Lebanese investors and expats, who turned to Cyprus for a safe haven following Lebanon’s financial meltdown, today find themselves once again gazing at an uncertain future as Cypriot authorities tighten the noose on the community.
The Lebanese community in Cyprus has been dealt one blow after another ranging from complicated investment and visa procedures to delayed permanent residency approvals. The latest, however, has forced an entire industry to exit Cyprus after its Central Bank imposed draconian measures that left Lebanese banks with no choice but to close shop despite years of warm bilateral ties between the Mediterranean neighbors.
Separated by only a few hundred kilometers, Lebanon and Cyprus have long enjoyed vibrant cultural and socioeconomic ties that date back to the the 13th century, when the first wave of Lebanese settled in the Mediterranean island, now home to over 20,000 Lebanese Cypriots.
Another wave of Lebanese investors and businessmen flocked to Cyprus centuries later to forge a bridge that linked Lebanon to the world in the years that followed the breakout of its 15-year civil war.
Throughout that bloody conflict, Cyprus served as a transit point for Lebanese travelers, and as a business hub for investors, initially in the maritime industry. Those investments soon started spilling over into other industries, fueling a boom in the leisure and hospitality business as Lebanese set up shop across the island to serve a growing number of travelers, expats and tourists.
The growth of the hospitality sector went hand in hand with a thriving residential real estate sector that also attracted Lebanese developers and property investors alike.
In the decades that followed, both Lebanese and Cypriots reaped the benefits of their harmonious relationship, one that was expected to deepen further after another crisis swept Lebanon, this time sparked by the country’s financial meltdown.
The crisis led many Lebanese investors to pour money into Cyprus, which has attracted over 20,000 expats and property owners since late 2019.
The island’s renewed popularity as a tourism and business hub among the Lebanese spurred reports that Cypriot authorities were planning a framework to further bolster deepening ties.
However, two years later, relief in Cyprus continues to elude the Lebanese, who are still reeling from the worsening crisis sweeping their home country.
Investors are being blocked from transferring funds through banks to the island – many banks won't even open accounts for Lebanese, while property owners are facing unjustified monthslong delays in visa applications. Meanwhile, Lebanese banks that for decades have facilitated the growing business and investment ties, have recently been forced to close shop after coming under unprecedented pressure from the Cypriot Central Bank.
The Central Bank required Lebanese banks to transfer liquidity in the amounts needed to cover insured deposits and 50 percent of non-guaranteed deposits, effectively forcing Lebanese lenders to exit the market.
“This clearly means that the Cypriot authorities do not want us here anymore,” L’Orient quoted one Lebanese banker as saying.
While it is understandable that the Cypriot Central Bank has to take measures to protect against any financial risks, Cypriot authorities could have opted for more balanced measures that mitigate its concerns while keeping Lebanese banks operational.
Their closure will complicate procedures for Lebanese expats and businessmen operating in Cyprus and undermine investments in the island at a time when we ought to be working together to leverage our ties to weather globally turbulent times. But while the Lebanese are now expected to stop considering Cyprus as a prime destination to live in or open businesses, Greece, the UAE and Portugal are looking forward to receiving them, and with much better facilities.
The question that comes to mind now is whether the Cypriot government will intervene in order to preserve what clearly was a mutually beneficial relationship?