Cyprus Mail: News Articles in English, 99-04-28

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

Wednesday, April 28, 1999

CONTENTS

[01] Cyprus probes reports on Milosevic cash and relatives

[02] Hotel concern at stagnation in bookings

[03] Deficit action 'unlikely' before next year

[04] Opposition hits out at Clerides TV performance

[05] Lack of air defences does not affect air base viability

[06] Government vows to help Pittas rise from the ashes

[07] Village anger as priest fells to tree to make way for missing monument

[08] Millennium extravaganzas will cost nothing to the taxpayer

[09] Last-minute deal averts Labour Department strike

[10] Port talks go on despite rejected offer

[01] Cyprus probes reports on Milosevic cash and relatives

CYPRUS is investigating allegations that Serbian money is being channelled to the island to purchase arms, following requests from America and Britain.

"The Central Bank is checking what the Americans and British are saying. The investigation is continuing, but as yet there are no conclusions," government spokesman Costas Serezis told the Cyprus Mail.

"We've approached the Cyprus government to discuss specific allegations about Yugoslav money and funds channelled between the two countries," said a British source yesterday.

"This is being looked at between the British and Cyprus governments," he added.

The government has also ordered its intelligence service (Kyp) to discover whether Yugoslav President Slobodan Milosevic has relatives in Cyprus managing his finances, an official source told the Cyprus Mailyesterday.

Kyp has not yet found evidence to suggest that any relative of Milosevic is living on the island, the source said.

Other informed sources suggested that Milosevic's sister was living on the island, and that Milosevic owned a Nicosia home in her name.

Reports in the local and foreign media claim Slobodan Milosevic has millions stashed away in offshore banks on the island, siphoned off from Yugoslav state coffers.

There are also allegations that money from Yugoslavia is being used in Cyprus to purchase arms.

"These are allegations and suspicions, and nothing has been proved, but it is something we are looking into with the help of the Cyprus government," said the British source.

Serezis was unaware of reports that the EU had called on Cyprus to enforce wider sanctions against Yugoslavia, besides an oil embargo agreed this week.

These are understood to include the introduction of a travel ban on all Belgrade officials and businesses, and of a list of people with close ties to Milosevic.

"These measures have not been put on the table, but we follow all EU policies and decisions, for which the government pays the price as public opinion is against such policies," said Serezis.

A report in yesterday's Apogematininewspaper said that British intelligence was combing the island to collect information on whether Milosevic had relatives or business contacts handling his finances.

"We don't comment on individual investigations," is all the British High Commission would say about the report.

Earlier this month, the US embassy said it was considering whether to ask the government to freeze Serb assets held in Yugoslav offshore banks.

Cyprus is no stranger to allegations of money laundering, and was often accused of breaking UN sanctions imposed on Belgrade during the Bosnian war.

Such accusations have always been strongly denied by the government, which says it imposes rigorous safeguards.

"Cyprus follows international guidelines on money laundering and has been complimented for its efforts," said Serezis.

At least four of the island's 30 Offshore Banking Units are Yugoslav, including Nicosia's Beogradska Banka.

Wednesday, April 28, 1999

[02] Hotel concern at stagnation in bookings

THERE was concern at yesterday's AGM of the Hoteliers Association over the effects that a continued war in Yugoslavia could have on local tourism.

Two days after a report in The Sunday Mailhighlighted a slump in summer bookings, officials acknowledged that a problem did exist.

Commerce, Industry and Tourism Minister Nicos Rolandis, who last week seemed unaware of the problem, said that information received from abroad indicated that the effects of the war on the island's tourism had not so far been devastating.

"But we can't rule out that if it continues there could be a problem," he said.

Cyprus was expecting a 12 per cent increase in tourism this year and until the end of last month showed a healthy upturn of over 13 per cent, Rolandis said.

Association chairman Avgerinos Nikitas said hoteliers were retaining a "reserved optimism" for the continuation of the "positive" picture which was expected this year.

"It must be pointed out, however, that the stagnation observed in the rate of bookings made in recent weeks justifiably raises concern of what is to come," Nikitas said.

But the hoteliers yesterday appeared more concerned with domestic issues such as competitiveness, productivity and mentality, and with finding ways to increase tourist figures to three million by the year 2003.

With hotels some £600 million in debt and operating at an annual occupancy rate of only 56 per cent, hoteliers feel they have good reason to worry.

"The financial state of the hotel industry is outlined by the offer of humiliating non-rewarding prices and low bed occupancy," Nikitas said.

He said the price of a holiday in Cyprus was 20 per cent higher than those of the island's main competitors in the Mediterranean, and 40 per cent higher than Turkey.

Labour costs, he said, represented 40 to 50 per cent of the revenues of a hotel unit, while competitors pay out only between 20 and 30 per cent on staff.

"Furthermore our hotel and tourist industry is characterised by low productivity levels," Nikitas added.

Some 30,000 people work in the tourism industry, 600 of whom are legally employed foreigners.

Nikitas also said it was inconceivable for tourists to face long queues at passport control on arrival to Cyprus.

"We need to bring about a radical change in our mentality," he said. "In other words we need to think in a European spirit and direction both in terms of intentions and in terms of action."

Hoteliers also want restraint on the creation of new tourist beds, promotion of more off-season tourism and more money to be spent on advertising by the Cyprus Tourism Organisation (CTO).

Rolandis also updated hoteliers yesterday on the government's moves to upgrade the tourist product with marinas, golf courses, theme parks and other plans to increase the flow of visitors.

Wednesday, April 28, 1999

[03] Deficit action 'unlikely' before next year

ANY ACTION to tackle the ever widening fiscal deficit is unlikely to materialise before late this year or early in 2000, bankers and economists said yesterday.

The issue took on added urgency last week when two of the island's financial heavyweights - Bank of Cyprus Chairman Solon Triantafyllides and Central Bank Governor Afxentios Afxentiou - outlined the dangers posed by the fiscal deficit and warned in unusually strong terms that urgent measures had to be taken quickly to arrest its growth.

The deficit grew to 5.5 per cent of GDP last year and is expected to hit almost six per cent in 1999, nearly double the three per cent ceiling set by the European Union to qualify for the single currency.

"The government and Parliament must realise that the problem is very serious," said Afxentiou last Thursday. He also called on the government to cut its own spending, impose new taxes and improve collection under existing tax laws.

But despite the pleas by Afxentiou and Triantafyllides, who wants value added tax immediately hiked to help narrow the deficit, the bankers and economists said the House was not likely to start looking at any proposals to tackle the shortfall before October or November at the earliest.

President Glafcos Clerides, whose Cabinet lost its slight majority in the 56-seat House after the Socialists quit his coalition in January, has just concluded the first round of consultations with political party leaders over economic reforms, and social policies to cushion their impact, as part of the harmonisation process with the European Union.

The reforms include the liberalisation of interest rates, lifting restrictions on capital movement and gradually raising VAT from its present eight per cent to 15 per cent over the next three years.

Opposition parties are opposed to most of these measures, and whatever eventually comes before the House will depend on the outcome of Clerides' talks with party leaders.

The negotiations have become more difficult with an increasingly polarised political climate after Clerides' December decision not to deploy the S-300 missiles and over differences on the war in Yugoslavia.

"The opposition simply does not want to share in the responsibility for policies which are unpopular," theorised a senior government economist who spoke to the Cyprus Mailon condition of anonymity. "But this is not something that the government can do without the approval of all political parties."

"Consensus politics is a tradition in Cyprus," he said.

The prospect of a fiscal deficit left to grow unhindered, said Hellenic Bank Chief Economist Marios Clerides, would force the Central Bank to introduce very strict monetary policy.

This would translate into borrowing becoming more expensive and, according to Clerides, hitting the private sector's growth the hardest.

Already, Afxentiou reportedly told commercial bank bosses on Thursday to rein in lending and restrict their credit expansion for 1999 to 10 per cent rather than the 12 per cent growth they sought.

The political hurdles on the path of the reform are interfering with the island's progress toward EU membership and are raising the possibility of legislation being rushed through the House soon before the target accession date: January 1, 2003.

Such a scenario has already been floated as a way out of the political stalemate that would ensure EU membership remained on schedule, but the government economist said it also posed dangers for the economy.

"We need a competitive financial system... If we don't liberalise now and instead wait until the last moment, we will suffer from shock since we will not have the experience of operating in a liberalised climate.

"How can you manage the economy if you don't have the tools to do so? Liberalised interest rates, to give one example, are a very important tool."

Wednesday, April 28, 1999

[04] Opposition hits out at Clerides TV performance

OPPOSITION parties rounded on President Clerides yesterday, saying Monday's television news conference offered nothing new, except for a lack of knowledge on Yugoslavia.

Akel took exception to Clerides stance that the government treated Kosovo as it did the Cyprus problem, as it has orchestrated a virulent anti-Nato campaign since the start of the bombing last month.

"President Clerides said nothing new and he was misinformed about the Rambouillet agreement," said Akel spokesman Nicos Katsourides.

During the televised interview, Clerides said the government opposed ethnic cleansing and that Cyprus should avoid knee-jerk reactions that could harm its national interests.

"His answers did not represent the facts on the ground in Yugoslavia," said Akel deputy Andreas Christou.

Christou added that the interview had become too embroiled in the Kosovo crisis at the expense of domestic issues.

Diko's Nicos Cleanthous also accused the president of point scoring rather than tackling important issues in depth, and said he was an apologist for Nato.

"The president was only trying to make an impression and represented a government which did not make mistakes," said Cleanthous.

As expected, ruling party Disy backed the president's performance.

"The president was clear about his objectives and policies. If he only answered questions about domestic issues then he would have been criticised for ignoring Kosovo," said Disy's Antonis Karras.

The deputy pointed out that the majority of questions from the floor had been about foreign affairs anyway.

European renewal party leader Alexis Galanos believed that Clerides should have put more emphasis on domestic issues.

Galanos said Clerides' response to speculation about a possible reshuffle showed he "did not have the will to do so".

The administration would undergo a major shake-up only if there was across- the-board consensus for a government of wider representation, Clerides said on Monday.

"We believe the president should go ahead with a reshuffle independent of the social dialogue. It is necessary to change the image of the government, " said United Democrat George Christofides.

Edek's former defence minister Yiannakis Omirou said Clerides was trying to blame Greece for the non-arrival of the S-300 missiles.

"Edek were surprised to see Clerides attempt to pass responsibility for the non-arrival of the missiles on to Greece. It was his decision," said Omirou.

Edek left the government in the wake of the December 29 decision.

Wednesday, April 28, 1999

[05] Lack of air defences does not affect air base viability

The Russian-made ground-to-air missiles - diverted to Crete on December 29 in the face of mounting international opposition to their deployment in Cyprus - were originally ordered, in January 1997, to provide air defence cover for the base.

But Chrysostomis, who visited the base yesterday, said the two issues were unrelated. "I believe the operation of the base is one issue and the issue of air-defence another. They are completely separate," he said.

The minister said the base could be brought into action should the need arise: "When there is a need, certainly, within the remit of the Common Defence Dogma, this base will have its use."

The defence pact commits Greece to come to Cyprus's defence should Turkey attack.

The Paphos Air Base, named after former Greek Premier Andreas Papandreou, was officially opened in March last year.

Wednesday, April 28, 1999

[06] Government vows to help Pittas rise from the ashes

THE GOVERNMENT yesterday vowed to do its bit to get the island's largest dairy, brought to a standstill by a massive fire at its state-of-the-art factory on Sunday, back on its feet.

A statement by the Agriculture Ministry made it clear the state saw the recovery of Pittas dairies as vital for the local milk industry.

"The Agriculture Ministry has studied the consequences arising (from the fire) and is making co-ordinated efforts, in association with other relevant agencies, to secure the normal absorption and supply of milk, especially sheep and goats' milk," the statement read.

Before the blaze at its Latsia factory outside Nicosia, Pittas took in a quarter of the island's total milk production, and half of its sheep and goats' milk production.

The company is now trying to bring its two older factories in Nicosia back into operation in an effort to maintain production, and the ministry said it would "provide every possible assistance" for these efforts.

The ministry said getting Pittas back into production was also important for the island's foreign exchange earnings. Pittas is the island's leading exporter of halloumi cheese.

Athos Pittas, one of the dairy owners, sought to reassure cow, sheep and goat farmers that their milk would be taken in.

"We want to assure milk producers that we are doing everything we can and are not about to abandon them. We are in close contact with the government and in no case will they be left exposed," he said.

Farmers' organisations have been demanding milk producers be covered by the state for any losses they suffer after the Pittas fire.

The director of the milk marketing board, Andreas Marangos, yesterday added his voice to those seeking to reassure dairy farmers.

"The sheep and goats' milk from the Larnaca, Famagusta and Nicosia districts was basically taken in by Pittas, but the board is not shirking its responsibilities and will try to find ways for the producers to continue producing and for their milk to be utilised," he said. "It all depends on how long it will take for the Pittas dairy to start up again."

Police forensic experts were yesterday able to enter the wreckage of the Latsia factory for the first time since Sunday, the heat from the gutted building having died down sufficiently. Investigations were not completed yesterday and are to continue today.

The owners have ruled out arson and an explosion heard immediately before the fire broke out suggests an over-heating boiler may have been the cause.

The fire, which began at 8.30am on Sunday and took nine fire engines and 40 men over three hours to contain, was the worst factory blaze ever in Cyprus, causing an estimated £10 million of damage to a dairy that had only begun operation earlier in the year.

Wednesday, April 28, 1999

[07] Village anger as priest fells to tree to make way for missing monument

PEDHOULAS villagers are up in arms over the local priest's "surreptitious" felling of a 45-foot redwood tree growing outside the mountain village's church.

"It is more the manner in which the priest handled the matter, going along and chopping down the tree at night with a fellow clergyman," village Mukhtar Marios Theocharous said yesterday.

The tree, a native of California, might in any case have been destined for the chop to make way for a memorial, but villagers were shocked to wake up on Thursday morning to find it suddenly gone.

Theocharous was keen to play down the villagers' reaction to the felling, but admitted things had got bad enough for police to be called in. The sequoia, planted 23 years ago, had become a popular feature in the village.

The village priest, Father Kourris, is apparently keen to erect a memorial to national heroes and the missing in place of the tree. Theocharous said the village improvement board had agreed the tree might have to go to make way for the memorial. But a final decision on the matter had not been taken and a felling licence had not been secured, he said.

The Forestry department confirmed yesterday that a licence was needed to cut down any tree.

A protest had reportedly been planned outside the church during Sunday's morning service but Father Kourris failed to turn up, deciding instead to hold a service at Ayios Rafail chapel, away from the village.

The Mukhtar said a meeting of all concerned would be called to try and smooth things over.

Wednesday, April 28, 1999

[08] Millennium extravaganzas will cost nothing to the taxpayer

The government plans for the millennium include a bid to host the Miss Universe beauty contest and a grand scale illusion by world-famous magician David Copperfield involving the "disappearance" of Aphrodite's Rock. But, in a statement yesterday, Rolandis said such extravaganzas would not cost the tax payer anything extra.

"Not even one additional cent from public funds will be paid out for (millennium) events being planned, if they go ahead, because, even though other countries will be providing huge sums on the millennium, in Cyprus publicity for the millennium will be part of the sum spent every year by the Cyprus Tourism Organisation for publicity," the statement read.

The statement added that reports that hosting the Miss Universe pageant would cost around £8 million were inaccurate. "The sum being considered is a small fraction of this," Rolandis said.

The minister added that such millennium events would draw more tourists to the island.

Wednesday, April 28, 1999

[09] Last-minute deal averts Labour Department strike

An announcement issued yesterday by public servants' union Pasydy said that a conditional agreement had been reached between the government and Labour Ministry employees.

Pasydy's statement said the agreement provided for "a reorganisation of the Labour Department," details of which would be decided at the next Joint Appointments Committee meeting on April 30.

Department employees had held a two-hour warning strike last week to demand the implementation of previously announced government plans for Labour Department reorganisation.

[10] Port talks go on despite rejected offer

Sek's harbour representative Panicos Alambritis told the Cyprus Mailthat the unions had not accepted a government offer presented the previous day, but that "the government has also rejected one of our proposals, so at least there is something on the negotiating table."

"We have not yet decided to strike and will be meeting with the two ministers (Communications and Labour) early next week," Alambritis said.

Peo's harbour representative Costas Christodoulou said that the ministers were expected to present union proposals at the next meeting of the Council of Ministers and that future strike action would depend on the Cabinet's reaction.

Dockers and stevedores at Larnaca port staged a 17-day strike in February, paralysing the harbour by blocking its entrance and refusing to load ships.

Unions wanted alternative employment and compensation for staff set to lose their jobs when the port is turned into a leisure harbour, according to plans announced by the government in February.

© Copyright Cyprus Mail 1999

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