.
Credit card spending on the rise
Data on plastic card expenditure have raised some interesting questions about business relations between Greek Cypriots and Turkey in the past year.
Data from the credit card company JCC Payment Systems Ltd show that spending in the “occupied areas and Attaleia” (Antalya), using plastic cards issued in the Greek Cypriot part of the island, rose by 24.8% over the year earlier in September.
Total expenditure in that month rose by EUR 154,866 to EUR 779,477, compared with EUR 624,622 in September 2009.
The primary reason for the increase was a EUR 145,327 rise in spending on airlines, from EUR 14,473 to EUR 159,800.
Moreover, this is not a one-off phenomenon. In the first nine months of the year, plastic card spending on airlines rose from only EUR 66,423 in January-September 2009 to EUR 1,072,506, or EUR 1.07 mln, in the same period of 2010.
Several possible explanations
We are still trying to get to the bottom of the reasons for this increase but there are several possible explanations.
First, it could be spending by Turkish Cypriots who have bank accounts in the south where card charges are perhaps cheaper.
However, with money-laundering rules now asking for proof of address, and Greek Cypriot banks probably unwilling to accept an address in an area where the regulators have no control, it does not seem the most likely explanation.
Second, it could reflect spending on flights from Larnaca to Turkey via Greece. This has traditionally been the long and arduous route Greek Cypriots take to Turkey, since the Republic of Cyprus long ago declared all ports and airports in the north closed.
But if you are avoiding the wrath of fellow Greek Cypriots, it seems that you would not book with a Turkish or Turkish Cypriot agent and would use a Greek airline and a Greek Cypriot agent to get to Turkey instead.
The third explanation is that Greek Cypriots or other residents in the south have started flying directly to Turkey from the Ercan (Tymbou) airport in the north, despite the taboos, in order to go on holiday.
In the past couple of years, visiting Istanbul or the ancient Greek sights has become a fashionable pastime among Greek Cypriots.
Connections may be more convenient
A fourth reason is that business people are using Ercan/Tymbou perhaps because connections to Europe are more convenient.
A quick look at flights to Brussels on a Monday morning reveal a five-hour trip from Ercan via Istanbul versus a six to nine-hour trip from Larnaca via Athens, Warsaw, Frankfurt, or Athens and Munich combined.
Finally, a fifth explanation is that people are simply flying to Turkey to do business.
The fact that there was an equally strong increase in airline spending even outside the holiday season gives some support to the idea that this could be people doing business with Turkey.
If so, it means that, despite the physical and psychological barriers to doing business implied by the Cyprus problem, Greek Cypriots realise that they are losing out if they don’t do business with the largest market in the region, which is galloping out of the global crisis.
But the truth is that we really don’t know. So if anyone knows for sure, please get in touch, either directly to [email protected] , or via the Financial Mirror at [email protected] .
I promise to buy a Turkish coffee, Cyprus coffee or Greek coffee (take your pick) for the one who provides the real answer.
Fiona Mullen, Sapienta Economics Ltd
