Citizenship By Investment

As Europe’s economic crisis has worsened, many governments have chosen to look for innovative ways to raise money. One of these, perhaps the quickest and easiest, but perhaps the most controversial, is to enable wealthy foreigners to obtain citizenship by investment.

Within the EU there are a number of countries that are following this course (background information here) with a list that now includes Cyprus, Portugal, Bulgaria and Malta. The costs and residency requirements differ quite widely, showing that there will always be some people in the world that have “made it” but are worried about the personal situation.

For many wealthy individuals a second or third passport is seen as diversification to help them leave quickly in times of trouble should their situation at home deteriorate rapidly.

Is This Europe’s Most Sophisticated Fantasy Football Game?

As the European football season draws to a close, I have been looking around for a fantasy football game to play next season and possibly during the coming world cup as well.

I think I might have found the perfect game! have launched a very sophisticated fantasy football game that uses 70 (yes seventy!) data points from top flight games in five European leagues (Enlgand, Spain, France, Italy and Germany). This means that it is now possible to play a squad that has been selected from across the best clubs in Europe and not just one country. Superb! I can’t wait to play.

See you in the dug out next season :-)

A Financial Bailout Sooner Or Later?

Despite the election results of last week, there still seems to be much negotiating to do as to whether Cyprus will receive a bailout from the European Union.

Initially, there had been little enthusiasm for the idea. Mr Schauble of Germany had made it clear that “no” was the answer. There were many elements that he found troubling – too many to overcome it seems. Then a little back and forth moved him closer to the idea. Now it seems that Germany has agreed that a bailout is possible and should happen, but the possible terms seem to remain a mystery.

There can be little doubt that this shows just how much power Mrs Merkel has in Europe. There is an old phrase in finance, “He who has the gold makes the rules”. In this instance it is she.

Since Germany will be paying a hefty percentage of any potential bailout, whether Angela Merkel feels willing and able to push the idea through the German Parliament is all important. Without her support there is no help.

With the prospect of an electoral stalemate in Italy and these negotiations with Cyprus financial markets around the world went into something of a short-term tailspin. The gentle complacency about the eurozone crisis seems to have ended and, when combined with the corruption scandal and economic woes in Spain, it will surely come roaring back.

Now it will be up to the new centre right leader of Cyprus Nicos Anastasiades to negotiate terms with Germany and Europe.

Update 27/03/2013:
Poor Cypus has dominated the news cycles for days now as the story about their bailout has rolled onwards. From reports it seems as though the country faced some very stern negotiating in Brussels leaving few options. The first, included rules to apply a levy on bank account holders (bailing them in) to help fill the shortfall was refused by the Cypriot parliament. By applying the levy to all savers, it would hit those with few assets and send a frightening precedent to savers throughout the EU that money in the bank is not safe.

For quite obvious reasons, the banks in Cyprus have been closed for days. If they had re-opened, they would surely have been emptied by now.

Several days of wrangling and a new deal was announced in the very last moments. The new deal protects savers with account balances of up to 100,000 euros, but will apply a levy (as yet an unknown percentage) on amounts over that. It is expected to be a significant number.

This will have the effect of closing Cyprus as an offshore location. Since banking is a very major part of the economy, this will be very painful for the local economy. Your author has read opinions that suggest that a fall of between 15 and 20% of GDP in the next three years is possible. That would put Cyprus into a depression. One can only presume that this will be horrendous for businesses of all shapes and sizes and the public will certainly suffer significantly.

By forcing such measures onto the banking system, there will be much less credit available. This will have a harsh impact on companies. For many small businesses, credit is one of the key elements that enables increased working capital to fund business growth. Without it, there will be far less job creation, restricting the economy still further and a poor period for the stock market.

At the time of writing the banks are still closed and only limited cash withdrawals are possible from ATMs. The plan is for the banks to re-open tomorrow, the fact that this is Easter weekend provides a limited amount of time for the banks to be deluged by worried savers. Fingers crossed that a full blown bank run does not develop – though it might – and that if one does, it does not cross the Mediterranean Sea and impact other euro nations such as Spain and Italy, where the banking sectors are already weak and mired in corruption scandals.

Powerful Policy

For sunny countries like Cyprus, power generation is changing. As the technology moves onwards for solar panels – and it is moving quickly – the opportunity for energy independence for small countries is becoming more possible. Oil dependency might be a thing of the past in perhaps forty or fifty years time.

Despite this, national electricity grids are not really designed for the entire country. In every nation – apart perhaps from Monaco – there are parts of the country that are simply harder to reach. This geographic isolation makes it more expensive to put basic utilities such as electricity, waste water services and the internet in place. This means that many of the things that we now view as “basic rights” in developed countries are lacking in more rural areas. The more advanced things that these basics enable (for example, not the internet but watching videos on the internet) are perhaps not vital, but very helpful for many people.

For this reason countryside energy policy is something that is gaining more importance at EU level. After all, we don’t all live in cities… In time, people living in the countryside will be better represented at the highest levels, but until then, we must hope that these organisations can do all they can for us.

The Fight For The Right To Register

While Cyprus might not be a global power in the world of football, there are other areas in which it has lots of influence. For example, it is one of the world leaders in the field of sea going vessels. It’s shipping registry is very well regarded and very competitive on the world stage. This article offers a very good overview of the history and positioning of the registry.

It makes sense that relatively small island nations (especially those in strategic locations) should be involved in the transportation sector and should do so in a way that enables them to grow their market beyond their own limited national borders.

This is certainly an approach shared by other small island nations. Malta, for example, also has a very well regarded and successful shipping registry. It has been a mainstay of the Maltese legal profession for many years and earlier in 2012 it was announced that it is the largest in the EU.

For this reason, Malta is trying to emulate that success in another sector – aviation. There is now a small but growing aircraft registry and a number of law firms (such as have opened their doors just to specialise in this field. In years to come, it seems likely that small countries such as Cyprus and Malta will be doing battle in this arena as well to win the lucrative contracts and consulting work that is available.

Money – The Real Sport In Cyprus

The real sport being played in Cyprus, is not, of course, played with a ball. It is international business. And here in Cyprus it is played on a very large scale – relative to the size of the island.

In fact, the banking crisis of 2012 – which is a part of the eurozone crisis – has highlighted to what extent Cyprus really plays. For example, this story from Spiegel Online discusses the amount of money held by Russian Oligarchs in the Cypriot banking system. The estimate is a little over 20 billion euros, which is similar to the island’s annual GDP.

Admittedly, this report comes at a time when there is a significant amount of paranoia within German society at the amount of money being needed around Europe for bailouts. Understandably so. And it is unusual for the thoughts of an intelligence agency to be publicised, so it is best to read into it what you will. All the same, it highlights just how effective the country has been at attracting foreign capital.

Football Fans Need To Be Realistic

It will come as very little surprise to hear that Cypriots are football-mad along with virtually every nation in the world. Needless to say, the national team of Cyprus isn’t exactly the world’s strongest outfit, and there simply isn’t the revenue in the country to support and fund major league teams as is the case in Spain, Italy, Germany and the UK. For this reason, the gulf between Cypriot teams and the rest looks sure to endure.

In this regard, Cyprus suffers as many other smaller nations do. For example, it is difficult to ever imagine a truly competitive football team coming from Luxembourg, Malta or Estonia. That is not meant to be negative, just realistic. Most football fans are realistic enough themselves which is why teams such as Manchester United, Barcelona, Chelsea, Juventus and a few noteable others are able to maintain such large foreign fan bases.

This, of course, helps to provide the television and kit sales incomes that these big clubs need to survive at their level. As is so often the way in life, the winners take all of the good stuff.