Cyprus striving to recover from the pandemic is hindered after the EU’s latest banking sanctions on Russia will also affect the island’s services sector, say stakeholders.
Many Russian offshore companies will now find themselves cut off from their banking assets in Russia, affecting their dealings with local companies.
On Sunday night, the President of the European Commission, Ursula von der Leyen, announced a new set of sanctions against Russia, including excluding certain Russian banks from SWIFT, a platform for financial institutions to exchange information about global monetary transactions.
Von der Leyen said the move would disconnect these banks from the international financial system, affecting their ability to operate globally and blocking Russian exports and imports.
In comments to news site Stockwatch, Theo Parperis, Head of Tax & Legal Services of PwC Cyprus, said the crisis would affect local services much like it will impact the industry globally.
“Cyprus provides a wide range of financial, administrative, accounting and consulting services to companies of large Russian groups based in Cyprus, and Cypriot companies that cooperate with large groups of companies from Russia and Ukraine,” said Parperis.
He pointed out: “This unfavourable business climate arising from the political instability in the region adds to rising fuel prices and the cost of other commodities such as steel, negatively affecting the recovery efforts”.
The CEO of Deloitte Cyprus, Pieris Markou, said: “Our country as a small economy is vulnerable to international developments, positive or negative.
“The sanctions imposed on Russia will negatively affect its economy, negatively impacting its economic relations with other countries, including Cyprus.
“As a result, the international services sector in Cyprus will be affected, as a significant source of income will be affected.
“The question for Cyprus and countries with close trade and economic relations with Russia is how long will this crisis last.
“If clashes and sanctions last for a long time, then challenges will also be long lasting and harder to address.”