allegations of mismanagement and vested interests are levelled at the Hilton board in a 120-page report submitted to Commerce Minister Nicos Rolandis.

The Commerce Ministry's findings are said to contain accusations of a series of irregularities and financial transactions in which board members directly profited.

Allegations cover the period under which the Hilton in Nicosia underwent a three-phase overhaul between 1995-97 costing £17 million.

According to an exclusive CyBC leak of the report, board members secured tenders for companies they owned and therefore made financial gains during the modernisation project.

An allegation contained in the ministry report claims that a board member who belonged to a company which insured the hotel during the renovation work received commission.

Other board members were involved in the tender for kitchen equipment, it says, and it is also alleged that the board, without any tender procedure, purchased room decorations from the daughter of a fellow member.

Children of board members also attended the Hilton's summer school free of charge, it is alleged.

The renovation work came under severe criticism from Rolandis for costing too much.

Rolandis suspected that £9 million of taxpayers money was overspent by the board to spruce up the luxury hotel and construct an 84-room new wing.

Since the expensive face-lift, the board has turned the Hilton into a loss- making concern, seeing £1 million annual profits transform into losses of the same amount.

The hotel is £12 million in debt, seriously hampering the government's plans to reduce its 82 per cent holding to 70 per cent under Stock Exchange rules.

Disy deputy Demetris Syllouris, and chairman of the House Commerce Committee looking into the allegations, described the board's behaviour as scandalous and a reason why the hotel was now losing money.

But despite the irregularities uncovered by the ministry report, Rolandis said no offence had been committed for the Attorney-general Alecos Markides to investigate.

He said that the real problem lay with the regulations which oversee semi- government and state-controlled organisations or companies.

Under regulations passed in the 1960s board members have the right to put forward tenders for the needs of the company or organisation, said the minister.

Nevertheless, this view is unlikely to placate deputies who will discuss the Commerce Ministry report at future committee meetings.

February 7, 1999

[05] Four remanded as suspect 'illegals'

The remand of two Iraqi Kurds, a Somalian and a Sudanese man, followed their arrest by Cyprus police who discovered ten immigrants outside the Pefkos Hotel in Limassol at 12.15am yesterday.

Six of the group, four children and their two mothers, believed to be of Kurdish origin, were taken into the custody of the Welfare Department.

Police said the group say they arrived in the occupied areas on February 2 where they were arrested as illegal immigrants and fined $40 each before being released.

They told police they entered the government-controlled areas at Dherynia last Friday.

Justice Minister Nicos Koshis said yesterday this latest incident highlighted the growing problem of illegal immigrants being smuggled from the occupied areas.

He claimed that many of immigrants were slipping through tight security by coming in through the British base of Dhekelia.

"We are taking measures but it's not easy to locate illegal immigrants when they are coming through Dhekelia," Koshis said yesterday.

February 7, 1999

[06] Cyprus University campus by the sea?

According to a local newspaper, Limassol Mayor Demetris Kontides has already been given an unofficial green light from the Education Ministry for the establishment of a university branch in Limassol.

The report in Phileleftheros yesterday quoted Kontides as saying that Education Minister Ouranios Ioannides had expressed "warm support" for the idea when the Limassol mayor raised the issue during a telephone conversation.

The discussion took place after an ad hoc House of Representatives committee decided to endorse the proposal as recommended by the Municipal Council.

The paper reported that Ioannides would study a report by Limassol Municipality and arrange to meet Kontides "within the next few days".

Students from outside Nicosia currently have to find accommodation in the capital or commute from their home towns in order to attend classes.

February 7, 1999

[07] Cautious steps on the road to liberalisation

WITH ONE eye on EU membership and another on its growing unpopularity, the government of President Glafcos Clerides appears to be cautiously widening its stride on the road to liberalisation.

Since the start of the year, it has projected an unusually resolute stance on the need to press ahead with what many believe to be overdue reform. It used no uncertain terms, for example, when it told Cyprus Airways this week that nothing less than oblivion awaited the national carrier - of which it owns 80 per cent - if its troubles continued.

The government has also declared its intention to put telecommunications monopoly Cyta on the path to privatisation by transforming it into a joint-stock company from its current status of a semi-governmental organisation.

Value added tax, it has said, will have to be gradually hiked to 15 per cent over the next three years, nearly double the present eight per cent.

It maintains that it has reduced spending, but admits that there is still a need to find additional revenues. The need is all the more pressing in view of a fiscal deficit of 5.4 per cent of gross domestic product which the government has vowed to reduce by December 2002 to three per cent, the maximum allowed for joining the European Monetary Union.

Cyprus, whose 1999 GDP growth is projected to match the 5.0 per cent achieved last year, opened EU accession negotiations in March last year. It hopes to join the 15-nation group by January 1, 2003 at the earliest.

But of the flurry of announcements in recent weeks about liberalisation, the arrival in the House last week of a draft bill to free interest rates stands out as a landmark in the island's drive toward liberalisation and harmonisation with EU laws.

The draft bill will repeal a nine per cent ceiling on interest rates imposed by the island's former British rulers to combat usury. When the bill is adopted, the Central Bank will simultaneously allow Cypriots to borrow abroad, according to economists.

This will ensure that local banks are prevented from monopolising the credit market, and means that the level of interest rates on the island will invariably reflect the average rate in the European Union.

The draft bill offers some transitional provisions for those who had already taken out housing loans, giving them a choice between a flat rate of nine per cent and a rate that will fluctuate under market forces.

This provision will remain valid only until December 2002. Meanwhile, the Central Bank will have the right to intervene if the rates fluctuate violently without justification.

The liberalisation of interest rates, according to a senior government economist, can be the catalyst for enhanced growth, but he argues that a great deal depends on the macroeconomic environment to which they are introduced.

For example, he said the fiscal deficit must be effectively tackled to ensure that liberalised interest rates do not hurt the economy.

The deficit has been caused in part by the phasing out of import duties on EU goods, costing the treasury an estimated £300 million in revenues over the past two years. Additional spending to revive some of the economy's slower sectors in 1997 and 1998 has also contributed to the shortfall.

The government borrows to cover the deficit. If it does so locally, it absorbs much of the credit available, thus pressuring interest rates upwards. If it borrows abroad, and there are signs that this is the intention this year, the banking system will have more money to lend and consequently fuel growth.

It is equally essential for the success of liberalised interest rates, the economist says, that Cypriots are allowed to borrow abroad. This will put pressure on the local banks to charge competitive rates, he explained.

In all likelihood, the government economist says, interest rates will go down once they are liberalised since the average rate in the European Union is anywhere between 3.5 and five per cent.

In turn, lower interest rates will make more attractive the proposition of investing in the three-year-old stock market, where returns can be much higher. Already, according to traders, the recent bull-run in the market - about 15 per cent appreciation since the start of the year - is partly attributed to the prospect of lower interest rates.

Yiannis Tirkides, chief economist at the Popular Bank, warns that the draft rates bill is biased in favour of the co-ops, which have the lion's share of the large market of housing loans, and charges that their existence outside Central Bank provision could spell problems for the entire economy.

The co-ops, of which there are some 300 of varied sizes, have a combined loan portfolio of some £2.5 billion, compared to £5 billion in the banks, according to some banking sources.

Offering cheaper services, lower fees, a higher level of flexibility in dealing with bad loans and being trade union-free, the co-ops are more popular than banks when it comes to borrowing to buy or build houses.

But while these characteristics are certain pluses with borrowers, Tirkides sees them as a recipe for possible disaster.

"If one or two of the large ones go under because of bad loans, this could have serious consequences for the entire economy," he told The Sunday Mail.

But the rates bill aside, some see the government's increasing talk of reform as largely rhetorical and charge that it is losing to trade unions the key battle of winning the hearts and minds of Cypriots over liberalisation.

"Liberalisation, deregulation and privatisation - you hear the words so often now, but nothing happens," said Marios Clerides, Hellenic Bank's chief economist. "I don't think that anyone has yet bitten the bullet of privatisation, for example," he told The Sunday Mail.

"The government has also allowed left-wing ideas to prevail among Cypriots who associate privatisation, for example, with the loss of jobs. It has failed to put forward a convincing argument that privatisation can mean lower prices and more efficiency," Clerides said.

"Nobody from the government appears to be prepared to stick his neck out and go directly to the people to say privatisation is good. They only say we have to do it to become members of the European Union," he said.

February 7, 1999

[08] Cyprus finish third in soccer tournament

The Greeks threw everything into attack and their efforts paid off in the 90th minute when Stelios Yiannakopoulos slammed a close range shot into the net past Belgian keeper Geert de Vlieger after a scramble.

While the Greek side had most of the match, both teams lacked good skills and created few decent scoring chances.

In the 27th minute and then just seconds later Sotiris Constantinidis and Apostolos Liolidis failed to score when the Belgians cleared the ball off the line.

Then in the 70th minute a free kick by Grigoris Georgatos hit the post and 10 minutes later a shot off a corner by Yannis Kalitzakis hit the crossbar.

In the earlier third-place match, Cyprus beat Finland 2-1 through a penalty in the 11th minute of extra time.

Antti Pohja put Finland ahead in the sixth minute on a rebound from a save by Cypriot goalkeeper Stavros Foukkaris.

The equaliser was an own goal by Lasse Karjalainen when the ball hit him in the 39th minute after goalkeeper Jani Viander saved a shot by Yiannos Ioannou.

Substitute Nick Papavassiliou scored from the penalty spot in the 11th minute of extra time for Cyprus, who missed two penalties in the first 40 minutes. (R)

© Copyright Cyprus Mail 1998

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