New Russia sanctions threaten services sector

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Cyprus’ services sector cannot sustain another blow from new EU sanctions on Moscow over its invasion of Ukraine, as the EU targets services to Russian firms, said Foreign Minister Ioannis Kasoulides.

Kasoulides said that sanctions should not be hurting EU member states more than they do Russia, and he would be tabling Cyprus’ views to his EU counterparts.

“From my part, I will be focusing on what has already been proven, the importance of the European Union acting united, with which we acted instantly in response to Russia’s invasion.

“The European Commission must consider when coming up with proposals for sanction, the specifics of each Member State.

“We need sanctions as an act of protest to stop Russia’s war machine from intervening in Ukraine.

“However, these sanctions cannot negatively affect member states more than on Russia itself.”

Last week, European Commission President Von der Leyen said the Kremlin relies on accountants, consultants and spin-doctors from Europe, “and this will now stop” as the EU is banning those services provided to Russian companies.

Other countries are also uneasy about the new sanctions package that blocks Russian crude oil imports.

Kasoulides said he understood Cypriot business concerns as the sixth package of sanctions stops EU countries from offering services directly linked to Russian funds

He said, “huge efforts have been made to protect our service sector from disproportionate decisions because other Member States have other problems”.

“For example, we do not have the problem of importing gas or oil from Russia, while others are much more dependent.

“But we have three sectors, tourism, shipping and services, which have already taken a blow and cannot withstand another hit.”

Asked whether Cyprus would support the lifting of the necessary unanimity for decisions at the European Council regarding sanctions, the Foreign Minister said that small states could not accept such a proposal.

“There are very serious issues in which many Member States have particular interests, not just foreign policy. Therefore, Cyprus favours unanimity when forming foreign policy.”

Meanwhile, the USA announced new sanctions targeting Russia’s services and defence industry, including banning service sales to Russian firms.

Earlier in March, Cyprus lawyers, auditors, and accountants said they had taken a direct hit from the war in Ukraine and sanctions imposed on Russia, estimating revenues have shrunk 15% in the aftermath of the conflict.

The Institute of Certified Public Accountants of Cyprus chair, Pieris Markou, said: “As a small economy which relies heavily on foreign investment and services, it is vulnerable to international developments whether they are positive or negative”.

He said it was expected that developments would have a significant impact, as the service sector relies on the business of Ukraine and Russia.

“We must not forget that our economic model is based on attracting foreign investment.

“So, when these companies cannot do business, either in Russia or Ukraine, the services sector will inevitably be affected.”