Loss of millions for the Republic of Cyprus from the purchase of fuel and tobacco products
Smuggling and the significant losses for the economy of the Republic of Cyprus from the purchase of fuel from the Occupied Territories are a brake on the efforts made to develop trade and economic relations between the two communities, as was seen in interesting panel organized on the second day of the Economist conference, in Nicosia, with the participation of representatives of the EU, the United Nations and the World Bank.
In the discussion, which took place with the central theme of the economic cooperation of the Greek Cypriot and Turkish Cypriot communities, with the participation of the Special Representative of the UN Secretary General in Cyprus, officials of the European Commission of the World Bank, as well as Cypriot companies active in the two communities, it was emphasized the need to further expand trade through the green line, but also the problems that arise, as well as specific recommendations to solve them.
The Special Representative of the UN Secretary General in Cyprus, Colin Stewart, highlighted the importance of expanding trade between the two communities, notably noting that in order to resolve the Cyprus issue, “we have to prepare the ground and I cannot I can think of a more effective way to do this than to break down the economic barriers between the two sides of the island and integrate the two economies.”
For his part, the head of the European Commission's Directorate-General for Reforms, Mario Nava, emphasized that trade through the green line “brings the world closer” and “builds trust” between the two communities, while Goran Tindzic, director for Eastern European affairs at the World Bank, announced that the Bank will conduct a study on the obstacles that exist to free movement throughout the island.
Losses of millions of euros for the Republic
The importance of economic cooperation between E/K and T/K was also mentioned by Mr. Pantelis Sklias, Rector of the University of Neapolis and professor of International Relations and Political Economy, underlining that confidence-building measures could facilitate trade, stressing but at the same time the factors that hinder cooperation.
Mr. Sklias pointed out that building trust requires, among other key factors, action in an environment of healthy competition, which is not the case in the case of Cyprus. As he mentioned, in 2022, based on the official available data, 185 million euros have been spent in the Occupied territories to buy fuel, an amount corresponding to 15-20% of the total consumption, with the loss in taxes and VAT for the Republic amounting to 80 million euros.
The same, he added, applies to other products, such as for example tobacco products, where only in 2022, 15.5% of cigarettes consumed in the free zones were smuggled products, which did not pay taxes in the Republic of Cyprus, with the loss revenues for the state to be estimated at 50 million euros, while the same percentage in 2020 was only 3.6%.
“Because of this and considering that the necessity of increasing bicommunal relations and trade should be taken for granted, I believe that additional institutional measures should be taken to strengthen intra-trade and increase confidence. Low-level policy is usually very helpful in these cases, but along with awareness of smuggling and the issues arising from it,” Mr Sklias concluded.
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