Cyprus in brief

Geography and population

Cyprus is situated in the eastern Mediterranean, lying at the hub of 3 continents and close to the busy trade routes linking Western Europe with the Arab World and the Far East. Cyprus' total area is 9.251 sq. km and is comparable in size to Lebanon in the Middle East or Connecticut in the United States. The island's time zone is 7 hours ahead of New York and 7 hours behind Tokyo.

The island enjoys the best type of Mediterranean climate with about 300 days of sunshine per year. The bulk of the rain falls during the period from November to March. The coldest month is January with minimum and maximum mean temperatures of 6 degrees C and 13 degrees C, respectively, while in August, the hottest month, the corresponding minimum and maximum mean temperatures are 21 degrees C and 36 degrees C.

Cyprus' estimated population is 741.000 of which 85 percent belongs to the Greek Cypriot community and 12 percent to the Turkish Cypriot community, whilst the remaining 3 percent are foreign residents. Greek and Turkish are the official languages of the Republic but English is widely spoken and understood, and is regularly used in commerce and government. Apart from the capital, Nicosia, with an estimated population of 193.000, all major cities are located on the coast. Limassol is the second largest city and the island's biggest port. Larnaka and Paphos, which are popular holiday resorts, are the third and fourth largest cities, respectively.

The economy

Cyprus has an open free market economy. The role of government is limited to regulation and the provision of public utilities. The island is often aptly referred to as a European country in the Middle East. Per capita GNP is about USD14.000, one of the highest in the Mediterranean. Considering other socioeconomic indicators such as the excellent housing conditions, the pollution free environment and the low crime rate, one may conclude that the quality of life is better than that reflected by per capita income alone. Furthermore, the cost of living is substantially lower than in most countries offering a comparable standard and quality of life. Nicosia ranks as seventh least expensive of the leading 56 international business centres surveyed in Prices and Earnings Around the Globe, published by the Union Bank of Switzerland in August 1997.

The economy is driven by thriving tourist and service sectors and a fast growing export-oriented industry. In terms of their contribution to GNP the three most important sectors of the economy are: trade, restaurants and hotels; finance, insurance and business services; and manufacturing. The performance of the economy has been such that it has combined high real growth with low inflation and low unemployment. Moreover, the economy is characterized by a low external debt service to exports ratio and a high international reserves to imports ratio. Of the USD 4,9 billion annual gross foreign exchange earnings, 33 percent originate from tourism, 24 percent from exports, 8 percent from transportation and over 7 percent from international business and shipping companies. Trade, hotels and restaurants is the economy' s most important sector. In fact, earnings from tourism have, in general, grown faster than domestic exports. Over 70 percent of tourist arrivals originate from the European Union. Cyprus' main exports are citrus fruit, potatoes, clothing, footwear, wine and alcoholic beverages, cement, cigarettes, as well as chemicals and toiletries. Manufactured goods and agricultural products account for 77 and 18 percent of domestic exports, respectively. With regards to imports, intermediate inputs and consumer goods are the most important categories, each accounting for more than 31 percent of total imports. Cyprus' main trading partner is the European Union accounting for about 48 percent of imports and 27 percent of exports.

Banking and finance

The legal tender is the Cyprus Pound. Its ultimate market maker is the Central Bank which aims to keep it stable against the ECU (CYP1 = ECU 1,7086). In addition to the Central Bank, the banking system consists of 8 onshore commercial banks, 32 offshore banking units, 4 specialized financial institutions and a number of leasing companies. Commercial banking arrangements and practices follow the British model.

Strong correspondent networks are maintained around the world by onshore and offshore banks. Most of them subscribe to SWIFT, Reuters, Telerate and other services. Thus they have easy access to the world banking network and are able to carry out traditional and specialized financial transactions.

Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance industry with all types of risk accepted, mainly through agents and brokers. Currently, over 80 insurance companies and insurance captives operate on the island, many of which are incorporated abroad and represent well known multinational insurers. The authorities regulate onshore banks and insurance companies in such a way as to safeguard the interests of depositors and assured, and to channel investments into productive activities.

The Stock Exchange commenced its operations in March 1996. The Council of the Stock Exchange (CSE) is responsible for implementation of its policy. Transactions are electronically displayed and the present clearing and settlement processes have been computerised. The CSE is planning in the near future to proceed to a fully computerised on-line trading and settlement system. In this connection, the necessary legislation has already been approved.

Transport and telecommunications

There is a wide network of air-routes connecting Cyprus with Europe, Africa and Asia. The island's two international airports are situated near Larnaka and Paphos, some 50 and 150 km, respectively, from Nicosia. They handle over 900 scheduled flights per week served by 36 international airlines as well as flights operated by 65 chartered airlines. The island is rapidly becoming a major international transit station for commercial air transportation with excellent connections within the entire region.

Seaborne traffic is served by a fully renewed port system comprising the multi-purpose ports of Limassol and Larnaka, the industrial port of Vassiliko and the 3 specialised oil terminals of Larnaka, Dhekelia and Moni. One-hundred shipping lines include Cyprus in their regular schedules to and from 5 continents. About 5.000 ships totalling 18 million net registered tons call at Cypriot ports each year.

Limassol and Larnaka ports are the island's main sea gateways handling two-thirds of the total volume of seaborne cargo, including the entire traffic in transit. Both ports are increasingly being used as regional warehouse and distribution centres. Supplementing one another in terms of facilities and traffic, they constitute a major container trans-shipment centre in the eastern Mediterranean. Transit cargoes enjoy special treatment at the ports. Such treatment includes, in addition to minimal customs formalities, free trade facilities and a very reliable handling and delivery system, the extension of berthing priority to their carriers and special rates for their long-term storage.

Cyprus recognises the importance of telecommunications and has invested heavily in the development of this sector. As a result, the island may claim, in this respect, to be among the most developed countries in the world.

Apart from conventional telecommunications services such as telephony, telex, telefax and telegraphy, the Cyprus Telecommunications Authority (CYTA) offers services such as the packet switched data network, mobile telephony (GSM and NMT900), voicemail, paging, maritime, TV transmission/reception, private leased circuits, audiotex, videoconferencing, access to the Internet and the X400 message handling system. Furthermore, the Integrated Services Digital Network (ISDN) has recently begun operating on a full commercial basis. The national network utilises state-of-the-art technology such as digital switching and transmission systems and fibre optic cables. Services to be introduced soon include videotex, the Paneuropean Paging System, as well as broadband services.

CYTA has, in collaboration with other telecommunications administrations in the region, installed submarine fibre optic cable systems connecting the island with Greece, Israel, Syria, Lebanon and Egypt. The latter constitutes part of a huge submarine fibre optic cable system, SEA-ME-WE2, stretching from Marseilles to Singapore. Furthermore, Cyprus will be a landing point for SEA-ME-WE3, a 38.000 km long 10Gbit/s state-of-the-art submarine fibre optic cable network linking the Pacific Rim, South East Asia, the Middle East and Western Europe. This extensive fibre optic cable network is complemented by an equally impressive satellite telecommunications network. Six major and a number of smaller satellite earth stations operate via Intelsat and Eutelsat.

Human resources

Cyprus maintains public elementary and secondary school systems of a very high standard. The educational system is complemented by vocational schools whose main responsibility is the training of skilled personnel for the tourism and manufacturing sectors. In every major city there exists a selection of good quality private schools which are addressed mainly to the needs of foreign speaking pupils. These schools offer tuition in English, French, Italian, Armenian and Arabic at reasonable fees.

Cyprus has a well-trained and versatile work force. The island ranks among the leading countries of the world in terms of the proportion of university graduates. Qualified professional, technical and clerical staff with wide experience and fluency in English and other languages are available for employment at reasonable remuneration.

Terms and conditions of employment are negotiated either directly between the employee and the employer of through collective bargaining between trade unions and employers' organizations. The number of man-days lost to strikes each year (currently about 68 per 100.000) is very low by international comparisons. Added to this is the fact that Cypriots are hardworking, adaptable and honest. Interpol statistics reveal that the average number of serious crimes per year is about 699 per 100.000 population, or less than one-sixth of the average figure for the European Union.

As a result of the high educational level of the population and due to historic and economic links between Cyprus, Britain and other European countries, legal, accounting, management, computer and other services are of the highest standard. A large number of lawyers are graduates of British or European universities or members of the English Inns of Court. Most accountants are British trained and members of either the Institute of Chartered Accountants or the Chartered Association of Certified Accountants. Professional advice, therefore, is available from experts who can draw on both local and international knowledge.

Government and legal system

The structure of Government is similar to other western democracies where human rights, political pluralism and private property are safeguarded. There is a multi-party system of democracy based on proportional representation.

The Head of State is the President of the Republic who is elected by universal suffrage for a five-year term of office. The Council of Ministers, which is appointed by the President, is the executive organ of the Republic. Legislative power lies with the House of Representatives whose members hold office for a period of five years. Cyprus is a member of the United Nations, and its specialized agencies, the Council of Europe and the Commonwealth. The island also has an association agreement with the European Union which provides for the abolition of all barriers to trade and the establishment of a customs union between the two sides by 1998. Cyprus is represented through full diplomatic missions in 27 countries, 9 major international organizations and 6 consulates general around the world.

The legal system is based on the same principles as those applicable in the United Kingdom and all statutes regulating business matters and procedures are based essentially on English law. Most laws are translated into English. The Continental system of administrative law, according to which the legality of administrative decisions can be judicially controlled, has been introduced and applied by virtue of the constitution.

Original criminal jurisdiction rests in District Courts for minor offences and in Assize Courts for more serious crimes. All appeals are heard by the Supreme Court which is also empowered to pronounce final judgement in all cases of constitutional and administrative law.