Europe is set for a recession and we must have a strong economy to combat it, Trade and Energy Minister Giorgos Papanastasiou told CyBC on Friday.

His warning came when asked as to whether the VAT on fuel could be reduced – with further comments made on Turkey’s claims of energy deals with Israel.

Papanastasiou sought to emphasise that nothing can be ruled out as part of the government’s measures to offer the public some relief from the cost of living but referred to the finance ministry for further decisions.

But he stressed that the finance ministry wants to have a strong economy when the European recession hits because in its view the recession is looming, and it does not want the economy to be endangered.

He noted, however, that the energy ministry has its own views on the matter of VAT on fuel which it has passed on to the finance ministry.

As for Turkey’s claims that energy deals are to be made with Israel, Papanastasiou said that the government has no such update, and it does not believe that its ally will proceed with developments which would burden Cyprus.

He further expressed his belief that Israel is more positive on cooperation with Cyprus rather than Turkey.

Papanastasiou explained that discussions are at a very advanced stage as to importing and liquefying Israeli natural gas, boosting electricity production on the island.

He expects to hold a meeting shortly with his Israeli counterpart to review the timetable.

As Israel looks to expand its energy capacity by turning to renewables, Cyprus has pitched itself as a potential provider of such power through a subsea electricity interconnector between the two countries.

Following the talks in Israel on June 14 and 15, Xinhua news agency reported that the two nations’ energy ministers agreed to prioritise construction of the 310-kilometre electricity interconnector, with an estimated price tag of €500 million.