IN THE midst of the financial squeeze, is the EU getting its money’s worth for the host of Cyprus reconciliation and development programmes it is funding?
The findings of a project titled ‘Reconciliation and Peace Economics in Cyprus’, funded by EuropeAid,  would suggest not.
The project’s aim was to promote “a conducive environment for the further development of trust, dialogue, cooperation and closer relationship between the Turkish Cypriot and Greek Cypriot communities...”
But “From the start of the project, it was apparent that there was little hope for a settlement and the project concluded as the UN-sponsored talks again failed,” concluded British-based academics, Dr Kate Flynn and Dr Tony King.
They had been contracted by the EU’s EuropeAid organisation to run a two-year project exploring “reconciliation and peace economics” on Cyprus.
After extensive study, the researchers found that given fundamental disagreements between the two communities on the root cause of the Cyprus problem, it is “highly problematic from the outset to effectively apply reconciliation initiatives”.
Their findings were out-and-out depressing. Some highlights: “The two communities do not agree on what the Cyprus problem is and there is little agreement about arrangements for a post-solution state.  There is marked reluctance to recognise the other side, as well as interact even with the checkpoints open. Most Cypriots do not cross the Green Line or have only done so once or twice, so bi-communal contact is limited to a small percentage of the population. There is notable societal mistrust both within as well as between communities. There is suspicion about political leadership and the direction of the talks.”
No doubt the report stands out for it no-nonsense take on efforts to bring the two communities closer in a bid to help reunification efforts.
And whereas the analysts are not stating that reconciliation is dead in the water, they do question the effectiveness of the projects and call for a rethink on their running.
Their report states that “the number of projects and events funded by the EU and others suggests that project fatigue detracts from significant interest in individual events.”
It goes on to say: “With no apparent programme coordination among the Cypriot Civil Society in Action projects, the EU is not making best use of its EuropeAid investment.”
The two researchers, whose own project cost €210,000, delivered their report to EU Aid in February, almost eight months ago, but decided to go public after getting zero feedback, with an item appearing in the Daily Telegraph on October 13 (“European aid: sleepy island in an aid cash row”).
The wording of their report might be read as suggesting that Cyprus reunification and reconciliation projects are self-perpetuating cash guzzlers with no clear sense of direction.
“My concern is that donors are providing what is supposed to be aid money, but the money is given for things not related to aid and development,” said project manager Flynn.
Flynn speaks of an uncoordinated “donor economy”, where funding applicants and recipients end up competing with one another rather than working together.
She’s quick to point out that she’s not singling out any individual organisation - she says there is a lot of good work going on - but is rather worried about the “way generally that money is poured into this. After all, it’s an investment, isn’t it?”
In 2006, the EU approved aid regulation 389/2006 to end the isolation of the Turkish Cypriot community and to help prepare for reunification. A total of €259 million was allocated for a five-year programme to be implemented by the Commission (DG Enlargement).
From 2011 on, EU assistance has continued in the form of annual allocations of €28 million, to build on the results achieved and support the ongoing UN process.
Figures seen by the Sunday Mail show that the EU budgeted €5.4 million for the “Cypriot Civil Society in Action” grant programme for the period October 2007 through October 2010.
“You’ve got all these projects but no coordination. There’s no clearing house, so to speak, where you could share the information and draw a conclusion as to where the peace process is headed. It’s not clear what EU aid aims to achieve with these funds,” Flynn told the Mail.
In October 2011, Flynn hosted a collaborative event for two EuropeAid projects in Nicosia.
But to her knowledge, no one from EuropeAid bothered to attend, although EuropeAid personnel were directly invited.
“No one [from EuropeAid] actually came up to talk to me, which was weird if one of their number did attend,” she said.
In late January of this year, Flynn emailed EuropeAid’s Nicosia office to request a meeting.
“I just wanted to discuss our project, do a follow-up. An appointment was made but then cancelled.  I was told ‘we don’t have time’.”
She returned to Cyprus in September, again asking for a meeting. Emails sent went unanswered.
Flynn is reluctant to speculate that this lack of interest might stem from her project’s findings.
“I honestly don’t have a clue what’s going on. There’s been no feedback whatsoever on our project, so I don’t know whether the folks in Nicosia or in Brussels even read our report,” she offers.
Yet Flynn is hesitant to brand aid activities related to the Cyprus problem as a “gravy train”:
“But I do wonder whether EU aid money is a substitute for fruitful engagement in a constructive situation. Does it really help the peace process, or does it merely serve to incentivise a never-ending process?”
And for the most part it’s the same consultants and analysts who get the grants.
“The same folks are going back and forth. Like in any other industry, one becomes versed in the code and uses the right language and rhetoric to appeal to donors to give you the money,” Flynn says.
In addition to the EU, a host of other donors are supporting the Cyprus peace process. These include the UNDP (United Nations Development Programme), supported by funds from USAID (United States Agency for International Development); and PRIO (Peace Research Institute Oslo), funded by the Norwegian Foreign Ministry and the British High Commission.
Fiona Mullen, who was worked with various bi-communal projects, says it “sometimes feels that you're banging your head on a brick wall. The effort is not echoed by political and business leaders on both sides.”
In this respect, she says, the findings by Flynn and King are nothing new. For example, research funded by the UNDP-ACT (UN Development Programme - Action for Cooperation and Trust in Cyprus) had come up with similar results. The programme in question consisted of two parts: how much money is being spent by members of each community on the other side, and how a post-settlement economy might look like.
That programme's full report has yet to be published.
Mullen suggests the report by Flynn and King was particularly poignant precisely because the researchers were unaware of earlier findings.
Flynn herself has told the Mail that she was a newcomer to the Cyprus peace process when she took up the project.
Part of the problem, which appears to be systemic, is the long lead-time between EU calls for grant applications and the actual implementation of projects. This can often lead to duplication. It can happen that by the time one project is completed, another programme - funded by a different organisation - may have already reached similar conclusions.
“So it's not so much a question whether these programmes are useful, but it certainly does highlight the need for coordination, which Flynn and King pointed out,” says Mullen.
And she thinks the Telegraph article may have misrepresented certain aspects of what is going on in Cyprus, for example the article's sardonic reference to a golf course inside the UN buffer zone.
Asked why, in spite of some findings pointing to little or no progress in reconciliation, such projects continue being funded, Mullen has this take:
“Money keeps being poured into Cyprus probably because it's a volatile region. People don't want to walk away from it in case something else happens.”

Most Cypriots have crossed the buffer zone no more than once or twice if at all

CYPRUS will today commemorate the 1940 resistance of the Greeks against the Axis forces, which signalled Greece’s direct involvement in the Second World War.
Celebrated in Greece as well as communities in the world with a connection to Greece, the celebration hinges on the ‘OXI’ (no) response that Greek dictator Ioannis Metaxas is said to have given to Italian dictator Benito Mussolini on October 28.
Scholars debate Metaxas’ actual response.
A parade is due to take place in Nicosia with school students marching to drumbeats, bearing the flags of Greece and Cyprus.  Politicians and state officials issued statements ahead of Ochi Day, hailing the heroism displayed by many.

A THREE-DAY conference will be held this coming week in Avignon, France on the history of the ancient city of Nea Paphos from antiquity until today.
The conference will be held between October 30 and November 1 and one of the sponsors is Paphos municipality with the mayor, Savvas Vergas addressing the opening ceremony. One of the topics on the agenda will be Paphos as the European Capital of Culture in 2017. Paphos was selected over Nicosia, the other Cyprus contender, in September. The conference, that is due to attract historians and archaeologists interested in the Nea Paphos’ excavations and the site’s history, is supported by the antiquities department.
Vergas is due to visit Marseille after Avignon to discuss cultural capital preparations.
Marseille-Provence is a European culture capital 2013.

PRESIDENT Demetris Christofias inaugurated an exhibition of Cypriot antiquities at the Paris Louvre Museum on Friday evening.
‘Cyprus between Byzantium and the West, from the 4th to the 16th century’ will be ongoing until January 28 next year and consists of 176 artefacts that are normally displayed in museums across Cyprus and Europe.
The exhibition includes icons, manuscripts, architectural fragments, silverware and ceramics to recount the island’s history between the 4th century and the onset of Christianity, up until the 16th century, the onset of Ottoman Cyprus.
French EU Affairs Minister Bernard Cazeneuve said on behalf of the French government that Christofias’ visit was a great honour, thanking his administration for chairing the council of the EU with great efficiency during difficult times.
“We are very proud to organize this exceptional exhibition which portrays one of Cyprus’ rich historical periods” Cazeneuve said.
The Louvre and the Cyprus Antiquities Department worked to put together the exhibition in the context of the Cyprus’ EU presidency.
Admission to the exhibition is included in the Louvre’s general admission ticket, which costs €11.

FOUR raccoons from Cyprus will travel tomorrow with the chairman of Animal Responsibility Cyprus (ARC) to go to their new home in Amsterdam in the Netherlands.
Accompanied by ARC’s chairman Kyriacos Kyriacou, the furry little creatures will find themselves to a sanctuary for exotic animals, the AAP.
The AAP offers a home for animals that were sometimes unlawfully intended as pets and needed protection. It already hosts a trio of primates who had spent ten years of their lives, caged in Kykkos monastery’s park in Nicosia.
The monkeys left in September last year.
Kyriacou will check in on them and discuss prospects for Cyprus hosting its own exotic animals’ sanctuary to host animals from Cyprus and neighbouring countries.
The raccoons themselves used to live in a pet shop in Paphos that shut down.
They spent five months in Aradippou before ARC arranged to move them to the AAP.
The raccoons are flying via Cyprus Airways.
A plea to help out with expenses of about €350 went unanswered, but “we will find a way to cover [the expense],” Kyriacou said. But anyone who wants to help ARC help its non-human friends is welcome to contribute, he added. Tel: 99-416852.

A GREEK company specialising in converting cars to run on liquefied petroleum gas (LPG) yesterday presented its credentials in Nicosia to potential investors and the public, expounding on how they stood to benefit.
The cabinet last month said it was allowing the introduction of LPG cars, paving the way for a cheaper and greener fuel.
And yesterday, Greek based company Gas Theodorou told people they had been in Cyprus since 2009, “anticipating” the time when people would look to convert their cars, said the company’s Giorgos Papadopoulos.
Gas Theodorou runs Gas Service in Greece, a network of conversion outlets that convert and service cars using Italian technology parts, Zavoli.
There are plans for five stations in Cyprus, one in each district, which will be part of the Gas Service network but the company hopes it will grow in the coming year.
“We run the biggest LPG-specialised network in Greece, to fit any specific car model so the vehicle’s factory specifications are adhered to,” Papadopoulos said.
A sign guided those interested – the public, mechanics, and potential investors – through a carpeted maze at Nicosia’s Cleopatra Hotel to a hallway leading to a conference space.
“I’m here to see if this could be a good investment,” said Nicos Kkais who added that he was at the presentation on behalf of others.
Others wanted to know how they could receive training to convert cars to LPG.
And a man wanted to know if a diesel-run car could be converted, to be told that right now it’s could not because that kind of conversion was currently more viable for much bigger vehicles.
The costs quoted for conversion run between €1,200 and €1,800 depending on the vehicle.
LPG is a blend of propane and butane that can be produced from natural gas or as a by-product of oil refining. Its emissions are less harmful than those of petrol making it environmentally friendlier. It is also cheaper
“The public is interested in the environment but also cost saving,” Papadopoulos said.
Gas Service claims to fit cars so that fuel efficiency is more or less the same at a usage of 10.5 litres per 100 km for LPG versus 10lt/100km for fuel.
They also claim that the vehicle performance is not compromised.
Given the efficiency claims, Gas Service says that drivers will be able to halve their fuel costs if they use LPG exclusively.
Conversion will result in dual-propulsion engine so that drivers can choose between LPG and conventional fuels. Converting will take up precious boot space when installing a new tank which has only 80 per cent of stated capacity – as all LPG tanks, Papadopoulos said.
The cabinet has set as a goal a year for different departments to draw up legislative changes, commerce minister Neoclis Sylikiotis said in September.
Different ministries will need to cooperate for this to be done, Sylikiotis said: the labour inspection department, the road transport department, the state’s legal services, among others.
Nicosia’s Gas Service official outlet, Marcos Marcou, said they were talked with state stakeholders and were pushing to expedite procedures, and ensure legislation “benefits the consumer”.

THE UNITED Nations (UN) were yesterday looking for mines in the buffer zone close to Denia village on the outskirts of Nicosia thought to have been carried away by a torrent that started in the occupied village of Ayios Vasileios.
The UN received word from ‘TRNC’ authorities late Friday that they suspected some landmines from Ayios Vasileios may have been swept away by a river swollen by rains.
They started looking for possible mines yesterday morning in the Denia area. Residents, hunters and farmers working in the area were yesterday warned to stay away until further notice.
A police spokesperson told the Cyprus Mail that there was a risk that poachers might unwittingly enter the buffer zone in that area looking for animals.
As a precaution, roads leading to the swollen torrent have been blocked, Denia community leader, Christakis Panayiotou, told the Cyprus News Agency.
“People are upset because tractors [and] agricultural vehicles go there,” Panayiotou said adding that he had not seen “in years” a torrent such as the one that may have carried away the  mines.
“The area is blocked off by the UN… It is an agricultural region and lots of people go there. Hunters go and so do farmers and the risk is great,” he added.
The UN told Panayiotou it may take a few days to know whether or not any mines were swept away because the water levels are too high.
Back in May, Denia village was evacuated so authorities could disable a bomb hailing back to the 1974 Turkish invasion, which was discovered lying at the bottom of a dry well.
School children and teachers were moved to the nearby village of Mammari when the discovery was made. About 500 residents had to wait for bomb experts to carry out a controlled explosion.
Two days later, the residents asked authorities to look for the remains of a mortar explosive. Police and explosives’ experts cordoned off a street and gutted a building, making off with “some very rusty remains,” Panayiotou said at the time.
But this time Panayiotou said the village was removed from the area where mines may have been swept and so most residents are not affected. “You have to have business there to go,” he said.
Panayiotou could not say if there was a specific number or kind of mines the UN was looking for. The Cyprus Mail could not get through to the UN yesterday and the police had no further information to relay.

FOR YEARS, Cyprus’ banks successfully promoted a positive image among society. They gave money to charities, sponsored the arts, supported worthy social initiatives, fuelled the development of the economy and paid their shareholders healthy dividends. For the decade following the stock exchange bubble, they could do no wrong, in public eyes, as they financed the construction super-boom of the noughties, gave loans to people with minimum of fuss and issued credit cards to their customers without being asked.
In this period they were also the best advertisers of the media, spending budgets of millions every year on television, radio and newspaper advertising. This dependence ensured the media were never overly critical of the banks - valued customers with big advertising budgets that had to be kept happy. The positive reports about the banks’ activities abounded and helped the cultivation of the image of the banks as agents of growth and prosperity. And when in 2007 the Central Bank Governor placed restrictions on housing loans, because the economy was over-heating, media and politicians all turned on him.
It was the first sign of how irresponsibly the banks had been behaving in their pursuit of higher profits but nobody took much notice as the economy was still booming and property prices were soaring thanks to easy credit. The banks were carried away by the property bubble as they had been eight years earlier by the stock exchange bubble, their top executives believing that they could do no wrong, with nobody, not even their boards, able to stand in their way. Boards of directors just sat back and allowed the mighty executives to take one reckless decision after the other.
All the costly blunders have now caught up with the banks, the executives who led them on the road to collapse have gone, insolvent Popular (Laiki) has come under the control of the state and the Bank of Cyprus needs state help to be able to re-capitalise. Over-expansion in Greece and the mindless purchase of billions of euro worth of Greek government bonds at a time when nobody with a little common sense would have invested in them, let alone smart bankers on obscene salaries bigger than the annual payroll of a medium sized business, have destroyed the sector. And the investigation into the banks’ portfolios, which will expose the scale of the debt write-offs and non-performing loans, is still to come.
On top of all the blunders, there was also the sale of the convertible bonds which wiped out savings of over a billion euro, as Popular and Bank of Cyprus tried to raise capital to cover losses. Had the banks’ top brass knowingly deceived their customers or did they actually believe they would be able to pay seven per cent interest for six years, during the worst ever recession and collapse of their businesses in Greece? Perhaps the bank bosses were still under the illusion that they could do no wrong when they were advising their customer to put their savings in convertible bonds.
But this is not all. Now, the banks have brought the economy to a standstill, charging extortionate interest rates – as high as 10.5 per cent in some cases - that are crippling businesses and preventing investment. They are turning the screw on their customers because of the reckless decisions taken by their top executives. It really beggars belief that apart from the extortionate interest rates and bank charges, the taxpayer will also be burdened with debts of billions to bail out these reckless banks, whose leadership destroyed the economy.
Letting them collapse would have been a just punishment, but the country’s already big problems would multiply ten-fold if this were allowed to happen. First, the state would have to come up with tens of billions to pay the for the €100,000 deposits it had guaranteed; second all the island’s banks would collapse because of the sector’s inter-dependence; third Cyprus would never again be able to sell itself as a financial services centre as foreign deposits are moved to safer banks abroad; fourth thousands of businesses would go under with the banks and the economy would contract to its post-invasion size.
In short, the economy is so closely linked to the survival of the banks we are obliged to do everything possible to keep them afloat, even though their irresponsibly reckless actions, past and present, do not deserve any support.  

HAS THE comrade embraced Catholicism? On Thursday he completed his third visit to the Vatican, to meet the Pope. He went once as House president, again as president in 2009 and also welcomed the Pontiff to Kyproulla in 2010. 

He has become so friendly with Pope Benedict XVI he probably addresses him as Benny. The comrade even ignored the rules of protocol by laying his hand on the Pope (see picture 2) like he would an old friend. So many visits to the Vatican and he has still not learnt the requirements of protocol which clearly state: “As with other monarchs, etiquette prohibits people from touching the Pope.”

The comrade was accompanied on his visit by his wife and foreign minister Erato Kozakou Marcoullis (on the right above) who looked like they had just been to a funeral. Erato looked like the mean widow of a Mexican landowner in a Western, and Elsi like her kindly and loyal maid.

ANOTHER ugly union tyrant, who had been keeping a low profile for months, hogged the limelight in the last few days. 

Macho, moustachioed president and secretary of the last 25 years of bank employees union ETYK, Loizos Hadjicostis, decided to enlighten us with his moral wisdom about the banking crisis on Friday, issuing a long statement slamming this week’s public hate-figure finance minister Vassos Shiarly, for his role in the convertible bonds scandal.

Hadjicostis showed a despicable lack of sympathy for a fellow moustache, adopting the cowardly, but very popular practice, of kicking a man when his down. He accused the much-maligned Shiarly of having a big responsibility for the convertible bonds scandal, of being paid a big bonus and of being involved in B of C work after he became a minister.

The self-righteous union tyrant was in moralistic mood, saying that Shiarly’s disputing of the Central Bank’s report on the convertible bonds, which blamed the bank’s head honchos that he was one of, “makes every citizen realise that we are on a catastrophic course, not only for the economy, but also for principles and values.”

When illustrious members of the Kyproulla establishment start preaching moral principles and values or lamenting their erosion, the bullshit detectors immediately hit red, indicating that there are no more lies left to tell. 

Hadjicostis was merely deflecting attention away from the emphatic defeat of ETYK. On the day he attacked Shiarly, Laiki Bank announced pay cuts of up to 17 per cent for its staff, without consulting the union. Such a humiliating defeat for the mighty tyrant was bound to spark moral indignation.

IN HIS announcement, our new teacher of morality, said that for “someone who contributed to the onset of the collapse of the banking system, to have the right to suggest remedies and play the saviour” he had to do the following things:

“1)To have the courage to apologise to society, shareholders and employees for his participation in the destruction of the banking system; 2) To apologise to all those asked today to make sacrifices because of his mistakes; 3) To return the hundreds of thousands of euro he was paid as bonuses for his allegedly big successes as a banker; 4) Shiarly must clarify whether he agrees or not with the President’s assertion that the main responsibility for the economic destruction of the banks belongs to the bankers.”

You have to admire the union bully’s nerve. Hadjicostis was the biggest cheerleader of Andreas Vgenopoulos, the Greek wheeler-dealer, who came to Kyproulla, used a host of empty promises to take over Laiki Bank on the cheap, made hundreds of millions out of the deal for himself and then led it to bankruptcy. 

Vgenopoulos made a much bigger contribution to the collapse of our banking system than Shiarly, but Hadjicostis carried on brown-nosing him even after his scams were revealed and he was forced to step down as chairman by the Cyprus Central Bank. In fact, after Vgenopoulos was forced out, the ETYK tyrant hosted a dinner to honour the man who singlehandedly bankrupted Laiki, and did not once ask him to return the hundreds of millions he made, or to apologise for his participation in the destruction of the banking system.

ON THE CONTRARY, during the dinner Hadjicostis gave Vgenopoulos the full Arslikhan treatment, thanking him for his “very constructive, honest, with good will, co-operation they had as the heads of the social partners of the Marfin-Laiki group.” It was through this co-operation and “pro-worker policy” followed by Vgenopoulos that the participation of an ETYK member on the bank’s board was established, the toady tyrant said, before presenting him with a gift in appreciation for leading Laiki to insolvency.

As ETYK was represented on the board of Laiki, why did its director do nothing to stop the catastrophic decisions taken by Vgenopoulos, which eventually led to pay-cuts of up to 17 per cent for the union’s members? Unless of course Shiarly was to blame for Laiki’s collapse as well. 

THE BULLSHIT detectors were also hitting red as Akelites tried to tell us there was nothing wrong with the B of C writing off debts of AKEL-controlled companies, worth close to 10 million euro. The moralising about the biased media wanting to harm AKEL was preceded by the customary lie – these companies had nothing to do with AKEL.

In the case of the €6.5 million debt write-off of Delta Trading, the company that did all its business with the Soviet Union in the good old days of the Cold War, the person negotiating with the bank on behalf of the company was the AKEL secretariat’s member responsible for commercial affairs, Venizelos Zannetou. All the shareholders of the company were AKEL members, but the party had nothing to do with Delta Trading.

Zannetou was at the negotiations, not as the party’s representative but as an independent business consultant. Our establishment was so impressed with to Zanettou’s negotiating skills it has written to ask him to represent us at negotiations with the B of C to which we owe 100 grand and want written off. We are waiting to hear what fee he will charge, but if he can get 6.5 million written off, a hundred grand would be a piece of cake for him.

WHEN attacking the banks for all our problems, Akelites try to keep the argument general, but if they have to name a bank it is invariably the B of C board they accuse of screwing up and of investing Greek government bonds. They never mention Laiki which is in much deeper trouble and never Vgenopoulos.

If they so happily attack the B of C which wrote off debts of €10 million, what has Vgenopoulos and Laiki done for AKEL to ensure that they are above comradely criticism? Whatever it was, it must have been worth a lot more than €10 million, to secure such fierce loyalty from the commies and for Vgenopoulos to still be welcome at the palazzo when he visits.

ONLY TWO weeks are left for the crunch meeting of the Euro group that will have to approve our bailout but there is still no word from the troika about its arrival.

On Friday, state radio announced that it was a matter of hours before an arrival date was announced, but the hours passed and nothing was announced. The comrade president is obviously getting a bit nervous at the prospect of not having any money to pay the public parasites and himself at the end of November, because he knows that if we miss the 12th deadline it would be next year before we get the loan.

He had a nerve telling the CyBC on Wednesday that he had contacted “leading official of the EU”, to tell them we were ready and waiting for the troika. The guy had the troika’s proposals since the end of July, and did not even look at them, preferring to go to the Olympics with his entourage and then to New York. Despite the public plea of the Eurogroup’s president in mid-September, he decided to deal with the bailout in October, eventually, sending his pathetic counter-proposals prepared by his clueless pourekka, to the troika on Monday.

The problem is that the troika has pooh-poohed pourekka’s proposals and is drafting new ones. What’s worse for the comrade is that the troikans have let it be understood that they would not come to Kyproulla unless he agrees to their proposals first.

THE COMRADE has not allowed the problems of the economy to interfere with this travel plans. In the last couple of  months, apart from visits to Brussels and the Vatican, he has also flown to Athens, Rome and Paris in order to open exhibitions of Cypriot antiquities. 

To show that he was not going to these cities for the sole purpose of opening exhibitions he also arranged to see heads of state or Prime ministers during the visits. In Athens he met both the president and the PM, in Rome he saw the PM and in Paris he saw the president. It made you wonder whether these people had nothing more important to do than waste their time meeting the comrade tourist? 

The only reason they gave him an appointment was because he is holding the EU presidency. If he were not, he would have had to restrict his statesman tourism to cutting the ribbon at the exhibitions.

DURING his Rome visit on Thursday the comrade also visited a joke entity, even more pseudo than ‘TRNC’, known as the Sovereign Military Order of Malta (SMOM). SMOM is a Roman Catholic religious order set up by the crusaders, which likes to call itself a sovereign state. The only problem is that this sovereign state has no territory of its own.

Our government in its great wisdom established diplomatic relations with SMOM in June and on Thursday the comrade became the first president to pay it a ‘state’ visit. The visit took place in a cupboard over which SMOM had territorial sovereignty.

A retired ambassador, who occasionally visits our establishment, informed us that for years SMOM had been sending requests to the Cyprus foreign ministry requesting the establishment of diplomatic relations, but these were ignored, as the order was considered something of a joke.

OUR COMRADE, obviously did not get the joke. Apart from establishing diplomatic relations with this joke state, he also agreed to visit it and be decorated by its leader - Prince and Grand Master of the order of the Knights of Malta Fra’ Matthew Festing – with the Collar of the Order Pro Merito Melitensi. 

Not to be outdone, the comrade also decorated Grand Master Flash, who must be a bit of a fruitcake as he insists on being addressed as His Most Eminent Highness, with the Grand Collar of the Order of Makarios III. OK Tof, was decorated for recognising SMOM but why did we decorate Grand Master Flash? What did he do to deserve the highest decoration of the Republic?

Does flattery of the Comrade earn someone the Grand Collar now? 

HARAVGHI wins the award for the headline of the week. In its Thursday edition, its headline read, “The paternity of the toughest measures belongs to DISY.” It was referring to the counter-proposals that the Tof government had prepared and sent to the troika last Monday. Given that the government is not to blame for anything, DISY must be responsible for the anti-popular measures included in the government’s counter-proposals.

There are still 119 days left before our comrade leader returns to Kellaki and starts work on destroying his garden. After successfully performing this task on the country, he is confident that he would have no difficulty laying his garden to waste.

Scary fashion in the Vatican

Can I call you Benny?

FAMILIES are spending weeks without electricity and are forced to go to a charity organisation for food and clothing, as the economic crisis’ grip on households grows stronger by the day.
“The situation is dramatic,” said Georgia Polyviou, head of the Alkionides charity. “We receive a call roughly every two minutes in the mornings from people whose electricity was cut off and who are seeking coupons for food.”
She said the situation was “100 per cent” worse than last year, with families that were last year making ends meet currently finding it difficult to survive.
“Single parents have been hit especially hard, after their benefits were slashed during the government’s reform,” said Polyviou, adding however that many other categories of people were suffering, such as large families and the unemployed. Last December, in the government’s effort to tidy up its finances, it decided to reform the benefits system. As a result, any benefits given to single parents by the welfare office were scrapped and responsibility was shifted to the finance ministry. As a result a single parent who may have received €800 a month from the state, ended up getting around €250.
And about 1,900 out of 6,200 beneficiaries were completely excluded, due to new criteria which was widely criticised for being unrealistic. Someone whose entire assets were worth €40,000 could receive €200 a month, with €50,000 they got €150 and €80,000 they got €100.
Last month, the labour ministry promised to spend some €2.7 million on assisting single parent families to pay off rent and loan instalments. “People are scared of having their homes repossessed as they can no longer meet their mortgage payments and loans.
“These are what we would call normal families last year, which have now found themselves in a very difficult situation due to unemployment,” said Polyviou.
She said electricity bills were possibly the biggest problem for these families.
“We have a family that has not had electricity for a month,” said Polyviou. “Both parents lost their jobs and they have two young children. What are they going to do? They simply cannot pay it.”
She said Alkionides had funded many electricity bills. “But we cannot pay them all.”
One 23-year-old woman sought help from the charity to pay a €425 electricity bill. “She returned to school as she had dropped out when she was younger. Her father is serving a 25-year prison sentence after being convicted of paedophilia, her mother is mentally ill and she has a younger brother who has dropped out of school. They had their electricity cut off a month ago.”
The school she is attending agreed to pay €125 towards the bill, while the remaining €300 was paid by Alkionides, which also gave her food coupons.
“Another woman who is suffering from leukaemia is working and earning €900. She is divorced with two children and the father does not pay alimony,” said Polyviou. “They too are about to have their power cut.”
With €400 going on the woman’s rent and €50 a week going on medical treatment that is not available for free, there is simply no way the woman will be able to pay up, she said.
“Electricity is the main problem, along with the lack of food. I have a lot of people with young children call me up and say they have €5 in their pockets and do not know where their next funds will come from,” said Polyviou.
“I would say around 16 per cent of the population is living under the poverty line,” said Polyviou. “The situation has deteriorated 100 per cent from last year.”
Recent official figures showed that the poverty and social exclusion rate increased in Cyprus between 2009 and 2010, placing between 120,000 and 130,000 people under the poverty line based on a population figure of 839,000. 
The figures however are two years old, and from a time when unemployment was still hovering between 6.0 and 7.0 per cent. It is now heading for double that figure after shooting up five percentage points in only 18 months, putting even more families below the poverty line.
Alkionides only used to hand out food coupons to poor families at Christmas and Easter. “This month so far, we have given 7,000 food coupons. We simply cannot give any more,” said Polyviou.”
The charity, which also runs a house in London, for people who go there for medical treatment, is organising a number of events in November and December in the hope to help more.
“There are so many cases; I even get calls from children telling me they are hungry and if I can help,” said Polyviou. “Unfortunately, I am now in the horrible position of saying that we just cannot help.”
But it is not just local families that are in dire straits.
The Future Worlds Centre (FWC) issued an urgent plea to the public last week for food and clothing for families of political refugees, people under subsidiary protection and recognised refugees.
According to Danae Psilla of the FWC, the situation is “very bad”.
“This initiative started after I visited a family of Palestinians, who sought food coupons from (clothes’ recycling NGO) Anakyklos,” said Psilla.
The family has three children, their father is paralysed through injury and their mother has been trying but cannot find work.
“They said the children do not have clothes and that they go to school without food; all they can afford is a small lunch, no dinner,” said Psilla.
Psilla said the situation was getting progressively worse.
“Parliament is delaying approving the benefits they get, resulting in some families not receiving any aid in over four months,” she explained.
And it is not due to their lack of effort to get work.
“These people who are looking for work, they are the last in line who will be given priority,” said Psilla. “First are the Cypriots, then EU workers as they know the English language better and then there are these people, who are always last on the list.”

Alkionides has a warehouse in Dali, where people can donate clothes, furniture and dried food to be handed out to people in need. To donate, contact Alkionides on 22 361295 from 8am to 1pm, Monday to Friday

Men queuing for vegetables thrown away at the end of market day in Nicosia

FINANCIAL regulatory authorities said yesterday it’s up to commercial banks to work out how to compensate the thousands of investors claiming to have been misled into buying high-risk bank securities.

It recently transpired that the island's two largest lenders - in need of a bailout - collectively accumulated over one billion in securities but stopped paying interest on them after making significant losses in the wake of a Greek sovereign debt write-down. The banks closed access to capital, affecting thousands of people.

The majority of the investors claim they were deceived by the banks into investing in securities without being told the risks by an authorised professional.

According to a leaked Central Bank probe, it appears the two lenders – Popular and Bank of Cyprus – tended to stress to investors the benefits of the securities (with a yield of 7.5 per cent) and downplayed, or altogether omitted to mention, the risks.

“Irrespective of the [Central Bank] probe, we believe that, if the banks are to regain their credibility, they themselves must provide a solution after an assessment of their financial results,” said Demetra Kalogirou, head of the Securities and Exchange Commission (SEC).

She said securities worth some €700 million were purchased by non-institutional investors –individuals and companies.

Kalogirou was speaking after a routine meeting held yesterday at the Central Bank between the SEC, the governor of the Central Bank, the Superintendent of Insurance (Finance Ministry) and the Superintendent of Cooperative Societies.

As a result of the Greek haircut, the two banks have been forced to ask for state assistance; this in turn has forced the cash-strapped government to turn to international lenders, the troika.

The troika advocates that the banks should offer the affected investors shares in exchange for the convertible securities, before a bailout amount for the banks can be agreed.

According to economist Costas Apostolides, that makes the most sense: “otherwise I just can’t see the banks, already in hot water, repaying these investors. The government certainly can’t cover it, unless the securities amount is added to the bailout figure, which means the broader public ends up paying.

“Trading the securities for shares – in the hopes that their value will rise in time – may perhaps not be the fairest solution, but it’s the most practical,” Apostolides said.

The investors, however, propose converting their now-dud securities into five-year bonds with a 5.0 per cent interest rate and the option to retrieve 20 per cent each year.

Hundreds of provident and insurance funds had invested in the affected securities; some provident funds invested up to 90 per cent of their deposits in these high-risk financial instruments.

A group of investors has issued the banks – but also regulatory authorities – a November 5 ultimatum by which to propose a solution. If the deadline is not met, the investors said, they will proceed with private prosecutions “against all parties liable” and withdraw their deposits from the banks.

A COMPUTER and software worth €30,000 were stolen from an EAC station in Pyla, it was announced yesterday.

According to the police, the theft was reported by an EAC official, who said the incident must have taken place at some point between May and October.

Police spokesman Andreas Angelides yesterday said the computer contained software worth €30,000, which could only be used by the EAC and nowhere else.

Angelides called on anyone with information on the case to contact the numbers 122 or 199, or Larnaca CID.

EAC chairman Haris Thrassou yesterday announced he was resigning from his post.

Thrassou said he handed his resignation to President Demetris Christofias in a meeting on Monday, during which the authority’s 2011 report was handed over.

He said the president accepted his resignation, but asked Thrassou to remain in his post until his replacement was arranged.

“When I accepted this position, the President of the Republic and the cabinet knew my term was for three years,” Thrassou explained. “But then, due to events that followed (Mari), I was asked to stay on for a little while longer, which I did. My close associates knew of my intentions and this is not a surprise to them.”

THE devastating effects of the Evangelos Florakis naval base blast in Mari – which killed 13 people and blew up the island’s main power station in Vasilikos – dominated the Electricity Authority of Cyprus’ (EAC) 2011 report, which was made public yesterday.

Presenting the semi-government organisation’s financial data, EAC chairman Haris Thrassou – who yesterday also announced his resignation – said the authority was still trying to make up for the effects of the Mari blast.

“The ability to generate 798MW of the total installed capacity of 1,520MW was lost,” Thrassou explained. “Given that the catastrophe occurred during the summer period of peak demand, when the expected Maximum Demand was 1,150MW, it was obvious that the available load of 722MW would be inadequate.”

He said some 60 per cent of generation capacity was lost and from the most productive units.

“The project to restore the Vasilikos Power Station to full operation is truly a huge one,” he said. “The relevant processes began at once. The project is continuing according to schedule. During 2011, the station was cleaned up, buildings were secured and work began on making them fit for use. At the same time, of course, work started on repairing the electro-mechanical equipment.”

He said the number of tenders published indicated the size of the project. “Around 300 separate tenders have been published, evaluated and awarded,” said Thrassou.

So far, unit 5 has been brought into complete operation, with a total capacity of 220MW. The first of unit 4’s gas turbines was put into operation yesterday – with a capacity of 75MW – while its second turbine is due to operate in roughly a fortnight.

Unit 4 is expected to be in full operation, generating 220MW, by the end of November.

“At the beginning of 2013 Unit 3, with a total capacity of 130MW is due to operate, followed in June 2013 by Unit 2 and Unit 1, each with a total capacity of 130MW,” Thrassou said.

He said this success was due to excellent cooperation between the EAC’s board, management and staff, but also with the commerce ministry, the Cyprus Energy Regulatory Authority (CERA) and the Transmission System Operator, together with whom an Energy Crisis Management Team was set up to deal with all the relevant issues every day on a 24-hour basis.

Thrassou said the EAC submitted claims for compensation from its insurance companies to cover the Vasilikos repair costs, which accepted responsibility.

“On the day of the explosion, Unit 5 was under construction and insured by the project contractor,” said Thrassou. “The Authority had drawn up a separate contract with the contractor’s insurance company for the value of the installations that were handed over on July 1 for temporary operations, a sum of €125.6 million with excess of €250,000.” 

The remaining installations were covered by an insurance policy with another company for the sum of €662.7 million, representing the cost of replacement and a deductible amount of €800,000.

Consumers will be paying the 5.75 per cent surcharge for Vasilikos – which was recently reduced from 6.96 per cent – until May 2013.

According to Thrassou, total billed sales of electricity in 2011 amounted 4.59 million MWh, a reduction of 3.9 per cent compared to 2010.

He said the fall in sales was mainly due to the Mari blast – not just because it knocked out its main power station, but also because the tragedy was followed by energy-saving measures by consumers.

“In 2011 the EAC’s fuel costs increased by 23 per cent over the 2010 figure,” Thrassou continued. “Of the EAC’s total costs of €841.6 million, the amount of €540.4 million, or 64.2 per cent, represented fuel costs. Salaries and employer’s contributions came to €115.9 million in 2011, compared to €121.2 million in 2010, a decrease of 4.37 per cent. Of the total costs of €841.6 million for 2011, €17.2 million represented the cost of temporary generation units and €24.5 million the price of electricity purchased from the occupied areas.” 

The authority’s operating profit fell by 24.6 per cent, from €112.1 million to €84.5 million.

“This amount is the accounting profit, the calculation of which includes, beyond revenues and costs, capital contributions and amortisation,” Thrassou explained.

He said the amount of €84.5 million represented a very low return and was not sufficient to fulfil the EAC’s goals.

“The rate of return of the capital base in 2011 fell to 5.1 per cent from 6.5 per cent in 2010, much lower than that obtained by the CERA methodology of around 7.2 per cent,” said Thrassou.

Net operating profit after amortisation of €58 million was €142.5 million, he added. “After the payment of financing costs, tax and changes to the working capital, available cash deposits amounted to €96.3 million.” 

For the funding of capital expenditure of €214.6 million, the entire amount of €96.3 million was used, together with capital contributions of €33 million and an increase of net borrowing to €85.3 million.

In 2011, the EAC’s long-term loans amounted to €452 million and net bank overdrafts to €172 million. The total amount of €624 million was €85 million more than the 2010 figure.

In 2011, work was completed on the Lakatamia, New Paphos, Amathus, Vasilikos South and Xeropotamos transmission substations as well as on the Psevdas and Alexigros transmission substations which were established to connect the Ayia Anna and Alexigros wind parks respectively to the EAC’s transmission system.  

In 2011, some 59 kilometres of new 132kV overhead power lines were brought into use together with 80 kilometres of new 132kV underground cables. 

Commerce Minister Neoclis Sylikiotis said the government planned to defend the EAC’s “national character” with all its might. He was most likely referring to the government’s current negotiation with international lenders the troika to bail out the island. One of troika’s demands, as leaked to the media, was privatisation of Cyprus’ SGOs.

AUTHORITIES knew “an event” at Mari naval base was only a matter of time, a witness testified yesterday in the ongoing trial.

Themistocles Kyriacou, of the Labour Inspection Department, told the court of an on- site inspection of the 98 munitions containers that took place on July 6, 2011, five days before the massive blast which left 13 people dead and scores injured.

Kyriacou, who was among the inspection party, said the check was called after one of the containers was found to have swollen and to have shifted by 30 centimetres from its original position due to an explosion of the munitions inside.

“It was an event warning us that another event, of similar or greater magnitude, would follow,” he said, adding: “No one could have predicted when this might happen, a week, a month…”

Subsequent to the inspection, the witness said, four measures were decided: the immediate removal of the swollen container and an inspection of its contents; the spraying of the entire cargo with sea water; clearing the brush in a radius of 50m around the cargo; and the gradual removal of the entire cargo and its storage in warehouses of the National Guard.

These measures, he said, would be implemented pending a go-ahead from the Defence Minister. The inspection party merely proposed what should be done, but had no authority to take action, or to order the evacuation of the naval base, Kyriacou said.

Under cross-examination, Kyriacou said the Labour Inspection Department did not order the shutdown of a neighboring power plant (Vasilikos) as “we believed that, provided these measures were implemented, the power plant would not be at risk.”

In previous sessions, the court heard that the report warning of a possible explosion at the naval base did not reach then Defence Minister Costas Papacostas in time.

The defendants in the trial are former foreign minister Marcos Kyprianou, former Defence Minister Costas Papacostas, former national guard deputy chief Savvas Argyrou, former fire service chief Andreas Nicolaou; deputy fire chief Charalambos Charalambous; and former disaster response squad (EMAK) commander Andreas Loizides.

They are accused of causing death by want of precaution, and homicide by gross negligence in relation to the 13 deaths; the details of each indictment vary.

NO promises were given to a convict who tipped authorities off about an alleged plot to assassinate the attorney-general and the central prison governor, Justice Minister Loucas Louca said yesterday.

Police have detained three suspects in connection with the case – a convict thought to be the mastermind, a former contract soldier, the alleged triggerman, and a lottery ticket seller.

According to police, the plan was to ambush Attorney-general Petros Clerides on the route between his home and work and use a disposable anti-tank weapon or LAW to assassinate him.

Louca yesterday confirmed that prison governor Giorgos Tryfonides was also a target.

The alleged mastermind of the plot claimed in court on Monday that the whole scheme had been hatched by the island’s most notorious convict, Antonis Prokopiou Kitas, currently doing life for the murder and rape of two women.

The suspect said Kitas’ objective was to win Clerides’ favour and secure his release from prison by warning the police and taking credit for saving the attorney-general.

The justice minister said while no promises were given he defended the practice of getting information from criminals.

“Information is collected from everywhere, prisons, the underworld – where are you going to get the information from? The Church? The main source is the underworld,” Louca told state radio.

The minister said police must evaluate all information and act accordingly although most of the time it was unreliable.

He said nothing was promised to Kitas in return for the information.

“No promise had been given,” he said.

Prison governor Giorgos Tryfonides said Kitas gave him the information first, which was then passed on to the police.

But the governor also blasted the delay in equipping the prison with equipment that jams mobile phones, which authorities believe were used in this and other plots.

“We have been talking about this system for the past three-and-a-half years but the process is stalled due to bureaucratic procedures,” Tryfonides said.

The governor said the tender had been cancelled and even if a new one was invited it would still take another couple of years – never mind the state’s cash flow problems.

Tryfonides said searches were carried out daily but phones still found their way into the facility through various routes, with wardens also allegedly involved in the trafficking.

“They are the ones we want to catch and kick out of the service but unfortunately no one is talking. We have suspicions but no proof,” he said.

THE Cyprus Medical Association (CMA) has decided to end its probe against a paediatrician accused three years ago of administering placebo vaccines to teenagers.

“The decision was mainly based on the fact that unfortunately, the unexpected death of the disciplinary council’s member doctor, Dr Simos Ellinas, resulted in the medical council’s composition being altered, which based on current legislation, makes it obligatory for the case’s trial to start from the beginning again,” the CMA said.

“Taking into account these new facts in this difficult, sensational and time-consuming case, the medical board concluded – after serious discussion and intense consultations – on the decision to not start an entirely new procedure from the beginning by a new disciplinary council, as the law provides, unless new evidence and new facts arise.”

The paediatrician in question, who has not been suspended as the investigation never wrapped, was accused of administering vaccines containing water to teenagers, which were meant to beat a new flu back in November 2009.

The CMA said it was looking into anonymous complaints.

The Health Ministry had previously announced that the new flu vaccines would be provided to children over 15 by state doctors only.

The prospect of using state health services alarmed a number of parents who rushed to private doctors for the vaccination. In the case of the paediatrician in question, however, suspicion was raised as children who had received the vaccine then contracted the new flu virus. Private doctors were charging up to €400 for the vaccine.

“To convict someone it needs to be proved beyond any reasonable doubt and with evidence that he is guilty,” said Vasos Economou, head of the association’s ethics committee, yesterday. “We were advised by eminent doctors that we would find it very difficult to support the case and if it reached the Supreme Court, we would spend many thousands of euros on compensation for the accused, if we could not substantiate a case against him,” he added.

Back when the case came to light, CMA head Dr Andreas Demetriou – who yesterday refused to comment any further, other than relaying the association’s official announcement – said some anonymous complaints had been made to the association, though not in writing.

And yesterday, Economou urged the public to file any complaints against doctors in writing.

“Even though there are complaints by members of the public against doctors on a daily basis, and some of them are very serious, they are not made in writing, which makes it very difficult to prepare cases, but also to ensure there is transparency in the medical world and citizens are being protected,” said Economou.

THE government may struggle to pay public sector salaries in December unless a bailout deal is clinched by mid-November, an official document quoted Finance Minister Vassos Shiarly as saying.

Shiarly expressed the hope yesterday that international lenders would be on the island early next week to finalise the conditions for the island’s bailout.

And the minutes quoted Shiarly as saying Cyprus might be "butchered" if international lenders dealt with the country in isolation from other eurozone states that need financial aid.

Meeting December's payroll commitments was contingent on the goodwill of bankers, the minister said according to the minutes of a meeting with parties in parliament.

Shiarly said that if a deal were agreed, Cyprus could get a first instalment of aid by December 24. 

Asked if Cyprus would manage until December, he said: "if needs be. We will have difficulties, but nothing can be absolute. I can't make predictions from now, because no banker would undertake a commitment on financing, even when times were good. I'm just saying it's manageable."

Cyprus sought financial aid from the European Union and the International Monetary Fund in June but the government has still not concluded a bailout deal with lenders despite repeatedly emphasising that it must be done before the November 12 Eurogroup meeting.

“We are ready,” Shiarly said yesterday after a meeting at the presidential palace. He said it was up to the troika to decide when they would come “but I hope… that we will see them early next week. I believe we are in position to clear many of the pending issues.”

After November 12, it will take the parliaments of individual eurozone nations about six weeks to sanction the Cyprus memorandum.

A deal should have been in place by October 20 to put the issue on the agenda of the Eurogroup meeting, Shiarly told the lawmakers, according to the minutes.

But Cyprus in fact only signalled it was ready to delve deep into a final round of talks last week, after preparing what it said were its own "counter-proposals" to an austerity package prepared by the troika in July.

At the parliamentary hearing, one lawmaker said Cyprus’ aid needs should be discussed at the same time as those of Spain and Greece because, if isolated, "Germany and Finland will tear us to pieces".

Responding to this at the time, Shiarly said: "Yes. That is precisely their approach. Our case is indeed difficult, because some have very negative positions concerning Cyprus... I'm inclined to believe that if we go on our own, naturally they will butcher us."

The island frequently falls under the radar, a fact authorities were clearly hoping it could turn to its advantage with a less-than-strenuous grilling from EU peers.

In the minutes of the discussion, Shiarly relates cases of some European finance ministers getting testy with Cyprus even though it was 2.30am and they were "exhausted" after spending hours on Greece and Spain.

"Imagine what will happen if we go completely on our own," he was quoted as saying. He also cited disagreements between Cyprus and lenders on the recapitalisation requirements of its banks. Lenders believe Cyprus needs €16 billion - €10 billion for banks alone. The government puts the total at €11 billion with 5.0 billion going to the banks. 

The island's debt to GDP ratio is already hovering at about 83 per cent.

IT IS VERY difficult to take the case of the planned murder of the Attorney-General entirely seriously. Everything fell into place so easily it was almost as if the whole thing had been stage-managed and rehearsed in advance. The police had been tipped off about the plot by a convicted murderer - Antonis Prokopiou Kitas, a.k.a. Al Capone – who is serving life and had on several occasions in the past caused embarrassment to the force.

The whole case was based on the testimony of an unreliable, attention-seeking criminal turned police informer who, a few months ago, wrote to the Attorney-General Petros Clerides requesting to be released. 

In his letter, he cited the help he had given to police, with investigations into crimes, including the double murder in Paphos. Clerides turned down the request, but Kitas did not hold a grudge, tipping off the police about the plot to murder the AG, some 10 days before it was scheduled to take place.

Three men were remanded in custody for eight days in connection with the investigations, one of whom was convict Andreas Onoufriou, serving 18 years after being found guilty of placing a bomb under the car of a Limassol judge; the explosion caused injuries to the judge and his daughter. Onoufriou was due for release next year. 

A lottery ticket seller that allegedly delivered the murder weapon (an anti-tank missile launcher) to a middle man co-operating with police, and a former National Guard sergeant who, allegedly, was to carry out the attack, were also remanded.

During the remand hearing, Onoufriou claimed that Kitas had set up the whole thing as payback, because he had tipped off the police of the lifer’s plan to kidnap president Christofias’ grandson. 

It is very difficult not to treat the whole case as some farce, thought up by prisoners who have nothing better to do all day. Clerides did not appear to take the plot very seriously, telling journalists on Monday that he did not feel at all insecure and had no intention to ask for additional police protection. 

Justice minister Loucas Louca yesterday said that police received an abundance of tip-offs from prisoners every week and only a tiny fraction of this information was reliable. It could well be that the tip-off about the planned murder of the AG did not belong to the tiny fraction of reliable information the minister was talking about. The police could occasionally be fooled when following leads given to them by convicted criminals.

FOUR licences for gas exploration in offshore blocks were announced by the government last night as part of the second licensing round launched in February.

The blocks for which the licenses have been awarded are: 2, 3, 9 and 11. They are all contiguous blocks, lying north and north-east of Block 12, where US firm Noble Energy has a concession to drill.

For blocks 2 and 3, licenses were awarded to a consortium consisting of ENI from Italy and KOGAS from South Korea; the license for Block 9 went to a consortium consisting of Total E&P Activities Petrolieres (operator), NOVATEC Overseas Exploration & Production GMbH and GPB Global Resources BV from Russia; and the Block 11 license went to Total E&P Activities Petrolieres.

Commerce Minister Neoclis Sylikiotis said the reason why the government decided to give the green light to these four blocks was the potential for economies of scale due to the fact the blocks are contiguous and in close proximity to Block 12, where significant reserves of natural gas (between 5 and 8 trillion cubic feet) have been found.

Sylikiotis said evaluation of the bids submitted for the remaining blocks (except for blocks 1, 4 and 13, for which no bids were made) would continue – meaning another batch of licenses could be awarded in the future.

In total, 15 bids from five companies and 10 from joint ventures were submitted in the second licensing round.

The minister said negotiations with the companies and consortia leading to possible exploration contracts would begin soon and should be completed within a few months.

Among other things, the contract will determine when exploratory drilling would commence, said Sylikiotis.

In the first licensing round, where only one bid was received, initial negotiations with Noble Energy lasted eight months. The US company was then given two years in which to start exploratory drilling.

This time round, however, due to competition over the blocks but also Cyprus’ acquired know-how, it should not take that long, Sylikiotis said.

Assuming negotiations with the selected companies are successful, the companies would next sign signature bonuses sometime in early 2013.

In a signature bonus, a payment is made up front to the host country for the right to develop a block commercially before work begins. Paying a signature bonus for a licence does not necessarily imply future revenues for the company from oil production in the same licence.

Sylikiotis said the proceeds to the state under the model production-sharing contract would be about 70 per cent, after recoverable expenses.

Immediate income would come in the form of the signature bonuses. Asked whether the government stood to make some €200 million from the signature bonuses on the four blocks awarded yesterday, Sylikiotis said that was a conservative estimate.

He said the development “opens new considerable prospects for the economy of Cyprus and the role that Cyprus is set to play as a key energy player in Europe and the southeast Mediterranean.

“You can understand how important a message this sends regarding the economy of Cyprus,” he added.

The government has said it hopes Cyprus will be able to have the infrastructure in place (pipelines, liquefaction terminal) by 2018 so it can start exporting natural gas by 2019.

Commerce minister Neoclis Sylikiotis