By Reginos Tsanos
The global economy is in turmoil. Large economies are teetering on the brink of collapse. There is volatility across all markets and sectors. The world has borne witness to billions of dollars’ worth of assets and securities being wiped out in just a single day of trading. The Eastern Mediterranean, once a haven for cruise liners, is now a station for warships and aircraft carriers patrolling trouble spots in Syria, Lebanon, and Libya.
Cyprus has been through its own troubles as well. The events that unfolded in March 2013 shook the foundations of everything that was built, particularly in the post-1974 era. But as the government readily informs us that we are ready to exit our economic stability programme, and return the country to growth, there are some events that point worryingly to the fact that we have failed to heed the lessons of the past.
Indeed it seems that we have not grasped one of the most important warnings from those events – that this was not just a financial crisis, but a much deeper problem, rooted in our behaviour, culture and practice, and not something that can be remedied simply by reforms on paper.
The Larnaca Municipality’s decision to reject the request for an extension of the use of the town’s port for support base operations in Cyprus’ Exclusive Economic Zone (EEZ) is a case in point.
A quick glance at the bigger picture helps emphasise its importance. Contrary to global developments, most notably the drop in oil prices, in the last few months a number of major international energy companies have given the Eastern Mediterranean a vote of confidence, publicly pronouncing their interest to engage in hydrocarbon exploration activities in the region. These companies include those that have been active in Cyprus’ EEZ, with ENI and TOTAL signing extensions to their contracts with the government for this exact purpose.
Their enthusiasm however has not been met with the analogous response. In fact, quite the opposite. ENI, TOTAL and Noble Energy – on whom we are waiting with bated breath to finalise its development plan for the Aphrodite field – have all invested significantly in developing Larnaca port as an onshore logistics base for the oil and gas industry. A large number of industry experts concur that, for a variety of reasons, Larnaca port is the most appropriate location.
Unfortunately, these companies are continuously receiving proverbial ‘slaps in the face’. And now, following the Municipality’s latest decision, will go back to the uncertainty and ambiguity emanating from the government, and specifically the Ports Authority, on the location of the onshore base. The two that have been touted, an area within the Sovereign British Bases adjacent to Limassol port, and the industrial area of Vasiliko, are unworkable in the short and medium term, as final approval of either would need to circumvent the maze of government bureaucracy.
At the same time, a campaign of misinformation about the environmental impact of onshore operations on Larnaca and the local environment, perpetuated by irresponsible politicians who have placed their own narrow self-interests ahead of the greater good, has taken root in the minds of local residents, with the government taking the role of a mere spectator in the events that unfolded.
In the midst of all of this, Larnaca port remains quiet and idle, its tourism product in decay, and having received another blow after the Zenon consortium failed to propose a viable leisure harbour project. The potential for economic growth is and will remain huge, and Larnaca could flourish similar to other cities across Europe, such as Stavanger in Norway, Aberdeen in Scotland, and Las Palmas in the Canary Islands. It is almost redundant to mention once again that the full-scale development of the industry in Cyprus will help in reviving important sectors of the Cypriot economy, creating new job opportunities for a depressed labour market, with unemployment still hovering close to 15 per cent.
Important decisions that relate to the future of Cyprus should not be left at the whim of petty politics, nor should they fall foul of electoral campaigns, diminishing our credibility as a country and our reliability as an energy partner. It is now imperative that the government displays the will and determination necessary to come good on its much-touted plans to develop Cyprus as an energy hub. Particularly in light of its active energy diplomacy abroad, the government should also capitalise on the political instability in the Eastern Mediterranean and pursue the development of an onshore logistics base to serve the oil and gas industry, not just for Cyprus but also for the wider region.
In the prevailing global economic environment, there are two things that investors value the most: security and reliability. The Larnaca port fiasco is yet another indication that we are running the risk of scaring off foreign inward investment. The energy industry will bounce back, and by that time we will have missed the boat.
Reginos Tsanos is CEO of Lavar Shipping and Chairman of the RPT Group