Archive for November 2006

Cyprus and the benefits of the tax-haven regime

November 30, 2006

Location has always proved crucial to Cyprus’s prosperity, and the recent crisis in Lebanon highlighted its role as a safe place to do business for banks, corporates and private investors. Nick Kochan reports.

Geographical location has rarely been more critical in ensuring an economy’s development than it is in the case of Cyprus. The island in the eastern Mediterranean has burgeoned in direct proportion to the problems of its less stable neighbours. Whether it is Middle East war, Russian instability or central European strife, Cyprus has welcomed those in need of a safe resort, as well as a place to do business with security.

Many of the 50,000 refugees that made the hazardous sea journey from Lebanon to Cyprus during the recent outbreak of Middle Eastern fighting may have since returned home. But the crisis alerted the world to the island’s hospitality and role of safe haven. Cyprus dug deep to give the refugees shelter: the daily bill for hosting them was reputedly some C£100,000 ($220,000), and the island won plaudits for its humanitarian stance.

Mardig Haladjian, Cyprus-based general manager for rating agency Moody’s, says: “Cyprus has benefited a lot from the troubles in the region and worldwide. The Lebanese civil war in the late 1970s, the break-up of Yugoslavia and the collapse of the Soviet Union were all good for Cyprus. The island has been able to attract international customers who wanted to be close to their home base, but away from disturbance.”

Russians move in

Russian and central European companies have moved there in droves to take advantage of favourable tax and investment incentives. Cyprus now ranks as one of the major sources of foreign investment into Russia. Mr Haladjian says: “Russian companies dealing in oil and gas have parked some of their revenues in Cyprus companies and banks. Russian banks have set up in Cyprus and they are booking transactions in Cyprus. They are attracted by the EU environment.”

Cyprus has also been a convenient base for many private transactions between Israeli and Arab businessmen, at times when political tension would have made publicity about such trade both unthinkable and unwise.

It has responded to the growing demand for a safe haven by liberalising rules of investment for both EU and non-EU nationals. Foreign companies can now invest freely in most areas of the economy (with the exception of the ever-sensitive media) without restriction. The next important step for Cyprus will be to join the eurozone, which is scheduled for January 2008. The country is already a member of the Exchange Rate Mechanism.

Earlier the EU had imposed an excessive deficit procedure against Cyprus. This has now been removed as a result of a tough spending clampdown. Its budget deficit has dropped from 6.25% in 2003 to 2.4% in 2005, well below the permitted EU limit of 3%.

An attractive tax regime is critical to the island’s appeal to foreign investment. Cyprus has a uniform corporate tax rate and double taxation treaties with more than 40 countries. This brings it in line with EU taxation rules. In 2003, the foreign corporate tax rate was raised from 4.25% to 10%, with the exception of the shipping industry, for which the tax rate has remained at 4.25%.

According to Harris Kleanthous, manager tax department at Ernst and Young in Cyprus: “Cyprus has more than 30 treaties in force, which apply to more than 40 countries. These offer reduced rates of withholding tax on dividends, interests and royalties paid from states into Cyprus.

“Together with low tax rates in Cyprus itself and the absence of withholding taxes on dividends and interest payments from Cypriot tax resident companies to non-residents, this makes Cyprus a very attractive jurisdiction from which to hold foreign investments.”
Investor taxes
Further tax factors enhance the island’s attractions to investors. For example, dividend income derived by a Cypriot tax resident company from shareholdings in foreign companies is exempt from income tax. A special defence contribution (SDC) of 15% is levied on dividend income if the shareholding in the foreign company is less than 1%. Mr Kleanthous says that if the shareholding is more than 1%, dividend income is exempt from the SDC impost.

Institutional and private investors have been attracted to the island as a result of its tax structures, says Mr Haladjian. “They view Cyprus as a base from which to invest in Russia, eastern Europe and in the Middle East. The number of international companies based in Cyprus continues to grow. EU membership has enabled Cyprus to establish itself as a reputable base.”

The country is also seeking to develop its mutual fund sector to enable it to compete with Dublin and Luxembourg. One competitive tool will be a series of preferential taxes that are now in the process of passing through the legislature, which will benefit fund managers setting up on the island.

Foreign investors are being encouraged to participate in the island’s burgeoning high tech and biotechnology sectors. Full ownership of Cypriot companies makes this attractive. The island has forged three important schemes to develop its high tech sector. They include an agreement with the Harvard School of Public Health to assist in the development of a local public health institute, the establishment of four business incubators and a link-up with the French Riviera Chamber of Commerce and Industry to establish a technology park in Cyprus.
Investment agency

Foreign investment in Cyprus, which currently exceeds $1bn a year, is facilitated by the Foreign Investors Services Centre (FISC), an arm of the Ministry of Commerce, Industry and Tourism. This serves as a one-stop shop for investors.

According to George Tsiamettis, commercial and industrial officer at the FISC: “The centre focuses on the development of high technology products, the enhancement of research and development, and technology transfer.”

Recent investors in Cyprus include UK software company GFI, the Lebanese telecoms company Scancom and the German retailer Lidl.

Shipping boom
Two other sectors have furnished Cyprus with much-needed foreign currency: shipping and foreign exchange. The shipping registry ranks ninth in the world, with almost 2000 vessels. European owned and managed ships provide the majority of clients. Improvement in the quality of the registry will raise income from this sector.

The island is also a transit base with a throughput of 333,000 boxes. It is investing heavily in ports infrastructure, although the sector’s expansion is inhibited by a Turkish embargo. The Cypriot government is seeking to counter this by expanding the Limassol port, and a new passenger terminal is due for completion in 2008.

In terms of tourism, the Cyprus government has offered incentives to firms building golf courses in a bid to create the infrastructure for a high-quality tourism sector. France, Germany and Italy provide most tourists to Cyprus although the number of Russians has grown since the island joined the EU and visa restrictions were lifted.

Foreign direct investment (FDI) into Cyprus originates primarily from EU countries (41%). Other European countries account for 21% and 8% of FDI comes from the Middle East.

A highly educated population has made Cyprus particularly attractive to companies involved in the service sector, says John Shekeris, commercial counsellor at the Cyprus High Commission Trade Centre. “Cyprus has a very high proportion of young people with university degrees,” he says. “Many have qualifications that are suitable for work in commerce, like law and accounting degrees.”

This may explain why Cyprus has a large number of legal and accounting and audit firms. The country started audit monitoring for audit firms in January 2005, ahead of the EU schedule, which allows each EU country two years to introduce its own legislation complying with the Audit Directive.

Financial services now account for 76% of the island’s GDP, says former minister of finance Makis Keravnos. “Cyprus has been gradually transformed from a country dependent on the primary sectors, to a fully fledged export-oriented service economy.’
Source: Nick Kochan for “The Banker”


Drug trade in Asia

November 29, 2006

“Drug trade in Asia”.
An  article bt Pierre-Arnaud Chouvy has been published in the “Encyclopedia of Modern Asia” (pp. 302, 304, in Levinson D., Christensen K. (Ed.),2002, Encyclopedia of Modern Asia, Chicago, Scribners, 3600 p.)

You can also find more info in the same subject by clicking in

Bibliography on Women in Intelligence

November 29, 2006

Sarah Helm

A Life In Secrets: The Story of Vera Atkins and the Lost Agents of SOE

London: Little Brown, 2005

In the “man’s world” of WWII European intelligence, Atkins rose quickly to a key position in Britain’s Special; Operations Executive (SOE) selecting agents and sending them to Europe. After the war she went searching for those who hadn’t returned. This book tells her story.


Mary S. Lovell

Cast No Shadow: The Life of the American Spy Who Changed the Course of World War II.

New York: Pantheon Books, 1992.

The story of Amy Elizabeth Thorpe Pack who spied for the British Security Coordination and the Office of Strategic Services. Her work led to the acquisition of the Italian and French naval ciphers prior to America’s landing in North Africa and other critical data.


Elizabeth P. MacDonald

Undercover Girl.

New York: Macmillan, 1947.

A look at the organization and personalities of the Office of Strategic Services in Washington, China, and Southeast Asia focusing on the Morale Operations section.

Melissa Mahle.

Denial and Deception: An Insider’s View of the CIA from Iran-Contra to 9/11

New York, Nation Books, 2004

The author was a successful operations officer in the CIA’s clandestine service. In he book she tells how that came about, what the training was like, and share some of her experiences in espionage.


Elizabeth P. McIntosh

Sisterhood of Spies: The Women of the OSS.

Annapolis, MD: Naval Institute Press, 1998.

Veteran of the OSS, Elizabeth McIntosh relates her own experiences and those of fellow OSS women in this book that reveals interesting stories and long kept secrets from WWII.


Judith Pearson

Wolves At The Door : The True Story of America’s Greatest Female Spy

Guildford, CT: The Lyons Press, 2005

Pearson tells the story of American Virginia Hall who became first a British agent with the French resistance, then an OSS officer behind the Nazi lines, and finally a CIA officer. All this despite the slight handicap of her wooden leg. She was the only women in WWII to receive the Distinguished Service Cross.


Tammy M. Proctor.

Female Intelligence: Women and Espionage in the First World War.

New York: New York University Press, 2003.

This book examines several important but little known espionage cases involving female spies during WWI.


Margaret Rossiter

Women in the Resistance.

New York: Praeger, 1991.

Stories of the Allied women who were part of the WWII resistance movement behind German lines.


Elizabeth R. Varon.

Southern Lady, Yankee Spy: The True Story of Elizabeth Van Lew, A Union Agent in the Heart of the Confederacy

New York: Oxford University Press, 2003.

New details from archives highlight this biography of this very successful Union agent who lived in the South.

Bulgaria and Greece Expand Cooperation

November 29, 2006

Bulgaria’s expected accession to the European Union is functioning as a catalyst for Greek investors’ interest in the Bulgarian market. During the first half of the current year, a real leap has taken place regarding Greek investments in this Balkan country, exceeding 640 million EURO; in 2005 they reached 181 million EURO. Greece is the second greatest investor in the neighboring country, with capital totaling 1 billion 365 million EURO and an 11.5 percent share of total foreign investments made in Bulgaria.
Source: ELKE

Greece to fund highway project

November 29, 2006

The Greek Government is expected to give 100 million euros to Serbia for completing its Corridor X highway project.

According to Serbian Foreign Economic Relations Minister Milan Parivodić, the Greek Government is expected to announce a decision for giving 100 million euros of donations to Serbia for completing the highway from Leskovac to the Macedonian border.

The construction of this part of the highway, which is about 80 kilometers long and is part of the European Corridor X route, will cost a total of 450 million euros, Parivodić said at the second Greek-Serbian business council meeting in Belgrade.  

He said that the rest of the money would be secured by the Serbian Government and that the construction could begin by the middle of 2007.

Parivodić said that the highway from Leskovac to Macedonia could be finished in about three years.

In the past five years, Greek investors have put 1.8 billion dollars into Serbia, topping the list of foreign investors, according to Parivodić.

The foreign trade exchange between Serbia and Greece this year is 30 percent greater than last year and, according to Parivodić, could be even greater if untapped cooperation in the fields of energy, infrastructure, food production and tourism are exploited.

In this year alone, the export of Serbian products to Greece was worth 198 million dollars and 142 million dollars worth of products was imported from Greece.

There are 80 Greek companies doing business directly in Serbia and 150 more that are investing with Serbian partners.

Source: B92

Interview by the Greek Foreign Minister Dora Bakoyanni to the newspaper Dnevnik in Skopje

November 29, 2006

1. Athens and Skopje constantly assess that bilateral relations are on very high level. Argument more is the fact that Greece is investor number one in Macedonia. Nevertheless, diplomatic representation is not on embassy level, so very logical is the question: which are the arguments for assessments that relations are so good and do you have any strategy for improving the things?

I am happy to confirm that our bilateral relations have indeed progressed spectacularly, which is a very positive development. We are neighbours, we are friends and we are partners. Hence, our strategic interests in the region are aligned: we seek a peaceful, stable and prosperous future for the peoples of South-Eastern Europe. According to official statistics, Greek investments head the list of invested capital with close to 1 billion euros and 10,000 jobs. These numbers represent Greece’s unwavering commitment in your country’s future. Bolstering development and helping combat unemployment, Greece’s economic presence is, I believe, a positive factor. Of course, Greek entrepreneurs are top investors not just because your country presents favourable economic opportunities for development, but also because the land and the people form a familiar and friendly environment. Our only difference relates to the name issue.

2. Both nations for a longer time negotiate about the differences regarding the name of Macedonia. For Macedonians this is an “irrational dispute” and for Greeks it is a “battle for cultural heritage”. Could both countries reach a compromise through constructive dialog, or finally, the dispute would be resolved through arbitrage in UN?

As you know UN Security Council Resolution 817 of 1993, urged our two countries to work together to reach a settlement. We have been carrying out negotiations even since under the auspices of the UN Secretary General, with the objective of finding a mutually acceptable solution. We both agree, I think, that hard work, co-operation, mutual respect and common goals provide the very foundations for progress, peace and prosperity. I strongly believe that we can find a solution as long as both parties demonstrate their good will and approach the talks in an open and constructive spirit. As far as the Greek government is concerned, I can guarantee you that we approach – as we have done in the past – the talks with the best and most honest of intentions. I had the pleasure of meeting my colleague Mr. Antonio Milošoski in New York last month, where and I had the opportunity to underline the need to move forward together.

3. You have been angry to Americans when they recognized the constitutional name of Macedonia. At the same time you called and still call for constructiveness of the Government in Skopje, but Greece was the side who refused the last proposal of Mr. Mathew Nimetz last year. Why did you refuse that proposal?

Last year Mr. Nimetz, the UN Secretary General Special Representative, submitted the first comprehensive proposal. In response our government, although well far from our views, accepted the document as a basis for negotiations. Skopje, on the other hand, refused the proposal. A few months later, Mr. Nimetz presented another, second, proposal Skopje accepted, Athens rejected it as 100% unbalanced. Be that as it may, we have to think positively and look to the future. In the danger of repeating myself, I would like to be crystal clear: the Greek people desire a solution that will lead to the complete normalisation of our bilateral relations, will facilitate the course of our neighbouring country towards Euro-Atlantic institutions and will strengthen stability and cooperation in our region.

4. Mrs. Bakoyannis, You as Foreign Minister as well as other Greek officials recently started with warnings that there is no Greek Parliament which will ratify accession of Macedonia in NATO and EU before name issue is resolved, but that same Greek Parliament ratified the Agreement for stabilization and association between EU and Macedonia. Don’t you think that such warnings are not in accordance with Interim Agreement and that with such a move Greece would “break” the same agreement?

I am not one to mince my words. I value straight talk – especially amongst good friends. We cannot put our heads in the sand. When I spoke of no Greek Parliament ratifying the accession of your country in NATO and the EU, I simply recognised the prospect of an undeniable reality. This realisation is not breaking the Interim Agreement, the same agreement which is asking both our countries to find a solution to the issue of the name. Now, we want to see your country within the framework of both NATO and the EU, thus as you said, our parliament did ratify the Agreement for Stabilization and Association with the Former Yugoslav Republic of Macedonia, which was a very significant step forward towards European integration. We want a strong state on our borders. A strong state with healthy economic growth, well-established rule of law and effective institutions in which all citizens – regardless of their religion or ethnicity – can place their confidence. This is not merely a wish. We are doing everything in our power to assist in every possible way, as we did with our other two friends, Romania and Bulgaria. You can be sure that once a mutually-accepted agreement is reached on the name, the Greek Parliament will be the first to ratify your accession to NATO and the EU. 

5. For a longer time Greece is promoting itself as locomotive of the Balkans. Does Greece have such a power and which is the motive and interest to play that role?

Greece strongly believes in our region’s potential, which is tremendous. Over 3,500 Greek companies are present in the Balkans, having invested more than 12 billion euros. Greek capital has created tens of thousands of new jobs and has thus I believe strengthened our region’s economies.

In the past few years, the Balkans are steadily transforming into a stable region that should become an integral part of the European Union. Greek foreign policy is playing an active, and I believe, constructive role in this process. Greece has strongly supported the integration of the whole of South-East Europe into one European family. Our overall political direction has been based on a very simple principle: if we are to have peace and prosperity on the continent, European integration cannot be fragmented. We believe the new Europe that is being born will be even richer, stronger and more enduring if it includes South-Eastern Europe.

Greece promotes the creation of a single economic space in the area which will act as a catalyst in the completion of the enlargement process. We have five major objectives: first, to support the completion of a Free Trade Area that will include all of our neighbours and replace the complex bilateral agreements between countries in the region currently in force. 

Second, the promotion of major transport corridors linking the whole region; to that end, for example, we are financing sections of Corridor X, which connects Thessaloniki, Skopje and Belgrade to Central and Eastern Europe.

Third, the promotion of a single energy market.

Fourth, the creation of major energy hubs transcending the Balkans and connecting the whole of South-Eastern Europe; for example, the pipeline connecting Skopje with Thessaloniki.

Fifth, the promotion of policies for the unification of the Balkan economic space into multiple sectors through development assistance.  For instance, this will include the internet linking of Balkan research and educational institutions and will facilitate the development of high-speed internet in the wider region.

6. Few years ago, speaking at the George Town University, You emphasized the importance of respecting the minorities’ rights. Then you didn’t mention the existence of Macedonian minority in Greece, and that position is not changed today. Macedonians are a fact for Council of Europe, for European parliament, for the State Department… except for the Government in Athens. Can we expect some changes in the politics toward Macedonian national minority and does Your Government plan to support the project of printing the ABECEDAR?

I am very proud of the quality of Greek democracy. All citizens of Greece have equal rights. Now, as I am sure you know, in Greece there is only one minority: the Muslims of Western Thrace. There is no so-called “Macedonian minority”. Whenever a political formation emerged in the name of such a quote-unquote “minority” it has never managed to obtain any popular support whatsoever.

7. There are some differences between Greek Government and Contact Group also had meetings with Serbian officials. What is your position regarding the future of Kosovo?

Unfortunately, despite months of negotiations no concrete progress has been achieved so far. The policy of Greece on this issue is clear. We believe we must not risk achieving a long-lasting and viable solution for the sake of meeting a pre-set deadline. International relations are dynamic rather than static. Adaptability is of essence. Hence, if the need arises for more time for the parties to achieve the best possible results, I believe it should be given to them. In this respect, we should not underestimate the domestic politics on each side, and should provide the opportunity for everyone involved to have a voice. We also believe that it is important to encourage the maintenance of democratic and human rights’ standards, especially when it comes to the protection of minorities. History in the Balkans has not been kind to minorities and their rights. It is time to change that once and for all. 

Most importantly, we must start preparing both in Kosovo and Serbia for the Day After. In Kosovo today, independence is seen as a magic wand which, once waved, will provide employment, stable electricity, education, health, prosperity for all. Yet, we all know that independence is no panacea. We have to work very hard so that Kosovo does not fail to deliver on its promises to the people.  More than half of Kosovo’s population is under 30. Unemployment is the highest in Europe and opportunities are the lowest. The people of Kosovo deserve a better future. When it comes to Serbia, we must remember the lessons of history that teach us that neither a country’s humiliation, nor one’s absolute victory guarantees peace and stability in the long term. This is even more pertinent in the case of Serbia, one of the most significant states in South-Eastern Europe. The lessons of the Weimar Republic remain as potent as ever.

8.  Europe is trying to define its borders, and the main dilemma is Turkey. You said that you will be constructive, but it seems that such constructivism needs a much deeper dialog with Ankara, because of Cyprus issue. What will be your position regarding Turkey?

Greece supports Turkey’s bid to become a full member of the EU. As you know, Turkey must fulfill certain concrete political, economic, and institutional criteria in order to join the EU. I want to be very clear here.

The EU is built on a shared legal and civic culture. It is important for Turkey, like all candidate countries before her, to proceed with the necessary reforms it has pledged to enact including, amongst others, the full implementation of the additional protocol of the Ankara Agreement. Once Turkey makes the necessary adjustments, she should be granted full entry to the European Union. Regarding Cyprus, a new solution is now being sought which, in our view, must take into consideration not only the work done by the UN, but also the plain fact that Cyprus is a member of the European Union.

9. In what kind political atmosphere were the local elections in Greece and would you like to comment the result, regarding the situation in the country as well as in the region. Is it possible premature general elections to be organized in Greece next year and do you see the PASOK as a respectable rival of Nea Demokratia?

The atmosphere of all elections in Greece has been very peaceful for decades now. In the recent local elections, Nea Demokratia has verified its political supremacy, but PASOK, as you say, always remains its most serious political rival. Fortunately, in recent decades, there is considerable consensus on the most serious issues, especially on foreign policy, between the two major parties.

New Norwegian, Swedish embassies, UNDP Office to open in Skopje

November 29, 2006

Norway and Sweden will open their new embassies, while United Nations Development Program (UNDP) its new office in Skopje on Wednesday.

Swedish Vice Foreign Minister Hans Jeppson, Deputy-Director General in Norwegian Foreign Ministry Nils Kamsvaag, UNDP Resident Representative to FYROM Maria Luisa Silva Mejias, and FYROM Vice Premier Zoran Stavreski will address the opening ceremony.

Afterwards, the two embassies will host an exhibition of paintings donated by Norwegian and Swedish artists to the city of Skopje afte the 1963 earthquake.

Source: MIA