Posted on: March 9, 2022, 05:56h.
Last updated on: March 9, 2022, 05:56h.
Cyprus used to be in love with Russians. However, after the country invaded Ukraine, the relationship has fractured and Cypriot casinos may pay the price.
Cyprus figured out long ago that, for some reason, it was particularly interesting to Russians. It may have been because of the warm Mediterranean weather, the beaches or the popular domestic wine, zivania. Regardless of the reason, the relationship between the two countries grew until Cyprus became a target for Russian investors, the mega-wealthy and more.
The sentiment, to some degree, has changed since Russia decided to illegally invade Ukraine. As Politico points out, Cyprus is distancing itself from its former commercial ally. As a result, the Cypriot hospitality scene, including its casinos, face potentially difficult times ahead.
Sour Grapes For Russians in Cyprus
Hundreds of thousands of Russian tourists flock to Cyprus annually, except during times of global pandemics. In 2020, according to Politico, Russia accounted for $100 billion in investments in the country. That was around one-quarter of all the money funneled into Cyprus that year.
The Cypriot economy is disproportionately affected compared to other countries due to the structure of the Cypriot economy and its reliance on Russian tourists,” Cypriot Finance Minister Constantinos Petrides said in comments to Politico.
Russian tourism, combined with Ukrainian, was to bring about 25% of the total tourism to Cyprus this year. However, for obvious reasons, that will no longer happen.
If the invasion lasts for less than a month, Cypriot Finance Minister Constantinos Petrides believes the country could rebound without too much of an issue. However, if it lasts longer, which is looking more likely every day, it will have lasting economic difficulties.
Tourism is a huge part of the Cypriot economy, delivering 80% of the country’s revenue. Losing the Russian channel will impact all levels of tourism and spending.
Cyprus Shuts Off Russia
Cyprus is a European Union (EU) nation. As such, it found itself in a difficult spot – back a major revenue source or back its union partners. It opted for the latter, but not without hesitation.
The country resisted calls to close its airways to Russian planes initially. The government also wanted to continue to allow Russian access to SWIFT, the global payments gateway. It relented, however, and has signed off on both.
Cyprus was also the last country in the EU to offer financial support to Ukraine, according to Politico. It is the only EU nation that is not part of NATO, as well.
Going forward, the banking industry in Cyprus will be altered. Several banks hold assets for Russian individuals now on EU sanction lists. Real estate projects, some of which received backing from Russian investors, will sit idle.
A number of Russian executives, some with a direct link to Putin’s government, moved quickly as Russian troops were advancing on Ukraine. Russian state-owned bank VTB Bank, which is no longer part of SWIFT, holds shares in the RCB bank in Cyprus. VTB brass moved all of those shares to Cypriot shareholders ahead of the invasion.
RCB is now a purely Cypriot bank. However, that doesn’t mean RCB bank won’t find a way to get its hands on those assets.
Limassol, Famagusta Come to a Halt
City of Dreams (CoD) Mediterranean is on track to open later this year. The Melco Resorts and Entertainment property is supposed to be the largest casino resort in all of Europe. There’s no doubt that its location in Limassol hoped to capitalize on the big-spending Russians that frequent the area.
That will likely now change, as will the success of Melco’s other satellite casinos the company owns. It is behind gaming venues in Larnaca, Paphos, and Famagusta, but they were all meant as an enticement to attract attention to CoD Mediterranean.
It’s too early to say how much trouble Russia’s invasion will cause Melco and the local gaming scene. However, there is a silver lining. As companies flee Russia in protest of the massacre and fear-mongering, some are open to setting up shop in the country.
There is still some reluctance, though. Panicos Demetriades, a former central banker in Cyprus, told Politico, “Cyprus is a small country and is known for its past relationship with Russia and the oligarchs. Thus it is very difficult to support itself and could become a victim of sanctions. Because of old sins, Cyprus is [on] the gray list and others are always suspicious.”