Two years ago Cyprus made global headlines when its banking system collapsed. The island nation was the fourth country to have its economy ‘bailed out’ by the European Union (after Greece, Ireland and Portugal), and a €10 billion rescue package was quickly approved in March 2013. More controversially, Euro-crats then seized accounts from depositors as part of what has become known as a ‘bail-in’ and implemented capital controls. Local customers of the affected banks were enraged, but protests were largely muted.
On 19 October the Cypriot finance ministry announced an expected to the rescue program, and that further aid and tax increases will be unnecessary. After a brutal recession, the ratings agency Fitch expects the Cypriot economy to grow by two percent next year. This is all good news, however the country’s plans to establish itself as a safe offshore banking jurisdiction are in tatters. A new strategy is obviously required.
Like many nations these days, Cyprus is now setting its sights on the growing tidal wave of Chinese outbound property investment. According to Juwai.com, total Chinese property investment into Europe doubled in 2014, totaling US$ 18 billion. And Cypriot President Nicos Anastasiades visited China this week, touting the country’s low corporate tax rates and relaxed residency requirements for property owners. Both are among Europe’s lowest, providing an attractive gateway for foreigners seeking an EU passport. Cyprus also intends to open 15 visa processing centers in Chinese cities.
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