Cyprus is the third largest Mediterranean island (after Cecelia and Sardinia) blessed by a mild climate and an advantageous geographical location. Its more than 640-km-long coastline with multiple natural harbors presents a perfect landing opportunity for an invading foreign army. As a result, all ancient Western civilizations one after another claimed this 9.3 thousands km2 piece of dry land placed by forces of nature in the midst of 2.5 million square kilometers of salty waters for themselves.
Among those early conquerors the most prominent were Greeks (~1400 BC), Phoenicians (~800 BC), Assyrians (from 708 BC), then Egyptians, Persians (from 545 BC), Macedonian (333 BC), Romans (since 58 BC) and Byzantines (from 395 AC). The Middle Ages brought to Cyprus new, greedy raiders from outer lands. Richard the Lion Heart seized the island in 1191 on his way to the Holy Land and then sold it to the Knights Templar, which almost immediately resold Cyprus to the French King. O tempora o mores.
The enlightened Renaissance brought to this island no less violence than the Dark Ages. In 1473 Cyprus fall into unscrupulous hands of Doge di Venezi. It stayed there until 1570, when Ottoman rulers made Doges an offer, which they couldn't refuse because this proposition was heavily accentuated by the presence of sixty thousands Turkish solders on the island. In 1878, following the Russo-Turkish War, which went south for Pashas, Cyprus succumbed to the British maritime force. Using its XIX century fleet's dominance, the Crown firmly held on to those sunny rocks for almost 100 years and in the process (1925) converted Cyprus into its full-fledge colony.
Ironically, the long-thought political independence, which came to Cyprus at 16 August 1960, didn't bring with it the desirable peace and tranquility. Following freedom day's festivities Greek and Turkish Cypriots had indulged into a civic conflict, which then lasted for almost 15 years.
In 1974, when, in response to Greece's coup d'etat (15 July), Turkish government send 40,000 troops and 180 tanks to the island, the full fledge international crisis erupted. It soon led to forced division of Cyprus to two administrative areas: the one located on the North, which still stays unrecognized by UN and is ruled by the Turkish army and the other - on the South, which remains under the administration of the Cyprus government.
Multiple attempts of international community to resolve this old-standing conflict have proved to be fruitless so far. The latest reunification plan, proposed by the United Nations, was soundly rejected by the Southerner voters on the referendum held in 2004. Today, as thousands years ago, Cyprus remains one of the hot-spots on the world political map.
The internationally recognized government of Cyprus consists of the president, elected by popular votes, and the unicameral 80-members Parliament - House of Representatives. House's major pro-government party - the right-wing Dimokratikos Sinagermos (DISY) - holds on to 18 out of 56 parliamentary seats. The second largest opposition party - pro-socialist Anorthotiko Komma Ergazomenou Laou - controls 16 House seats.
In May 2004 Cyprus became the EU member-state. Still, the North remains outside of both Nicosia and Brussels' administrative control. Additionally there are two territories, which are inaccessible for Cyprus authorities - the one, which belongs to United Kingdom and the other, which serves as the buffer zone between North and South, and controlled by the UN.
The Cyprus economy mostly relies on the offshore banking and international tourism. After 2012 Cyprus banking crisis and the resulting clients accounts' "haircut", initiated by authorities, the massive UHNVI exodus followed. However, since then, the island has again gradually gained back its popularity among EU and USA investors as the emerging financial gates to the Southeastern Asia. As a result, island's GDP growth rate slowly but steadily recovers from the negative 2% in 2013 to 1% in 2016.
Cyprus' two leading economic sectors - banking and tourism - might serve as the launching pod for local tech founders. At the same time, relatively small island's economy cannot serve as a basis for startups long-term growth. The island's long-lasting political, legal and administrative divisions only exacerbate this situation rising costs of running business for the local entrepreneurs.
The Central Bank of Cyprus (CBC) officials belongs to the school of thoughts, which stipulates that although Bitcoin has already proved to be the invasive specie, its usage rate is still very insignificant and, therefore, this new nomisma doesn't present any real threat to the country's lex monetae.
As early as February 2014 this position was expressed by CBC's directors in the press release, which was named "Attention to the Risks of Fake Currencies.". Although this statement turned to be highly critical towards Bitcoin, citing multiple risks associated with wielding this new electronic medium of exchange, it, at the same time, confirmed non-regulated, "non-legal" status of the crypto-currencies in Cyprus.
As in many other countries around the world it leaves local crypto-users wobbling in the "gray" legal area. However, it might be exactly what plays into hands of monetary authorities of this small island nation, which, on the one hand, relies so heavily on the influx of new, crypto-hungry clients into its local banks, but, on the other, can't be looked at as opposing the main-stream position of EU financial watch-dogs. Regrettably, it leaves local bank's clients wonder whether or not transacting with crypto on their accounts will increase the risks to be penalized by Cyprus authorities in the future.
Business Notes for Startups Founders:
political climate: not friendly;
economic climate: marginally friendly;
regions to focus: EU, Asia;
industries to focus: FinTech and tourism;
major limitations: small economy, tiny population, administrative division of the country, political instability;
stimulus: growing tourism and financial sector;
opportunities: to create a e-business aimed at international travelers;
Cryptocurrencies and ICOs (outlook): not regulated (unclear).
The author: Svyatoslav (Svet) Sedov
Angel investor and founder of The First International Incubator for Silicon Valley Companies (FirstInternational.In) in the Bay Area, CA, USA.
Twitter: https://twitter.com/SvjatoslavSedof
