Cyprus Mail: News Articles in English, 00-06-01

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From: The Cyprus Mail at <http://www.cyprus-mail.com/>

Thursday, June 1, 2000

CONTENTS

[01] Tobacco ad ban would send 10 per cent of revenue up in smoke

[02] Wreck capsizes as police tow it ashore

[03] Disy: ‘paramilitary’ row has become a joke

[04] International business not worried about loss of offshore privilege

[05] Market up amid high turnover

[06] Cabinet considering siesta time cut

[07] Vassiliou ‘well enough to see Gladiator’

[08] Petrol up 4 cents a litre

[09] Can Cyprus prove it’s serious on cutting deficit?

[01] Tobacco ad ban would send 10 per cent of revenue up in smoke

THE CYPRUS advertising industry could lose almost 10 per cent of its annual gross revenues if tobacco advertising and sponsorship is banned, an industry insider said yesterday.

Health Minister Frixos Savvides made his public pledge on Tuesday to coincide with ‘World No-Tobacco Day’, adding he also expected the Cabinet to approve laws to monitor tobacco adverts until his hoped-for August 2001 ban takes effect. An advertising ban would bring Cyprus into line with EU law.

Himself a smoker struggling to quit, Savvides said the new laws were needed because tobacco ads "glorify tobacco products (especially to the young) as providers of strength, wealth, freedom, fun and health."

Indeed, a survey released on Tuesday by the Cyprus Anti-Cancer Society indicated 22 per cent of smokers admitted advertisements "pushed them" to smoke. Another 43 per cent (again victims of tobacco adverts' false glamour) said smoking made them feel "more attractive" - presumably to the opposite sex, the survey showed.

Savvides' pledged bill to bar tobacco adverts next year would cost local ad firms over £1.5 million a year in adverts, promotions and sponsorships by the four tobacco companies in Cyprus, said Despo Lefkaritou, of the DeLeMa public relations firm.

"That's a hell of a lot of money (to be) taking out of the economy," she said. "It's just under 10 per cent" of Cyprus' total annual advertising business, which she estimated at "approximately £20 million per year."

Of that total, she said, the tobacco companies in Cyprus spend over £1 million a year advertising their products, and the remaining in various tobacco-related promotions and sponsorships of such things as car rallies and other public events.

Spokesmen for Pyramis, Telia Pavla and Success Advertising, which all have roles in tobacco adverts in Cyprus, agreed an advertising ban would wreak havoc with revenues.

Savvides on Tuesday also warned that the legislation he intended to bring before the Cabinet included raising the fine for violating the island's no- smoking laws from £500 to £1,000 or six months in jail, or both.

Current non-smoking laws are rarely enforced.

However, the Attorney-general's office confirmed that Cyprus does have a litany of laws banning smoking in such public places as cinemas, theatres, hospitals, and other areas, such as banks, where the public gathers to do business.

Current Cyprus law regarding where smoking is and is not legal complies with EU law, said Nicoletta Ioannou, legal officer on EU issues in the Attorney-general's office.

"(But) a new law is coming" that will tighten things even further," she said, referring to the bill Savvides pledged on Tuesday to introduce.

Ioannou said the proposed law, if passed by the Cabinet and the House of Representatives, would guard non-smokers in the workplace against the dangers of "passive smoking" by requiring employers and workers to reach consensus on where workplace smoking was allowed.

As Ioannou explained it, the proposed law would favour non-smokers: even a single non-smoker in a room full of smoking colleagues would have to be given a smoke-free environment in which to work, she said.

But Ioannou emphasised that such an arrangement would be reached by give- and-take by employees and employer, as even the new law would not force an employer to ban all workplace smoking.

Dr Louis Kontozis, cardiologist at the Apollonion Hospital, noted that passive smoking subjected non-smokers to a "25-to-80 per cent increased risk of lung cancer".

"Passive smoking" also causes "a three-times higher death rate due to heart disease," Kontozis said.

He added: "50 per cent (of heart attack deaths) are due to smoking. Smokers, on average, die three years earlier than non-smokers, and they double the risk of strokes."

Kontozis noted that in each puff of cigarette smoke, there are "about 4,000 compounds, including 50 known carcinogens." Among tobacco's toxins are "lead, arsenic, cyanide, ammonia and carbon monoxide," he said, adding this last poison starves the brain of the amount of oxygen it needs to function normally.

As for low-tar cigarettes, Kontozis added: "these do not make any difference," since those who smoke them -- thinking they are inhaling fewer poisons -- simply inhale more deeply, thereby negating any ‘benefits’ one hoped to derive from their lower tar.

"Don’t smoke at all," Kontozis said. "It's best."

© Copyright Cyprus Mail 2000

Thursday, June 1, 2000

[02] Wreck capsizes as police tow it ashore

THE TOURIST boat that went up in flames on Tuesday capsized yesterday, delaying police efforts to identify the cause of the blaze.

Police were until last night still trying to right the Lady Diana, which capsized just outside Paralimni fish sanctuary while being towed to shore.

Famagusta assistant police chief Lefteris Solomou said the police's electromechanical service and the Commercial Shipping Department would have to wait until the boat was upright again to investigate further.

Solomou said that the boat, which was completely destroyed, had not been insured against fire, but had insured any passengers it was carrying.

Doctors yesterday said that the boat's captain, 52-year-old Antonakis Gregoriou, was on his way to full recovery.

Dr Andreas Karapaisis of Paralimni's Lito Clinic said that Captain Gregoriou, who suffered second-degree burns to his face and arms, was expected to be released in about five days.

Passengers receiving medical treatment for slight injuries sustained in the fire were expected to be released yesterday.

Forty-one passengers, all tourists, were travelling on the boat when the blaze broke out. Eleven were taken to the Lito Clinic in Paralimni and the Napa Olympic Clinic in Ayia Napa.

Of these 11, two were released by late Tuesday afternoon and two kept under medical supervision overnight with Captain Gregoriou. Another five were treated for shock and released.

The £250,000 boat operated daily out of Ayia Napa and was licensed to hold 170 passengers.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[03] Disy: ‘paramilitary’ row has become a joke

AFTER a week of bitter exchanges over the alleged existence of a Disy ‘paramilitary’ group monitoring the National Guard, the governing right- wing party said yesterday it would not "engage" further on the issue until the investigation was over.

The allegations were first made last Friday by opposition Akel deputy Costas Papacostas, who claimed a clandestine paramilitary group had been tasked by Disy to keep tabs on the political persuasions of National Guard officers.

In a written statement read to reporters yesterday by party spokesman Tassos Mitsopoulos, Disy said the whole issue had taken ridiculous proportions. The party had therefore "unanimously decided to adopt the party chairman's proposal not to engage further on the issue for the duration of the investigation."

"We consider it a joke to continue with a dialogue which is essentially pointless," Mitsopoulos said.

"We think that it is impossible to link Disy with so called paramilitary groups. We have condemned them and we are not prepared to carry on with an issue which creates tension," he added.

However, Disy did not miss the chance to take a shot at Akel, urging the left-wing party to abandon "its tactic of escalation and nihilistic critique, a practice which unfortunately paves the way for unnecessary confrontation at a time when we should collectively and responsibly deal with our national problem, and European Union accession."

Akel Chairman Demetris Christofias yesterday acknowledged that the ongoing bickering damaged defence and Cyprus in general, but nevertheless lambasted party meddling in the army, and the labelling of officers as ‘ours’, ‘dangerous’, or ‘neutral’.

"I think the damage inflicted by these actions is far greater than the possible damage stemming from discussing the issue," Christofias said.

"We cannot hide foul play just because it could harm the Cyprus issue," he added.

Christofias defended Papacostas' action to publicise the issue, saying the existence of the problem had been confirmed by the Defence Minister and the Commander of the National Guard.

Meanwhile Attorney-general Alecos Markides said a team of appointed investigators might be flying to Greece to interview former National Guard Commander Demetris Demou and his second in command Leonidas Economopoulos.

On Tuesday, Economopoulos issued a written statement explaining his involvement in the issue.

He said that Colonel Avraam Marangos had gone to him with vague ‘conspiracy’ charges, adding that he threw a piece of paper on his desk.

Economopoulos ignored the paper and asked Marangos to write a report and submit it along with the evidence of the alleged ‘conspiracy’.

Instead, Marangos bypassed the army's hierarchy and gave the documents to Akel’s Papacostas.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[04] International business not worried about loss of offshore privilege

INTERNATIONAL businesses with resident offices in Cyprus - once known as ‘the offshore sector’ - should not be overly affected by a January 1, 2006, change in tax laws, the Cyprus International Businesses Association (CIBA) said yesterday.

"Insofar as the international business community with resident offices in Cyprus is concerned, this change - providing the tax rate is pegged around 10 per cent - should not materially affect those of us with offices here," a CIBA announcement said.

Current tax rates for businesses resident on Cyprus but dealing off the island are pegged at 4.25 per cent, while tax rates for domestic businesses dealing within the local economy are 20 and 25 per cent, depending on annual turnover.

Balancing the two tax structures to OECD satisfaction would entail raising international business sector tax rates to the same level to which the rates would be lowered for the domestic industrial sector.

CIBA said this tax rate change was necessary due to pressure from the Organisation for Economic Co-operation and Development (OECD), which was otherwise considering placing Cyprus on its tax haven blacklist.

CIBA also noted that December 31, 2005 coincided with the end of a 10-year extension of ‘Taxing Provisions’, which was agreed by the Council of Ministers on January 1, 1996.

While corporate tax restructuring appears inevitable, CIBA noted matters of personal taxes needed attention. "Consideration must be given to the effect, if any, of EU membership on those of us living, working or retired in Cyprus, and who are subjected to preferential rates of personal taxation."

CIBA said it took this issue very seriously and would keep its members abreast of developments.

Finance Minister Takis Klerides on May 18 announced Cyprus was scrapping tax advantages for the so-called offshore sector by the end of 2005 to avoid the OECD tax haven blacklist.

The OECD wants countries all over the world to harmonise tax rates between foreign and local companies, and has threatened any country failing to comply with such blacklisting. The stigma of the term, "tax haven" - with its money-laundering and other illicit connotations - could make a country an economic pariah.

The contribution of international business companies to the Cyprus economy is considerable. They generate $300 million a year, a bit more than 25 per cent of total manufacturing output.

These so-called offshore companies also tot up about four per cent of the island's GDP on only two per cent of its labour force.

The OECD launched a crusade to close down nearly 50 tax havens worldwide in 1996. Simultaneously, the G7 organisation of the seven most industrialised states submitted a report to the Cyprus government outlining measures it needed to adopt to eliminate tax competition considered harmful to other countries.

All OECD member states will be forced to eliminate tax advantages unfavourable to other member states by April 2003. Because Cyprus is not an OECD member state, it has been given more grace time to sort out its tax structure.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[05] Market up amid high turnover

STRONG buying interest accompanied by high turnover in small to medium caps pushed the Cyprus bourse 1.23 per cent higher yesterday. The benchmark index gained 6.52 points to a close of 535.21, its highest intraday level. Its opening of 529.19 points was the lowest point of the day.

Traded value rose to £44.1 million on 23.3 million shares traded.

Newcomer Europrofit, which hit the market at an opening price of three pounds, lurched to a high of £3.20 and closed at £2.68. It was one of the most actively traded stocks of the day with 1.9 million shares changing hands.

Traders said interest was spurred in the stock by an announcement from CLR Investment Fund that it planned to make a bid to acquire a controlling stake in the company.

CLR, which has plans to list on the market itself, said it would offer £1.41 for each Europrofit share. Shares in financial services firm Severis and Athienitis were also actively traded with a turnover of 1.3 million shares ahead of a 1:2 bonus issue in mid June.

It rose four cents to a last trade of £4.65. ShareLink, which is planning a 10:1 bonus, was the highest net gainer with a climb of 44 cents to 28.36 pounds, a new year high. Advancing stocks outpaced decliners 64 to 43 and eleven issues were unchanged on 118 traded. There were 9,902 deals.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[06] Cabinet considering siesta time cut

An announcement had been expected yesterday, but the issue was eclipsed by the decision to raise fuel prices, and nothing on siesta times was announced.

The decision is now expected to be announced later this week.

According to yesterday’s Phileleftheros, Labour Minster Andreas Moushiouttas' recommendation was for a one and a half month cut, with the period running for July and August only, instead of June until mid- September, as happens now.

Shops and offices close between 1pm and 4pm over the period.

The Labour Ministry was yesterday unable to comment on the issue pending the Cabinet decision.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[07] Vassiliou ‘well enough to see Gladiator’

Vassiliou, who is recovering from complex brain surgery, was seen in the British capital at a screening of the Hollywood epic Gladiator.

But his party could only confirm that he had been feeling well enough to occasionally dine out and go for walks in a nearby park.

Party director-general Yiannakis Ioannou also told the Cyprus Mail that Vassiliou would be seeing doctors today so that a decision could be taken about when he could return to Cyprus.

Vassiliou is Cyprus' Chief EU Negotiator and a former President of the Republic.

He underwent surgery for the removal of a meningioma of the cerebellum in mid-May, days after the condition was diagnosed, and has since been recovering in London.

Vassiliou insisted on having his secretary flown over soon after surgery in order for him to continue with some of his duties and has said he eagerly anticipates returning to Cyprus.

© Copyright Cyprus Mail

Thursday, June 1, 2000

[08] Petrol up 4 cents a litre

SKY HIGH crude oil prices and a rock bottom Cyprus pound yesterday forced the government to risk the unpopular measure of raising petrol pump prices.

The new prices came into effect immediately -- but the decision could be reversed by the House of Representatives today.

Super was upped from 40 to 44 cents a litre, unleaded from 37.8 to 41.8 cents a litre and diesel and kerosene from 14.6 to 16.6 cents a litre.

Despite the price rises, Cyprus still has by far the cheapest petrol in Europe. The price of a litre of petrol in Britain is almost twice what it is here.

The price hike had been widely expected, with the government unhappy at having to dig into already depleted state coffers to subsidise oil imports to the tune of around £4 million a month since the turn of the year.

Petrol stations were swamped yesterday morning as the Cabinet met to discuss a rise in pump prices. As news of the Cabinet decision broke around midday, queues outside petrol stations grew quickly as drivers sped to fill their tanks before the relevant bill was delivered to the House and came into effect.

The bill duly arrived at the House at around 2.30pm.

The Cabinet decision came into effect immediately to avoid profiteering, but the new prices may still only apply for just over 24 hours. The House plenum is expected to vote on the bill this afternoon -- and the government cannot be certain of the majority vote needed to make the hike permanent.

The main opposition party Akel yesterday made it clear it would not back the price hike, labelling the cabinet decision "hasty and wrong".

Speaking after the Cabinet meeting, Commerce Minister Nicos Rolandis said the decision to raise prices had been a hard but "responsible" one to take.

Earlier this year, Rolandis tried and failed to get parliamentary parties to back petrol price rises.

The parties were wary of supporting such an unpopular move, and urged the government to wait a while to see if crude oil prices dropped. The government was forced to subsidise oil imports, as petrol companies said pump prices were so low they could not afford to import oil.

Rolandis yesterday argued that subsidising fuel prices had become "an impossible burden" for state finances, noting that £14 million had been spent since January 1. This demand on state funds was growing, he said: "Unfortunately, with current crude prices, and the current value of the Cyprus pound against the dollar, this loss is continuing at a higher rate than in the past, at about £5 million a month."

"Indicators do not argue a reduction in crude prices in the near future," he added.

Crude prices have not come down significantly since the turn of the year, and yesterday romped to an 11-week high. The value of the Cyprus pound against the dollar has also remained very low: one pound was yesterday worth just $1.62.

Rolandis promised the Cabinet would re-examine the issue if crude prices came down or the value of the pound went up. But it is unheard of for pump prices to be lowered.

The Cabinet yesterday also abolished the state fuel subsidy for national carrier Cyprus Airways, which amounts to about £200,000 a year. Rolandis said the move was necessary for Cyprus harmonisation with the acquis communitaire of the European Union.

The airline said it was disappointed by the decision, which it estimated would cost it an extra £1.5 million this year, on top of the extra £6.5 million it attributed to the rise in crude oil prices.

A CY statement said the decision would damage the company's financial position as the increase had not been forecasted in its planning. It said most of its contracts with tour operators had already been signed, without taking the extra costs into account.

Akel condemned the petrol price rise at the pumps, arguing that crude prices were about to come down as the oil-producing countries had just agreed to up production. It also suggested the value of the pound was about to improve.

The communist party also protested that the government was raising fuel prices less than a week after VAT had been increased by two per cent to 10 per cent.

The Chamber of Commerce and Industry, Keve, also slammed the Cabinet decision yesterday, saying that it would harm the economy by increasing inflation.

The cost of a litre

Britain - 83.9

France - 69.4

Italy - 67.7

Belgium - 61.3

Germany - 61.0

Portugal - 56.5

Ireland - 53.4

Austria - 51.9

Greece - 51.8

Spain - 51.6

Cyprus - 47.5

© Copyright Cyprus Mail

Thursday, June 1, 2000

[09] Can Cyprus prove it’s serious on cutting deficit?

MOODY’S ratings agency’s warning to Cyprus to quicken the pace of fiscal reform or face downgrading yesterday sparked mixed reactions as to whether the government was capable of meeting the ultimatum to reduce public debt.

On Monday, the international ratings agency Moody’s switched the island’s foreign debt outlook from stable to negative. Although Cyprus has performed persistently well in the past, inflationary pressure and mounting government spending have dented its debt management.

Downgrading would increase interest rates for borrowing on the international market and bludgeon the country’s credibility.

In 1995, government debt was only one per cent of GDP, whereas today it stands at 4.5 per cent – and inflation is five per cent – three times the European average.

In 1999, government debt was 61.3 per cent of GDP. The EU’s Maastricht criteria for economic and monetary union require state government debt to be below 60 per cent of GDP.

Last Thursday, the House raised VAT to 10 per cent, a two per cent rise which stands to bring in an extra £60 million into government coffers. But £47.2 million worth of tax concessions given back to voters offset the revenue gains.

EU harmonisation measures have also cut import revenues by slashing import duties, and moves to cut tax rates on local companies to bring them into line with the offshore community, could lose the government even more income.

To stave off an actual downgrading by Moody’s as well as line up with Brussels, the public deficit has to be cut and the rate of bank credit, which this year increased by 27 per cent, must be kept in check.

The Finance Ministry has emphasised that everything would be done in order to prevent an actual downgrading.

"The government has taken Moody’s warning seriously into account. It has put together, and is applying a specific programme to reduce the public deficit over the next few years," an announcement said yesterday.

But economists and businessmen blame the government for the crisis in confidence, saying it has baulked at the necessary tax increases for political reasons.

The increase in fiscal debt is moving Cyprus further away from Europe – a serious matter with only three years to go before planned EU accession.

"If the government is worried about increasing taxes for political reasons then it’s got a real problem. It’s a fiscal and taxation juggling act, and it’s going to be quite interesting to see how (Finance Minister) Takis Klerides manages it all," commented businessman David Rumsey, chairman of CIFSA (the Cyprus International Financial Services Authority).

"I have absolutely no doubt that they’re going to have to do it and because the political will is there, on all sides for Cyprus to get into Europe."

The Central Bank has already announced measures to limit the spiralling bank credit. Last week it decided to limit commercial banks to a maximum expansion of 12 per cent for 2000. Minimum reserve requirements are also to be raised for the first time since January 1996 – from 7 to 8 per cent as of July 1. Commercial banks in Cyprus have also been issued with the same threat to measure up or face credit rating downgrading.

But others are not so positive about the chances of the economy getting back on track.

"I’m not very optimistic. The fiscal policy has been inactive for as far back as I can remember. The IMF has not said anything Cypriot economists have not already said," commented Marios Clerides, a manager at Hellenic Bank.

"It’s not unusual for credit agencies to issue these warnings. We are in a good position, but we should take this warning seriously. But if we succeed then I don’t think there will be a downgrading," said Charis Achniotis, chief senior manager of economic research and management services at the Central Bank.

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